UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Fresh America Corp.
(Name of Issuer)
Warrants (exercisable into common stock)
(Title of Class of Securities)
35803R 6# 7
(CUSIP Number)
Marcia A. Casey
Senior Counsel
John Hancock Financial Services, Inc.
T-30-12
Post Office Box 111
Boston, Massachusetts 02117
(617) 572-9183
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 5, 2001
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box.|_|.
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7 for
other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 10 pages)
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
------------------------------------ ----------------------------------
CUSIP No. 35803R6#7 13D Page 2 of 10 Pages
------------------------------------ ----------------------------------
----------- --------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John Hancock Financial Services, Inc.
I.R.S. No. 04-3483032
----------- --------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
----------- --------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
----------- --------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
See Item 3
----------- --------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_|
----------- --------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
------------------------- --------- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY 45,414,529: 38,602,350 through its direct, wholly-owned subsidiary JHLICO and
OWNED BY 6,812,179 through its indirect, wholly-owned subsidiary John Hancock Variable
EACH Life Insurance Company
REPORTING
PERSON
WITH
------------------------- --------- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
------------------------- --------- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
45,414,529: 38,602,350 through its direct, wholly-owned subsidiary JHLICO and
6,812,179 through its indirect, wholly-owned subsidiary John Hancock Variable
Life Insurance Company
------------------------- --------- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
----------- --------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
See Rows 7 and 9.
----------- --------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
----------- --------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
84.4% as described in Rows 7 and 9.
----------- --------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
HC
----------- --------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
------------------------------------ ----------------------------------
CUSIP No. 35803R6#7 13D Page 3 of 10 Pages
------------------------------------ ----------------------------------
----------- --------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John Hancock Life Insurance Company
I.R.S. No. 04-1414660
----------- --------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
----------- --------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
----------- --------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
See Item 3
----------- --------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_|
----------- --------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
------------------------- --------- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY 38,602,350 directly and 6,812,179 through its indirect, wholly-owned
OWNED BY subsidiary John Hancock Variable Life Insurance Company
EACH
REPORTING
PERSON
WITH
------------------------- --------- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
0
------------------------- --------- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
38,602,350 directly and 6,812,179 through its indirect, wholly-owned
subsidiary John Hancock Variable Life Insurance Company
------------------------- --------- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
----------- --------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
38,602,350
----------- --------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
----------- --------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
84.4% See Item 4
----------- --------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IC, IA
----------- --------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
------------------------------------ ----------------------------------
CUSIP No. 35803R6#7 13D Page 4 of 10 Pages
------------------------------------ ----------------------------------
----------- --------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John Hancock Variable Life Insurance Company
I.R.S. No. 04-2664016
----------- --------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
----------- --------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
----------- --------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
See Item 3
----------- --------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_|
----------- --------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
------------------------- --------- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY 6,812,179
OWNED BY
EACH
REPORTING
PERSON
WITH
------------------------- --------- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
------------------------- --------- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
6,812,179
------------------------- --------- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
----------- --------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,812,179
----------- --------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
----------- --------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.8% See Item 4
----------- --------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IC, IA
----------- --------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
------------------------------------ ----------------------------
CUSIP No. 35803R6#7 13D Page 5 of 10 Pages
------------------------------------ ----------------------------
Item 1. Security and Issuer.
This statement relates to Warrants to purchase Common Stock (the
"Warrants"), $.01 par value per share (provided however that par value is
expected to change to $.001 per share upon the approval and filing of the
Amended and Restated Articles of Incorporation of the Issuer as described in
Item 4), of Fresh America Corp. (the "Issuer"). The principal executive offices
of the Issuer are located at 6600 LBJ Freeway, Suite 180, Dallas, Texas 75240.
Item 2. Identity and Background
The persons filing this statement are John Hancock Financial Services,
Inc., a Delaware corporation ("JHFS"), its direct, wholly-owned subsidiary, John
Hancock Life Insurance Company, a Massachusetts corporation, ("JHLICO"), and
JHLICO's direct, wholly-owned subsidiary John Hancock Variable Life Insurance
Company ("JHVLICO), a Massachusetts corporation, (collectively, the "Reporting
Persons").
JHFS's principal business is diversified financial services. JHLICO's
and JHVLICO's principal business is life insurance. The principal office and
business address for the Reporting Persons is located at John Hancock Place,
P.O. Box 111, Boston, Massachusetts 02117.
The name, residence or business address and principal occupation or
employment of each of the executive officers and directors of the Reporting
Persons are set forth in Attachments A, B, and C, respectively. Except as
otherwise noted in Attachments A, B, or C, each is a citizen of the United
States of America and neither the Reporting Persons nor any such person has,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), or been party to any civil
proceeding which resulted in a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
JHLICO obtained 29,519,444 Warrants and JHLICO also has direct
beneficial ownership of the 4,541,453 Warrants issued to Signature 1A (Cayman),
Ltd. ("Cayman") and the 4,541,453 Warrants issued to Signature 3 Limited
("Signature 3"). Cayman and Signature 3 are advisory accounts of JHLICO. JHVLICO
obtained 6,812,179 Warrants.
In addition to the Warrants noted above, JHLICO, JHVLICO and Investors Partner
Life Insurance Company ("Investors") obtained 27,000 shares of Series D
Cumulative Redeemable Preferred Stock (the "Series D Preferred Stock"), $1.00
par value per share, of the Issuer pursuant to an exchange and cancellation of
(a) $20,000,000 in aggregate principal amount of the Issuer's 12% Senior
Subordinated Notes due May 1, 2007; (b) an aggregate of 155,483 Series A
Warrants to purchase Common Stock of the Issuer, (c) an aggregate of 420,651
Series B Warrants to purchase Common Stock of the Issuer, and (d) an aggregate
of 50,000 shares of Series C Cumulative Redeemable Preferred Stock of the
Issuer, all previously held by JHLICO, JHVLICO, Cayman, Signature 3 and
Investors (collectively, the "Hancock Entities").
------------------------------------ ----------------------------
CUSIP No. 35803R6#7 13D Page 6 of 10 Pages
------------------------------------ ----------------------------
The securities listed in clauses (a), (b), (c) and (d) of this Item 3
were previously acquired by JHLICO, JHVLICO, Cayman and Investors pursuant to
(i) a Securities Purchase Agreement dated as of May 4, 1998, by and among the
Issuer, JHLICO, JHVLICO and Cayman; (ii) a Securities Purchase Agreement dated
as of April 15, 2000, by and among the Issuer, JHLICO, JHVLICO and Investors and
(iii) a Warrant Agreement dated as of May 4, 1998, amended by the Amended and
Restated Warrant Agreement dated as of April 15, 2000, among the Issuer, JHLICO,
JHVLICO and Cayman.
Item 4. Purpose of Transaction
On August 14, 2001, the Hancock Entities, the Issuer and North Texas
Opportunity Fund ("NTOF") executed a Securities Exchange and Purchase Agreement
("Purchase Agreement") whereby the Hancock Entities exchanged, on September 5,
2001, the securities listed in clauses (a), (b), (c) and (d) of Item 3 for the
Warrants and the Series D Preferred Stock. A copy of the Purchase Agreement is
attached hereto as Exhibit A. Upon exercise, the Warrants shall account for
approximately 27% of the Issuer's Common Stock determined on a fully diluted
basis. (Pursuant to the Purchase Agreement, NTOF was issued 84,100,980 Warrants
which, upon exercise, will account for approximately 50% of the Issuer's Common
Stock on a fully diluted basis. The 84.4% referred to in Item #13 reflects the
collective percentage of the Reporting Persons and Signature 3 without giving
effect to the warrants owned by NTOF.) The transactions contemplated by the
Purchase Agreement were effective as of September 5, 2001, subject to certain
post-closing conditions. Although the Warrants are immediately exercisable, the
Issuer currently does not have a sufficient number of authorized shares of
Common Stock to issue upon exercise of the Warrants. Therefore, before the
Warrants may be exercised by the Reporting Persons, shareholder approval, which
is beyond the control of the Reporting Persons, must be obtained to, among other
things, approve an amendment to the Issuer's Articles of Incorporation to
increase the number of authorized shares of Common Stock and decrease the stated
par value of the Common Stock. A copy of the JHLICO Warrant is attached hereto
as Exhibit B; the JHVLICO Warrant is attached hereto as Exhibit C; the Cayman
Warrant is attached hereto as Exhibit D; and the Signature 3 Warrant is attached
hereto as Exhibit F. The Certificate of Designation, attached hereto as Exhibit
G, sets forth the voting powers, rights and preferences of the Series D
Preferred Stock of the Issuer.
The Hancock Entities, the Issuer and NTOF also executed a Shareholders
Agreement ("Shareholders Agreement") on August 14, 2001 which, among other
things, provides that for so long as any Hancock Entity owns any capital stock
of the Issuer, the Hancock Entities shall have the right, upon written notice to
NTOF, to designate one of the five directors of the Issuer. At all times prior
to the Hancock Entities giving such written notice to NTOF, NTOF shall have the
right to designate an additional director thereby providing NTOF with the
ability to designate four directors. The Shareholders Agreement also contains a
voting agreement whereby the Hancock Entities and certain other shareholders
have agreed to vote all shares owned or later acquired by such shareholders so
that at all times the persons designated to serve as members of the Board of
Directors pursuant to the provisions of the Shareholders Agreement will be
elected and remain members of the Board of Directors. A copy of the Shareholders
Agreement is attached hereto as Exhibit G.
------------------------------------ ----------------------------
CUSIP No. 35803R6#7 13D Page 7 of 10 Pages
------------------------------------ ----------------------------
Item 5. Interest in Securities of the Issuer
JHLICO obtained 29,519,444 Warrants and JHLICO also has direct
beneficial ownership of the 4,541,453 Warrants issued to Signature 1A (Cayman),
Ltd. ("Cayman") and the 4,541,453 Warrants issued to Signature 3 Limited
("Signature 3"). Cayman and Signature 3 are advisory accounts of JHLICO. JHVLICO
obtained 6,812,179 Warrants.
(a) (i) The Reporting Persons, including the Cayman and Signature 3
Warrants, are the beneficial owners of Warrants to purchase 45,414,529 shares of
Common Stock of the Issuer.
If shareholder approval is obtained as described in Item 4, then the
holdings of the Reporting Persons Cayman and Signature 3, collectively, will
represent approximately 27% of the total of 168,201,960 (such number determined
on a fully diluted basis) shares of Common Stock that will be outstanding
(according to information provided to the Reporting Persons by the Issuer) upon
the shareholder approval discussed in Item 4; (ii) certain of the Hancock
Entities (JHLICO, JHVLICO and Investors) are also the beneficial owners of
27,000 shares of Series D Preferred Stock of the Issuer, representing
approximately 35% of the 77,000 shares of Series D Preferred Stock outstanding.
(b) (i) There are certain voting powers associated with the Common
Stock and the Series D Preferred Stock and each of the Hancock Entities has the
right to vote or to direct the vote of the Series D Preferred Stock and the
Warrants that are owned by such Hancock Entity; (ii) each of the Hancock
Entities has right to dispose or direct the disposition of the Warrants and the
Series D Preferred Stock owned by such Hancock Entity.
(c) Except as disclosed above in response to Item 3, there have been no
transactions in shares of Common Stock by the Reporting Persons.
(d) No.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
See Item 4 above.
Item 7. Material to Be Filed as Exhibits
Exhibit No. Description
----------- -----------
A. Securities Exchange and Purchase Agreement, dated August
14, 2001, by and among Fresh America Corp., North Texas
Opportunity Fund LP and each of John Hancock Financial
Services, Inc., John Hancock Life Insurance Company,
John Hancock Variable Life Insurance Company,
Signature 1A (Cayman), Ltd., Signature 3 Limited
and Investors Partner Life Insurance Company
------------------------------------ ----------------------------
CUSIP No. 35803R6#7 13D Page 8 of 10 Pages
------------------------------------ ----------------------------
B. John Hancock Life Insurance Company Warrant to purchase
29,519,444 shares of common stock of Fresh America Corp.
C. John Hancock Variable Life Insurance Company Warrant to
purchase 6,812,179 shares of common stock of Fresh America
Corp.
D. Signature 1A (Cayman), Ltd. Warrant to purchase
4,541,453 shares of common stock of Fresh America Corp.
E. Signature 3 Limited Warrant to purchase
4,541,453 shares of common stock of Fresh America Corp.
F. Certificate of Designation
G. Shareholders Agreement, dated August 14, 2001, by and
among Fresh America Corp., North Texas Opportunity Fund
LP and each of John Hancock Financial Services, Inc.
John Hancock Life Insurance Company, John
Hancock Variable Life Insurance Company, Signature 1A
(Cayman), Ltd., Signature 3 Limited and Investors Partner
Life Insurance Company
------------------------------------ ----------------------------
CUSIP No. 35803R6#7 13D Page 9 of 10 Pages
------------------------------------ ----------------------------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
current.
September 17, 2001
John Hancock Financial Services, Inc.
By: /s/Barry J. Rubenstein
--------------------------
Name: Barry J. Rubenstein
Title: Vice President, Counsel & Secretary
John Hancock Life Insurance Company
By: /s/Roger G. Nastou
----------------------
Name: Roger G. Nastou
Title: Vice President
John Hancock Variable Life Insurance Company
By: /s/Michele G. Van Leer
--------------------------
Name: Michele G. Van Leer
Title: President
Investors Partner Life Insurance Company
By: /s/Michele G. Van Leer
--------------------------
Name: Michele G. Van Leer
Title: President
------------------------------------ ----------------------------
CUSIP No. 35803R6#7 13D Page 10 of 10 Pages
------------------------------------ ----------------------------
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
A. Securities Exchange and Purchase Agreement
B. John Hancock Life Insurance Company Warrant
C. John Hancock Variable Life Insurance Company Warrant
D. Signature 1A (Cayman) Ltd. Warrant
E. Signature 3 Limited Warrant
F. Certificate of Designation
G. Shareholders Agreement
ATTACHMENT A
JOHN HANCOCK FINANCIAL SERVICES, INC.
DIRECTORS AND EXECUTIVE OFFICERS (as of 9/14/01)
Name Business or Positions with JHFS and Present
Residential Address Principal Occupation
I. MacAllister Booth 68 Barnes Hill Road Director - JHFS
Concord, MA 01742
Wayne A. Budd John Hancock Place Director - Executive Vice President and
P.O. Box 111 General Counsel - JHFS
Boston, MA 02117
John M. Connors, Jr. 200 Clarendon Street Director - JHFS; CEO and Director of
Boston, MA 02116 Hill, Holiday, Connors, Cosmopulos, Inc.
David F. D'Alessandro John Hancock Place Director, Chairman and Chief Executive
P.O. Box 111 Officer - JHFS
Boston, MA 02117
Robert E. Fast, Esq. 60 State Street Director - JHFS; Senior Partner of Hale
Boston, MA 02109 and Dorr
Dr. Kathleen Foley Feldstein 147 Clifton Street Director - JHFS; President of Economics
Belmont, MA 02178 Studies, Inc.
Nelson S. Gifford 75 Federal Street Director - JHFS; Principal, Fleetwing
Suite 1100 Capital
Boston, MA 02110-1911
Thomas P. Glynn 800 Boylston Street Director - JHFS; Chief Operating
Boston, MA 02199 Officer, Partners Healthcare System
Michael C. Hawley P.O. Box 111 Director - JHFS
Boston, MA 02117
Edward H. Linde 800 Boylston Street Director - JHFS; President and CEO of
Boston, MA 02199 Boston Properties, Inc.
Judith A. McHale 7700 Wisconsin Avenue Director - JHFS; President and Chief
Bethesda, MD 20814 Operating Officer of Discovery
Communications, Inc.
R. Robert Popeo, Esq. One Financial Center Director - JHFS; Chairman, Mintz, Levin,
Boston, MA 02111 Cohn, Ferris, Glovsky and Popeo, P.C.
Richard F. Syron 81 Wyman Street Director - JHFS; Chairman, President and
Waltham, MA 02454 CEO of Thermo Electron Corporation
Robert J. Tarr, Jr. 200 Wheeler Road Director - JHFS; Chairman, President and
Burlington, MA 01803 CEO of HomeRuns.com
ATTACHMENT B
JOHN HANCOCK LIFE INSURANCE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS (as of 9/14/01)
Name Business or Positions with JHLICO and Present
Residential Address Principal Occupation
Foster L. Aborn John Hancock Place Director - JHLICO
P.O. Box 111
Boston, MA 02117
I. MacAllister Booth 68 Barnes Hill Road Director - JHLICO
Concord, MA 01742
Wayne A. Budd John Hancock Place Director - Executive Vice President and
P.O. Box 111 General Counsel - JHLICO
Boston, MA 02117
John M. Connors, Jr. 200 Clarendon Street Director - JHLICO; CEO and Director of
Boston, MA 02116 Hill, Holiday, Connors, Cosmopulos, Inc.
David F. D'Alessandro John Hancock Place Director, Chairman and Chief Executive
P.O. Box 111 Officer - JHLICO
Boston, MA 02117
John M. DeCiccio John Hancock Place Director - JHLICO; Executive Vice
P.O. Box 111 President and Chief Investment Officer -
Boston, MA 02117 JHLICO
Robert E. Fast, Esq. 60 State Street Director - JHLICO; Senior Partner of
Boston, MA 02109 Hale and Dorr
Dr. Kathleen Foley Feldstein 147 Clifton Street Director - JHLICO; President of
Belmont, MA 02178 Economics Studies, Inc.
Nelson S. Gifford 75 Federal Street Director - JHLICO; Principal, Fleetwing
Suite 1100 Capital
Boston, MA 02110-1911
Thomas P. Glynn 800 Boylston Street Director - JHLICO; Chief Operating
Boston, MA 02199 Officer, Partners Healthcare System
Michael C. Hawley John Hancock Place Director - JHLICO
P.O. Box 111
Boston, MA 02117
Edward H. Linde 800 Boylston Street Director - JHLICO; President and CEO of
Boston, MA 02199 Boston Properties, Inc.
Judith A. McHale 7700 Wisconsin Avenue Director - JHLICO; President and Chief
Bethesda, MD 20814 Operating Officer of Discovery
Communications, Inc.
R. Robert Popeo, Esq. One Financial Center Director - JHLICO; Chairman, Mintz,
Boston, MA 02111 Levin, Cohn, Ferris, Glovsky and Popeo,
P.C.
Richard F. Syron 81 Wyman Street Director - JHLICO; Chairman, President
Waltham, MA 02454 and CEO of Thermo Electron Corporation
Robert J. Tarr, Jr. 200 Wheeler Road Director - JHLICO; Chairman, President
Burlington, MA 01803 and CEO of HomeRuns.com
ATTACHMENT C
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
Directors as of September 14, 2001
Name Business or Positions with JHFS and Present Principal
Residential Address Occupation
Ronald J. Bocage John Hancock Place Director - Vice President and
P. O. Box 111 Counsel
Boston, MA 02117
David F. D'Alessandro John Hancock Place Director - Chairman
P. O. Box 111
Boston, MA 02117
Bruce M. Jones 197 Clarendon Street Director - Vice President
Boston, MA 02117
Barbara L. Luddy 200 Berkeley Street Director - Vice President and
Boston, MA 02117 Actuary
Robert S. Paster John Hancock Place Director - Vice President
P. O. Box 111
Boston, MA 02117
Robert R. Reitano John Hancock Place Director - Vice President and Chief
P. O. Box 111 Investment Officer
Boston, MA 02117
Paul J. Strong 197 Clarendon Street Director - Vice President
Boston, MA 02117
Michele G. Van Leer 197 Clarendon Street Director - Vice Chairman and
Boston, MA 02117 President
================================================================================
SECURITIES EXCHANGE AND PURCHASE AGREEMENT
by and among
FRESH AMERICA CORP.,
NORTH TEXAS OPPORTUNITY FUND LP
and each of
JOHN HANCOCK LIFE INSURANCE COMPANY,
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY,
SIGNATURE 1A (Cayman), LTD.,
SIGNATURE 3 LIMITED
and
INVESTORS PARTNER LIFE INSURANCE COMPANY
August 14, 2001
================================================================================
TABLE OF CONTENTS
Page
Article I - Definitions...........................................................................................2
Article II - The Series D Preferred Stock........................................................................13
2.01 Sale of Series D Preferred Stock to NTOF.......................................................13
2.02 Exchange of Series C Preferred Stock for Series D Preferred Stock by Hancock Entities..........13
2.03 Legend.........................................................................................13
2.04 Transfer and Exchange..........................................................................14
2.05 Lost, Stolen, Mutilated or Destroyed Certificate...............................................14
-
2.06 Series D Preferred Stock Dilution Fee..........................................................14
Article III - The Warrants.......................................................................................15
3.01 Sale of Series C Warrants to NTOF..............................................................15
3.02 Exchange of Series A Warrants, Series B Warrants and Notes for Series C Warrants by Hancock
Entities.......................................................................................15
3.03 Legend.........................................................................................15
3.04 Exercise Price.................................................................................16
3.05 Exercise.......................................................................................16
3.06 Taxes..........................................................................................17
3.07 Warrant Register...............................................................................17
3.08 Transfer and Exchange..........................................................................17
3.09 Adjustments to Number of Shares of Common Stock Purchasable....................................18
3.10 Lost, Stolen, Mutilated or Destroyed Warrants..................................................21
3.11 Legend.........................................................................................21
Article IV - Closing.............................................................................................22
Article V - Put Option...........................................................................................22
5.01 Grant of Option................................................................................22
5.02 Put Price......................................................................................23
5.03 Exercise of Put Option.........................................................................24
5.04 Certain Remedies...............................................................................24
5.05 Put Option Closing.............................................................................25
5.06 Put Price Upon Failure to Receive Requisite Shareholder Approval...............................25
Article VI - Registration Rights; Exchange Rights................................................................25
6.01 Required Registration..........................................................................25
6.02 Incidental Registration........................................................................26
6.03 Form S-3 Registrations.........................................................................26
6.04 Rule 144 Availability..........................................................................27
6.05 Registration Procedures........................................................................27
i
6.06 Allocation of Expenses.........................................................................30
6.07 Listing on Securities Exchange.................................................................30
6.08 Holdback Agreements............................................................................30
6.09 Rule 144.......................................................................................31
6.10 Rule 144A......................................................................................31
6.11 Limitations on Subsequent Registration Rights..................................................31
6.12 Exchange Rights................................................................................32
6.13 Other Rights...................................................................................32
Article VII - Representations and Warranties.....................................................................32
7.01 Representations and Warranties of the Company and its Subsidiaries.............................32
7.02 Representations and Warranties of the Purchasers...............................................42
Article VIII - Covenants.........................................................................................43
8.01 Financial Statements and Reporting Information.................................................43
8.02 Laws...........................................................................................44
8.03 Inspection.....................................................................................45
8.04 Certain Actions................................................................................45
8.05 Records........................................................................................48
8.06 Accountants....................................................................................48
8.07 Existence......................................................................................48
8.08 Notice.........................................................................................48
8.09 Taxes..........................................................................................50
8.10 Warrant Rights.................................................................................50
8.11 Reservation of Warrant Shares..................................................................50
8.12 Insurance......................................................................................50
8.13 Prohibition on Conflicting Agreements..........................................................51
8.14 Transactions with Affiliates...................................................................51
8.15 Use of Proceeds................................................................................51
8.16 Bylaws.........................................................................................51
8.17 Subsidiaries...................................................................................51
8.18 Certain Other Agreements.......................................................................51
8.19 Advice of Changes; Supplemental Schedules......................................................51
8.20 Preparation and Filing of Sec Documents.......................................................52
8.21 Preparation of Proxy Statement; Company Shareholders Meeting...................................52
8.22 Public Announcements...........................................................................53
8.22 Shareholder Litigation.........................................................................53
8.24 Officers and Directors Indemnification.........................................................53
Article IX - Conditions..........................................................................................53
9.01 Purchasers Conditions..........................................................................53
9.02 Company Conditions.............................................................................55
Article X - Miscellaneous........................................................................................56
10.01 Indemnification................................................................................56
10.02 Equitable Relief...............................................................................57
ii
10.03 Integration and Amendments.....................................................................57
10.04 Headings.......................................................................................57
10.05 Severability...................................................................................57
10.06 Notices........................................................................................58
10.07 Successors.....................................................................................59
10.08 Remedies.......................................................................................59
10.09 Survival.......................................................................................60
10.10 Fees and Expenses..............................................................................60
10.11 Counterparts...................................................................................61
10.12 Other Business.................................................................................61
10.13 Choice of Law..................................................................................61
10.14 Duties Among Holders...........................................................................62
iii
SECURITIES EXCHANGE AND PURCHASE AGREEMENT
------------------------------------------
This SECURITIES EXCHANGE AND PURCHASE AGREEMENT (this "Agreement") is
made as of August 14, 2001, by and among FRESH AMERICA CORP., a Texas
corporation (the "Company"), NORTH TEXAS OPPORTUNITY FUND LP, a Texas limited
partnership ("NTOF"), and each of JOHN HANCOCK LIFE INSURANCE COMPANY ("JH
Life"), JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY ("JH Variable"), SIGNATURE
1A (CAYMAN), LTD. ("Cayman"), SIGNATURE 3 LIMITED ("Signature 3") and INVESTORS
PARTNER LIFE INSURANCE COMPANY ("Investors" and, together with JH Life, JH
Variable, Cayman and Signature 3, individually a "Hancock Entity" and
collectively, the "Hancock Entities"). NTOF and the Hancock Entities are at
times herein referred to individually as a "Purchaser" and collectively as the
"Purchasers".
W I T N E S S E T H:
WHEREAS, pursuant to that certain Securities Purchase Agreement dated
as of May 4, 1998 (as amended from time to time, the "Initial Securities
Purchase Agreement"), the Company sold to JH Life, JH Variable and Cayman (i) an
aggregate of 155,483 warrants to purchase Common Stock (the "Initial Warrants")
and (ii) twenty million dollars ($20,000,000) in aggregate principal amount of
the Company's 12% Senior Subordinated Notes due May 1, 2003 (the "Initial
Notes");
WHEREAS, pursuant to that certain Amended and Restated Warrant
Agreement With Respect to Warrant Agreement dated as of May 4, 1998, dated as of
April 15, 2000 (the "Amended and Restated Warrant Agreement"), the Company and
JH Life, JH Variable, Cayman and Investors agreed, among other things, to amend
and to restate the terms and conditions of the Initial Warrants, to re-designate
such Initial Warrants as Series A Warrants (as so designated, the "Series A
Warrants") and to specify the rights attendant to the Series B Warrants to
purchase common Stock (the "Series B Warrants");
WHEREAS, pursuant to that certain Amended and Restated Note Agreement
dated as of April 15, 2000 (the "Amended and Restated Note Agreement"), the
Company, JH Life, JH Variable and Cayman agreed, among other things, to amend
and to restate the terms and conditions of the Initial Notes (as so amended and
restated, the "Notes") and to extend the maturity date of the Initial Notes to
May 1, 2007;
WHEREAS, pursuant to that certain Securities Purchase Agreement dated
as of April 15, 2000 (the "Additional Securities Purchase Agreement"), the
Company sold to JH Life, JH Variable and Investors (i) an aggregate of 420,651
Series B Warrants and (ii) an aggregate of 50,000 shares of Series C Cumulative
Redeemable Preferred Stock (the "Series C Preferred Stock");
WHEREAS, the Hancock Entities desire to exchange with the Company, and
the Company desires to exchange with the Hancock Entities, all of the issued and
outstanding Series A Warrants, Series B Warrants, Series C Preferred Stock and
Notes (including, in each case, any and all accrued and unpaid dividends, fees
(excluding any and all fees which constitute Hancock Closing Expenses (as
hereinafter defined)) or interest related thereto) owned by them for an
1
aggregate of twenty-seven thousand (27,000) shares of Series D Preferred Stock
(as defined below) and warrants to purchase, subject to adjustment pursuant to
the terms of this Agreement, an aggregate of forty-five million four hundred
fourteen thousand five hundred twenty-nine (45,414,529) shares of Common Stock
(all such warrants issued to any Hancock Entity shall be referred to herein,
collectively, as the "Hancock Warrants"), in each case on the terms and
conditions set forth herein;
WHEREAS, the Company also desires to sell to NTOF, and NTOF desires to
purchase from the Company, an aggregate of fifty thousand (50,000) shares of
Series D Preferred Stock and a warrant (the "NTOF Warrant" and, together with
the Hancock Warrants, the "Series C Warrants") to purchase, subject to
adjustment pursuant to the terms of this Agreement, an aggregate of eighty-four
million one hundred thousand nine hundred eighty (84,100,980) shares of Common
Stock, in each case on the terms and conditions set forth herein; and
WHEREAS, the Series D Preferred Stock will have the rights, preferences
and designations set forth herein and in the Certificate of Designation;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Purchasers, intending to be legally bound, hereby agree as
follows:
Article I
Definitions
As used in this Agreement, the following terms have the meanings
indicated:
Accelerated Put Event. This term is defined in Section 5.01.
--------------------- ------------
Additional Securities Purchase Agreement. This term is defined in the
recitals.
Affiliate. With respect to any Person, (a) a Person (other than in the
case of the Company, a Purchaser) that, directly or indirectly or
through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person; (b) any Person of which such
Person or such Person's spouse is an officer, director, security
holder, partner, or, in the case of a trust, the beneficiary or
trustee, and (c) any Person that is an officer, director, security
holder, partner, or, in the case of a trust, the beneficiary or trustee
of such Person. The term "control" as used with respect to any Person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by contract, or
otherwise. Except as otherwise provided herein, the term "Affiliate"
shall include any and all members of a Person's immediate family.
2
Agreement. This term is defined in the preamble and includes all
amendments, modifications and restatements thereof.
Amended and Restated Articles. The Amended and Restated Articles of
Incorporation of the Company, in the form attached hereto as Annex A,
to be filed by the Company with the Secretary of State of Texas in
connection with the transactions contemplated hereby upon receipt of
requisite shareholder approval.
Amended and Restated Note Agreement. This term is defined in the
recitals.
Amended and Restated Warrant Agreement. This term is defined in the
recitals.
Appraised Value. The value determined in accordance with the following
procedures. For a period of thirty (30) days after the date of a
Valuation Event (the "Negotiation Period"), each party to this
Agreement agrees to negotiate in good faith to reach agreement upon the
Appraised Value of the securities or property at issue, as of the date
of the Valuation Event, which will be the fair market value of such
securities or property, without premium for control or discount for
minority interests, illiquidity, or restrictions on transfer. If the
parties are unable to agree upon the Appraised Value of such securities
or other property by the end of the Negotiation Period, then the
Appraised Value of such securities or property will be determined for
purposes of this Agreement by a recognized appraisal or investment
banking firm (an "Appraiser") mutually agreeable to the Holders and the
Company. If the Holders and the Company cannot agree on an Appraiser
within fifteen (15) days after the end of the Negotiation Period, then
the Company, on the one hand, and the Holders, on the other hand, shall
each select an Appraiser within twenty-one (21) days after the end of
the Negotiation Period and those two Appraisers shall select within
twenty-five (25) days after the end of the Negotiation Period an
independent Appraiser to determine the fair market value of such
securities or property, without premium for control or discount for
minority interests, illiquidity or minority restrictions on transfer.
Such independent Appraiser shall be directed to determine fair market
value of such securities or property as soon as practicable, but in no
event later than thirty (30) days from the date of its selection. The
determination by an Appraiser of the fair market value will be
conclusive and binding on all parties to this Agreement. The Appraised
Value of each share of Common Stock at a time when (a) the Company is
not a reporting company under the Exchange Act and (b) the Common Stock
is not traded in the organized securities markets, will, in all cases,
be calculated by determining the Appraised Value of the entire Company
taken as a whole, and dividing that value by the sum of (x) the number
of shares of Common Stock then outstanding, plus (y) the number of
3
shares of Common Stock Equivalents, without premium for control or
discount for minority interests, illiquidity, or restrictions on
transfer. The costs of the Appraiser or Appraisers, as the case may be,
will be borne solely by the Company. In no event will the Appraised
Value of the Common Stock or Other Securities be less than the per
share consideration received or receivable with respect to the Common
Stock or securities or property of the same class as the Other
Securities, as the case may be, in connection with a pending
transaction involving a sale, merger, recapitalization, reorganization
or consolidation of, or share exchange involving, the Company, a
dissolution of the Company, a sale or transfer of all or a majority of
its assets or revenue or income generating capacity, or any similar
transaction. The prevailing market prices for any security or property
will not be dispositive of the Appraised Value thereof.
Appraiser. This term is defined in the definition of Appraised Value.
---------
Average Market Value. The average of the Closing Prices for the
security in question for the thirty (30) trading days immediately
preceding the date of determination.
Benefit Arrangement. Each material employment, severance or other
similar contract, arrangement or policy (written or oral) and each plan
or arrangement (written or oral) providing for severance benefits,
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or
other forms of incentive compensation or post-retirement insurance,
compensation or benefits, in each case that (a) is not an Employee Plan
and (b) covers any employee or former employee of the Company.
Board of Directors. The board of directors of the Company. Unless the
context requires otherwise, the term "Board of Directors" includes any
and all committees of such Board of Directors.
Business Day. Each day of the week except Saturdays, Sundays and days
on which banking institutions are authorized by law to close in the
State of Texas.
Capital Stock. As to any Person, its common stock and any membership
interests, general or limited partnership interests, units or common or
preference stock or other capital stock of such Person authorized from
time to time, and any other units, shares, options, interests,
participations, or other equivalents (however designated) of or in such
Person, whether voting or nonvoting, including, without limitation,
units, common stock, options, warrants, preferred stock, phantom stock,
stock appreciation rights, convertible notes or debentures, stock
purchase rights, and all agreements, instruments, documents, and
securities convertible, exercisable, or exchangeable, in whole or in
part, into any one or more of the foregoing.
Cayman. This term is defined in the preamble.
------
Certificate of Designation. The Series D Preferred Stock Certificate of
Designation of the Company (a) dated of even date herewith, (b) to be
filed by the Company with the Secretary of State of Texas on or before
the Closing Date, (c) setting forth the rights and preferences of
Series D Preferred Stock and (d) in substantially the form attached
hereto as Annex B.
4
Change in Control. The occurrence of either of the following: (a) the
Holders shall cease to have the ability to elect, directly, a majority
of the members of the Board of Directors; or (b) the Holders shall
cease to own and to control, directly or indirectly, at least
seventy-five percent (75%) of the issued and outstanding shares of
Capital Stock of the Company (in either case, other than as a result of
a transaction approved by the Holders or solely as a result of the
voluntary sale by any Holder of all or any part of its Capital Stock;
provided, however, that, upon the consummation of any such sale, the
percentage of Capital Stock of the Company set forth in clause (b)
above shall be automatically reduced by the percentage of Capital Stock
of the Company so transferred).
Closing. This term is defined in Article IV.
------- ----------
Closing Date. This term is defined in Article IV.
------------ ----------
Closing Fee. This term is defined in Section 10.10(b).
----------- ----------------
Closing Price. For any given trading day:
-------------
(a) If the primary market for the security in question is a
national securities exchange registered under the Exchange Act, the
National Association of Securities Dealers Automated Quotation System
-- National Market System, or other market or quotation system in which
last sale transactions are reported on a contemporaneous basis, then
the last reported sales price, regular way, of such security for such
day, or, if there has not been a sale on such trading day, then the
highest closing or last bid quotation therefor on such trading day
(excluding, in any case, any price that is not the result of bona fide
arm's length trading); or
(b) If the primary market for such security is not an exchange
or quotation system in which last sale transactions are
contemporaneously reported, then the highest closing or last bona fide
bid or asked quotation by disinterested Persons in the over-the-counter
market on such trading day as reported by the National Association of
Securities Dealers through its Automated Quotation System or its
successor or such other generally accepted source of publicly reported
bid quotations as the Holders designate.
Code. The Internal Revenue Code of 1986, as amended and in effect from
time to time, and all regulations promulgated thereunder.
Comfort Letter. This term is defined in Section 6.05(h).
-------------- ---------------
Commission. The Securities and Exchange Commission and any successor
federal agency having similar powers.
Common Stock. The common stock, $.01 par value per share, of the
Company; provided, however, that upon the approval and filing of the
Amended and Restated Articles, the par value of the Common Stock shall
be reduced to $.0001 per share.
5
Common Stock Equivalent. Any option, warrant, right or similar security
exercisable into, exchangeable for, or convertible to Common Stock.
Company. This term is defined in the preamble and includes any
successor or assign of the Company. Unless the context requires
otherwise, the term "Company" includes any and all Subsidiaries.
-------
Contracts. This term is defined in Section 7.01(l).
--------- ---------------
Employee Plan. Each "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) that (a) is subject to any provision of ERISA
and (b) is maintained or contributed to by the Company or any ERISA
Affiliate of the Company.
Employment Agreements. The Employment Agreements and/or Consulting
Agreements by and between the Company and each Management Employee, in
each case (a) dated as of the Closing Date, (b) in form and substance
satisfactory to each of the Purchasers (in each such Purchaser's sole
and absolute discretion) and (c) as amended, modified or restated from
time to time after the Closing Date in accordance with the provisions
hereof.
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
-----
ERISA Affiliate. With respect to any Person, any other Person that,
together with such Person, would be treated as a single employer under
Section 414 of the Code.
Exchange Act. The Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
Exchange Common Stock. This term is defined in Section 6.12.
--------------------- ------------
Exchange Company. This term is defined in Section 6.12.
---------------- ------------
Exchange Notice. This term is defined in Section 6.12.
--------------- ------------
Exercise Price. The price per share specified in Section 3.04 as
adjusted from time to time pursuant to the provisions of this
Agreement.
Fair Market Value.
-----------------
(a) As to securities regularly traded in the organized
securities markets, the Average Market Value; and
6
(b) as to all securities not regularly traded in the
securities markets and other property, the fair market value of such
securities or property as determined in good faith by the Board of
Directors, without premium for control or discount for minority
interests, illiquidity, or restrictions on transfer, at the time it
authorizes the transaction (a "Valuation Event") requiring a
determination of Fair Market Value under this Agreement; provided,
however, that, at the election of the Holders, the Fair Market Value of
such securities and other property will be the Appraised Value.
Financial Statements. This term is defined in Section 7.01(s).
-------------------- ---------------
GAAP. The generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or
in statements of the Financial Accounting Standards Board and/or their
respective successors and that are applicable in the circumstances as
of the date in question; provided, however, that the Company may not
change the use or application of any material accounting method,
practice or principle without the prior written consent of the Holders.
Accounting principles are applied on a "consistent basis" when the
accounting principles observed in a current period are comparable in
all material respects to those accounting principles applied in a
preceding period.
Governmental Entity. This term is defined in Section 7.01(i).
------------------- ---------------
Hancock Entities. This term is defined in the preamble and includes any
successors or assigns of each such Hancock Entity.
Hancock Closing Expenses. This term is defined in Section 10.10(d).
------------------------ ----------------
Hancock Expense Deposit. This term is defined in Section 10.10(d).
----------------------- ----------------
Hancock Warrants. This term is defined in the recitals.
----------------
Holder Representatives. This term is defined in Article I of the
Shareholders Agreement.
Holders. The Purchasers, and all other Persons holding Registrable
Securities, except that neither the Company (nor any Affiliate of the
Company) will at any time be a Holder. Unless otherwise provided in
this Agreement, in each instance that the Holders are required to
request, approve or consent in concert to an action, the Holders will
be deemed to have requested, approved or consented to such action if
the Holders of a majority-in-interest of the Registrable Securities so
request or consent.
7
Indebtedness. For any Person: (a) all indebtedness, whether or not
represented by bonds, debentures, notes, securities, or other evidences
of indebtedness, for the repayment of money borrowed, (b) all
indebtedness representing deferred payment of the purchase price of
property or assets, (c) all indebtedness under any lease that, in
conformity with GAAP, is required to be capitalized for balance sheet
purposes and leases of property or assets made as a part of any sale
and lease-back transaction if required to be capitalized, (d) all
indebtedness under guaranties, endorsements, assumptions, or other
contractual obligations, including any letters of credit, or the
obligations in respect of, or to purchase or otherwise acquire,
indebtedness of others, (e) all indebtedness secured by a Lien existing
on property owned, subject to such Lien, whether or not the
indebtedness secured thereby shall have been assumed by the owner
thereof, (f) trade accounts payable more than ninety (90) days past
due, (g) all amendments, renewals, extensions, modifications and
refinancings of any indebtedness or obligations referred to in clauses
(a), (b), (c), (d), (e) or (f) above.
Indemnified Party. This term is defined in Section 10.01.
----------------- -------------
Initial Holders. The Purchasers and any Affiliate of the Purchasers to
which any of the Series D Preferred Stock or Warrants or any part of or
interest in the Series D Preferred Stock or Warrants is assigned.
Initial Notes. This term is defined in the recitals.
-------------
Initial Securities Purchase Agreement. This term is defined in the
recitals.
Initial Warrants. This term is defined in the recitals.
----------------
Intellectual Property. This term is defined in Section 7.01(f).
--------------------- ---------------
Investors. This term is defined in the preamble.
---------
Issuable Warrant Shares. Shares of Common Stock or Other Securities
issuable on exercise of the Warrants.
Issued Warrant Shares. Shares of Common Stock or Other Securities
issued upon exercise of the Warrants.
JH Life. This term is defined in the preamble.
-------
JH Variable. This term is defined in the preamble.
-----------
Key Employee. Any employee of the Company holding the position of Vice
President or higher.
8
Lien. Any lien, mortgage, security interest, tax lien, pledge,
encumbrance, financing statement, or conditional sale or title
retention agreement, or any other interest in property designed to
secure the repayment of Indebtedness or any other obligation, whether
arising by agreement, operation of law, or otherwise.
Management Employee. Each of Cheryl Taylor, Larry Martin, Gary Weiner,
Steve Finberg and Colon Washburn.
Martin Purchase Agreement. That certain Stock Purchase Agreement among
the Company, Hereford Haven, Inc. and Larry Martin dated December 19,
1997, as amended and in effect on the Closing Date, and otherwise in
form and substance satisfactory to each of the Purchasers (in each
Purchaser's sole and absolute discretion).
Material Adverse Effect. Any event, development or circumstance that
has had or could reasonably be expected to have a material adverse
effect on (a) the business, assets, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole, (b)
the ability of the Company to perform its obligations under this
Agreement and the Other Agreements, or (c) the validity or
enforceability of (i) this Agreement or any of the Other Agreements or
(ii) the rights and remedies of the Purchasers under this Agreement or
any of the Other Agreements, in each case as compared to that existing
as of the Closing Date and (if applicable) as represented herein or
therein.
Monitoring Agreement. That certain Monitoring Agreement by and between
the Company and North Texas Investment Advisors LLC, a Delaware limited
liability company, (a) dated as of the Closing Date, (b) in the form
attached hereto as Annex C and (c) as the same may be modified or
amended from time to time in accordance with the terms hereof.
Negotiation Period. This term is defined in the definition of Appraised
Value.
Notes. This term is defined in the recitals.
-----
NTOF. This term is defined in the preamble.
----
NTOF Warrants. This term is defined in the recitals.
-------------
Original Issue Price of a share of Series D Preferred Stock. One
hundred dollars ($100).
Other Agreements. Each of (a) the Shareholders Agreement, (b) the
Certificate of Designation, (c) the Employment Agreements, (d) the
Martin Purchase Agreement, (e) the Monitoring Agreement and (f) all
other agreements, instruments and documents (including, without
limitation, powers of attorney, consents, assignments, contracts,
notices and all other written matter), and all renewals, modifications
and extensions thereof, whether heretofore, now or hereafter executed
by or on behalf of the Company and delivered to and for the benefit of
the Purchasers or any Person participating with the Purchasers with
respect to this Agreement or any of the transactions contemplated by
this Agreement.
9
Other Securities. Any stock, membership interests, other securities,
property, or other property or rights (other than Common Stock) that
the Holders become entitled to receive upon exercise of the Warrants.
Permits. This term is defined in Section 7.01(i).
------- ---------------
Permitted Acquisitions. This term is defined in Section 2.04 of the
Shareholders Agreement.
Permitted Stock. The aggregate of (a) any and all Common Stock issued
to, or reserved for issuance for, any Person in connection with the
exercise of any options or warrants to acquire Common Stock (other than
the Warrant Shares) that are outstanding as of the Closing Date and set
forth on Schedule 7.01(d), plus (b) any and all Warrant Shares, plus
(c) Common Stock, or options or warrants to acquire Common Stock,
constituting, in the aggregate, 29,513,560 shares of Common Stock of
the Company (including any Common Stock deemed outstanding pursuant to
Section 3.09(d)), issued to, or reserved for issuance for, the present
and future employees and management of the Company pursuant to an
Employee Plan or other Benefit Arrangement approved by the Board of
Directors. Unless otherwise agreed to by all Holders, the number of
shares of Permitted Stock issued or reserved for issuance under clauses
(a) and (c) above shall not exceed, in the aggregate, 30,276,353
shares.
Person. This term will be interpreted broadly to include any
individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, company, limited
liability company, institution, entity, party, or government (whether
national, federal, state, county, city, municipal, or otherwise,
including, without limitation, any instrumentality, division, agency,
body, or department of any of the foregoing).
Property. Property or assets of all kinds, real, personal or mixed,
tangible or intangible (including, without limitation, all rights
relating thereto), whether owned or acquired on or after the Closing
Date.
Proxy Statement. This term is defined in Section 8.21(a).
--------------- ---------------
Purchaser and Purchasers. These terms are defined in the preamble.
--------- ----------
Put Option. This term is defined in Section 5.01.
---------- ------------
Put Option Closing. This term is defined in Section 5.05.
------------------ ------------
Put Option Period. This term is defined in Section 5.01.
----------------- ------------
10
Put Price. This term is defined in Section 5.02.
--------- ------------
Put Shares. The Series D Preferred Stock and any other shares of
Capital Stock owned from time to time by a Holder as a result of such
Holder's ownership of Series D Preferred Stock. Notwithstanding
anything contained or implied herein to the contrary, the term "Put
Shares" shall not include the Warrant Shares.
Qualified Private Financing. Any private equity offering (excluding any
issuance of Permitted Stock) in which the Company receives at least
twenty million dollars ($20,000,000) in net cash proceeds.
Qualified Public Offering. A firm underwritten public offering of the
Company's Common Stock under the Securities Act completed by the
Company and resulting in gross cash proceeds (before underwriting
discounts and commissions) of at least twenty million dollars
($20,000,000).
Register, registered, and registration refer to a registration effected
by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of
such registration statement.
Registrable Securities. (a) The Issuable Warrant Shares, (b) the Issued
Warrant Shares and (c) any other Capital Stock owned from time to time
by a Holder that have not been previously sold to the public
(including, without limitation, the Series D Preferred Stock).
Requisite Shareholder Approval. This term is defined in Section 1 of
the Certificate of Designation.
SEC Documents. This term is defined in Section 7.01(w).
------------- ---------------
Senior Loan Documents. That certain Restated Business Loan Agreement
dated February 2, 1998, among the Company, Bank of America, N.A. and
the other parties named therein, as amended, extended, renewed or
restated from time to time, including, without limitation, as amended
by the Thirteenth Amendment.
Series A Warrants. This term is defined in the recitals.
-----------------
Series B Warrants. This term is defined in the recitals.
-----------------
Series C Preferred Stock. This term is defined in the recitals.
------------------------
Series C Warrants. This term is defined in the recitals.
-----------------
Series D Preferred Stock. The Series D Cumulative Redeemable Preferred
Stock, $1.00 par value per share, of the Company.
11
Series D Preferred Stock Dilution Fee. This term is defined in Section
2.06.
Securities Act. The Securities Act of 1933, as amended, and the rules
and regulations thereunder.
Shareholders Agreement. The Shareholders Agreement by and among the
Company and the Purchasers (a) dated as of the date hereof, (b) in the
form attached hereto as Annex D and (c) as amended, modified or
restated from time to time.
Shareholders Meeting. This term is defined in Section 8.21(b).
-------------------- ---------------
Signature 3. This term is defined in the preamble.
-----------
Subsidiary. Each Person of which or in which the Company or its other
Subsidiaries own directly or indirectly fifty-one percent (51%) or more
of (a) the combined voting power of all classes of securities having
general voting power under ordinary circumstances to elect a majority
of the board of directors or equivalent body of such Person, if it is a
corporation or similar person; (b) the capital interest or profits
interest of such Person, if it is a partnership, limited liability
company, joint venture, or similar entity; or (c) the beneficial
interest of such Person, if it is a trust, association, or other
unincorporated organization.
Supplemental Disclosure Schedules. This term is defined in Section
8.19.
TBCA. The Texas Business Corporation Act, as amended from time to time.
----
Termination Fee. This term is defined in Section 10.10(c).
--------------- ----------------
Thirteenth Amendment. That certain Thirteenth Amendment to Restated
Business Loan Agreement by and among the Company, Bank of America, N.A.
and the other parties named therein and dated as of the Closing Date.
Transaction Fees. This term is defined in Section 10.10(a).
---------------- ----------------
Valuation Event. This term is defined in the definition of Fair Market
Value.
Warrants. The Series C Warrants, dated as of the Closing Date and
issued to the Initial Holders, and all Warrants issued upon the
transfer or division of, or in substitution for, such Warrants.
Warrant Shares. The Issued Warrant Shares and the Issuable Warrant
Shares, collectively.
12
Article II
The Series D Preferred Stock
2.01 Sale of Series D Preferred Stock to NTOF.
----------------------------------------
(a) Sale of Series D Preferred Stock. On the Closing Date,
NTOF agrees to purchase from the Company, and the Company agrees to
issue to NTOF, the aggregate number of shares of Series D Preferred
Stock set forth beneath NTOF's name on the signature page of this
Agreement, all subject to and in accordance with the terms and
conditions of this Agreement. The Series D Preferred Stock issued to
NTOF pursuant to the terms hereof shall have the rights, restrictions,
privileges and preferences set forth in the Certificate of Designation.
(b) Purchase Price. In consideration of the Company's issuance
of the Series D Preferred Stock to NTOF, NTOF shall pay to the Company,
on the Closing Date, the aggregate purchase price set forth beneath
NTOF's name on the signature page to this Agreement, all subject to and
in accordance with the terms and conditions of this Agreement.
2.02 Exchange of Series C Preferred Stock for Series D Preferred Stock
by Hancock Entities. On the Closing Date and subject to the terms and conditions
of this Agreement, JH Life, Investors and JH Variable agree to deliver to the
Company, and the Company agrees to accept from such Hancock Entities, an
aggregate of 50,000 shares of Series C Preferred Stock, and, in exchange
therefor and for any and all accrued and unpaid dividends, fees (excluding any
and all fees which constitute Hancock Closing Expenses) or interest related
thereto, the Company agrees to issue to JH Life, Investors and JH Variable, and
each such Hancock Entity hereby agrees to accept from the Company, the number of
shares of Series D Preferred Stock set beneath each such Hancock Entity's name
on the signature page of this Agreement. The Series D Preferred Stock issued to
JH Life, Investors and JH Variable pursuant to the terms hereof shall have the
rights, restrictions, privileges and preferences set forth in the Certificate of
Designation.
2.03 Legend. The Company will deliver to each Purchaser on the Closing
Date one or more certificates representing the Series D Preferred Stock to be
issued to such Purchaser in such denominations as such Purchaser requests. Such
certificates will be issued in each Purchaser's name or in the name or names of
its designee or designees, as the case may be. It is understood and agreed that
all of the certificates evidencing the Series D Preferred Stock will bear the
following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (A) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION
FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS, AND (B) ARE
SUBJECT TO THE TERMS OF AND PROVISIONS OF (I) A SECURITIES EXCHANGE AND
PURCHASE AGREEMENT, DATED AS OF AUGUST 14, 2001, BY AND AMONG FRESH
AMERICA CORP. (THE "COMPANY") AND THE PURCHASERS NAMED THEREIN AND (II)
A SHAREHOLDERS AGREEMENT, DATED AS OF AUGUST 14, 2001, BY AND AMONG THE
COMPANY AND THE PURCHASERS NAMED THEREIN (AS SUCH AGREEMENTS MAY BE
SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE
"AGREEMENTS"). COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE OFFICES OF
THE COMPANY."
13
2.04 Transfer and Exchange. Subject to the terms of Section 10.07 and
the Shareholders Agreement, the Series D Preferred Stock is transferable, as to
all or any part of the Series D Preferred Stock, by the Holders of the Series D
Preferred Stock, in person or by duly authorized attorney, on the books of the
Company upon surrender of certificates representing the Series D Preferred Stock
at the principal offices of the Company, together with a transfer authorization
duly executed, provided, in each case, that the applicable transferee first
represents and warrants, pursuant to a written instrument in form and substance
reasonably satisfactory to the Company, as to the matters set forth in Section
7.02. Absent any such transfer, the Company may deem and treat the registered
Holders of the Series D Preferred Stock at any time as the absolute owners of
the Series D Preferred Stock for all purposes and will not be affected by any
notice to the contrary. If any Series D Preferred Stock is transferred in part,
then the Company will, at the time of surrender of certificates representing the
Series D Preferred Stock, issue to the transferee certificates representing the
Series D Preferred Stock transferred and to the transferor certificates
representing the Series D Preferred Stock not transferred.
2.05 Lost, Stolen, Mutilated or Destroyed Certificate. If any
certificate representing the Series D Preferred Stock is lost, stolen, mutilated
or destroyed, then the Company will issue a new certificate of like
denomination, tenor and date as the certificate so lost, stolen, mutilated or
destroyed upon its receipt of an affidavit including notice of ownership from
the Holder of the lost, stolen, mutilated or destroyed Series D Preferred Stock
certificate.
2.06 Series D Preferred Stock Dilution Fee. If, while any Holder
beneficially owns any Series D Preferred Stock, Common Stock or Other
Securities, the Company pays any dividend or makes any distribution to any
holder of any class of its Capital Stock with respect to such Capital Stock
(other than (a) a distribution of Common Stock or Other Securities made to the
Purchasers upon exercise of the Warrants or (b) a dividend or other distribution
made pursuant to a transaction approved by the Holders), then each Holder will
be entitled to receive in respect of such Series D Preferred Stock, Common Stock
or Other Securities a dilution fee in cash (the "Series D Preferred Stock
Dilution Fee") on the date of payment of such dividend or distribution, which
Series D Preferred Stock Dilution Fee will be equal to (a) the product of (i)
the highest amount per share paid to any class of Capital Stock of the Company
multiplied by (ii) the aggregate number of shares of Series D Preferred Stock,
Common Stock and/or Other Securities of the Company then owned by such Holder,
less (b) the amount of such dividend or distribution otherwise paid to such
Holder as a result of its ownership of any Series D Preferred Stock, Common
Stock and/or Other Securities of the Company.
14
Article III
The Warrants
3.01 Sale of Series C Warrants to NTOF.
---------------------------------
(a) Sale of Series C Warrants. On the Closing Date, NTOF
agrees to purchase from the Company, and the Company agrees to issue to
NTOF, Warrants, in each case in substantially the form attached to this
Agreement as Annex E and incorporated in this Agreement by reference,
to purchase the aggregate number of shares of Common Stock set forth
beneath NTOF's name on the signature page of this Agreement, all
subject to and in accordance with the terms and conditions of this
Agreement.
(b) Purchase Price. In consideration for the Company's
issuance of the Warrants to NTOF, NTOF shall pay to the Company, on the
Closing Date, the aggregate purchase price set forth beneath NTOF's
name on the signature page to this Agreement, all subject to and in
accordance with the terms and conditions of this Agreement.
3.02 Exchange of Series A Warrants, Series B Warrants and Notes for
Series C Warrants by Hancock Entities. On the Closing Date, each of the Hancock
Entities agrees to deliver to the Company, and the Company agrees to accept from
the Hancock Entities, all of the issued and outstanding Series A Warrants,
Series B Warrants and Notes owned by each such Hancock Entity and, in exchange
therefor and for any and all accrued and unpaid dividends, fees (excluding any
and all fees which constitute Hancock Closing Expenses) or interest related
thereto, the Company agrees to issue to each such Hancock Entity, and each such
Hancock Entity hereby agrees to accept from the Company, Warrants, in each case
in substantially the form attached to this Agreement as Annex E and incorporated
in this Agreement by reference, to purchase the aggregate number of shares of
Common Stock set forth beneath such Hancock Entity's name on the signature pages
of this Agreement, all subject to and in accordance with the terms and
conditions of this Agreement
3.03 Legend. The Company will deliver to each Purchaser on the Closing
Date one or more certificates representing the Warrants to be issued to such
Purchaser in such denominations as such Purchaser requests. Such certificates
will be issued in each Purchaser's name or in the name or names of its designee
or designees, as the case may be. It is understood and agreed that all of the
certificates evidencing the Warrants will bear the following legend:
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF (A) HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES
LAWS, AND (B) ARE SUBJECT TO THE TERMS AND PROVISIONS OF (I) A
15
SECURITIES EXCHANGE AND PURCHASE AGREEMENT, DATED AS OF AUGUST 14,
2001, BY AND AMONG FRESH AMERICA CORP. (THE "COMPANY") AND THE
PURCHASERS NAMED THEREIN AND (II) A SHAREHOLDERS AGREEMENT, DATED AS OF
AUGUST 14, 2001, BY AND AMONG THE COMPANY AND THE PURCHASERS NAMED
THEREIN (AS SUCH AGREEMENTS MAY BE SUPPLEMENTED, MODIFIED, AMENDED, OR
RESTATED FROM TIME TO TIME, THE "AGREEMENTS"). COPIES OF THE AGREEMENTS
ARE AVAILABLE AT THE OFFICES OF THE COMPANY."
3.04 Exercise Price. The Exercise Price per share will be $0.0001 for
each share of Common Stock represented by the Warrants; provided, however, that
in no event will the aggregate Exercise Price for all of the shares of Common
Stock covered by all Warrants owned by a particular Holder exceed one hundred
dollars ($100) per Holder, whether as a result of any change in the par value of
the Common Stock or Other Securities, as a result of any change in the number of
shares purchasable as provided in this Article III, or otherwise; provided,
further, that such limitation of the aggregate Exercise Price will have no
effect whatsoever upon the amount or number of Warrant Shares for which the
Warrants may be exercised.
3.05 Exercise.
--------
(a) Subject to the provisions of Article V, each of the
Warrants may be exercised by the applicable Purchaser, or such
Purchaser's successor Holders, at any time or from time to time after
the Closing Date and prior to 12:00 p.m. midnight (Dallas, Texas time)
on the tenth (10th) anniversary of the Closing Date; provided, however,
that as a condition to the expiration of any Warrant exercise rights,
the Company shall be required to give each Holder not more than ninety
(90) and not less than sixty (60) days' prior written notice of such
expiration. Each of the Warrants may be exercised on any day that is a
Business Day, for all or any part of the number of Issuable Warrant
Shares purchasable upon its exercise. In order to exercise any Warrant,
in whole or in part, the Holder will deliver to the Company at the
address designated by the Company pursuant to Section 10.06, (i) a
written notice of such Holder's election to exercise its Warrant, which
notice will specify the number of Issuable Warrant Shares to be
purchased pursuant to such exercise, (ii) payment of the Exercise
Price, in an amount equal to the aggregate purchase price for all
Issuable Warrant Shares to be purchased pursuant to such exercise, and
(iii) the Warrant. Such notice will be substantially in the form of the
Subscription Form appearing at the end of the Warrants. Upon the
receipt of such notice, the Company will, as promptly as practicable,
and in any event within three (3) Business Days, execute, or cause to
be executed, and deliver to such Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock and
16
Other Securities issuable upon such exercise, as provided in this
Agreement. The certificate or certificates so delivered will be in such
denominations as may be specified in such notice or by such Holder and
will be registered in the name of such Holder, or such other name as
designated in such notice or by such Holder. A Warrant will be deemed
to have been exercised, such certificate or certificates will be deemed
to have been issued, and such Holder or any other Person so designated
or named in such notice will be deemed to have become a holder of
record of shares for all purposes, as of the date that payment of the
Exercise Price and the applicable Warrant are received by the Company.
If the Warrant has been exercised in part, then the Company will, at
the time of delivery of such certificate or certificates, deliver to
such Holder a new Warrant evidencing the rights of such Holder to
purchase a number of Issuable Warrant Shares with respect to which the
Warrant has not been exercised, which new Warrant will, in all other
respects, be identical with the Warrants, or, with the consent of such
Holder, appropriate notation may be made on the Warrant and the Warrant
returned to such Holder.
(b) Payment of the Exercise Price will be made, at the option
of the Holder, (i) in cash, (ii) by certified or official bank check,
(iii) by cancellation of any debt owed by the Company to the Holder or
(iv) by cancellation of Warrant Shares, valued at Fair Market Value. If
the Holder surrenders a combination of cash or cancellation of any debt
owed by the Company to the Holder or Warrant Shares, then the Holder
will specify the respective number of shares of Common Stock to be
purchased with each form of consideration, and the foregoing provisions
will be applied to each form of consideration with the same effect as
if the Warrant were being separately exercised with respect to each
form of consideration; provided, however, that a Holder may designate
that any cash to be remitted to a Holder in payment of debt be applied,
together with other monies, to the exercise of the portion of the
Warrant being exercised for cash.
3.06 Taxes. The issuance of any Common Stock or Other Securities upon
the exercise of the Warrants will be made without charge to any Holder for any
tax, other than income taxes assessed against such Holder, in respect of such
issuance.
3.07 Warrant Register. The Company will, at all times while any of the
Warrants remain outstanding and exercisable, keep and maintain at its principal
office a register in which the registration, transfer, and exchange of the
Warrants will be evidenced. The Company will not at any time, except upon the
dissolution, liquidation, or winding up of the Company, close such register so
as to result in preventing or delaying the exercise or transfer of any Warrant.
3.08 Transfer and Exchange. Subject to the terms of Section 10.07 and
the Shareholders Agreement, the Warrants and all options and rights under the
Warrants are transferable, as to all or any part of the Issuable Warrant Shares
purchasable upon the exercise thereof, by the Holders of the Warrants, in person
or by duly authorized attorney, on the books of the Company upon surrender of
the Warrants at the principal offices of the Company, together with the form of
transfer authorization attached to the Warrants duly executed. Absent any such
transfer and subject to the Shareholders Agreement, the Company may deem and
treat the registered Holders of the Warrants at any time as the absolute owners
of the Warrants for all purposes and will not be affected by any notice to the
contrary. If any Warrant is transferred in part, then the Company will, at the
time of surrender of such Warrant, issue to the transferee a Warrant covering
the number of Issuable Warrant Shares transferred and to the transferor a
Warrant covering the number of Issuable Warrant Shares not transferred.
17
3.09 Adjustments to Number of Shares of Common Stock Purchasable.
-----------------------------------------------------------
(a) The Warrants will be exercisable for the number of shares
of Common Stock in such manner that, following the complete and full
exercise of the Warrant of each Holder, the amount of Common Stock
issued to all Holders will equal the aggregate number of shares of
Common Stock set forth beneath the name of the Purchasers on the
signature pages of this Agreement, as adjusted, to the extent
necessary, to give effect to the following events:
(i) In case at any time or from time to time, the
holders of any class of Common Stock or Common Stock
Equivalent have received, or (on or after the record date
fixed for the determination of shareholders eligible to
receive) have become entitled to receive, without payment
therefor:
(A) consideration (other than cash) by way
of dividend or distribution; or
(B) consideration (including cash) by way of
spin-off, split-up, reclassification (including any
reclassification in connection with a consolidation
or merger in which the Company is the surviving
corporation), recapitalization, combination of shares
into a smaller number of shares, or similar corporate
restructuring;
other than Common Stock issued as a stock dividend or in a
stock split (adjustments in respect of which are provided for
in Sections 3.09(a)(ii) and (iii)), then, and in each such
case, each Holder, upon the exercise of any Warrants held
thereby, will be entitled to receive, for each Issuable
Warrant Share to which such Holder is entitled as of the
record date fixed for such distribution, the greatest per
share amount of consideration received by any holder of any
class of Common Stock or Common Stock Equivalent or to which
such holder is entitled. All such consideration receivable
upon exercise of the Warrant with respect to such a
distribution will be deemed to be outstanding and owned by
such Holder for purposes of determining the amount of
consideration to which such Holder is entitled upon exercise
of the Warrant with respect to any subsequent distribution.
(ii) If at any time there occurs any stock split,
stock dividend, reverse stock split, or other subdivision of
the Common Stock, then the number of shares of Common Stock to
be received by the Holder of the Warrant and the Exercise
Price, subject to the limitations set forth in this Agreement,
will be proportionately adjusted.
(iii) Upon any reclassification or change of
outstanding shares of any class of Common Stock or Common
Stock Equivalent (other than a change in par value, or from
par value to no par value, or from no par value to par value),
or upon any consolidation of the Company with, or merger or
share exchange of the Company with or into, another Person, or
in the case of any sale of all or a majority of the property,
assets, business, income or revenue generating capacity, or
goodwill of the Company (other than a Permitted Acquisition),
the Company, or such successor or other Person, as the case
18
may be, will provide in writing that the Holder of the Warrant
will thereafter be entitled to receive the highest per share
kind and amount of consideration received or receivable
(including cash) upon such reclassification, change,
consolidation, merger, share exchange, or sale by any holder
of any class of Common Stock or Common Stock Equivalent that
the Warrant entitles the Holder to receive immediately prior
to such reclassification, change, consolidation, merger, share
exchange, or sale (as adjusted pursuant to this Agreement).
Any such successor Person will thereafter be deemed to be the
Company for purposes of the Warrants and will provide for
adjustments that are as nearly equivalent as may be possible
to the adjustments provided for by this Section 3.09.
(iv) If at any time the Company issues or sells any
shares of Common Stock (other than Permitted Stock or pursuant
to a Permitted Acquisition) or any Common Stock Equivalent at
a per unit or share consideration (which consideration will
include the price paid upon issuance plus the minimum amount
of any exercise, conversion, or similar payment made upon
exercise or conversion of any Common Stock Equivalent) less
than the then current Fair Market Value per share of Common
Stock immediately prior to the time such Common Stock or
Common Stock Equivalent is issued or sold, then:
(A) the Exercise Price will be reduced to
the lower of the prices calculated by:
(I) dividing (x) an amount equal to
the sum of (1) the number of shares of
Common Stock outstanding on a fully diluted
basis immediately prior to such issuance or
sale multiplied by the then existing
Exercise Price, plus (2) the aggregate
consideration, if any, received by the
Company upon such issuance or sale, by (y)
the total number of shares of Common Stock
outstanding immediately after such issuance
or sale on a fully diluted basis; and
(II) multiplying the then existing
Exercise Price by a fraction, the numerator
of which is (x) the sum of (1) the number of
shares of Common Stock outstanding on a
fully diluted basis immediately prior to
such issuance or sale, multiplied by the
Fair Market Value per share of Common Stock
immediately prior to such issuance or sale,
plus (2) the aggregate consideration
received by the Company upon such issuance
or sale, divided by (y) the total number of
shares of Common Stock outstanding on a
fully diluted basis immediately after such
issuance or sale, and the denominator of
19
which is the Fair Market Value per share of
Common Stock immediately prior to such
issuance or sale (for purposes of this
subsection (II), the date as of which the
Fair Market Value per share of Common Stock
will be computed will be the earlier of the
date upon which the Company (aa) enters into
a firm contract for the issuance of such
shares, or (bb) issues such shares); and
(B) the number of shares of Common Stock for
which any of the Warrants may be exercised at the
Exercise Price resulting from the adjustment
described in subsection (A) above will be equal to
the product of the number of shares of Common Stock
purchasable under such Warrants immediately prior to
such adjustment multiplied by a fraction, the
numerator of which is the Exercise Price in effect
immediately prior to such adjustment and the
denominator of which is the Exercise Price resulting
from such adjustment.
(v) If any event occurs as to which the preceding
Sections 3.09(a)(i) through (iv) are not strictly applicable,
but as to which the failure to make any adjustment would not
fairly protect the purchase rights represented by the Warrants
in accordance with the essential intent and principles of this
Agreement, then, in each such case, the Holder may appoint an
independent investment bank or firm of independent public
accountants, which will give its opinion as to the adjustment,
if any, on a basis consistent with the essential intent and
principles established in this Agreement, necessary to
preserve the purchase rights represented by the Warrants. Upon
receipt of such opinion, the Company will promptly deliver a
copy of such opinion to the Holder and will make the
adjustments described in such opinion. The fees and expenses
of such investment bank or independent public accountants will
be borne by the Company.
(b) The Company will not by any action, including, without
limitation, amending, or permitting the amendment of, the charter
documents, bylaws, or similar instruments of the Company or through any
reorganization, reclassification, transfer of assets, consolidation,
merger, share exchange, dissolution, issue or sale of securities, or
any other similar voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Agreement or the
Warrants, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of the Holders against
impairment or dilution. Without limiting the generality of the
foregoing, the Company will (i) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock and
Other Securities, free and clear of all liens, encumbrances, equities,
and claims, and (ii) use its best efforts to obtain all such
authorizations, exemptions, or consents from any public regulatory body
having jurisdiction as may be necessary to enable the Company to
perform its obligations under the Warrants. Without limiting the
generality of the foregoing, the Company represents and warrants that
the Board of Directors has agreed that the Exercise Price will be
adequate and has determined the issuance of the Warrants to be in the
best interests of the Company.
20
(c) Any calculation under this Section 3.09 will be made to
the nearest one ten-thousandth of a share and the number of Issuable
Warrant Shares resulting from such calculation will be rounded up to
the next whole share of Common Stock or Other Securities comprising
Issuable Warrant Shares.
(d) For purposes of the computations to be made pursuant to
(i) this Section 3.09 and (ii) the definition of "Permitted Stock",
there shall be deemed to be outstanding the maximum number of shares of
Common Stock issuable upon exercise or conversion of all Common Stock
Equivalents then outstanding.
(e) Except as otherwise contemplated by this Agreement or the
Other Agreements, the Company will not, and will not permit any
Subsidiary to, issue any Capital Stock other than (i) Common Stock or
Common Stock Equivalents or (ii) with respect to the Company, the
Series D Preferred Stock to be issued to Purchasers on the Closing
Date.
3.10 Lost, Stolen, Mutilated or Destroyed Warrants. If any Warrant is
lost, stolen, mutilated, or destroyed, then the Company will issue a new Warrant
of like denomination, tenor and date as the Warrant so lost, stolen, mutilated
or destroyed upon the receipt by the Company of an affidavit and notice of
ownership from the Holder of the lost, stolen, mutilated or destroyed Warrant.
Any such new Warrant will constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant is at any time enforceable by any Person; provided, however, that the
Company shall not honor any original Warrant if it has received an affidavit of
loss from any Holder as contemplated herein and has issued to such Holder a new
Warrant as contemplated herein.
3.11 Legend. The Warrants and the Warrant Shares have not been
registered under the Securities Act or qualified under applicable state
securities laws. Accordingly, unless there is an effective registration
statement and qualification respecting the Warrants and the Warrant Shares under
the Securities Act or under applicable state securities laws at the time of
exercise of a Warrant, any stock certificate issued pursuant to the exercise of
a Warrant will bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (A) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION
FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS AND (B) ARE
SUBJECT TO THE TERMS OF AND PROVISIONS OF (I) A SECURITIES EXCHANGE AND
PURCHASE AGREEMENT, DATED AS OF AUGUST 14, 2001, BY AND AMONG FRESH
AMERICA CORP. (THE "COMPANY") and the purchasers named therein AND (II)
A SHAREHOLDERS AGREEMENT, DATED AS OF AUGUST 14, 2001, BY AND AMONG THE
COMPANY AND THE PURCHASERS NAMED THEREIN (AS SUCH AGREEMENTS MAY BE
SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE
"AGREEMENTS"). COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE OFFICES OF
THE COMPANY."
21
Article IV
Closing
The closing of the transactions contemplated hereby shall take place at
10:00 a.m., Dallas, Texas time on a date to be specified by the parties, which
date (the "Closing Date") shall be (i) no earlier than ten (10) Business Days
after the date hereof and (ii) no later than three (3) Business Days after the
waiver or satisfaction of all of the conditions precedent set forth in Article
IX, at the offices of Patton Boggs LLP, 2001 Ross Avenue, Suite 3000, Dallas,
Texas 75201, or at such other time and/or place as the parties hereto shall
agree (the "Closing"). At the Closing, each of the parties hereto shall execute
and deliver each of the Other Agreements to which it is a party (other than the
Shareholders Agreement, which shall be executed and delivered by each of the
parties thereto simultaneously with the execution and delivery of this
Agreement) and shall have otherwise satisfied or fulfilled all conditions
precedent to the consummation of the transactions contemplated hereby and
thereby. At the Closing, the Company shall issue and deliver to each Purchaser
one or more stock certificates or warrants, in each case in definitive form and
registered in the name of such Purchaser (or such other party as such Purchaser
may designate), representing the shares of Series D Preferred Stock and the
Warrants being purchased by it. As payment in full for the shares of Series D
Preferred Stock and the Warrants being purchased by NTOF at the Closing, and
against delivery of the stock certificates or warrants therefor, NTOF shall
deliver to the Company by certified check or by wire transfer of immediately
available funds the aggregate purchase price set forth beneath NTOF's name on
the signature page to this Agreement. As payment in full for the shares of
Series D Preferred Stock and the Warrants being purchased by the Hancock
Entities at the Closing, and against delivery of the stock certificates or
warrants therefor, the Hancock Entities shall deliver to the Company all shares
of Series C Preferred Stock and all Series A Warrants, Series B Warrants and
Notes.
Article V
Put Option
5.01 Grant of Option. Subject to the provisions of Section 5.03, the
Company hereby grants to each Holder an option to sell to the Company, and the
Company is obligated to purchase from each Holder under such option (the "Put
Option"), all (or such portion as is designated by any such Holder pursuant to
Section 5.03 below) of the Put Shares held by such Holder. The Put Option will
be effective at any time or times after the earlier to occur of (i) the third
(3rd) anniversary of the date of this Agreement or (ii) at any time or times
after the occurrence of any of the events listed in any of clauses (a), (b),
(c), (d) or (e) below (each, an "Accelerated Put Event") (the "Put Option
Period"):
22
(a) any failure of the Company in any material respect to
perform any of its obligations under the Amended and Restated Articles
(other than the failure of the Company to pay any dividends when due
with respect to the Series D Preferred Stock); provided, however, that
the Put Option Period will continue with respect to any such failure,
even after the same has been cured, if notice of exercise of the Put
Option by such Holder is provided pursuant to this Article V during the
continuance of any such failure; provided, further, that any such Put
Option Period will cease to continue with respect to any such failure
if all Initial Holders have waived in writing such failure;
(b) any failure of the Company in any material respect to
perform any of its obligations under this Agreement or the Shareholders
Agreement; provided, however, that the Put Option Period will continue
with respect to any such failure, even after the same has been cured,
if notice of exercise of the Put Option by such Holder is provided
pursuant to this Article V during the continuance of any such failure;
provided, further, that any such Put Option Period will cease to
continue with respect to any such failure if all Initial Holders have
waived in writing such failure;
(c) (i) a merger, consolidation, share exchange or similar
transaction involving the Company and one or more Persons in which the
Company is not the surviving or resulting Person, (ii) a merger,
consolidation, share exchange or similar transaction involving the
Company and one or more Persons in which the Company is the surviving
or resulting Person in such transaction but as a result of which the
beneficial owners of the shares of Capital Stock of the Company
immediately prior to such transaction will, immediately after such
transaction, beneficially own less than a majority of the shares of
Capital Stock of the Company, (iii) a sale in one or more related
transactions of all or substantially all of the assets, business, or
revenue or income generating operations of the Company or (iv) any
substantial change in the type of business conducted by the Company;
(d) a Change in Control; or
(e) the consummation of either a Qualified Public
Offering or a Qualified Private Financing.
5.02 Put Price. Subject to the provisions of Section 5.06, if any
Holder exercises the Put Option, then the price to be paid to each such Holder
pursuant to this Agreement will be the aggregate price determined in accordance
with the following provisions (collectively, the "Put Price"):
(a) With respect to any shares of Series D Preferred Stock included
within the Put Shares, the price to be paid to each such Holder pursuant to this
Agreement will be cash (denominated in U.S. Dollars) in an amount equal to the
product of (i) the number of shares of Series D Preferred Stock for which the
Put Option is being exercised by such Holder, times (ii) the sum of (A) the
Original Issue Price of a share of Series D Preferred Stock, plus (B) any and
all accrued and unpaid dividends with respect to such share of Series D
Preferred Stock (whether or not declared and computed to the date payment
thereof is made available), plus (C) any and all accrued interest payable with
respect to any such accrued and unpaid dividends.
23
(b) With respect to any Capital Stock of the Company (other than Series
D Preferred Stock) included within the Put Shares, the price to be paid to each
such Holder pursuant to this Agreement will be cash (denominated in U.S.
Dollars) in an amount equal to the product of (i) the Fair Market Value per
share of such Capital Stock as of the end of the month immediately preceding the
date notice is given of the exercise of the Put Option pursuant to Section 5.03,
multiplied by (ii) the number of shares of Capital Stock of the Company (other
than Series D Preferred Stock) for which the Put Option is being exercised by
such Holder.
(c) If, upon any exercise of the Put Option, the assets of the Company
shall be insufficient to permit the payment in full to the applicable Holders of
the Put Price or if all or any portion of the Put Price is not permitted to be
paid to one or more of the applicable Holders pursuant to the provisions of the
TBCA or the Senior Loan Documents, then the full amount of the Put Price that is
permitted to be paid shall be distributed ratably among the Holders exercising
the applicable Put Option.
5.03 Exercise of Put Option. The Put Option may be exercised during the
Put Option Period with respect to all or any portion of the Put Shares by such
Holder giving notice to the Company and each other Holder during the Put Option
Period of the Holder's election to exercise the Put Option, and the date of the
Put Option Closing, which will be not less than fifteen (15) nor more than
thirty (30) days after the date of such notice. The Company will provide each
Holder desiring to exercise its Put Option the name and address of each other
Holder. Notwithstanding the foregoing, if a Holder receives such notice of
another Holder's exercise of such other Holder's Put Option, then the Holder
receiving such notice may elect to exercise its Put Option and designate a Put
Option Closing simultaneous and pari passu with that of such other Holder.
Notwithstanding anything contained or implied herein to the contrary, no Holder
shall have the right to exercise its Put Option unless and until such exercise
has been approved by all Initial Holders; provided, however, that any Holder
shall have the individual right, in its sole and absolute discretion, to execute
its Put Option upon the occurrence of any of the events listed in any of clauses
(c), (d) or (e) of Section 5.01.
5.04 Certain Remedies. If the Company defaults in its obligation to
purchase all or any portion of the Put Shares upon exercise of the Put Option or
if any Holder exercises the Put Option at a time when all or any portion of the
Put Price is not permitted to be paid in cash to such Holder pursuant to the
provisions of the TBCA or the Senior Loan Documents, then, in addition to any
other rights or remedies of each Holder (but subject to the following sentence),
the Company shall pay such amount of the Put Price as is permitted pursuant to
the provisions of the TBCA or the Senior Loan Documents, as applicable, and any
unpaid portion of the Put Price will bear interest at the lesser of (i) eighteen
percent (18%) per annum or (ii) the highest rate permitted by applicable law,
and the Company will, upon the request of any Holder, execute and deliver to
such Holder a promissory note, in form and substance satisfactory to such
Holder, evidencing the obligation of the Company to pay any such unpaid portion
of the Put Price.
24
5.05 Put Option Closing. The closing for any purchase and sale of all
or any portion of the Put Shares will take place at the office of the Company on
the date specified in such notice of exercise (each, a "Put Option Closing"). At
any Put Option Closing, to the extent applicable, the Holder of the Put Shares
will deliver the certificate or certificates evidencing the Put Shares being
purchased, duly endorsed in blank. In consideration therefor, the Company will
deliver to the Holder the Put Price, which will be payable in cash.
5.06 Put Price Upon Failure to Receive Requisite Shareholder Approval.
Notwithstanding anything contained or implied herein to the contrary, if, for
any reason, the Company shall fail to receive Requisite Shareholder Approval on
or before December 31, 2001, then, from and after January 1, 2002, the aggregate
Put Price to be paid to each Holder upon exercise of the Put Option shall be the
product of (i) the Put Price otherwise payable to such Holder pursuant to the
provisions of Section 5.02, multiplied by (ii) three (3).
Article VI
Registration Rights; Exchange Rights
6.01 Required Registration. At any time following one hundred eighty
(180) days after the Closing Date, a majority of the Holders may, upon not more
than two (2) occasions, make a written request to the Company requesting that
the Company effect the registration of Registrable Securities (provided,
however, that from and after the third (3rd) anniversary of the Closing Date,
any Holder (as opposed to a majority of the Holders) shall have the individual
right to so request the Company to effect the registration of Registrable
Securities). Within thirty (30) days after receipt of such a request, the
Company will notify all Holders of such request and use its commercially
reasonable best efforts to effect the registration of all Registrable Securities
that the Company has been so requested to register by any Holder for sale, all
to the extent required to permit the disposition (in accordance with the
intended method or methods thereof) of the Registrable Securities so registered.
In no event will any Person other than a Holder be entitled to include any
shares of Capital Stock in any registration statement filed pursuant to this
Section 6.01. Notwithstanding the foregoing, the Company shall not be required
to effect a registration pursuant to this Section 6.01 (i) during the period
starting with the date of filing of, and ending on the date one hundred and
eighty (180) days following the effective date of the registration statement
pertaining to a Qualified Public Offering, (ii) if within thirty (30) days of
receipt of a written request from the Holders pursuant to this Section 6.01, the
Company gives notice to such Holders of the Company's intention to file a
registration statement for a Qualified Public Offering within ninety (90) days,
(iii) if the Company shall furnish to the Holders requesting a registration
statement pursuant to this Section 6.01, a certificate signed by the Chairman of
the Board of Directors stating that in the good faith judgment of the Board of
Directors, it would be seriously detrimental to the Company and its shareholders
for such registration statement to be effected at such time, in which event the
Company shall have the right to defer such filing for a period of not more than
one hundred and twenty (120) days after receipt of the request of the applicable
Holders, or (iv) if the Holders propose to dispose of shares of Registrable
Securities that may be immediately registered on Form S-3 pursuant to a request
made pursuant to Section 6.03.
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6.02 Incidental Registration. If the Company at any time proposes to
file on its behalf or on behalf of any of its security holders a registration
statement under the Securities Act on any form (other than a registration
statement on Form S-4 or S-8 or any successor form unless such forms are being
used in lieu of or as the functional equivalent of, registration rights) for any
class that is the same or similar to Registrable Securities, then it will give
written notice setting forth the terms of the proposed offering and such other
information as any Holder may reasonably request to all Holders at least thirty
(30) days before the initial filing with the Commission of such registration
statement, and offer to include in such filing such Registrable Securities as
any Holder may request. Each Holder desiring to have Registrable Securities
registered under this Section 6.02 will advise the Company in writing within
twenty (20) days after the date of receipt of such notice from the Company,
setting forth (i) the amount of such Registrable Securities for which
registration is requested and (ii) the intended disposition of such Registrable
Securities. The Company will thereupon include in such filing the number of
Registrable Securities for which registration is so requested, and will use its
best efforts to effect registration under the Securities Act of such Registrable
Securities.
Notwithstanding the foregoing, if the managing underwriter or
underwriters, if any, of such offering deliver a written opinion to each Holder
of such Registrable Securities that the success of the offering would be
materially and adversely affected by the inclusion of the Registrable Securities
requested to be included, then the amount of securities to be offered for the
accounts of all Holders will be reduced pro rata (based on the ratio that each
such Holder's requested securities bears to the total number of shares requested
to be included in such registration statement) to the extent necessary to reduce
the total amount of securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters; provided, however,
that if securities are being offered for the account of other Persons as well as
the Company, then with respect to the Registrable Securities intended to be
offered to all Holders, the proportion by which the amount of such class of
securities intended to be offered by all Holders is reduced will not exceed the
proportion by which the amount of such class of securities intended to be
offered by such other Persons (other than the Company) is reduced; provided,
further, that in no event shall the amount of Registrable Securities intended to
be offered by all Holders be reduced below twenty-five percent (25%) of the
total amount of securities to be offered.
6.03 Form S-3 Registrations. In addition to the registration rights
provided in Sections 6.01 and 6.02 above, if at any time the Company is eligible
to use Form S-3 (or any successor form) for registration of secondary sales of
Registrable Securities, any Holder may request in writing that the Company
register shares of Registrable Securities on such form. Upon receipt of such
request, the Company will promptly notify all Holders in writing of the receipt
of such request, and each such Holder may elect (by written notice sent to the
Company within thirty (30) days of receipt of the Company's notice) to have its
Registrable Securities included in such registration pursuant to this Section
6.03. Thereupon, the Company will, as soon as practicable, use its commercially
reasonable best efforts to effect the registration on Form S-3 of all
Registrable Securities that the Company has so been requested to register by
such Holder for sale. The Company will use its commercially reasonable best
efforts to qualify and maintain its qualification for eligibility to use Form
S-3 for such purposes. Notwithstanding the foregoing, the Company shall not be
obligated to effect any such registration, qualification or compliance pursuant
26
to this Section 6.03 (i) if Form S-3 is not available for such offering by the
Holders, or (ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than one million dollars ($1,000,000), or (iii) if,
within thirty (30) days of receipt of a written request from any Holder or
Holders pursuant to this Section 6.03, the Company gives notice to such Holder
or Holders of the Company's intention to make a public offering with respect to
which such Holder will have incidental registration rights pursuant to Section
6.02 within ninety (90) days, or (iv) if the Company shall furnish to the
Holders a certificate signed by the Chairman of the Board of Directors stating
that in good faith judgment of the Board of Directors, it would be seriously
detrimental to the Company and its shareholders for such Form S-3 registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than one hundred twenty (120) days after receipt of the request of the Holder or
Holders under this Section 6.03, or (v) if the Company has, already effected
three (3) registrations on Form S-3 for the Holders pursuant to this Section
6.03.
6.04 Rule 144 Availability. Notwithstanding the foregoing, the Company
will not be obligated to register any Registrable Securities as to which counsel
acceptable to the Holders renders an opinion in form and substance satisfactory
to the Holders to the effect that such Registrable Securities are freely
saleable without limitation as to volume, manner of sale, or otherwise under
Rule 144 promulgated under the Securities Act.
6.05 Registration Procedures. In connection with any registration of
Registrable Securities under this Article VI, the Company will, as soon as
reasonably practicable:
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its
commercially reasonable best efforts to cause such registration
statement to become and remain effective until the earlier of such time
as all Registrable Securities subject to such registration statement
have been disposed of or the expiration of one hundred eighty (180)
days; provided, however, that:
(i) before the initial filing of any registration
statement, the Company will furnish to all Holders covered by
such registration statement, their counsel, and the
underwriters, if any, and their counsel, copies of all such
documents proposed to be filed at least ten (10) days prior
thereto, which documents will be subject to the reasonable
review, within such ten (10) day period, of such Holders,
their counsel and the underwriters; and
(ii) before filing any prospectus or any amendments
or supplements to any registration statement or prospectus,
the Company will furnish to all Holders covered by such
registration statement, their counsel, and the underwriters,
if any, and their counsel, copies of all such documents
proposed to be filed a reasonable period of time (in light of
the nature of the amendments or changes contained therein,
which shall in every event be at least one (1) day and shall
never be required to be more than ten (10) days) prior
thereto, which documents will be subject to the reasonable
review, within such period, of such Holders, their counsel and
the underwriters;
27
(b) prepare and file with the Commission such amendments,
post-effective amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the sale or
other disposition of all Registrable Securities covered by such
registration statement until the earlier of such time as all of such
Registrable Securities have been disposed of or the expiration of one
hundred eighty (180) days (except with respect to registrations
effected on Form S-3 or any successor form, as to which no such period
shall apply);
(c) furnish to each Holder such number of copies of the
registration statement and prospectus (including, without limitation, a
preliminary prospectus) in conformity with the requirements of the
Securities Act (in each case including all exhibits) and each amendment
or supplement thereto, together with such other documents as any Holder
may reasonably request;
(d) use its commercially reasonable best efforts to register
or to qualify the Registrable Securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions within the United States and Puerto Rico as each Holder
reasonably requests, and do such other acts and things as may be
reasonably required of it to enable such Holder to consummate the
disposition in such jurisdiction of the securities covered by such
registration statement;
(e) otherwise use its commercially reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and
make available to its securities holders, as soon as practicable, an
earnings statement covering the period of at least twelve (12) months
beginning with the first month after the effective date of such
registration statement, which earnings statement will satisfy the
provisions of Section 11(a) of the Securities Act;
(f) provide and cause to be maintained a transfer agent and
registrar for Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such registration statement;
(g) if requested by the underwriters for any underwritten
offering or Registrable Securities on behalf of a Holder pursuant to a
registration requested under Section 6.01, then (i) the Company will
enter into an underwriting agreement with such underwriters for such
offering, such agreement to contain such representations and warranties
by the Company and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary
distributions, including, without limitation, provisions with respect
to indemnities and contribution as are reasonably satisfactory to such
underwriters and the Holders; (ii) the Holders on whose behalf
28
Registrable Securities are to be distributed by such underwriters will
be parties to any such underwriting agreement and (iii) the
representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters, will also
be made to and for the benefit of such Holders; and no Holder will be
required by the Company to make any representations or warranties to or
agreements with the Company or the underwriters other than reasonable
and customary representations, warranties or agreements regarding such
Holder, such Holder's Registrable Securities, such Holder's intended
method or methods of disposition, and any other representation required
by law;
(h) furnish, at the written request of any Holder, on the date
that such Registrable Securities are delivered to the underwriters for
sale pursuant to such registration, or, if such Registrable Securities
are not being sold through underwriters, on the date that the
registration statement with respect to such Registrable Securities
becomes effective, (i) an opinion, in form and substance reasonably
satisfactory to such Holders and addressing matters customarily
addressed in underwritten public offerings, of the counsel representing
the Company for the purposes of such registration (who will not be an
employee of the Company and who will be satisfactory to such Holders),
which opinion will be addressed to the underwriters, if any, and to the
selling Holders; and (ii) a letter (the "Comfort Letter"), in form and
substance reasonably satisfactory to such Holders, from the independent
certified public accountants of the Company, addressed to the
underwriters, if any, and to the selling Holders making such request
(and, if such accountants refuse to deliver the Comfort Letter to such
Holders, then the Comfort Letter will be addressed to the Company and
accompanied by a letter from such accountants addressed to such Holders
stating that they may rely on the Comfort Letter addressed to the
Company); and
(i) during the period when the registration statement is
required to be effective, notify each selling Holder of the happening
of any event as a result of which the prospectus included in the
registration statement contains an untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and prepare a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
It will be a condition precedent to the obligation of the Company to
take any action pursuant to this Article VI in respect of the Registrable
Securities that are to be registered at the request of any Holder that such
Holder furnish to the Company such information regarding the Registrable
Securities held by such Holder and the intended method of disposition thereof as
is legally required in connection with the action taken by the Company. The
managing underwriter or underwriters, if any, for any offering of Registrable
Securities to be registered pursuant to Section 6.01 or 6.03 will be selected by
the Holders of a majority of the Registrable Securities being so registered.
29
6.06 Allocation of Expenses. Except as provided in the following
sentence, the Company will bear all expenses arising or incurred in connection
with any of the transactions contemplated by this Article VI, including, without
limitation, (a) all expenses incident to filing with the National Association of
Securities Dealers, Inc., (b) registration fees, (c) printing and copying
expenses, (d) fees and expenses for any Persons retained by the Company,
including accountant, counsel and other special experts, (e) expenses of any
special audits or comfort letters incident to or required by any such
registration or qualification, (f) expenses of complying with the securities or
blue sky laws of any jurisdictions in connection with such registration or
qualification, (g) reasonable fees and expenses of counsel for each of the
Hancock Entities and NTOF, (h) messenger and delivery expenses and (i) all
expenses in connection with any registration not effected by the Company. Each
Holder will severally bear the expense of its underwriting fees, discounts or
commissions relating to its sale of Registrable Securities.
6.07 Listing on Securities Exchange. If the Company lists any shares of
Capital Stock on any securities exchange or on the National Association of
Securities Dealers, Inc. Automated Quotation System or similar system, then it
will, at its expense, list thereon, maintain and, when necessary, increase such
listing of, all Registrable Securities.
6.08 Holdback Agreements.
-------------------
(a) If any registration pursuant to Section 6.02 is in
connection with an underwritten public offering, then each Holder of
Registrable Securities agrees, if so required by the managing
underwriter, not to effect any public sale or distribution of
Registrable Securities (other than as part of such underwritten public
offering) during the period beginning seven (7) days prior to the
effective date of such registration statement and ending on the one
hundred eightieth (180th) day after the effective date of such
registration statement, provided that each Management Employee and each
Person that is an officer, director or beneficial owner of five percent
(5%) or more of the outstanding shares of any class of Capital Stock of
the Company enters into an agreement obligating such Person to comply
with the provisions of this Section 6.08(a).
(b) The Company agrees (i) not to effect, and to use its
commercially reasonable best efforts to cause each holder of its equity
securities or any securities convertible into or exchangeable or
exercisable for any of such securities not to effect, any public sale
or distribution during the period seven (7) days (or such longer period
as may be prescribed by Regulation M) prior to the effective date of
the registration statement employed in any underwritten public offering
and ending on the one hundred eightieth (180th) day after any such
registration statement contemplated by Sections 6.01 or 6.03 has become
effective, except as part of such underwritten public offering pursuant
to such registration statement and except pursuant to securities
registered on Forms S-4 or S-8 of the Commission or any successor
forms, and (ii) to use its commercially reasonable best efforts to
cause each holder of its equity securities or any securities
convertible into or exchangeable or exercisable for any of such
securities, in each case purchased from the Company at any time after
the date of this Agreement (other than in a public offering), to agree
not to effect any such public sale or distribution of such securities
during such period.
30
6.09 Rule 144. The Company will take such action as any Holder may
reasonably request, at the expense of the Company, all to the extent required
from time to time to enable such Holder to sell shares of Registrable Securities
or any other applicable stock of the Company without registration pursuant to
and in accordance with (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation adopted by
the Commission. Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with such requirements.
6.10 Rule 144A. The Company agrees that, upon the request of any Holder
or any prospective purchaser of any Series D Preferred Stock, Warrants or
Warrant Shares designated by a Holder, the Company will promptly provide (but in
any case within fifteen (15) days of a request) to such Holder or potential
purchaser, the following information:
(a) a brief statement of the nature of the business of the
Company and any Subsidiaries and the products and services they offer;
(b) the most recent consolidated balance sheets and profit and
losses and retained earnings statements, and similar financial
statements of the Company for such part of the two preceding fiscal
years prior to such request as the Company has been in operation (such
financial information will be audited, to the extent reasonably
available); and
(c) such other information about the Company, any
Subsidiaries, and their business, financial condition, and results of
operations as the requesting Holder or potential purchaser requests in
order to comply with Rule 144A, as amended, and the antifraud
provisions of the federal and state securities laws.
The Company hereby represents and warrants to any such requesting Holder and any
prospective purchaser of any Series D Preferred Stock, Warrants or Warrant
Shares from such Holder that the information provided by the Company pursuant to
this Section 6.10 will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
6.11 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company will not, without the prior written consent
of the Holders, enter into any agreement with any holder or prospective holder
of any securities of the Company that would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
6.01, unless under the terms of such agreement, such holder or prospective
31
holder may include such securities in any such registration only to the extent
that the inclusion of its securities will not reduce the amount of the
Registrable Securities of the Holders that is included or (b) to make a demand
registration that could result in such registration statement being declared
effective prior to the effectiveness of the first registration statement
effected under Section 6.01 or within one hundred eighty (180) days of the
effective date of any registration effected pursuant to Section 6.01.
6.12 Exchange Rights. At the option of any Holder, any such Holder may
exchange all or any portion of its Registrable Securities for fully paid and
nonassessable shares (calculated as to each exchange to the nearest
one-thousandth (1/1000) of a share and rounded upward) of common stock of any
Affiliate or Subsidiary of the Company that on the date of receipt of the
Exchange Notice has a class of capital stock registered under Section 12 of the
Exchange Act or within four hundred eighty-five (485) days will have a class of
capital stock so registered (any such Affiliate or Subsidiary will be referred
to in this Agreement as the "Exchange Company" and such common stock of any such
Affiliate or Subsidiary will be referred to in this Agreement as "Exchange
Common Stock"). Each $1,000 worth of Registrable Securities (valued in the same
manner as set forth in Section 5.02 on the date that the Exchange Notice was
sent), will be exchangeable for $1,000 worth of Exchange Common Stock (valued in
the same manner as set forth in Section 5.02 on the date that the Exchange
Notice was sent). To exchange Registrable Securities into Exchange Common Stock,
the Holder will surrender at the principal office of the Exchange Company the
certificate or certificates evidencing such Registrable Securities duly endorsed
or assigned to the Company, and give written notice to the Company at such
office that it elects to exchange such Registrable Securities (the "Exchange
Notice"). Registrable Securities will be deemed to have been exchanged
immediately prior to the close of business on the day of the surrender for
exchange in accordance with the foregoing provisions, and the Person or Persons
entitled to receive the Exchange Common Stock issuable upon any such exchange
will thereupon be treated for all purposes as the record holder or holders of
the Exchange Common Stock. As promptly as practicable on or after the exchange
date, the Exchange Company will issue and deliver a certificate or certificates
for the number of full shares of Exchange Common Stock issuable upon exchange to
the Person or Persons entitled to receive such shares. Upon exchange of any
Issued Warrant Shares, the Company will pay or make with respect to Issued
Warrant Shares any dividends or other distributions that have been declared on
the Warrant Shares in kind or cash, as the case may be. If any Holder exchanges
its Registrable Securities for shares of Exchange Common Stock pursuant to this
Section 6.12, then such Holder will have all of the rights set forth in this
Article VI, except that, for the purposes of this Article VI, the term "Company"
will refer instead to the Exchange Company and the term "Registrable Securities"
will refer to the shares of Exchange Common Stock held by such Holder.
6.13 Other Rights. Unless otherwise contemplated by this Article VI,
the Company will not grant to any Person any registration rights without the
consent of all Holders.
Article VII
Representations and Warranties
7.01 Representations and Warranties of the Company and its
Subsidiaries. The Company hereby represents and warrants to each Purchaser that:
32
(a) Organization and Qualification. The Company is a
corporation duly organized and validly existing and in good standing
under the laws of its state of incorporation and is qualified or
licensed to do business in all other countries, states and
jurisdictions the laws of which require it to be so qualified or
licensed. Except as set forth on Schedule 7.01(a), the Company has no
Subsidiaries. Schedule 7.01(a) sets forth for each Subsidiary (i) its
full legal name, (ii) its jurisdiction of incorporation or organization
and (iii) the percentage of the voting stock of which is held by the
Company and each other Subsidiary. Except as set forth on Schedule
7.01(a), no Person, other than the Purchasers, has any rights, whether
granted by the Company or any other Person, to acquire any portion of
the equity interest of the Company or the assets of the Company other
than the Permitted Stock.
(b) Authority; Binding Obligation. The Company has the right
and power, and is duly authorized, (i) to enter into, to execute, to
deliver and to perform this Agreement and the Other Agreements and (ii)
to create, issue, offer, sell and deliver the Warrants and the Series D
Preferred Stock, and the officers of the Company executing and
delivering this Agreement, the Other Agreements, the Warrants and the
certificates representing the Series D Preferred Stock are duly
authorized to do so. This Agreement, the Other Agreements, the Warrants
and the Series D Preferred Stock, when duly and validly executed,
issued and delivered, will constitute the legal, valid and binding
obligations of Company, enforceable against the Company in accordance
with their respective terms.
(c) No Conflicts. The execution, delivery and performance of
this Agreement, the Other Agreements, the Warrants and the Series D
Preferred Stock will not, by the lapse of time, the giving of notice,
or otherwise, constitute a violation of any applicable provision
contained in the articles of incorporation, as amended, bylaws or
organizational documents of the Company or contained in any agreement,
instrument or document to which the Company is a party or by which it
is bound and will not result in any breach of any of the provisions of,
or constitute a default under, or result in the creation of a Lien upon
any Property of the Company or any Subsidiary under the provisions of
such agreement, charter instrument, bylaw or other instrument or any
order, judgment, decree, or ruling of any court, arbitrator or
Governmental Entity applicable to the Company or any of its Property.
(d) Capitalization.
--------------
(i) Set forth on Schedule 7.01(d) is a listing of the
authorized Capital Stock, the par value per share of each
class of Capital Stock and the number of shares of each class
of Capital Stock issued and outstanding, in each case with
respect to each of the Company and its Subsidiaries on and as
of the date hereof; provided, however, that, notwithstanding
anything contained or implied herein to the contrary,
immediately prior and as a condition precedent to the Closing,
the Company shall be required to deliver to the Purchasers an
33
updated Schedule 7.01(d) listing the authorized Capital Stock,
the par value per share of each class of Capital Stock and the
number of shares of each class of Capital Stock issued and
outstanding, in each case with respect to each of the Company
and its Subsidiaries, (A) on and as of the Closing Date and
prior to giving effect to the transactions contemplated hereby
and (B) on and as of the Closing Date and after giving effect
to the transactions contemplated hereby. The Company owns all
of the issued and outstanding shares of Capital Stock of each
of its Subsidiaries. Upon approval and filing of the Amended
and Restated Articles, One Hundred Twenty-Nine Million Five
Hundred Fifteen Thousand Five Hundred and Nine (129,515,509)
shares of Common Stock will be reserved for issuance on
exercise of the Warrants. Except as set forth on Schedule
7.01(d), all such issued and outstanding Capital Stock has
been duly authorized and validly issued, is fully paid and
nonassessable and has been offered, issued, sold and delivered
by Company free from preemptive rights, rights of first
refusal or similar rights (other than such rights arising
under this Agreement or the Other Agreements or as otherwise
set forth on Schedule 7.01(d)) and in compliance with
applicable federal and state securities laws. Except pursuant
to this Agreement or the Other Agreements or as otherwise set
forth on Schedule 7.01(d) and except for the Permitted Stock,
the Company is not obligated to issue or to sell any Capital
Stock, and, except for this Agreement and the Other
Agreements, the Company is not a party to, or otherwise bound
by, any agreement affecting the voting of any Capital Stock.
Except for this Agreement, the Company is not, nor will it be,
a party to, or otherwise bound by, any agreement obligating it
to register any of its Capital Stock.
(ii) The Series D Preferred Stock and the Warrants
have been, in each case, duly and validly authorized and, when
issued in accordance with the terms of this Agreement, will be
validly issued, fully paid, nonassessable and free of
preemptive rights, rights of first refusal or similar rights
(other than such rights as arise pursuant to the terms of the
Other Agreements). Upon approval and filing of the Amended and
Restated Articles, the shares of Common Stock issuable on
exercise of the Warrants will be duly and validly authorized
and reserved for issuance and, when issued in accordance with
the terms of the Warrants, will be validly issued, fully paid,
nonassessable and free of preemptive rights, rights of first
refusal or similar rights (other than such rights as arise
pursuant to the terms of the Other Agreements);
(e) Title to Properties. Except as set forth on Schedule
7.01(e), the Company has good title to its properties and assets, and
none of such properties or assets is subject to any Lien, except for
(i) Liens for or current taxes not yet due and payable, (ii)
mechanics', carriers', repairers' and other similar Liens imposed by
law arising or incurred in the ordinary course of business for
obligations not yet due, (iii) landlords' Liens or other similar Liens
on leases of real estate arising from the provisions of such leases,
and (iv) imperfections of title, if any, not material in nature or
amount and not materially detracting from the value or impairing the
use of the property subject thereto or impairing the operations or
proposed operations of the Company. The Company has received no notice
of any special assessment or other regulatory proceedings which would
affect such properties and assets.
34
(f) Intellectual Property. Set forth on Schedule 7.01(f) is a
list and brief description of all domestic and foreign patents, patent
rights, patent applications, trademarks, trademark applications,
service marks, service mark applications, trade names, domain names and
registered copyrights, and all applications for such that are in the
process of being prepared, owned by or registered in the name of the
Company, or of which the Company is a licensor or licensee. Except as
set forth on Schedule 7.01(f), the Company owns or possesses adequate
licenses or other rights to use all patents, patent applications,
trademarks, trademark applications, service marks, service mark
applications, trade names, domain names, copyrights, manufacturing
processes, formulae, trade secrets, customer lists and know how
(collectively, "Intellectual Property") necessary to the conduct of its
business as conducted and as proposed to be conducted, and no claim is
pending or, to the Company's knowledge, threatened to the effect that
the operations of the Company infringe upon or conflict with the
asserted rights of any other person under any Intellectual Property,
and, to the Company's knowledge, there is no basis for any such claim
(whether or not pending or threatened). Except as set forth on Schedule
7.01(f), no claim is pending or, to the Company's knowledge, threatened
to the effect that any such Intellectual Property owned or licensed by
the Company, or which the Company otherwise has the right to use, is
invalid or unenforceable by the Company, and, to the Company's
knowledge, there is no basis for any such claim (whether or not pending
or threatened). All material technical information developed by and
belonging to the Company that has not been patented has been kept
confidential. Except as set forth on Schedule 7.01(f) and except for
arrangements and agreements entered into in the ordinary course of
business, none of which individually or in the aggregate have or will
have a Material Adverse Effect, the Company has not granted or assigned
to any other Person any right to manufacture, have manufactured,
assemble or sell the products or proposed products, or to provide the
services or proposed services, of the Company.
(g) Proprietary Information of Third Parties. Except as set
forth on Schedule 7.01(g), no third party has claimed or, to the
Company's knowledge, has reason to claim that any person employed by or
affiliated with the Company has (i) violated or may be violating any of
the terms or conditions of his employment, non-competition,
non-solicitation or non-disclosure agreement with such third party,
(ii) disclosed or may be disclosing or utilized or may be utilizing any
trade secret or proprietary information or documentation of such third
party or (iii) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. To the Company's knowledge, no person employed by or
affiliated with the Company has employed or proposes to employ any
trade secret or any information or documentation proprietary to any
former employer, and, to the Company's knowledge, no person employed by
or affiliated with the Company has violated any confidential
35
relationship that such person may have had with any third party, in
each case in connection with the development, manufacture or sale of
any product or proposed product or the development or sale of any
service or proposed service of the Company. The Company does not
believe it is or will be necessary to use any inventions of any of its
employees (or persons it currently intends to hire) made prior to their
employment by the Company in the Company's business as currently
conducted or as currently proposed to be conducted. To the Company's
knowledge, neither the execution and delivery of this Agreement nor the
conduct or proposed conduct of the business of the Company will
conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under any contract, covenant or
instrument under which any officer, director or employee of the Company
is obligated.
(h) No Voting Agreements. Except as set forth on Schedule
7.01(h), there is not now, and at no time during the term of this
Agreement or the Other Agreements will there be, any agreement,
arrangement or understanding involving the Company, other than this
Agreement and the Other Agreements, modifying, restricting, or in any
way affecting the rights of any security holder to vote securities of
the Company or its Subsidiaries.
(i) Litigation; Compliance with Law. Except as set forth on
Schedule 7.01(i), there is no (i) action, suit, claim, proceeding or
investigation pending or, to the Company's knowledge, threatened
against the Company, at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign (each, a
"Governmental Entity"), (ii) arbitration proceeding relating to the
Company pending under collective bargaining agreements or otherwise or
(iii) governmental inquiry pending or, to the Company's knowledge,
threatened against the Company (including, without limitation, any
inquiry as to the qualification of the Company to hold or to receive
any license or permit), in each case that could reasonably be expected
to result in a Material Adverse Effect in any change in equity
ownership of the Company or that questions the validity of the this
Agreement or the Other Agreements or the right of the Company to enter
into them or consummate the transactions contemplated hereby or
thereby, and there is no basis for any of the foregoing. The Company
has not received any opinion or written legal advice from legal counsel
to the effect that it is exposed, from a legal standpoint, to any
liability or disadvantage that may be material to its business,
financial condition, operations, property or affairs. The Company is
not subject to any order, writ, injunction, judgment or decree known to
or served upon the Company of any Governmental Entity. Except as set
forth on Schedule 7.01(i), there are no actions or suits by the Company
pending, threatened or contemplated against others. The Company has
complied, in all materials respects, with all laws, rules, regulations
and orders applicable to its business, operations, properties, assets,
products and services. The Company has all material permits,
franchises, licenses and other authorizations necessary to conduct its
business as conducted and as proposed to be conducted (collectively,
"Permits"), and, to the Company's knowledge, the Company has been
operating its business pursuant to and in compliance with the terms of
all such Permits. There is no existing law, rule, regulation or order,
and the Company is not aware of any proposed law, rule, regulation or
order, whether federal, state, county or local, that would prohibit or
restrict the Company from conducting its business in any jurisdiction
in which it is now conducting business or in which it proposes to
conduct business or that would otherwise have a Material Adverse
Effect.
36
(j) Disclosure. None of the documents, instruments, or other
information furnished to the Purchasers by the Company contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make any statements made therein, in light of
circumstances under which they were made, not misleading. No
representation, warranty, or statement made by the Company in this
Agreement or the Shareholders Agreement, or in any document,
certificate, exhibit or schedule attached hereto or thereto or
delivered in connection herewith or therewith, contains or will contain
any untrue statement of a material fact, or omits or will omit to state
a material fact necessary to make any statements made herein or
therein, in light of the circumstances under which they were made, not
misleading. To the Company's knowledge, there is no fact that has or
could reasonably be expected to have a Material Adverse Effect that has
not been disclosed in the documents provided to the Purchasers.
(k) Leasehold Interests. Each lease or agreement to which the
Company is a party under which it is a lessee of any property, real or
personal, is a valid agreement, binding upon the Company, without any
default of the Company thereunder. No event has occurred and is
continuing that, with due notice or lapse of time or both, would
constitute a default or event of default by the Company under any such
lease or agreement. The Company's possession of such property has not
been disturbed and, to the Company's knowledge, no claim has been
asserted against the Company adverse to its rights in such leasehold
interests.
(l) Contracts. Set forth on Schedule 7.01(l) is a complete
list of all material agreements, understandings, instruments, contracts
or other documents to which the Company is a party or by which it is
bound (collectively, "Contracts"). The Company has performed in all
material respects all the obligations required be performed by it to
date (or has received a valid, enforceable and irrevocable written
waiver with respect to its non-performance), has received no notice of
default and is not in default (with due notice or lapse of time or
both) under any Contract. The Company has no present expectation or
intention of not performing in all material respects its obligations
under each Contract, and the Company has no knowledge of any breach by
any other party to any Contract. The Company is in full compliance with
all of the terms and provisions of its articles of incorporation, as
amended, and bylaws.
(m) Governmental Approvals. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Section
7.02, no registration or filing with, or consent or approval of or
other action by, any Governmental Entity is or will be necessary for
the valid execution, delivery and performance by the Company of this
Agreement or the Other Agreements or the issuance, sale and delivery of
the Series D Preferred Stock, the Warrant or the Warrant Shares, other
than filings made pursuant to federal or state securities laws in
connection with the sale of the Series D Preferred Stock.
37
(n) Conduct of Offering. Neither the Company nor any person
authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Series D
Preferred Stock or Warrants or any security of the Company similar to
the Series D Preferred Stock or Warrants has taken or will take any
action (including, without limitation, any offer, issuance or sale of
any security of the Company under circumstances that might require the
integration of such security with Series D Preferred Stock and/or
Warrants under the Securities Act or the rules and regulations of the
Commission thereunder), in either case so as to subject the offering,
issuance or sale of the Series D Preferred Stock or Warrants to the
registration provisions of the Securities Act.
(o) No Brokers. Except as set forth on Schedule 7.01(o), the
Company has no contract, arrangement or understanding with any broker,
finder or similar agent with respect to the transactions contemplated
by this Agreement.
(p) Employee Matters. Set forth on Schedule 7.01(p) is a list
of the names of the executive officers of the Company, together with
the title or job classification of each such person and the total
compensation anticipated to be paid to each such person by the Company
and its Subsidiaries during the current fiscal year. Except as set
forth on Schedule 7.01(p), none of such persons or any other employee
of the Company has an employment agreement or understanding, whether
oral or written, with the Company that is not terminable at will by the
Company without cost or other liability to the Company. Except as set
forth on Schedule 7.01(p), each officer, employee, independent
contractor and/or consultant of the Company that has had or will have
access to confidential information or Intellectual Property of the
Company, or that has or will participate in any material respect in the
development of the Company's Intellectual Property, has entered into a
confidentiality and non-disclosure agreement with the Company, and all
such agreements are in full force and effect. No officer of the Company
has advised the Company (orally or in writing) that he or she intends
to terminate his or her employment with the Company. The Company has
complied in all material respects with all applicable laws relating to
the employment of labor, including provisions relating to wages, hours,
equal opportunity, collective bargaining and the payment of Social
Security and other taxes. The Company is not bound by or subject to
(and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or,
to the knowledge of the Company, has sought to represent any of the
employees, representatives or agents of the Company. There is no strike
or other labor dispute involving the Company pending, or to the
knowledge of the Company threatened, that could have a Material Adverse
Effect, nor is the Company aware of any labor organization activity
involving its employees.
(q) Transactions with Affiliates. Except as set forth on
Schedule 7.01(q), no director, officer, employee or shareholder of the
Company, or Affiliate of any such Person, and no other Person in which
any such Person, or any Affiliate of any such Person, has a substantial
interest or is an officer, director, trustee, partner or holder of more
than five percent (5%) of the outstanding Capital Stock thereof, is a
party to any transaction or agreement with the Company, including any
contract, agreement or other arrangement providing for the employment
of, furnishing of services by, rental of real or personal property
38
from, loan of money from, or otherwise requiring payments to any such
Person. Except as set forth on Schedule 7.01(q), to the Company's
knowledge, none of the Company's officers or directors, or any
Affiliates thereof, are, directly or indirectly, indebted to the
Company (other than in connection with purchases of the Company's
stock) or have any direct or indirect ownership interest in any Person
that competes with the Company. Except as set forth on Schedule
7.01(q), the Company is not a guarantor or indemnitor of any
indebtedness of any other Person. Set forth on Schedule 7.01(q) is a
list of the Company's Affiliates.
(r) ERISA. Set forth on Schedule 7.01(r) is a list and brief
description of (i) each Employee Plan that covers any employee of the
Company and (ii) each Benefit Arrangement of the Company. No such
Employee Plan or Benefit Arrangement is an "employee pension benefit
plan" as defined in Section 3(2) of ERISA. The Company and its ERISA
Affiliates have not incurred, nor do they expect to incur, any
liability under Title IV of ERISA arising in connection with the
termination of any plan covered or previously covered by Title IV of
ERISA. Each Employee Plan and each Benefit Arrangement has been
maintained in substantial compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations that are applicable to such Employee Plan or such Benefit
Arrangement. No material tax under Section 4980B of the Code has been
incurred in respect of any Employee Plan that is a group health plan,
as defined in Section 5000(b)(1) of the Code. With respect to the
employees and former employees of the Company, there are no employee
post-retirement medical or health plans in effect, except as required
by Section 4980B of the Code or other applicable law.
(s) Financial Statements. The Company has made available to
the Purchasers a draft of its unaudited financial statements (including
balance sheet, income statement and statement of shareholders' equity)
for the six (6) month period ended June 29, 2001 and a draft of its
audited financial statements for the fiscal year ended December 29,
2000 (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated, except that the
Financial Statements may not contain all footnotes required by GAAP and
may be subject to year-end audit adjustments. The Financial Statements
fairly present the financial condition and operating results of the
Company in all material respects as of the dates, and for the periods
indicated therein, subject to normal year-end audit adjustments. Except
as set forth in the Financial Statements, the Company has no material
liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to June 30, 2001
and (ii) obligations under the contracts and commitments (A) incurred
in the ordinary course of business, (B) not required under GAAP to be
reflected in the Financial Statements and (C) that individually or in
the aggregate, are not material to the financial condition or operating
results of the Company.
39
(t) Environmental Matters. The Company is not in violation of
any applicable statute, law or regulation relating to the environment
or occupational health and safety, and no material expenditures are or
will be required in order to comply with any such existing statute, law
or regulation.
(u) Tax Returns and Payments. The Company has filed all tax
returns and reports (including any extensions) as required by law. All
such returns and reports are true and correct in all material respects.
Except as disclosed on Schedule 7.01(u), the Company has timely paid
any and all taxes and other assessments when due (other than taxes and
other assessments that either alone or in the aggregate do not exceed
$100,000). The Company knows of no proposed additional tax assessment
against it or any Subsidiary that could reasonably be expected to be
material.
(v) Absence of Changes. Except as set forth on Schedule
7.01(v) or as contemplated by this Agreement and the Other Agreements,
since December 29, 2000, there has not been:
(i) any change in the assets, liabilities, financial
condition or operating results of the Company from that
reflected in the Financial Statements, except changes that,
either alone or in the aggregate, have not had a Material
Adverse Effect;
(ii) any damage, destruction or loss of or with
respect to any of the Company's properties or assets, whether
or not covered by insurance, other than damage, destruction or
loss that has not had a Material Adverse Effect;
(iii) any waiver or compromise by the Company of a
valuable right or of a material debt owed to it;
(iv) any satisfaction or discharge of any lien,
claim, or encumbrance or payment of any obligation by the
Company, except in the ordinary course of business and that is
not material to the business, properties or financial
condition of the Company;
(v) any material modification, amendment or other
change to any Contract;
(vi) any change in any compensation arrangement or
agreement with any employee, officer, director or shareholder;
(vii) any resignation or termination of employment of
any officer of the Company; or
(viii) any arrangement or commitment by the Company
to do any of the things described in this Section 7.01(v).
40
(w) SEC Documents. Except as set forth on Schedule 7.01(w),
the Company has filed, and as of the Closing Date the Company will have
filed, all required reports, schedules, forms, statements and other
documents with the Commission since June 3, 1994 (collectively, the
"SEC Documents"). As of their respective dates, (i) the SEC Documents
complied or will comply in all material respects with all applicable
requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the Commission promulgated
thereunder, and (ii) none of the SEC Documents contained any untrue
statement of a material fact or failed to state a material fact
required to be stated therein or otherwise necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Except to the extent that information contained
in any SEC Document has been revised or superseded by a subsequently
filed SEC Document, none of the SEC Documents contains, and no SEC
Document filed by the Company prior to the Closing Date will contain,
any untrue statement of a material fact or failed to state a material
fact required to be stated therein or otherwise necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included
within the SEC Documents (including, in each case, any notes thereto)
(i) comply or will comply as to form in all material respects with the
accounting requirements of the Commission applicable thereto, (ii) have
been prepared or will be prepared in accordance with GAAP (as in effect
as of the date thereof) applied on a consistent basis during the
periods involved, except in the case of unaudited statements as
permitted by Form 10-Q of the Commission and other rules and
regulations of the Commission, and (iii) fairly present in all material
respects, or will fairly present in all material respects, the
consolidated financial position of the Company and its Subsidiaries (if
any) as of the date thereof and the consolidated results of their
operations and cash flows for the periods then ended, subject, in the
case of any unaudited statements, to normal year-end audit adjustments.
(x) Board of Directors Findings and Recommendations. The Board
of Directors (i) has unanimously approved and adopted this Agreement,
each of the Other Agreements and the Senior Loan Documents, and each of
the transactions contemplated hereby or thereby, (ii) has unanimously
determined that this Agreement, each of the Other Agreements and the
Senior Loan Documents, and each of the transactions contemplated hereby
or thereby, are fair to and in the best interests of the Company and
its shareholders and (iii) unanimously recommends that the shareholders
of the Company, to the extent required by law, approve and adopt this
Agreement, each of the Other Agreements and the Senior Loan Documents,
and each of the transactions contemplated hereby or thereby.
(y) Inapplicability of PART THIRTEEN of the TBCA. The Board of
Directors has taken all actions necessary and appropriate to render the
limitations on "business combinations" contained in PART THIRTEEN of
the TBCA inapplicable to this Agreement and each of the Other
Agreements and to each of the transactions contemplated hereby or
thereby.
41
(z) Voting Requirements. The affirmative vote of two-thirds of
the outstanding shares of the Common Stock and the affirmative vote of
two-thirds of the outstanding shares of Series C Preferred Stock are
the only votes of the holders of any class or series of the Capital
Stock of the Company necessary or otherwise required to approve and to
adopt this Agreement and the Other Agreements or the transactions
contemplated hereby and thereby.
7.02 Representations and Warranties of the Purchasers. Each Purchaser
(other than with respect to the representations and warranties set forth in
Section 7.02(e), which representations and warranties will be deemed to have
been made jointly and severally only by the Hancock Entities) hereby represents
and warrants to the Company that:
(a) Authority; Binding Obligation. Such Purchaser has the
right and power and is duly authorized to enter into, to execute, to
deliver and to perform this Agreement and the Other Agreements to which
it is a party, and any partners, officers or agents executing and
delivering this Agreement or the Other Agreements to which it is a
party are duly authorized to do so. This Agreement and the Other
Agreements to which it is a party, when duly and validly executed and
delivered, will constitute legal, valid and binding obligations of such
Purchaser, enforceable against such Purchaser in accordance with their
respective terms.
(b) Investor Status. Such Purchaser (i) is an "accredited
investor", as that term is defined in Regulation D promulgated under
the Securities Act, and (ii) has such knowledge, skill, and experience
in business and financial matters, based on actual participation, that
(A) it is capable of evaluating the merits and risks of an investment
in the Company and the suitability thereof as an investment for such
Purchaser and (B) it is able financially to bear the risks thereof.
(c) Investment Intent. Such Purchaser is acquiring the Series
D Preferred Stock, the Warrants and the Warrant Shares for investment
for its own account and not with a view to any distribution thereof in
violation of applicable securities laws.
(d) Legends. Such Purchaser agrees that the certificates
representing the Series D Preferred Stock, the Warrants and the Warrant
Shares will bear the legends referenced in this Agreement, and such
Series D Preferred Stock, such Warrants and such Warrant Shares, as the
case may be, will not be offered, sold or transferred in the absence of
registration or exemption under applicable federal and state securities
laws.
(e) Ownership of Capital Stock of the Company. The Series A
Warrants, the Series B Warrants, the Series C Preferred Stock and the
Notes, in each case as described and set forth in the recitals to this
Agreement, represent all of the Capital Stock of the Company owned by
any Hancock Entity (or any Affiliate thereof) as of the date hereof and
without giving effect to the transactions contemplated hereby, and the
Hancock Entities collectively represent each and every Affiliate of JH
Life owning any shares of Capital Stock of the Company.
42
Article VIII
Covenants
The Company hereby agrees, until such time as (i) the Company shall
have redeemed all of the Series D Preferred Stock and (ii) the Initial Holders
own less than twenty percent (20%) of the outstanding Capital Stock of the
Company (on a fully-diluted basis), as follows:
8.01 Financial Statements and Reporting Information. From and after the
date of this Agreement, the Company will keep books of account and prepare
financial statements and will cause to be furnished to the Purchasers or other
Holder the items set forth below, all of the foregoing and following to be kept
and prepared in accordance with GAAP.
(a) As soon as available, and in any event within thirty (30)
days after the Closing Date, a copy of the final audited financial
statements of the Company for its fiscal year ended December 29, 2000,
together with the annual audit report prepared by the Company's
independent public accountants, which shall not be qualified or
limited.
(b) As soon as available, and in any event within one hundred
twenty (120) days after the end of each fiscal year of the Company,
beginning with the fiscal year ending December 29, 2001, (i) a copy of
the financial statements of the Company for such fiscal year containing
a consolidated and consolidating balance sheet, statement of income,
statement of shareholders' equity and statement of cash flows, each as
at the end of such fiscal year and for the period then ended and in
each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and audited and
certified by independent certified public accountants of recognized
standing selected by the Company and consented to by the Holders, (ii)
a comparison of the actual results during such fiscal year to those
originally budgeted by the Company and approved by the Board of
Directors prior to the beginning of such fiscal year, together with a
summary analysis of all variances prepared by the Company's management.
The annual audit report required by this Agreement will not be
qualified or limited. The Purchasers shall receive copies of all
reports and material correspondence sent to the Company's management by
the auditors concurrently with the delivery of the financial statements
referred to in this Section 8.01(b).
(c) As soon as available, and in any event within thirty (30)
days after the end of each calendar month, a copy of unaudited
consolidated and consolidating financial statements of the Company as
of the end of such calendar month and for the portion of the fiscal
year then ended, containing a consolidated and consolidating balance
sheet, statement of income and statement of cash flows, in each case
setting forth in comparative form the figures for the corresponding
period of the preceding fiscal year, together with a comparison of the
actual results during such period to those originally budgeted by the
Company and approved by the Board of Directors for such period with
analysis of all material variances.
(d) On or before thirty (30) days prior to the beginning of
each fiscal year of the Company, an annual budget or business plan for
the Company and its Subsidiaries for such fiscal year on a monthly
basis, including projected consolidated and consolidating balance
sheets, income statements and cash flow statements of the Company and
its Subsidiaries for each month of such fiscal year, and, at the
beginning of each fiscal quarter, all revisions thereto approved by the
Board of Directors.
43
(e) Concurrently with the delivery of each of the financial
statements referred to in Section 8.01(b) and Section 8.01(c), a
certificate of an authorized officer of the Company (i) stating, with
respect to the financial statements contemplated by Section 8.01(b),
that the financial statements attached thereto have been prepared in
accordance with GAAP and fairly and accurately present the consolidated
and consolidating financial condition and results of operations of the
Company at the date and for the period indicated therein, and, with
respect to the financial statements contemplated by Section 8.01(c),
that the financial statements attached thereto fairly and accurately
present (subject to year-end audit adjustments) the consolidated and
consolidating financial condition and results of operations of the
Company at the date and for the period indicated therein, and (ii)
containing a narrative report of the business and affairs of the
Company that includes, but is not limited to, a discussion of the
results of operations compared to those originally budgeted for such
period by the Company prior to the beginning of such period.
(f) As soon as available, a copy of each (i) financial
statement, report, notice or proxy statement sent by the Company to any
of its shareholders, (ii) regular, periodic or special report,
registration statement or prospectus filed by the Company with any
securities exchange, state securities regulator or the Commission,
(iii) material order issued by any Governmental Entity in any material
proceeding to which the Company is a party or to which any of its
assets is subject, (iv) press release or other statement made available
generally by the Company to the public concerning developments in the
business of the Company and (v) a copy of all correspondence, reports
and other information sent by the Company to any holder of any
Indebtedness.
(g) Promptly, such additional information concerning the
Company as any Holder may request, including, without limitation,
auditor management reports and audit "waive" lists.
8.02 Laws. From and after the date of this Agreement, the Company will
comply with all applicable statutes, regulations and orders of the United
States, domestic and foreign states, and municipalities, agencies and
instrumentalities of the foregoing applicable to the Company, except where
failure to so comply would not have a Material Adverse Effect.
8.03 Inspection. From and after the date of this Agreement, the Company
will permit any representative designated by any Holder (a) to visit and to
inspect any of the properties of the Company, (b) to examine the corporate and
financial records of the Company and make copies thereof or extracts therefrom
and (c) to discuss the affairs, finances and accounts of the Company with the
directors, officers, key employees and independent accountants of the Company.
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8.04 Certain Actions. From and after the date of this Agreement, the
Company, without the prior written consent of the Holders (such consent being
one hundred percent (100%) of the Holders with respect to each of clauses (a),
(b), (f), (g), (n), (p)(iii), (p)(iv), (p)(v) and (u) below), which consent may
be withheld in the sole discretion of each such Holder, will not, and will not
permit any Subsidiary to:
(a) except as otherwise contemplated by this Agreement, permit
to occur any amendment, alteration, or modification of its articles of
incorporation, as amended, or other charter or organizational documents
of the Company, in each case as constituted on the date of this
Agreement, the effect of which, in the good faith judgment of any
Holder, would be to adversely alter, impair, or affect, either the
rights and benefits of any of the Holders or the duties and obligations
of the Company under or with respect to this Agreement, the Other
Agreements, the Warrant or the Series D Preferred Stock;
(b) except as otherwise permitted pursuant to the terms of
this Agreement, the Other Agreements or the Amended and Restated
Articles, (i) declare or make any dividends or distributions of its
cash, stock, property or assets or (ii) redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of the Capital Stock of
the Company or any of the Capital Stock of any Affiliate of the
Company;
(c) effect any sale, lease, assignment, transfer or other
conveyance of any portion of the assets or operations or the revenue or
income generating capacity of the Company (other than inventory in the
ordinary course of business and other assets reasonably and in good
faith determined by the Company to be obsolete or no longer necessary
to the business of the Company) or to take any such action that has the
effect of any of the foregoing;
(d) except for the issuance of Warrant Shares upon exercise of
the Warrants or as otherwise provided pursuant to the terms of this
Agreement, the Other Agreements Agreement or the Amended and Restated
Articles, (i) issue, sell or otherwise dispose of any Capital Stock of
the Company or any Capital Stock of any Subsidiary, (ii) dissolve or
liquidate the Company or any of its Subsidiaries or (iii) effect any
consolidation or merger involving the Company or any reclassification,
corporate reorganization, stock split, reverse stock split or other
change of or in any class of Capital Stock;
(e) enter into any line of business that the Company is not
conducting on the date of this Agreement or acquire any substantial
business operation or assets (through a stock or asset purchase or
otherwise);
(f) except for the issuance of Warrant Shares upon exercise of
the Warrants or as otherwise provided pursuant to the terms of this
Agreement or the Other Agreements, (i) enter into any transaction or
transactions with any Initial Holder, any director, officer, employee,
securityholder or Affiliate of the Company, or any Affiliate of the
foregoing, except upon terms that, in the opinion of all Holders, are
fair and reasonable and that are, in any event, at least as favorable
as would result in a comparable arm's-length transaction with a Person
who is not a director, officer, employee, securityholder or Affiliate
of the Company, or any Affiliate of the foregoing, or (ii) advance any
monies to any such Persons;
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(g) except for ordinary and reasonable annual directors fees
to be paid by the Company to its outside directors and except as
otherwise provided in the Monitoring Agreement, pay any management,
consulting or similar fee to or for the direct or indirect benefit of
any of its officers, directors, Affiliates or securityholders;
(h) (i) acquire any debt or equity interest in any Person,
(ii) establish or acquire any Subsidiary not in existence as of the
date hereof, (iii) make any additional capital contribution or purchase
any additional equity in any existing Subsidiary, (iv) make any
advances or loans to any Subsidiary or (iv) during any fiscal year of
the Company, transfer any assets to its Subsidiaries which, either
alone or in the aggregate, have a fair market value in excess of two
hundred fifty thousand dollars ($250,000);
(i) allow the aggregate par value of the Capital Stock subject
to the Warrants from time to time to exceed the price payable upon
exercise of the Warrants, as adjusted from time to time;
(j) except as otherwise provided herein, file a registration
statement with the Commission or any state securities commission or
agency regarding any Capital Stock of the Company;
(k) except as otherwise provided in the Senior Loan Documents,
incur or suffer to exist any Indebtedness (including, without
limitation, any Indebtedness incurred in respect of any revolving
credit loans, term loans, capital lease obligations and/or guaranties)
in excess of eight million dollars ($8,000,000);
(l) except as otherwise provided in the Senior Loan Documents,
permit the assets of the Company to be subject to any Liens;
(m) undertake any litigation against any third party (other
than litigation instituted against one or more account debtors of the
Company with respect to one or more unpaid accounts, where the
aggregate amount in controversy is less than one hundred thousand
dollars ($100,000));
(n) during any fiscal year, increase by more than five percent
(5%) the total annual compensation (including, but not limited to, base
salary, bonus and perquisites) of any executive officer of the Company;
(o) enter into any contract or other agreement (other than the
Senior Loan Documents) that obligates the Company to make annual
payments thereunder in excess of two hundred fifty thousand dollars
($250,000);
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(p) (i) terminate any Key Employee of the Company or any of
its Subsidiaries, (ii) hire any Person to serve as Key Employee of the
Company or any of its Subsidiaries, (iii) grant any additional
equity-based compensation to any Key Employee of the Company or any of
its Subsidiaries, (iv) make any severance payment to any Key Employee
in connection with any termination of the employment of such Key
Employee (other than, with respect to the Management Employees only,
severance payments contemplated by the Employment Agreements, as in
effect on the Closing Date), (v) modify (A) the severance payment
obligations of the Company or (B) the incentive compensation payable by
the Company, in each case set forth in the Employment Agreements, as in
effect on the Closing Date;
(q) acquire during any twelve (12) month period any Property
or other assets from any Person or Person, the aggregate value of which
exceeds five hundred thousand dollars ($500,000);
(r) adopt any annual budget for the Company or any of its
Subsidiaries; provided, however, that for purposes of this Section
8.04(r) only and after the Closing Date, the consent of the Holders
shall be deemed to have been received if the Holder Representatives
approve such budget;
(s) make or agree to make any capital expenditures other than
capital expenditures that (i) are the subject of contractually
committed purchase orders as of the date hereof and are disclosed on
Schedule 7.01(l) or (ii) do not exceed two hundred fifty thousand
dollars ($250,000) individually and one million dollars ($1,000,000) in
the aggregate;
(t) make any tax election or settle or compromise any material
tax liability or take any other action with respect to the computation
of taxes or the preparation of tax returns or reports, in each case
that is inconsistent with past practice;
(u) enter into or adopt any new Employee Plan or other Benefit
Arrangement or amend in any material respect any Employee Plan or other
Benefit Arrangement in effect as of the date of this Agreement, in each
case except as otherwise required by applicable law;
(v) (i) fail to maintain in full force and effect any Permit
that is required in or for the conduct of the businesses of the Company
or any of its Subsidiaries, or (ii) sell, transfer, license or
otherwise dispose of any rights or interests under such Permits;
(w) except as may be required by GAAP, make any change in or
to its accounting methods or any of its tax or accounting principles or
practices; or
(x) obligate itself or otherwise agree to take, permit or
enter into any of the events described in subsections (a) through (w)
of this Section 8.04.
47
8.05 Records. From and after the date of this Agreement, the Company
and each of its Subsidiaries will keep books and records of account in which
full, true and correct entries will be made of all dealings and transactions in
relation to its business and affairs, and all such books and records shall be
kept in accordance with GAAP.
8.06 Accountants. From and after the date of this Agreement, the
Company will retain independent public accountants (the selection of which shall
be approved by the Holders) who will compile the consolidated and consolidating
financial statements of the Company at the end of each fiscal year, and if the
services of such independent public accountants are terminated, then the Company
will promptly notify each Holder of such termination and will include in such
notice a statement as to whether the change of accountants was recommended or
approved by the Board of Directors or any committee thereof. Upon any Holder's
request, the Company will request the firm of independent public accountants
whose services are terminated to deliver (without liability for such firm) to
each Holder a letter of such firm setting forth the reasons for the termination
of their services.
8.07 Existence. From and after the date of this Agreement, the Company
will maintain in full force and effect its corporate existence, rights and
franchises, including, but not limited to, all licenses and other rights to use
Intellectual Property.
8.08 Notice.
------
(a) In the event of (i) any setting by the Company of a record
date with respect to the holders of any class of Capital Stock for the
purpose of determining which of such holders are entitled to dividends,
repurchases of securities or other distributions, or any right to
subscribe for, purchase or otherwise acquire any shares of Capital
Stock or other property or to receive any other right, (ii) any capital
reorganization of the Company or any reclassification or
recapitalization of its Capital Stock, (iii) any transfer of all or a
majority of the assets, business or revenue or income generating
capacity of the Company or any consolidation, merger, share exchange,
reorganization or similar transaction involving the Company, (iv) any
voluntary or involuntary dissolution, liquidation or winding up of the
Company or (v) any proposed issue or grant by the Company of any
Capital Stock, or any right or option to subscribe for, purchase or
otherwise acquire any Capital Stock (other than the issuance of Warrant
Shares upon exercise of the Warrants and other than Permitted Stock),
then, in each such event, the Company will deliver or cause to be
delivered to the Holders a notice specifying, as the case may be, (A)
the date on which any such record is to be set for the purpose of such
dividend, distribution or right, and the amount and character of such
dividend, distribution or right, (B) the date as of which the holders
48
of record will be entitled to vote on any reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
share exchange, conveyance, dissolution, liquidation or winding-up, (C)
the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, share exchange,
conveyance, dissolution, liquidation or winding-up is to take place and
the time, if any is to be fixed, as of which the holders of record of
any class of Capital Stock will be entitled to exchange their shares of
Capital Stock for securities or other property deliverable upon such
event, (D) the amount and character of any Capital Stock, property or
rights proposed to be issued or granted, the consideration to be
received therefor (and, in the case of rights or options, the exercise
price thereof), the date of such proposed issue or grant and the
Persons or class of Persons to whom such proposed issue or grant will
be offered or made and (E) such other information as the Holders may
reasonably request. Any such notice will be deposited in the United
States mail, postage prepaid, at least thirty (30) days prior to the
date therein specified.
(b) If there is any adjustment pursuant to the provisions of
Section 3.09, or if any Other Securities become issuable in lieu of
shares of such Common Stock upon exercise of the Warrants, then the
Company will immediately cause written notice thereof to be sent to
each Holder, which notice will be accompanied by a certificate of the
Company setting forth in reasonable detail: (i) the basis for the
Holders becoming entitled to receive such Other Securities, (ii) the
facts requiring any such adjustment, (iii) the number of shares
receivable after such adjustment, or the kind and amount of any Other
Securities to be received upon the exercise of the Warrant and (iv) the
computation by which such adjustment was made. At the request of any
Holder and upon surrender of the Warrants of such Holder, the Company
will reissue the Warrants of such Holder in a form conforming to such
adjustments.
(c) If the Company fails to file its Form 10-K with the
Commission on or before one hundred twenty (120) days of the end of any
fiscal year of the Company, the Company will, within one hundred twenty
(120) days of the end of such fiscal year of the Company, deliver to
each Holder of Warrants a certificate of the chief financial officer of
the Company setting forth:
(i) the number of shares of Common Stock
issuable upon the exercise of each Warrant and the Exercise
Price of such shares as of the end of such fiscal year;
(ii) a brief statement of the facts requiring
each adjustment, if any, required to be made in such fiscal
year; and
(iii) the computation by which each such
adjustment was made.
8.09 Taxes. From and after the date of this Agreement, the Company will
file all required tax returns, reports and requests for refunds on a timely
basis and will pay on a timely basis all taxes imposed on it or any of its
assets, income or franchises. This Section 8.09 shall not preclude the Company
from contesting any taxes or other payments if they are being diligently
contested in good faith in a manner that stays enforcement thereof and if
appropriate expense provisions have been recorded in conformity with GAAP.
8.10 Warrant Rights. Subject to the approval and filing of the Amended
and Restated Articles, the Company covenants and agrees that, during the term of
this Agreement and so long as any Warrant is outstanding, (a) the Company will
at all times have authorized and reserved a sufficient number of shares of
Common Stock and Other Securities (if any), to provide for the exercise in full
of the rights represented by the Warrants and the exercise in full of the rights
of the Holders under this Agreement and the Other Agreements, (b) the Company
49
will not increase or permit to be increased the par value per share or stated
capital of the Issuable Warrant Shares or the consideration receivable upon
issuance of its Issuable Warrant Shares and (c) if the exercise of the Warrant
would require the payment by the Holder of consideration for the Common Stock or
Other Securities (if any) receivable upon such exercise of less than the par or
stated value of such Issuable Warrant Shares, then the Company will promptly
take such action as may be necessary to change the par or stated value of such
Issuable Warrant Shares to an amount less than or equal to such consideration.
8.11 Reservation of Warrant Shares. Subject to the approval and filing
of the Amended and Restated Articles, the Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, for
the purpose of effecting the exercise of the Warrants and otherwise complying
with the terms of this Agreement and the Other Agreements, such number of its
duly authorized shares of Common Stock as shall be sufficient to effect the
exercise of the Warrants from time to time outstanding or otherwise to comply
with the terms of this Agreement or the Other Agreements. If at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the exercise of the Warrants or otherwise to comply with the terms of
this Agreement or the Other Agreement following the approval and filing of the
Amended and Restated Articles, then the Company will forthwith take such
additional corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes. The Company will obtain any authorization, consent, approval
or other action by or make any filing with any court or administrative body that
may be required under applicable state securities laws in connection with the
issuance of the Warrant Shares upon exercise of the Warrants.
8.12 Insurance. From and after the date of this Agreement, the Company
(i) shall maintain, and shall cause each of its Subsidiaries (if any) to
maintain, as to their respective properties and business, with financially sound
and reputable insurers, insurance against such casualties and contingencies and
of such types and in such amounts as is customary for companies similarly
situated, and (ii) maintain the existing directors' and officers' liability
insurance policy of the Company.
8.13 Prohibition on Conflicting Agreements. From and after the date of
this Agreement, neither the Company nor any of its Subsidiaries shall become a
party to any agreement that by its terms prohibits the Company's performance of
any of this Agreement or any of the Other Agreements.
8.14 Transactions with Affiliates. Except for transactions contemplated
by this Agreement or the Other Agreements or as otherwise approved by all of the
Holders, from and after the date of this Agreement, neither the Company nor any
of its Subsidiaries shall enter into any transaction with any director, officer,
employee or holder of more than five percent (5%) of the outstanding Capital
Stock of the Company or any of its Subsidiaries, any Affiliate of such Person,
or any Person in which such Person, or an Affiliate of such Person, is a
director, officer, trustee, partner or holder of more than five percent (5%) of
the outstanding Capital Stock thereof.
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8.15 Use of Proceeds. The Company shall use the proceeds from the sale
of the Series D Preferred Stock and Warrants solely for working capital purposes
and to reduce existing Indebtedness.
8.16 Bylaws. The Company shall at all times cause its bylaws to provide
that the number of directors fixed in accordance therewith shall in no event
conflict with any of the terms or provisions of this Agreement or the Other
Agreements. The Company shall at all times maintain in its bylaws and/or other
organizational documents provisions indemnifying all directors against liability
and absolving all directors from liability to the Company and its shareholders,
in each case to the maximum extent permitted under the laws of the State of
Texas.
8.17 Subsidiaries. Except as otherwise approved by the Board of
Directors or as may exist as of the Closing Date, from and after the date of
this Agreement, the Company will not organize or acquire any Subsidiary.
8.18 Certain Other Agreements. The Company will not enter into any
amendment, modification or waiver of the Martin Purchase Agreement or the
Monitoring Agreement without the prior written consent of all Holders.
8.19 Advice of Changes; Supplemental Schedule. Prior to the Closing
Date, the Company shall promptly (but in no event later than three (3) Business
Days after the occurrence thereof) advise NTOF and Hancock Entities orally and
in writing of (i) any representation or warranty of the Company set forth in
this Agreement becoming untrue or inaccurate, (ii) the failure of the Company to
comply with or otherwise satisfy any covenant, condition or agreement to be
complied with or otherwise satisfied by it under this Agreement, (iii) any
change or event that has, or could reasonably be expected to have, a Material
Adverse Effect or that could otherwise materially affect the ability of the
Company to fulfill its obligations hereunder; provided, however, that no
notification made by the Company pursuant to this Section 8.19 shall affect the
representations, warranties, covenants or agreements contained in this Agreement
or be deemed to have amended the disclosure schedules attached hereto. On or
immediately before the Closing Date, the Company shall provide the Purchasers
with a revised and updated set of disclosure schedules (the "Supplemental
Disclosure Schedules"), which Supplemental Disclosure Schedules shall be true,
correct and complete as of such Closing Date and shall reflect any and all
changes to the underlying disclosure schedules described in this Agreement that
have occurred since the date of this Agreement.
8.20 Preparation and Filing of SEC Documents. Prior to the Closing
Date, the Company shall prepare any and all SEC Documents set forth on Schedule
7.01(w) or as otherwise required to be filed by the Company as of such Closing
Date, and all such SEC Documents shall be complete and correct in all material
respects. Within five (5) days of the Closing Date, the Company shall file with
the Commission any and all SEC Documents set forth on Schedule 7.01(w) or
otherwise required to be filed by the Company as of such Closing Date and shall
provide copies of all such SEC Documents to any Purchaser upon such Purchaser's
written request.
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8.21 Preparation of Proxy Statement; Company Shareholders Meeting. The
Company, acting through the Board of Directors, shall, in accordance with
applicable law and the terms and provisions of the articles of incorporation, as
amended, and bylaws of the Company:
(a) As promptly as practicable following the Closing Date, (i)
prepare and file with the Commission a proxy statement relating to the
Shareholders Meeting (the "Proxy Statement"), (ii) use its commercially
reasonable best efforts to have such Proxy Statement declared effective
or otherwise be cleared by the Commission and (iii) mail such Proxy
Statement to the shareholders of the Company. NTOF and Hancock Entities
shall be given reasonable opportunity to review and to comment upon the
Proxy Statement (and any and all supplements thereto) prior to the time
that they are filed with the Commission. The Company shall also provide
to each of NTOF and Hancock Entities a copy of any written comments and
oral notification of any verbal comments, in each case, that are
received by the Company from the Commission or any of its staff with
respect to such Proxy Statement and shall further provide to each of
NTOF and Hancock Entities a copy of any written response and oral
notification of any verbal response to any and all such comments. If,
at any time the Company is required to prepare and file a supplement to
such Proxy Statement, then the Company shall prepare and file such
supplement with the Commission and shall disseminate such supplement to
its shareholders, in each case as promptly as practicable and in
accordance with applicable law.
(b) As promptly as practicable following the Closing Date,
duly call, give notice of, convene and hold to a meeting of the
Company's shareholders for the purposes of approving the transactions
contemplated hereby, including, but not limited to, the issuance of the
Series D Preferred Stock and the Warrants (the "Shareholders Meeting").
The Company, through the Board of Directors, further agrees to
recommend to its shareholders, to the extent required by applicable
law, the approval and adoption of this Agreement, each of the Other
Agreement and the Senior Loan Documents and the consummation of each of
the transactions contemplated hereby and thereby, including, but not
limited to, the issuance of the Series D Preferred Stock and the
Warrants.
8.22 Public Announcements. Each of NTOF, Hancock Entities and the
Company hereby agree to consult with each other before issuing, and to provide
each other with reasonable opportunity to review and to comment upon, any press
release or other public statements with respect to the transactions contemplated
hereby and by the Other Agreements, and none of NTOF, Hancock Entities or the
Company shall issue any such press release or other public statement prior to
such consultation and review, except as may otherwise be required by applicable
law, stock exchange requirements or court order. If any of NTOF, Hancock
Entities or the Company determine that a press release or other public statement
is required by applicable law, stock exchange requirements or court order, then
such party will consult and coordinate with the other parties regarding the form
and substance thereof.
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8.23 Shareholder Litigation. The Company shall give each of NTOF and
Hancock Entities the opportunity to participate in the defense or settlement of
any shareholder litigation against the Company or all or any portion of the
Board of Directors relating to the transactions contemplated hereby or by the
Other Agreements. Notwithstanding anything contained or implied herein to the
contrary, the Company shall not settle or otherwise agree to set aside any such
litigation without the prior written consent of each of NTOF and Hancock
Entities, which consent shall not be unreasonably withheld or delayed.
8.24 Officers and Directors Indemnification. The Purchasers hereby
agree that any and all rights to indemnification existing as of the date hereof
in favor of the directors and officers of the Company as provided in the
articles of incorporation, as amended, and bylaws of the Company (in each case,
as in effect as of the date hereof) shall survive the Closing and shall continue
in full force and effect in accordance with the terms thereof.
Article IX
Conditions
9.01 Purchasers' Conditions. The obligations of the Purchasers to
effect the transactions contemplated by this Agreement are subject to the
satisfaction or waiver by each such Purchaser of the following conditions
precedent:
(a) Opinion. The Purchasers will have received favorable opinions,
dated the Closing Date, from Vinson & Elkins, L.L.P., counsel for the Company
covering matters raised by this Agreement and such other matters as the
Purchasers or their respective counsel may request, and otherwise in form and
substance satisfactory to each of the Purchasers and their respective counsel,
and written permission from each other firm issuing an opinion to the Company in
connection with the transactions contemplated hereby and thereby authorizing
each Purchaser to rely on such opinions.
(b) Material Adverse Effect. No event or occurrence shall have occurred
since December 29, 2000, that has had or that could reasonably be expected to
have a Material Adverse Effect.
(c) Other Agreements. The Company and each of the other parties thereto
(other than the Purchasers) will have executed and delivered the Other
Agreements.
(d) Thirteenth Amendment. The Company and each of the other parties
thereto will have executed and delivered the Thirteenth Amendment, which
Thirteenth Amendment shall be in form and substance satisfactory to each
Purchaser (in each Purchaser's sole and absolute discretion).
(e) Shareholder Approval. The Purchasers shall have received
irrevocable proxies or other voting agreements from shareholders of the Company
holding such number of shares of Capital Stock of the Company as shall be
necessary and appropriate to effect and to consummate the transactions
contemplated hereby and by the Other Agreements.
53
(f) No Injunctions or Other Restraints. No judgement, decree, statute,
law, ordinance, rule, regulation, temporary restraining order, preliminary or
permanent injunction or other order preventing (i) the consummation of the
transactions contemplated hereby or by the Other Agreements or (ii) the
ownership by any Purchaser of any portion of the Company or its Subsidiaries or
any of the Capital Stock of the Company shall have been entered, enacted,
promulgated, enforced or otherwise issued by any court of competent jurisdiction
or any Governmental Entity and shall be in effect.
(g) No Litigation. There shall not be pending or threatened by any
Governmental Entity any suit, action or other proceeding that (i) challenges or
seeks to restrain or to prohibit (A) the consummation of any of the transactions
contemplated hereby or by the Other Agreements or (B) the ownership by any
Purchaser of any portion of the Company or its Subsidiaries, (ii) seeks to
compel any of the Purchasers to dispose of or to hold separate any portion of
the business or assets of the Company or its Subsidiaries or (iii) seeks to
impose limitations on the ability of any of the Purchasers to acquire, to hold,
or otherwise to exercise full rights of ownership with respect to, any shares of
Capital Stock of the Company.
(h) Representations and Warranties; Covenants. Each representation and
warranty of the Company set forth in this Agreement and the Other Agreements
will be true and correct when made and as of the Closing Date, and the Company
will have fully performed each covenant or agreement set forth in this Agreement
and the Other Agreements.
(i) Proceedings; Consents. All proceedings taken in connection with the
transactions contemplated by this Agreement or the Other Agreements, and all
documents necessary to the consummation of this Agreement or the Other
Agreements, will be satisfactory in form and substance to the Purchasers and
their respective counsel, and the Purchasers and their respective counsel will
have received certificates of compliance and copies (executed or certified as
may be appropriate) of all documents, instruments and agreements that the
Purchasers or their respective counsel may reasonably request in connection with
the consummation of such transactions. All consents of any Person necessary to
the consummation of the transactions contemplated by this Agreement or the Other
Agreements will have been received, be in full force and effect, and not be
subject to any onerous condition.
(j) Certificates. The Company shall have executed and delivered to the
Purchasers a certificate, dated as of the Closing Date, attesting to the matters
set forth in Section 9.01(b) and (h), which certificate shall be in form and
substance satisfactory to the Purchasers and their respective counsel.
(k) Payment of Fees and Expenses. The Company shall have paid to,
reimbursed or otherwise made provision for the payment to each of the Purchasers
and their respective counsel of any all fees and expenses due and payable
thereto pursuant to the provisions of Section 10.10; provided, however, that all
such fees and expenses due and payable to the Hancock Entities and their counsel
shall be paid first from the Hancock Expense Deposit in accordance with Section
10.10(d) (to the extent that the unused amount of the Hancock Expense Deposit,
as of the Closing Date, is sufficient to cover all such fees and expenses).
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(l) Financial Statements. The Purchasers shall have received (i) final,
correct and complete copies of the Company's unaudited financial statements
(including balance sheet, income statement and statement of shareholders'
equity) for the six (6) month period ended June 29, 2001 and (ii) final, correct
and complete copies of the Company's audited financial statements for its fiscal
year ended December 29, 2000 (excluding only the annual audit report prepared by
the Company's independent public accountants, which annual audit report shall be
delivered to the Purchasers within thirty (30) days after the Closing Date in
accordance with Section 8.01(a)), in each case, which shall be satisfactory to
each of the Purchasers (in each Purchaser's sole and absolute discretion).
9.02 Company Conditions. The obligations of the Company to effect the
transactions contemplated by this Agreement are subject to the following
conditions precedent:
(a) Other Agreements. The Purchasers and each of the other parties
thereto (other than the Company) will have entered into the Other Agreements.
(b) Representations and Warranties; Covenants. Each representation and
warranty of the Purchasers set forth in this Agreement and the Other Agreements
will be true and correct when made and as of the Closing Date, and the
Purchasers will have fully performed each covenant or agreement set forth in
this Agreement and the Other Agreements required to be performed by the
Purchasers.
(c) No Injunctions or Other Restraints. No judgement, decree, statute,
law, ordinance, rule, regulation, temporary restraining order, preliminary or
permanent injunction or other order preventing (i) the consummation of the
transactions contemplated hereby or by the Other Agreements or (ii) the
ownership by any Purchaser of any portion of the Company or its Subsidiaries or
any of the Capital Stock of the Company shall have been entered, enacted,
promulgated, enforced or otherwise issued by any court of competent jurisdiction
or any Governmental Entity and shall be in effect.
(d) Proceedings; Consents. All proceedings taken in connection with the
transactions contemplated by this Agreement or the Other Agreements, and all
documents necessary to the consummation of this Agreement or the Other
Agreements, will be satisfactory in form and substance to the Company and its
counsel, and the Company and its counsel will have received certificates of
compliance and copies (executed or certified as may be appropriate) of all
documents, instruments and agreements that the Company or its counsel may
reasonably request in connection with the consummation of such transactions. All
consents of any Person necessary to the consummation of the transactions
contemplated by this Agreement or the Other Agreements will have been received,
be in full force and effect, and not be subject to any onerous condition.
55
(e) Certificates. Each Purchaser shall have executed and delivered to
the Company a certificate, dated as of the Closing Date, attesting to the
matters set forth in Sections 9.02(b) and 9.02(c), which certificate shall be in
form and substance satisfactory to the Company and its counsel.
(f) Shareholder Approval. The Purchasers shall have received
irrevocable proxies or other voting agreements from shareholders of the Company
holding such number of shares of Capital Stock of the Company as shall be
necessary and appropriate to effect and to consummate the transactions
contemplated hereby and by the Other Agreements.
Article X
Miscellaneous
10.01 Indemnification. In addition to any other rights or remedies to
which the Purchasers and the other Holders may be entitled, the Company agrees
to and will indemnify and hold harmless all Purchasers, all Holders, and each of
their respective Affiliates, successors, assigns, officers, directors,
employees, attorneys and agents (individually and collectively, an "Indemnified
Party") from and against any and all losses, claims, obligations, liabilities,
deficiencies, diminutions in value, penalties, causes of action, damages, costs,
and expenses (including, without limitation, costs of investigation and defense,
reasonable attorneys' fees, and expenses), including, without limitation, those
arising out of the sole or contributory negligence of any Indemnified Party (but
excluding the gross negligence or willful misconduct of such Indemnified Party),
that the Indemnified Party may suffer, incur, or be responsible for, arising or
resulting from (i) any misrepresentation, breach of warranty or nonfulfillment
of any covenant or agreement on the part of the Company under this Agreement,
the Other Agreements or any other agreement, document or instrument governing or
evidencing the Series D Preferred Stock, the Warrants or the Warrant Shares,
(ii) any misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished by the Company to any Purchaser or any
Holder under or in connection with this Agreement or the Other Agreements, (iii)
any action or inaction taken by the Company in the conduct of its business or
operations, (iv) the transactions contemplated hereby or by the Other Agreements
or (v) any investigation, litigation or other proceeding (including, without
limitation, any threatened investigation, litigation or other proceeding)
relating to any of the foregoing.
10.02 Equitable Relief. It is agreed that a violation by any party of
the terms of this Agreement cannot be adequately measured or compensated in
money damages, and that any breach or threatened breach of this Agreement by a
party to this Agreement would do irreparable injury to the nondefaulting party.
It is, therefore, agreed that in the event of any breach or threatened breach by
a party to this Agreement of the terms and conditions set forth in this
Agreement, the nondefaulting party will be entitled, in addition to any and all
other rights and remedies that it may have in law or in equity, to apply for and
obtain injunctive relief requiring the defaulting party to be restrained from
any such breach or threatened breach or to refrain from a continuation of any
actual breach.
56
10.03 Integration and Amendments. This Agreement and the Other
Agreements constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof and supersede all previous written, and all
previous or contemporaneous oral, negotiations, understandings, arrangements,
and agreements. This Agreement may not be amended or supplemented except by a
writing signed by Company and the Holders of a majority-in-interest of the
Registrable Securities; provided, however, that changes, revisions, supplements
or amendments to the provisions related to (i) any economic term with respect to
any of the Registrable Securities, (ii) Section 2.02 (and any defined terms used
therein), (iii) Section 3.02 (and any defined terms used therein), (iv) Article
IV (and any defined terms used therein), (v) Article V (and any defined terms
used therein), (vi) Article VI (and any defined terms used therein), (vii)
Sections 8.04(a), 8.04(b), 8.04(f), 8.04(g), 8.04(n), 8.04(p)(iii), 8.04(p)(iv),
8.04(p)(v), 8.04(u), 8.14 and 8.18 (and any defined terms used in such
Sections), (viii) the definition of Permitted Stock, (ix) Article IX (and any
defined terms used therein), (x) this Section 10.03, and (xi) Section 10.10(d)
shall, in each case, require the consent of each Purchaser and each other
Holder. Any approval or consent granted by Holders in accordance with the second
sentence of the definition of "Holders" shall not be deemed an amendment or
supplement for purposes of the preceding sentence. Notwithstanding anything to
the contrary contained herein, no change, revision, supplement or amendment to
any provision of this Agreement or any Other Agreement may be made during the
period from the date of execution of this Agreement through and including the
Closing Date except by a writing signed by the Company and all Holders.
10.04 Headings. The headings in this Agreement are for convenience and
reference only and are not part of the substance of this Agreement. References
in this Agreement to Sections and Articles are references to the Sections and
Articles of this Agreement unless otherwise specified.
10.05 Severability. The parties to this Agreement expressly agree that
it is not the intention of any of them to violate any public policy, statutory
or common law rules, regulations or decisions of any governmental or regulatory
body. If any provision of this Agreement is judicially or administratively
interpreted or construed as being in violation of any such policy, rule,
regulation or decision, then the provision, section, sentence, word, clause or
combination thereof causing such violation will be inoperative (and in lieu
thereof there will be inserted such provision, sentence, word, clause or
combination thereof as may be valid and consistent with the intent of the
parties under this Agreement), and the remainder of this Agreement, as amended,
will remain binding upon the parties, unless the inoperative provision would
cause enforcement of the remainder of this Agreement to be inequitable under the
circumstances.
10.06 Notices. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication be given to or
served upon any of the parties by another, such notice, demand, request,
consent, approval, declaration or other communication will be in writing and
will be deemed to have been validly served, given or delivered (and "the date of
such notice" or words of similar effect will mean the date) five (5) days after
deposit in the United States mails, certified mail, return receipt requested,
with proper postage prepaid, or upon receipt thereof (whether by non-certified
mail, telecopy, telegram, express delivery or otherwise), whichever is earlier,
and addressed to the party to be notified as follows:
57
If to NTOF, at: North Texas Opportunity Fund LP
13355 Noel Road, Suite 2210
Dallas, Texas 75240
Attn: Arthur W. Hollingsworth
Facsimile: (972) 702-7391
with courtesy copies to: Patton Boggs LLP
2001 Ross Avenue, Suite 3000
Dallas, Texas 75201
Attn: R. Jeffery Cole, Esq.
Fax: (214) 758-1550
If to the Hancock Entities, at John Hancock Life Insurance Company
3030 LBJ Freeway, Suite 240
Dallas, TX 75234
Attn: William Hasson
Fax: (972) 404-3003
and
John Hancock Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attn: Pamela Memishian (T30)
Fax: (617) 572-9269
and
John Hancock Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attn: David Johnson (T57)
Fax: (617) 572-1165
with courtesy copies to: Bingham Dana LLP
One State Street
Hartford, CT 06103
Attn: Thomas F. O'Connor, Esq.
Fax: (860) 240-2800
58
If to the Company, at: Fresh America Corp.
6600 LBJ Freeway, Suite 180
Dallas, Texas 75240
Attn: Chief Financial Officer
Facsimile: (972) 774-0515
with courtesy copies to: Vinson & Elkins, L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201-2975
Attn: Alan Bogdanow
Facsimile: (214) 220-7716
or to such other address as each party may designate for itself by like notice.
Notice to any Management Shareholder or to any Holder other than the Purchasers
will be delivered as set forth above to the address of such Person shown on the
stock transfer books of the Company unless such Person has advised the Company
in writing of a different address to which notices are to be sent under this
Agreement.
Failure or delay in delivering courtesy copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies of the actual notice will in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
No notice, demand, request, consent, approval, declaration or other
communication will be deemed to have been given or received unless and until it
sets forth all items of information required to be set forth therein pursuant to
the terms of this Agreement.
10.07 Successors. This Agreement will be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
10.08 Remedies. The failure of any party to enforce any right or remedy
under this Agreement, or promptly to enforce any such right or remedy, will not
constitute a waiver thereof, nor give rise to any estoppel against such party,
nor excuse any other party from its obligations under this Agreement. Any waiver
of any such right or remedy by any party must be in writing and signed by the
party against which such waiver is sought to be enforced.
10.09 Survival. All warranties, representations and covenants made by
any party in this Agreement or in any certificate or other instrument delivered
by such party or on its behalf under this Agreement will be considered to have
been relied upon by the party to which it is delivered and will survive the
Closing Date, regardless of any investigation made by such party or on its
behalf. All statements in any such certificate or other instrument will
constitute warranties and representations under this Agreement.
59
10.10 Fees and Expenses.
-----------------
(a) Transaction Fees. The Company shall pay to each Holder
promptly upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees (to
include reasonable outside counsel fees), expended or incurred by such
Holder in connection with (a)(i) the negotiation and preparation of
this Agreement and the Other Agreements (without regard to whether the
Closing ever occurs), (ii) the Holders' continued administration hereof
and thereof (including, without limitation, from and after the
occurrence and during the continuance of any failure of the Company in
any material respect to perform any of its obligations under this
Agreement or the Other Agreements, any costs and/or expenses incurred
by any Holder in connection with the exercise of its inspection rights
pursuant to Section 8.03) and (iii) the preparation of any amendments
and waivers hereto and thereto, (b) the enforcement of each Holder's
rights and/or the collection of any amounts that become due to any
Holder under this Agreement or under any of the Other Agreements and
(c) the prosecution or defense of any action in any way related to this
Agreement or any of the Other Agreements, including without limitation,
any action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary
proceeding, contested matter or motion brought by any Holder or any
other Person) relating to the Company or any other Person or entity
(collectively, the "Transaction Fees"); provided, however, that if the
Closing shall fail to occur for any reason, then the Company shall not
be required to pay any Transaction Fees to NTOF or on behalf of NTOF in
excess of fifty thousand dollars ($50,000).
(b) Closing Fee. In addition to any other amounts payable to
NTOF pursuant to this Section 10.10, on the Closing Date, the Company
shall pay to NTOF in immediately available funds a closing fee of two
hundred thousand dollars ($200,000) (the "Closing Fee"), which Closing
Fee shall be fully earned and non-refundable as of such Closing Date.
(c) Termination Fee. In addition to any other amounts payable
to NTOF pursuant to this Section 10.10, in the event NTOF is ready,
willing and able to consummate the transactions on the Closing Date
contemplated by this Agreement and the Other Agreements and if such
transactions are not consummated for any reason (other than a breach or
default by NTOF under this Agreement), including, but not limited to,
as a result of the failure of satisfaction of any conditions precedent
set forth in Article IX, then, in such event, the Company shall pay to
NTOF, via wire transfer of immediately available funds, a termination
fee in an amount equal to five hundred thousand dollars ($500,000) (the
"Termination Fee"), provided, however, that if NTOF elects not to
consummate the transactions contemplated hereby solely as a result of
the failure of satisfaction of the condition precedent set forth in
Section 9.01(e), NTOF shall not be entitled to receive the Termination
Fee.
60
(d) Hancock Expense Deposit. The Hancock Entities jointly and
severally represent, warrant and agree that on or about April 20, 2001,
the Company advanced to Bingham Dana LLP, on behalf of the Hancock
Entities the aggregate sum of two hundred thousand dollars ($200,000)
(the "Hancock Expense Deposit") for purposes of providing the Hancock
Entities with monies against which the Hancock Entities could charge
fees and expenses reimbursable by the Company under and pursuant to the
Initial Securities Purchase Agreement, the Amended and Restated Note
Agreement, the Additional Securities Purchase Agreement, the Notes, the
Series C Preferred Stock, the Series A Warrants and the Series B
Warrants. The Hancock Entities, jointly and severally, further
represent, warrant and agree that (i) the unused amount of the Hancock
Expense Deposit, as of the date of this Agreement (after application of
funds for Invoice No. 517882, dated August 9, 2001), is one hundred
sixty-six thousand nine hundred twenty and 99/100 dollars
($166,920.99), (ii) no fees or expenses of any kind, nature or
description are currently owing to the Hancock Entities by the Company
(except for attorneys fees and expenses which are reimbursable by the
Company to the Hancock Entities in connection with the negotiation and
preparation of this Agreement and the Other Agreements pursuant to
Section 10.10(a) hereof (hereinafter, the "Hancock Closing Expenses"))
and (iii) within thirty (30) days of the later of (A) the date of the
Shareholders Meeting or (B) the Closing Date, the Hancock Entities will
return/refund to the Company the portion, if any, of the Hancock
Expense Deposit remaining after payment of the Hancock Closing
Expenses.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original and all of which, taken
together, will constitute one agreement.
10.12 Other Business. It is understood and accepted that the
Purchasers, the Holders and their respective Affiliates have or may have
interests in other business ventures that may be in conflict with the activities
of the Company and that nothing in this Agreement will limit the current or
future business activities of such parties whether or not such activities are
competitive with those of the Company. The Company and each Management
Shareholder hereby agrees that all business opportunities in any field
substantially related to the business of the Company will be pursued exclusively
through the Company.
10.13 Choice of Law. THIS AGREEMENT HAS BEEN EXECUTED, DELIVERED AND
ACCEPTED BY THE PARTIES IN THE STATE OF TEXAS WILL BE DEEMED TO HAVE BEEN MADE
IN THE STATE OF TEXAS, AND WILL BE INTERPRETED AND THE RIGHTS OF THE PARTIES
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE THERETO
AND THE INTERNAL LAWS OF THE STATE OF TEXAS APPLICABLE TO AN AGREEMENT EXECUTED,
DELIVERED AND PERFORMED THEREIN, WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW
RULES THEREOF OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION OF THE
SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
61
10.14 Duties Among Holders. Each Holder agrees that no other Holder
will by virtue of this Agreement be under any fiduciary or other duty to give or
withhold any consent or approval under this Agreement or to take any other
action or omit to take any action under this Agreement, and that each other
Holder may act or refrain from acting under this Agreement as such other Holder
may, in its discretion, elect.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
62
Securities Purchase Agreement
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
COMPANY:
-------
FRESH AMERICA CORP., a Texas corporation
By:
-------------------------------------------
Name: Cheryl A. Taylor
Title:Chief Financial Officer
NTOF:
----
NORTH TEXAS OPPORTUNITY FUND LP
By: North Texas Opportunity Fund Capital
Partners LP, its general partner
By: NTOF LLC, its general partner
By:
-------------------------------
Name: Arthur W. Hollingsworth
Title: Manager
Number of Shares of Series D Preferred Stock: 50,000
Purchase Price (all shares): $5,000,000
Number of Warrant Shares: 84,100,980
Purchase Price (all Warrants): $1.00
HANCOCK ENTITIES:
----------------
JOHN HANCOCK LIFE INSURANCE COMPANY
By:
---------------------------------------------------
Name:
--------------------
Title:
---------------------------------------------------
Number of Shares of Series D Preferred Stock: 24,840
Number of Warrant Shares: 29,519,444
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By:
---------------------------------------------------
Name:
--------------------
Title:
---------------------------------------------------
Number of Shares of Series D Preferred Stock: 1,620
Number of Warrant Shares: 6,812,179
SIGNATURE 1A (CAYMAN), LTD.
By: John Hancock Life Insurance Company,
Portfolio Advisor
By:
---------------------------------------------------
Name:
--------------------
Title:
---------------------------------------------------
Number of Warrant Shares: 4,541,453
SIGNATURE 3 LIMITED
By: John Hancock Life Insurance Company,
Portfolio Advisor
By:
----------------------------------------------------
Name:
--------------------
Title:
----------------------------------------------------
Number of Warrant Shares: 4,541,453
INVESTORS PARTNER LIFE INSURANCE COMPANY
By:
-------------------------------------------------------
Name:
--------------------
Title:
----------------------------------------------------
Number of Shares of Series D Preferred Stock: 540
WARRANT
-------
JOHN HANCOCK LIFE INSURANCE COMPANY
-----------------------------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF (A) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND
ALL APPLICABLE STATE SECURITIES LAWS, AND (B) ARE SUBJECT TO THE TERMS AND
PROVISIONS OF (I) A SECURITIES exchange and PURCHASE AGREEMENT, DATED AS OF
AUGUST 14, 2001, BY AND AMONG FRESH AMERICA CORP. (THE "COMPANY") and the
purchasers named therein AND (II) A SHAREHOLDERS AGREEMENT, DATED AS OF AUGUST
14, 2001, BY AND AMONG THE COMPANY and the purchasers named therein (AS SUCH
AGREEMENTS MAY BE SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO
TIME, THE "AGREEMENTS"). COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE OFFICES
OF THE COMPANY.
29,519,444 Shares of common stock Warrant No. C-2
PPN: 35803R 6# 7
WARRANT TO PURCHASE 29,519,444 SHARES OF COMMON STOCK OF
FRESH AMERICA CORP.
This is to certify that, in consideration of the covenants and
agreements set forth herein and in the Agreements and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, JOHN HANCOCK LIFE INSURANCE COMPANY (the "Holder"), and its
successors and registered assigns, is entitled at any time after the Closing
Date (as defined in the Agreements) and prior to 12:00 midnight (Dallas, Texas
time) August 14, 2011 to exercise this Warrant to purchase 29,519,444 shares of
common stock of the Company, as the same shall be adjusted from time to time
pursuant to the provisions of the Agreements at a price per share as specified
in the Agreements and to exercise the other rights, powers and privileges
hereinafter provided, all on the terms and subject to the conditions specified
in this Warrant and in the Agreements.
This Warrant is issued under, and the rights represented hereby are
subject to the terms and provisions contained in, the Agreements, all terms and
provisions of which the registered holder of this Warrant, by acceptance of this
Warrant, assents. Reference is hereby made to the Agreements for a more complete
statement of the rights and limitations of rights of the registered holder of
this Warrant and the rights and duties of the Company under this Warrant. Copies
of the Agreements are on file at the office of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed this 5th day of September, 2001.
FRESH AMERICA CORP.
By:
--------------------------------------------
Name: Cheryl A. Taylor
Title: Chief Financial Officer
SUBSCRIPTION FORM
-----------------
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases ________ of the number of shares of common stock
of Fresh America Corp. purchasable with this Warrant, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to ____________________ whose address is
______________________________, and if such shares do not include all of the
shares issuable as provided in this Warrant, that a new Warrant of like tenor
and date for the balance of the shares issuable thereunder to be delivered to
the undersigned.
Dated: _____________ __, ____
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
Address:
--------------------------
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of common stock set forth below:
No. of Shares Name and Address of Assignee
------------- ----------------------------
and does hereby irrevocably constitute and appoint as attorney
______________________ to register such transfer on the books of
____________________________ maintained for that purpose, with full power of
substitution in the premises.
Dated: _______________ __, ____.
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
WARRANT
-------
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
--------------------------------------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF (A) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND
ALL APPLICABLE STATE SECURITIES LAWS, AND (B) ARE SUBJECT TO THE TERMS AND
PROVISIONS OF (I) A SECURITIES exchange and PURCHASE AGREEMENT, DATED AS OF
AUGUST 14, 2001, BY AND AMONG FRESH AMERICA CORP. (THE "COMPANY") AND THE
PURCHASERS NAMED THEREIN AND (II) A SHAREHOLDERS AGREEMENT, DATED AS OF AUGUST
14, 2001, BY AND AMONG THE COMPANY AND THE PURCHASERS NAMED THEREIN (AS SUCH
AGREEMENTS MAY BE SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO
TIME, THE "AGREEMENTS"). COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE OFFICES
OF THE COMPANY.
6,812,179 Shares of common stock Warrant No. C-3
PPN: 35803R 6# 7
WARRANT TO PURCHASE 6,812,179 SHARES OF COMMON STOCK OF
FRESH AMERICA CORP.
This is to certify that, in consideration of the covenants and
agreements set forth herein and in the Agreements and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (the "Holder"), and
its successors and registered assigns, is entitled at any time after the Closing
Date (as defined in the Agreements) and prior to 12:00 midnight (Dallas, Texas
time) August 14, 2011 to exercise this Warrant to purchase 6,812,179 shares of
common stock of the Company, as the same shall be adjusted from time to time
pursuant to the provisions of the Agreements at a price per share as specified
in the Agreements and to exercise the other rights, powers and privileges
hereinafter provided, all on the terms and subject to the conditions specified
in this Warrant and in the Agreements.
This Warrant is issued under, and the rights represented hereby are
subject to the terms and provisions contained in, the Agreements, all terms and
provisions of which the registered holder of this Warrant, by acceptance of this
Warrant, assents. Reference is hereby made to the Agreements for a more complete
statement of the rights and limitations of rights of the registered holder of
this Warrant and the rights and duties of the Company under this Warrant. Copies
of the Agreements are on file at the office of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed this 5th day of September, 2001.
FRESH AMERICA CORP.
By:
------------------------------------------
Name: Cheryl A. Taylor
Title: Chief Financial Officer
SUBSCRIPTION FORM
-----------------
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases ________ of the number of shares of common stock
of Fresh America Corp. purchasable with this Warrant, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to ____________________ whose address is
______________________________, and if such shares do not include all of the
shares issuable as provided in this Warrant, that a new Warrant of like tenor
and date for the balance of the shares issuable thereunder to be delivered to
the undersigned.
Dated: _____________ __, ____
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address:
--------------------------------
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of common stock set forth below:
No. of Shares Name and Address of Assignee
------------- ----------------------------
and does hereby irrevocably constitute and appoint as attorney
______________________ to register such transfer on the books of
____________________________ maintained for that purpose, with full power of
substitution in the premises.
Dated: _______________ __, ____.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
WARRANT
-------
SIGNATURE 1A (CAYMAN), LTD.
---------------------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF (A) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND
ALL APPLICABLE STATE SECURITIES LAWS, AND (B) ARE SUBJECT TO THE TERMS AND
PROVISIONS OF (I) A SECURITIES exchange and PURCHASE AGREEMENT, DATED AS OF
AUGUST 14, 2001, BY AND AMONG FRESH AMERICA CORP. (THE "COMPANY") AND THE
PURCHASERS NAMED THEREIN AND (II) A SHAREHOLDERS AGREEMENT, DATED AS OF AUGUST
14, 2001, BY AND AMONG THE COMPANY AND THE PURCHASERS NAMED THEREIN (AS SUCH
AGREEMENTS MAY BE SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO
TIME, THE "AGREEMENTS"). COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE OFFICES
OF THE COMPANY.
4,541,453 Shares of common stock Warrant No. C-4
PPN: 35803R 6# 7
WARRANT TO PURCHASE 4,541,453 SHARES OF COMMON STOCK OF
FRESH AMERICA CORP.
This is to certify that, in consideration of the covenants and
agreements set forth herein and in the Agreements and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, AUER & CO., as nominee for SIGNATURE 1A (CAYMAN), LTD. (the
"Holder"), and its successors and registered assigns, is entitled at any time
after the Closing Date (as defined in the Agreements) and prior to 12:00
midnight (Dallas, Texas time) August 14, 2011 to exercise this Warrant to
purchase 4,541,453 shares of common stock of the Company, as the same shall be
adjusted from time to time pursuant to the provisions of the Agreements at a
price per share as specified in the Agreements and to exercise the other rights,
powers and privileges hereinafter provided, all on the terms and subject to the
conditions specified in this Warrant and in the Agreements.
This Warrant is issued under, and the rights represented hereby are
subject to the terms and provisions contained in, the Agreements, all terms and
provisions of which the registered holder of this Warrant, by acceptance of this
Warrant, assents. Reference is hereby made to the Agreements for a more complete
statement of the rights and limitations of rights of the registered holder of
this Warrant and the rights and duties of the Company under this Warrant. Copies
of the Agreements are on file at the office of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed this 5th day of September, 2001.
FRESH AMERICA CORP.
By:
-----------------------------------
Name: Cheryl A. Taylor
Title: Chief Financial Officer
SUBSCRIPTION FORM
-----------------
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases ________ of the number of shares of common stock
of Fresh America Corp. purchasable with this Warrant, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to ____________________ whose address is
______________________________, and if such shares do not include all of the
shares issuable as provided in this Warrant, that a new Warrant of like tenor
and date for the balance of the shares issuable thereunder to be delivered to
the undersigned.
Dated: _____________ __, ____
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
Address:
--------------------------
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of common stock set forth below:
No. of Shares Name and Address of Assignee
------------- ----------------------------
and does hereby irrevocably constitute and appoint as attorney
______________________ to register such transfer on the books of
____________________________ maintained for that purpose, with full power of
substitution in the premises.
Dated: _______________ __, ____.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
WARRANT
-------
SIGNATURE 3 LIMITED
-------------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF (A) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND
ALL APPLICABLE STATE SECURITIES LAWS, AND (B) ARE SUBJECT TO THE TERMS AND
PROVISIONS OF (I) A SECURITIES exchange and PURCHASE AGREEMENT, DATED AS OF
AUGUST 14, 2001, BY AND AMONG FRESH AMERICA CORP. (THE "COMPANY") and the
purchasers named therein AND (II) A SHAREHOLDERS AGREEMENT, DATED AS OF AUGUST
14, 2001, BY AND AMONG THE COMPANY and the purchasers named therein (AS SUCH
AGREEMENTS MAY BE SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO
TIME, THE "AGREEMENTS"). COPIES OF THE AGREEMENTS ARE AVAILABLE AT THE OFFICES
OF THE COMPANY.
4,541,453 Shares of common stock Warrant No. C-5
PPN: 35803R 6# 7
WARRANT TO PURCHASE 4,541,453 SHARES OF COMMON STOCK OF
FRESH AMERICA CORP.
This is to certify that, in consideration of the covenants and
agreements set forth herein and in the Agreements and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, HARE & CO., as nominee for SIGNATURE 3 LIMITED (the "Holder"), and
its successors and registered assigns, is entitled at any time after the Closing
Date (as defined in the Agreements) and prior to 12:00 midnight (Dallas, Texas
time) August 14, 2011 to exercise this Warrant to purchase 4,541,453 shares of
common stock of the Company, as the same shall be adjusted from time to time
pursuant to the provisions of the Agreements at a price per share as specified
in the Agreements and to exercise the other rights, powers and privileges
hereinafter provided, all on the terms and subject to the conditions specified
in this Warrant and in the Agreements.
This Warrant is issued under, and the rights represented hereby are
subject to the terms and provisions contained in, the Agreements, all terms and
provisions of which the registered holder of this Warrant, by acceptance of this
Warrant, assents. Reference is hereby made to the Agreements for a more complete
statement of the rights and limitations of rights of the registered holder of
this Warrant and the rights and duties of the Company under this Warrant. Copies
of the Agreements are on file at the office of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed this 5th day of September, 2001.
FRESH AMERICA CORP.
By:
-----------------------------------
Name: Cheryl A. Taylor
Title: Chief Financial Officer
SUBSCRIPTION FORM
-----------------
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases ________ of the number of shares of common stock
of Fresh America Corp. purchasable with this Warrant, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to ____________________ whose address is
______________________________, and if such shares do not include all of the
shares issuable as provided in this Warrant, that a new Warrant of like tenor
and date for the balance of the shares issuable thereunder to be delivered to
the undersigned.
Dated: _____________ __, ____
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
Address:
--------------------
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of common stock set forth below:
No. of Shares Name and Address of Assignee
------------- ----------------------------
and does hereby irrevocably constitute and appoint as attorney
______________________ to register such transfer on the books of
____________________________ maintained for that purpose, with full power of
substitution in the premises.
Dated: _______________ __, ____.
By:
--------------------------
Name:
---------------------
Title:
--------------------
ATTACHMENT A
The designations, voting powers, preferences and rights, and the
qualifications, limitations and restrictions of the Series D Cumulative
Redeemable Preferred Stock, par value $1.00 per share, of the Corporation shall
be as follows:
1. DEFINITIONS
As used herein, the following terms have the following meanings:
Board of Directors -- means the board of directors of the Corporation.
Unless the context requires otherwise, the term "Board of Directors" includes
any and all committees of such Board of Directors.
Business Day -- means a day other than a Saturday, a Sunday or a legal
holiday in the State of Texas.
Common Stock -- means the common stock, par value $.01 per share, of
the Corporation.
Corporation-- means Fresh America Corp., a Texas corporation.
Hancock Director -- is defined in Section 2.4(a).
Hancock Entities -- has the meaning set forth in the Securities
Purchase Agreement.
Insolvency Event -- means and includes any of the following
occurrences:
(a) a receiver, liquidator, custodian or trustee of the
Corporation, or of all or any substantial part of the Property of
either, is appointed by court order and such order remains in effect
for more than thirty (30) Business Days, or an order for relief is
entered with respect to the Corporation, or the Corporation is
adjudicated a bankrupt or insolvent;
(b) all or any substantial part of the Property of the
Corporation is sequestered by court order and such order remains in
effect for more than thirty (30) Business Days;
(c) a petition is filed against the Corporation under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction, whether now
or hereafter in effect, and is not dismissed within thirty (30)
Business Days after such filing;
(d) the Corporation files a voluntary petition in bankruptcy
or seeks relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect, or consents to the filing of any petition against it under any
such law; or
1
(e) the Corporation makes an assignment for the benefit of its
creditors or admits in writing its inability, or fails, to pay its
debts generally as they become due or consents to the appointment of a
receiver, liquidator or trustee of the Corporation or of all or a
substantial part of its Property.
Junior Stock -- is defined in Section 2.1.
Liquidation Event -- means and includes:
(a) any Insolvency Event;
(b) any other voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation (pursuant
to Part Six or Part Seven of the Texas Business Corporation Act or
otherwise); or
(c) the sale, lease, transfer or other disposition of all or
substantially all of the Property of the Corporation; or any merger,
consolidation, amalgamation or share exchange of or involving the
Corporation in which the Corporation is not the surviving corporation;
in either case, as a result of which the Common Stock ceases to be
outstanding.
Liquidation Preference Notice -- is defined in Section 2.3(b).
Liquidation Preference Payments -- is defined in Section 2.3(a).
NTOF -- means North Texas Opportunity Fund LP, a Texas limited
partnership.
NTOF Directors -- is defined in Section 2.4(a).
Other Payment Date -- is defined in Section 2.2(b).
Person -- will be interpreted broadly to include any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, company, limited liability company, institution,
entity, party, or government (whether national, federal, state, county, city,
municipal, or otherwise, including, without limitation, any instrumentality,
division, agency, body, or department of any of the foregoing).
Preferred Stock -- means and includes all series or classes of
preferred stock provided for in the Articles of Incorporation or any certificate
of designations relating thereto, including the Series D Preferred Stock.
Property -- means any and all interests in any kind of property or
asset whatsoever, whether real, personal or mixed and whether tangible or
intangible.
2
Put Price -- is defined in Article I of the Securities Purchase
Agreement.
Qualified Private Financing -- means any private equity offering
(excluding any exercise of the Series D Warrants or the exercise of any stock
options) in which the Corporation receives at least Twenty Million Dollars
($20,000,000) in net cash proceeds.
Qualified Public Offering -- means any public equity offering
(excluding any exercise of the Series D Warrants or the exercise of any stock
options) in which the Corporation receives at least Twenty Million Dollars
($20,000,000) in net cash proceeds.
Redemption Notice -- is defined in Section 2.6(a).
Redemption Price -- means, with respect to any share of Series D
Preferred Stock, the sum of (a) One Hundred Dollars ($100.00), plus (b) any and
all accrued and unpaid dividends with respect to such share of Series D
Preferred Stock (whether or not declared and computed to the date payment
thereof is made available), plus (c) any and all accrued interest payable with
respect to any such accrued and unpaid dividends.
Requisite Shareholder Approval -- means the affirmative vote, in person
or by proxy, of the holders of sixty-six and two-thirds percent (66 2/3%) of the
outstanding shares of Common Stock in connection with matters contemplated by
the Securities Purchase Agreement.
Securities Purchase Agreement -- means the Securities Exchange and
Purchase Agreement, dated as of August 14, 2001, among the Corporation and the
Purchasers named therein, as amended from time to time.
Series D Accrued Dividends -- is defined in Section 2.2(c).
Series D Directors -- is defined in Section 2.4(a).
Series D Dividend Payment Date -- is defined in Section 2.2(a).
Series D Observer -- is defined in Section 2.4(a).
Series D Preferred Stock -- means the Series D Cumulative Redeemable
Preferred Stock, par value $1.00 per share, with a stated price of One Hundred
Dollars ($100) per share, authorized hereunder.
3
2. SERIES D CUMULATIVE REDEEMABLE PREFERRED STOCK
2.1 Ranking
The Series D Preferred Stock shall be senior to, and shall be entitled
to preference in connection with payment of dividends and payment upon the
occurrence of a Liquidation Event, to the Common Stock and to all other
Preferred Stock, whether now existing or hereinafter created. All Common Stock
and all Preferred Stock of the Corporation other than the Series D Preferred
Stock shall rank as "Junior Stock."
2.2 Dividends.
(a) Cumulative Dividend Payments. Subject to Section 2.2(f), all
holders of Series D Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors, on such Series D Preferred Stock, payable
in cash out of the Property of the Corporation legally available therefor, a
cumulative dividend at an annual rate of Eight Dollars ($8.00) per share,
payable on the last day of each calendar month, commencing September 30, 2001
(each, a "Series D Dividend Payment Date"); provided, however, that with respect
to the first Series D Dividend Payment Date to occur with respect to any shares
of Series D Preferred Stock, if the first date of issuance of such shares of
Series D Preferred Stock is not a Series D Dividend Payment Date, then the
holders of such shares of Series D Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation, as the
dividend payable upon such shares, payable in cash out of the Property of the
Corporation legally available therefor, a dividend in respect of each such share
of Series D Preferred Stock in the amount equal to the product of:
(i) (A) Eight Dollars ($8.00) per share; divided by (B)
twelve (12); multiplied by
(ii) the quotient of:
(A) the number of days from (and including) the first
date of issuance of such shares of Series D Preferred Stock
until (but excluding) such Series D Dividend Payment Date;
divided by
(B) thirty (30).
(b) Cumulative Payments on Other Dates. If the Board of Directors
declares a dividend in respect of the Series D Preferred Stock that is, pursuant
to the terms of this Section 2.2, payable on a date other than a Series D
Dividend Payment Date (each, an "Other Payment Date"), then the dividend in
respect of each share of Series D Preferred Stock for the period from the
immediately preceding Series D Dividend Payment Date to the Other Payment Date
shall be in the amount equal to the product of:
(i) (A) Eight Dollars ($8.00) per share; divided by (B)
twelve (12); multiplied by
4
(ii) the quotient of:
(A) the number of days from (and including) the
immediately preceding Series D Dividend Payment Date until
(but excluding) the Other Payment Date; divided by
(B) thirty (30);
and the amount of the dividend per share payable, when, as and if declared by
the Board of Directors, on the Series D Dividend Payment Date next succeeding
such Other Payment Date shall equal the difference of:
(1) the amount per share specified in Section
2.2(a) to be paid on such Series D Dividend Payment Date;
minus
(2) the amount of the dividend actually paid per
share on such Other Payment Date pursuant to Section 2.2(b).
(c) Dividends Cumulative. The dividend on each share of Series D
Preferred Stock shall accrue from day to day, whether or not earned or declared
and notwithstanding the insufficiency of legally available funds for the payment
thereof or the postponement of the payment thereof by the Corporation for any
reason, shall be cumulative from the date of issuance of such share and shall be
compounded monthly (based upon a rate equal to eight percent (8%) per annum and
assuming a year consisting of 360 days). Subject to the provisions of Section
2.2(h), any and all accrued and unpaid dividends shall cumulate and bear
interest until paid at a rate equal to the lesser of eighteen percent (18%) per
annum or the highest rate of interest permitted by applicable law and shall be
compounded monthly (based upon a rate equal to eighteen percent (18%) per annum
and assuming a year consisting of 360 days). Any and all accrued and unpaid
dividends, and any and all accrued and unpaid interest with respect thereto, are
collectively referred to as the "Series D Accrued Dividends".
(d) Restriction on Payment of Other Dividends. For so long as any
Series D Accrued Dividends have not been paid in full, or if funds for the
payment of the current dividend in respect of the Series D Preferred Stock shall
not have been set aside for the exclusive purpose of paying such then current
dividend, the Corporation shall not declare or pay any dividends on, or make any
distribution in respect of, or purchase or redeem (or make any payment into a
sinking fund for the purpose of purchasing or redeeming), any Junior Stock.
(e) No Right of Participation. The holders of shares of Series D
Preferred Stock shall not be entitled to receive any dividends or other
distributions except as provided herein.
(f) Accelerated Dividend Payment. Notwithstanding anything contained or
implied herein to the contrary, any and all Series D Accrued Dividends shall be
immediately due and payable upon the occurrence of any of the following events:
(i) the consummation of a Qualified Private Financing, (ii) the consummation of
a Qualified Public Offering or (iii) any Liquidation Event. Subject to the
5
provisions of Section 2.2(h), if, upon the occurrence of any of the events set
forth in this Section 2.2(f), the holders of the Series D Preferred Stock shall
not have received in cash the full amount of any and all Series D Accrued
Dividends, then such Series D Accrued Dividends shall cumulate and bear interest
until paid at a rate equal to the lesser of eighteen percent (18%) per annum or
the highest rate of interest permitted by applicable law and shall be compounded
monthly (based upon a rate equal to eighteen percent (18%) per annum and
assuming a year consisting of 360 days).
(g) Cumulative Dividend Payments Upon Failure to Receive Requisite
Shareholder Approval. Notwithstanding anything contained or implied herein to
the contrary, if, for any reason, the Corporation shall fail to receive the
Requisite Shareholder Approval on or before December 31, 2001, then, from and
after January 1, 2002, (i) all holders of Series D Preferred Stock shall be
entitled to receive, in lieu of the dividend set forth in Section 2.2(a) and
when, as and if declared by the Board of Directors, on such Series D Preferred
Stock, payable in cash out of the Property of the Corporation legally available
therefor, a cumulative dividend at an annual rate of Eighteen Dollars ($18.00)
per share, and all such dividends shall be cumulative from the date of issuance
of each such share and shall be compounded monthly (based upon a rate equal to
the lesser of eighteen percent (18%) per annum or the highest rate permitted by
applicable law and assuming a year consisting of 360 days) and (ii) the
references to "Eight Dollars ($8.00) per share" set forth in each of Sections
2.2(a)(i)(A) and 2.2(b)(i)(A) shall be automatically deemed to be "Eighteen
Dollars ($18.00) per share". Except as specifically provided in this Section
2.2(g), all other provisions and defined terms contained herein and generally
applicable to the receipt and payment of the Series D Accrued Dividends shall
apply to the receipt and payment of the dividends set forth in this Section
2.2(g) upon the failure of the Corporation to receive the Requisite Shareholder
Approval on or before December 31, 2001.
(h) Restrictions on Dividend Payments Contained in Senior Loan
Documents. Notwithstanding anything contained or implied herein to the contrary,
if the Corporation shall fail to pay, in cash, all or any portion of the
dividend set forth in Section 2.2(a) at any time there exists a restriction on
payment contained in any document or instrument evidencing or governing any
indebtedness of the Corporation that is now or hereafter senior in right of
payment, liquidation or other priority to the Series D Preferred Stock, then
such dividend or portion thereof not paid in cash shall cumulate as provided in
Section 2.2(c); provided, however, that, except as otherwise provided in Section
2.2(g), such accrued and unpaid dividends shall, in lieu of the interest rate
set forth in Section 2.2(c), bear interest until paid at a rate equal to the
lesser of twelve percent (12%) per annum (assuming a year consisting of 360
days) or highest rate of interest permitted by applicable law.
2.3 Liquidation Preference.
(a) Liquidation Preference Payments. In the event of a distribution of
the Property of the Corporation upon or in connection with a Liquidation Event,
the holders of the Series D Preferred Stock shall be entitled to be paid in cash
a liquidation price per share equal to the Redemption Price (collectively, the
"Liquidation Preference Payments"). All Liquidation Preference Payments shall be
paid in full before any Property or funds in respect of such Liquidation Event
shall be paid or distributed to the holders of any Junior Stock. If, upon the
occurrence of any Liquidation Event, the Property distributable among the
6
holders of the shares of the Series D Preferred Stock shall be insufficient to
permit the payment in full to all such holders of their respective Liquidation
Preference Payments, then the holders of shares of Series D Preferred Stock
shall share ratably in the distribution of Property of the Corporation in
accordance with the sum that would be payable in such distribution if all sums
payable were discharged in full. Upon payment in full of the Liquidation
Preference Payments, the remaining Property of the Corporation available for
distribution shall be distributed ratably among the holders of the Series D
Preferred Stock and the holders of Common Stock; provided, however, that if, for
any reason, the Corporation shall fail to receive the Requisite Shareholder
Approval on or before December 31, 2001, then, from and after January 1, 2002,
upon payment in full of the Liquidation Preference Payments, the remaining
Property of the Corporation available for distribution shall be distributed
among the holders of the Series D Preferred Stock and the holders of Common
Stock such that (i) the holders of the Series D Preferred Stock receive an
amount of Property equal to ninety percent (90%) of the fair market value (as
determined in accordance with the provisions of Section 2.3(c)) of the remaining
Property of the Corporation available for distribution, which amount of Property
shall then be distributed ratably among the holders of the Series D Preferred
Stock, and (ii) the holders of Common Stock receive an amount of Property equal
to ten percent (10%) of the fair market value (as determined in accordance with
the provisions of Section 2.3(c)) of the remaining Property of the Corporation
available for distribution, which amount of Property shall then be distributed
ratably among the holders of Common Stock.
(b) Notice. The Corporation shall deliver a written notice of any
Liquidation Event pursuant to which any Liquidation Preference Payment shall be
payable (each, a "Liquidation Preference Notice") to all holders of record of
Series D Preferred Stock. Each Liquidation Preference Notice shall (i) state the
amount of the Liquidation Preference Payments and the date upon, and place at,
which such Liquidation Preference Payments are to be paid or otherwise
delivered, (ii) be addressed to each holder of record of Series D Preferred
Stock at the address for such holder shown on the records of the Corporation and
(iii) be delivered by the Corporation to such holder via courier, via certified
or registered mail, return receipt requested, or via telecopier or facsimile,
receipt confirmed, in each case not less than fifteen (15) Business Days prior
to the payment date stated therein.
(c) Valuation of Non-Cash Consideration. If, in connection with any
Liquidation Event, the consideration received by the Corporation or its
shareholders is other than cash, then the value of such consideration will be
deemed to be the fair market value thereof as determined in good faith by the
Board of Directors. Any securities included within such consideration shall be
valued as follows:
(i) Securities not subject to investment letter or other similar
restrictions on free marketability;
7
(A) If traded on a recognized securities exchange or
The Nasdaq Stock Market, then the value shall be deemed to be
the average of the closing prices of such securities on such
exchange or market for the thirty (30) trading days
immediately preceding the date of determination;
(B) If actively traded over-the-counter, then the
value shall be deemed to be the average of the closing bid or
sale prices (whichever is applicable) of such securities for
the thirty (30) trading days immediately preceding the date of
determination; and
(C) If there is no active public market, then the
value shall be the fair market value thereof, as determined in
good faith by the Board of Directors.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other
than restrictions arising solely by virtue of a shareholder's status as
an affiliate or former affiliate) shall be to make an appropriate
discount from the fair market value determined as above in Section
2.3(c)(i) to reflect the approximate fair market value thereof, as
determined in good faith by the Board of Directors.
2.4 Board of Directors.
(a) Series D Observers and Directors. Each holder of Series D Preferred
Stock, at all times during which such holder owns any capital stock of the
Corporation, shall have the right to designate, by written notice, one (1)
Person to attend and to observe all meetings of the Board of Directors (each, a
"Series D Observer"). The Board of Directors shall consist of five (5) members.
The Corporation shall not, without the written consent or affirmative vote of
all holders of the outstanding shares of Series D Preferred Stock, given in
writing or by vote at a meeting, each consenting or voting (as the case may be)
separately as a series, increase the maximum number of directors constituting
the Board of Directors to a number in excess of five (5). The holders of the
Series D Preferred Stock, voting as a separate series, shall be entitled to
elect four (4) directors of the Corporation. The remaining director shall be
elected by a vote or written consent of the holders of the Common Stock, voting
as a separate class. Subject to the provisions of this Section 2.4, for so long
as NTOF owns any Series D Preferred Stock or any other capital stock of the
Corporation, NTOF shall have the right to designate three (3) members to serve
on the Board of Directors (the "NTOF Directors"). For so long as any Hancock
Entity owns any Series D Preferred Stock or any other capital stock of the
Corporation, the Hancock Entities shall have the right, upon written notice to
NTOF, to designate one (1) member to serve on the Board of Directors (the
"Hancock Director" and together with the NTOF Directors, the "Series D
Directors"); provided, however, that, at all times prior to the Hancock Entities
giving such written notice to NTOF, NTOF shall have the right to designate the
Hancock Director.
(b) Death, Resignation or Removal of Series D Director. Subject to
applicable law, no Series D Director designated pursuant to the provisions of
this Section 2.4 may be removed from the Board of Directors without the prior
written consent of the Person entitled to designate such Series D Director
pursuant to the terms hereof. If any Series D Director dies, resigns, is removed
or otherwise ceases to serve as a member of the Board of Directors, then the
8
Corporation shall give notice thereof to the Person entitled to designate such
candidate, and such Person shall promptly designate a successor and notify the
Board of Directors of its selection, and the Board of Directors shall act
promptly to fill the vacancy with such designee in accordance with the bylaws of
the Corporation and applicable law. The Board of Directors shall have no right
to fill any vacancy on the Board of Directors for which any Person has the right
to designate a candidate pursuant to the terms hereof unless such vacancy is
filled by the designee of the Person having the right to so designate such
director.
(c) Notice of Director Election. Within five (5) days after a record
date is set for any annual meeting for the election of directors or for the
mailing of any consent solicited for such purpose, the Secretary of the
Corporation shall notify each Person entitled to designate candidates pursuant
to the terms hereof of the upcoming election and anticipated date thereof and
shall request that each Person entitled to designate candidates take all
necessary action to designate its candidate(s). Each Person entitled to
designate candidates pursuant to the terms hereof shall notify the Secretary of
the Corporation at least ten (10) days before such election of such Person's
respective candidate(s). A failure by a Person entitled to designate candidates
pursuant to the terms hereof to provide such notification shall be deemed to be
a designation by such Person of the same candidates, if any, as were last
designated by such Person. Any designation pursuant to this Section 2.4(c) shall
be made in writing.
(d) Termination Upon Qualified Public Offering. All rights of the
holders of Series D Preferred Stock to designate and elect, as a separate
series, members of the Board of Directors pursuant to the provisions of this
Section 2.4 shall terminate upon the consummation of a Qualified Public
Offering.
2.5 Other Voting Rights.
(a) Approval Rights for Certain Actions. Unless the consent or approval
of a greater number of shares shall then be required by applicable law, the
affirmative vote of the holders of at least sixty-six and two-thirds percent (66
2/3%) of the outstanding shares of Series D Preferred Stock, voting separately
as a single class, shall be necessary to:
9
(i) Create or authorize the creation of any additional class
or series of shares of capital stock ranking senior or pari passu to
the Series D Preferred Stock as to dividends, redemption rights,
conversion rights and/or the distribution of assets upon the occurrence
of a Liquidation Event, or increase the authorized amount of any
additional class or series of shares of stock ranking senior or pari
passu to the Series D Preferred Stock as to dividends, redemption
rights, conversion rights and/or distribution of assets upon the
occurrence of a Liquidation Event, or create or authorize any
obligation or security convertible or exercisable into shares of any
class or series of stock ranking senior or pari passu to the Series D
Preferred Stock as to dividends, redemption rights, conversion rights
and/or the distribution of assets upon the occurrence of a Liquidation
Event, whether any such creation, authorization or increase shall be by
means of amendment to the Articles of Incorporation of the Corporation
or by merger, consolidation or otherwise;
(ii) increase the authorized number of shares of Preferred
Stock or increase the authorized number of shares of Series D Preferred
Stock;
(iii) except as expressly permitted by the Securities Purchase
Agreement, authorize, adopt or approve an amendment to the Articles of
Incorporation of the Corporation that would increase or decrease the
par value, or dividends payable in respect of the shares of Series D
Preferred Stock, or alter or change the powers, preferences or special
rights of the shares of Series D Preferred Stock or any other capital
stock of the Corporation;
(iv) (A) amend, alter or repeal the Articles of Incorporation
or the bylaws of the Corporation in a manner adverse to holders of the
Series D Preferred Stock or (B) otherwise alter or change the rights,
preferences or privileges of the shares of Series D Preferred Stock;
provided, however, that notwithstanding any other provisions herein,
the creation or authorization of any shares of Junior Stock shall not
require the approval of the holders of the Series D Preferred Stock;
(v) reclassify any shares of the Corporation's capital stock
into any other capital stock;
(vi) except as expressly permitted by the Securities Purchase
Agreement, effect any Liquidation Event;
(vii) Redeem or otherwise acquire any shares of Series D
Preferred Stock, except as expressly provided herein or in the
Securities Purchase Agreement or pursuant to a purchase offer made pro
rata to all holders of the shares of Series D Preferred Stock on the
basis of the aggregate number of outstanding shares of Series D
Preferred Stock then held by each such holder; or
(viii) except as otherwise provided herein or pursuant to the
terms of the Securities Purchase Agreement, issue, sell or otherwise
dispose of any capital stock of the Corporation or any capital stock of
any direct or indirect subsidiary of the Corporation.
10
(b) Special Voting Rights Upon Failure to Receive Requisite Shareholder
Approval. Notwithstanding anything contained or implied herein to the contrary,
if, for any reason, the Corporation shall fail to receive the Requisite
Shareholder Approval on or before December 31, 2001, then, from and after
January 1, 2002, the holders of Series D Preferred Stock shall be entitled (i)
except as otherwise provided by applicable law, to vote as a separate class on
all matters on which any shareholders of the Corporation are entitled to vote or
to consent, with each share of Series D Preferred Stock being entitled to one
(1) vote per share, and (ii) to vote together with the holders of Common Stock
on all matters on which any holder of Common Stock is entitled to vote or to
consent, with each share of Series D Preferred Stock being entitled to two
hundred fifty (250) votes per share.
(c) Voting Procedures.
(i) The right of holders of shares of Series D Preferred Stock
to take any action as provided in Section 2.4 or Section 2.5 may be
exercised, in person or by proxy or attorney-in-fact, at any annual
meeting of shareholders or at a special meeting of holders of shares of
Series D Preferred Stock held for such purpose as hereinafter provided
or at any adjournment thereof, or by the written consent, delivered to
the Secretary of the Corporation, of the holders of the minimum number
of shares required to take such action, which shall be a majority of
the outstanding shares of Series D Preferred Stock unless otherwise
required by law, pursuant to the terms hereof or pursuant to the terms
of the Securities Purchase Agreement.
(ii) So long as such right to vote continues (and unless such
right has been exercised by written consent of the minimum number of
shares required to take such action), the Chairman of the Board or the
President of the Corporation may call, and upon the written request of
holders of record of at least fifty percent (50%) of the outstanding
shares of Series D Preferred Stock, addressed to the Secretary of the
Corporation at the principal office of the Corporation, shall call, a
special meeting of the holders of shares entitled to vote as provided
herein. Such meeting shall be held within thirty (30) days after
delivery of such request to the Secretary, at the place and upon the
notice provided by law and in the bylaws of the Corporation for the
holding of meetings of shareholders.
(iii) At each meeting of shareholders at which the holders of
shares of Series D Preferred Stock shall have the right to vote
separately as a class (whether to elect directors of the Corporation or
otherwise), the presence in person or by proxy of the holders of record
of a majority of the total number of shares of Series D Preferred Stock
then outstanding and entitled to vote on the matter shall be necessary
and sufficient to constitute a quorum. At any such meeting or at any
adjournment thereof:
(A) the absence of a quorum of the holders of shares
of Series D Preferred Stock shall not prevent the election of
directors other than those to be elected by the holders of
shares of Series D Preferred Stock, and the absence of a
quorum of the holders of shares of any other class or series
of capital stock shall not prevent the election of directors
to be elected by the holders of shares of Series D Preferred
Stock, or the taking of any action as provided in this Section
2.5; and
11
(B) in the absence of a quorum of the holders of
shares of Series D Preferred Stock, a majority of the holders
of such shares present in person or by proxy shall have the
power to adjourn the meeting as to the actions to be taken by
the holders of shares of Series D Preferred Stock from time to
time and place to place without notice other than announcement
at the meeting until a quorum shall be present.
(iv) Except as otherwise provided in Section 2.5(b), in
connection with the taking of any action set forth in Section 2.4 or
Section 2.5(a) by the holders of shares of Series D Preferred Stock,
each such holder shall have one (1) vote for each share of such stock
standing in its name on the transfer books of the Corporation as of any
record date fixed for such purpose or if no such date be fixed, at the
close of business on the Business Day next preceding the day on which
notice is given, or if notice is waived, at the close of business on
the Business Day next preceding the day on which the meeting is held;
provided, however, that any shares of Series D Preferred Stock owned by
the Corporation or any affiliate of the Corporation shall not be deemed
to be outstanding for purposes of taking any action set forth in
Section 2.4 or Section 2.5(a).
(d) No Other Rights. Notwithstanding Section 2.29A(1) of the Texas
Business Corporation Act, except as otherwise provided in Section 2.4 and
Section 2.5 and as otherwise expressly required by the Texas Business
Corporation Act (including, without limitation, Section 4.03A thereof), no
holder of shares of the Series D Preferred Stock shall have the right to vote in
respect of any matter. Nothing in this Section 2.5(d) shall limit the right or
power of any holder of capital stock of the Corporation from entering into any
agreement or voting trust concerning the voting of shares of capital stock of
the Corporation held by such holder or from granting any proxy concerning any
voting rights to any other Person.
12
2.6 Redemption.
(a) Pursuant to Securities Purchase Agreement. On April 30, 2007, the
Corporation shall have the right and the obligation (subject to the provisions
hereof) to redeem all of the shares of the Series D Preferred Stock remaining
outstanding at a price per share equal to the Redemption Price. The Corporation
shall give each holder of record of shares of Series D Preferred Stock written
notice of such redemption (each, a "Redemption Notice") on or prior to the date
that is thirty (30) days before the date such redemption is required to be made.
Notwithstanding anything contained or implied herein to the contrary, each
holder of record of shares of Series D Preferred Stock shall have the right to
elect not to have the shares of Series D Preferred Stock owned by it redeemed
pursuant to the terms of the first sentence of this Section 2.6 if such holder
provides the Corporation with written notice of such election within five (5)
Business Days of its receipt of the applicable Redemption Notice. In addition to
the redemption rights herein set forth, the Corporation shall be required to
redeem and to repurchase shares of Series D Preferred Stock from the applicable
holder thereof upon the events, at the price and in accordance with the terms
and conditions set forth in Article V of the Securities Purchase Agreement.
(b) Continuance of Rights Pending Payment of Redemption Price. Upon
payment by the Corporation in full of the Redemption Price in respect of any
shares of Series D Preferred Stock redeemed pursuant to this Section 2.6, all
rights of the holder thereof in respect of such shares of Series D Preferred
Stock shall terminate. If the Corporation fails to pay the Redemption Price when
due with respect to any share or shares of Series D Preferred Stock, then all
rights of the holders of such shares shall continue until payment in full of the
Redemption Price therefor. Without limiting the generality of the foregoing,
dividends in respect of the Series D Preferred Stock shall continue to accrue
pending payment in full of the Redemption Price therefor.
(c) Legal Limitations. Notwithstanding anything contained in this
Section 2.6 to the contrary, the Corporation shall not be obligated to effect
any redemption or repurchase of Series D Preferred Stock to the extent that (but
only to the extent that) payment of the aggregate Redemption Price, at such
time, would violate applicable law; provided, however, that if any such
violation would not result from the redemption of any number of shares of Series
D Preferred Stock that is less than the total number of shares of Series D
Preferred Stock that the Corporation is obligated to redeem and to repurchase
hereunder, then, in addition to any other remedies set forth in Section 5.04 of
the Securities Purchase Agreement and at the option of the holders of the Series
D Preferred Stock, the Corporation shall redeem and repurchase the maximum
number or shares of Series D Preferred Stock it may so redeem and repurchase,
such number of shares of Series D Preferred Stock to be allocated ratably among
the holders thereof that are entitled to have their shares of Series D Preferred
Stock so redeemed and repurchased according to the number of shares of Series D
Preferred Stock so tendered or held, as applicable. To the extent that the
13
Corporation shall at any time fail, in reliance upon this Section 2.6(c), to
redeem and to repurchase any shares of Series D Preferred Stock pursuant to this
Section 2.6, the Corporation shall redeem and repurchase, on the first day of
each fiscal quarter of the Corporation thereafter, the maximum number of the
shares of Series D Preferred Stock that the Corporation previously failed to
redeem or to repurchase as it is then legally permitted to redeem and to
repurchase, such number of shares of Series D Preferred Stock to be allocated
ratably among the holders thereof that are entitled to have their shares of
Series D Preferred Stock so redeemed and repurchased according to the number of
shares so tendered or held, as applicable.
2.7 Limitation on Number of Shares.
The Corporation shall not issue any shares of Series D Preferred Stock
except for:
(a) the seventy-seven thousand (77,000) shares initially
issued;
(b) shares represented by certificates issued pursuant to
Section 2.8(a) upon the transfer or exchange of any other shares of
Series D Preferred Stock; and
(c) shares represented by certificates issued pursuant to
Section 2.8(b) in replacement of any lost, stolen, destroyed or
mutilated certificate for Series D Preferred Stock.
2.8 Miscellaneous.
(a) Registration of Transfer or Exchange. The Corporation shall keep at
its principal office a stock register for the registration of the Series D
Preferred Stock. Upon the surrender of any stock certificate evidencing shares
of Series D Preferred Stock at the principal office of the Corporation, the
Corporation shall, at the request of the holder of record of such certificate,
execute and deliver (at the Corporation's expense) a new stock certificate or
certificates in exchange therefor representing, in the aggregate, the number of
shares of Series D Preferred Stock represented by the surrendered stock
certificate. The Corporation shall cancel any such surrendered stock
certificate. Each such new stock certificate shall be registered in such name or
names and shall represent such number of shares of Series D Preferred Stock as
are requested by the holder of the surrendered stock certificate and shall be
substantially identical in form to the surrendered stock certificate. If any
holder of shares of Series D Preferred Stock to be so transferred shall direct
that any such new stock certificate or certificate be registered in a name or
names different from that of the holders of such shares of Series D Preferred
Stock, then, if required by the Corporation, such surrendered certificate shall
be accompanied by proper instruments of assignment.
(b) Replacement. Upon receipt by the Corporation of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any stock certificate evidencing shares of Series D Preferred
Stock and:
(i) in the case of loss, theft or destruction, upon receiving
an indemnity reasonably satisfactory to the Corporation (provided,
however, that if the holder of such stock certificate is an insurance
company, bank, pension fund, private equity fund or other institutional
investor, then its own agreement of indemnity shall be deemed to be
satisfactory); or
14
(ii) in the case of mutilation, upon surrender and cancellation
thereof;
the Corporation, at its own expense, shall execute and deliver, in lieu thereof,
a new stock certificate evidencing such shares of Series D Preferred Stock.
(c) Transfer Taxes. The issue of certificates for Series D Preferred
Stock pursuant to Section 2.8(a) or Section 2.8(b) shall be made without charge
to the shareholder for any tax in respect of the issue thereof. Notwithstanding
any other provision to the contrary, the Corporation shall not be required to
pay any tax that may be payable in respect of any transfer involved in the issue
and delivery of new certificates for Series D Preferred Stock in any name other
than that of the holder of any shares of Series D Preferred Stock surrendered,
and the Corporation shall not be required to issue or to deliver any such
certificate unless and until the Person or Persons requesting the issue thereof
shall have paid to the Corporation the amount of such tax or shall have
established to the satisfaction of the Corporation that such tax has been paid.
15
================================================================================
================================================================================
SHAREHOLDERS AGREEMENT
by and among
FRESH AMERICA CORP.,
NORTH TEXAS OPPORTUNITY FUND LP,
and
each of
JOHN HANCOCK LIFE INSURANCE COMPANY,
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY,
SIGNATURE 1A (CAYMAN), LTD.,
SIGNATURE 3 LIMITED
and
INVESTORS PARTNER LIFE INSURANCE COMPANY
August 14, 2001
================================================================================
TABLE OF CONTENTS
Article I Definitions.....................................................................................1
Article II Holders' Preemptive Rights.....................................................................10
2.01 Preemptive Right...............................................................................10
2.02 Notice to Holders..............................................................................10
2.03 Allocation of Unsubscribed New Securities......................................................11
2.04 Permitted Acquisitions.........................................................................11
Article III Right of First Offer; Co-Sale Rights...........................................................11
3.01 Right of First Offer...........................................................................11
3.02 Rights of Co-Sale..............................................................................13
3.03 Method of Electing Sale; Allocation of Sales...................................................13
3.04 Sales to Related Parties.......................................................................14
Article IV Pull-Along Rights..............................................................................14
Article V Directors......................................................................................15
5.01 Voting Agreement...............................................................................15
5.02 Board Observation and Membership...............................................................15
5.03 Board of Directors.............................................................................16
Article VI Personal Gain on Sale Transaction; Unlocking Proposal..........................................17
6.01 Personal Gain on Sale Transaction..............................................................17
6.02 Unlocking Proposal.............................................................................18
Article VII Representations and Warranties.................................................................18
7.01 Representations and Warranties of the Company..................................................18
7.02 Representations and Warranties of the Purchasers...............................................18
Article VIII Covenants......................................................................................18
Article IX Miscellaneous..................................................................................19
9.01 Indemnification................................................................................19
9.02 Equitable Relief...............................................................................19
9.03 Integration and Amendments.....................................................................19
9.04 Headings.......................................................................................20
9.05 Severability...................................................................................20
9.06 Notices........................................................................................20
9.07 Successors.....................................................................................22
9.08 Remedies.......................................................................................22
9.09 Survival.......................................................................................22
9.10 Fees...........................................................................................22
9.11 Counterparts...................................................................................22
9.12 Other Business.................................................................................22
9.13 Choice of Law..................................................................................22
9.14 Nominees for Beneficial Owners.................................................................23
9.15 Fiduciary Duties...............................................................................23
9.16 Duties Among Holders...........................................................................23
9.17 Confidentiality................................................................................23
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (as from time to time amended, modified and
restated in accordance with the terms hereof, this "Agreement") is made as of
August 14, 2001, to be effective for all purposes as of the Closing Date (as
hereinafter defined), by and among fresh america corp., a Texas corporation (the
"Company"), north texas opportunity fund lp, a Texas limited partnership
("NTOF"), and each of JOHN HANCOCK LIFE INSURANCE COMPANY ("JH Life"), JOHN
HANCOCK VARIABLE LIFE INSURANCE COMPANY ("JH Variable"), SIGNATURE 1A (CAYMAN),
LTD. ("Cayman"), SIGNATURE 3 LIMITED ("Signature 3") and INVESTORS PARTNER LIFE
INSURANCE COMPANY ("Investors"). JH Life, JH Variable, Cayman, Signature 3 and
Investors are at times herein referred to individually as a "Hancock Entity" and
collectively as the "Hancock Entities", and NTOF and the Hancock Entities are at
times herein referred to individually as a "Purchaser" and collectively as the
"Purchasers".
W I T N E S S E T H:
WHEREAS, the Company and the Purchasers have entered into a Securities
Exchange and Purchase Agreement (as amended, modified or restated from time to
time, the "Purchase Agreement") dated of even date herewith and pursuant to
which the Company has issued (i) to NTOF fifty thousand (50,000) shares of
Preferred Stock (as hereinafter defined) and one or more Warrants (as
hereinafter defined) to purchase, subject to adjustment as provided in the
Purchase Agreement, an aggregate of 84,100,980 shares of Common Stock (as
hereinafter defined) and (ii) to the Hancock Entities an aggregate of
twenty-seven thousand (27,000) shares of Preferred Stock and Warrants to
purchase, subject to adjustment as provided in the Purchase Agreement, an
aggregate of 45,414,529 shares of Common Stock; and
WHEREAS, the Purchasers are willing to enter into and to consummate the
transactions contemplated by the Purchase Agreement only if, among other things,
the Company and the Purchasers enter into, and agree to perform under, this
Agreement.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
representations, warranties and covenants contained in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchasers, intending to be legally bound,
hereby agree as follows:
Article I
Definitions
As used in this Agreement, the following terms have the meanings
indicated:
Acceptable Pull-Along Sale Terms. With respect to any Pull-Along Sale,
means the following terms:
1
(a) the transaction giving rise to such Pull-Along
Sale shall continue to meet the provisions of sales pursuant
to Article III;
(b) the sale by the Hancock Entities shall be at the
same price, on the same terms and conditions (subject to
paragraph (e) below) and for the same type of consideration
(subject to paragraph (c) below) as is to be received in the
proposed sale by the Initiating Shareholders;
(c) at least ninety percent (90%) of the
consideration to be paid to the Hancock Entities in connection
with such sale consists solely of cash or Freely Tradeable
Securities;
(d) if any consideration consists of Freely Tradeable
Securities, then each Hancock Entity shall have received, at
such holder's option, an opinion, addressed to such Hancock
Entity or stating that the Hancock Entities are entitled to
rely thereon, of a firm of nationally recognized securities
counsel reasonably acceptable to the Hancock Entities to the
effect that each Hancock Entity may immediately resell any and
all such Freely Tradeable Securities pursuant to a valid
exemption under the Securities Act; and
(e) (i) any agreement to be entered into by the
Hancock Entities in connection with such sale shall contain
only those provisions that are customarily found in agreements
of the type typically entered into in transactions of such
type, (ii) such agreement shall provide that any liability
under such agreement for indemnification or similar obligation
thereunder (including indemnifications for breach of
representations or warranties, other than representations and
warranties by the Hancock Entities with respect to
authorization to sell, and title to, the Registrable
Securities being sold by the Hancock Entities) shall be on a
several basis limited to each Holder's percentage interest on
a fully diluted basis of all Registrable Securities included
in such transaction and (iii) such agreement shall provide
that each Hancock Entity's maximum liability under any such
agreement shall in no event exceed the amount equal to the
cash proceeds of such sale actually received by such Hancock
Entity in connection with such sale.
Affiliate. With respect to any Person, (a) a Person that, directly or
indirectly or through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person; (b) any
Person of which such Person or such Person's spouse is an officer,
director, security holder, partner, or, in the case of a trust, the
beneficiary or trustee, and (c) any Person that is an officer,
director, security holder, partner, or, in the case of a trust, the
beneficiary or trustee of such Person. The term "control" as used with
respect to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.
Agreement. This term is defined in the preamble to this Agreement.
---------
2
Amended and Restated Articles. This term is defined in Article I of the
Purchase Agreement.
Appraised Value. The value determined in accordance with the following
procedures. For a period of thirty (30) days after the date of a
Valuation Event (the "Negotiation Period"), each party to this
Agreement agrees to negotiate in good faith to reach agreement upon the
Appraised Value of the securities or other property at issue, as of the
date of the Valuation Event, which Appraised Value will be the fair
market value of such securities or property, without premium for
control or discount for minority interests, illiquidity or restrictions
on transfer. If the parties are unable to agree upon the Appraised
Value of such securities or other property by the end of the
Negotiation Period, then the Appraised Value of such securities or
property will be determined for purposes of this Agreement by a
recognized appraisal or investment banking firm mutually agreeable to a
majority of the Holders taking part in the transaction the subject of
such valuation and the Company (the "Appraiser"). If such Holders and
the Company cannot agree on an Appraiser within fifteen (15) days after
the end of the Negotiation Period, then the Company, on the one hand,
and such Holders, on the other hand, shall each select an Appraiser
within twenty-one (21) days after the end of the Negotiation Period
and, within twenty-five (25) days after the end of the Negotiation
Period, those two Appraisers shall select an independent Appraiser to
determine the fair market value of such securities or property, without
premium for control or discount for minority interests, illiquidity or
restrictions on transfer. Such independent Appraiser shall be directed
to determine the fair market value of such securities or property as
soon as practicable, but in no event later than thirty (30) days from
the date of its selection. The determination by an Appraiser of the
fair market value will be conclusive and binding on all parties to this
Agreement. The Appraised Value of each share of Common Stock at a time
when (a) the Company is not a reporting company under the Exchange Act
and (b) the Common Stock is not traded in or on an organized securities
market or exchange, will, in all cases, be calculated by determining
the Appraised Value of the Company taken as a whole and by dividing
that value by the sum of (x) the number of shares of Common Stock then
outstanding plus (y) the number of shares of Common Stock Equivalents,
without premium for control or discount for minority interests,
illiquidity or restrictions on transfer. The costs of the Appraiser
will be borne by the Company. In no event will the Appraised Value of
the Common Stock or Other Securities be less than the per share
consideration received or receivable with respect to the Common Stock
or securities or property of the same class as the Other Securities, as
the case may be, in connection with a pending transaction involving a
sale, merger, recapitalization, reorganization or consolidation of, or
share exchange involving, the Company, a dissolution of the Company, a
sale or transfer of all or a majority of its assets or revenue or
income generating capacity, or any similar transaction. The prevailing
market prices for any security or property will not be dispositive of
the Appraised Value thereof.
Appraiser. This term is defined in the definition of Appraised Value.
---------
3
Average Market Value. The average Closing Price for the security in
question for the thirty (30) trading days immediately preceding the
date of determination.
Board of Directors. The board of directors of the Company. Unless this
Agreement expressly states otherwise, the term "Board of Directors"
includes any and all committees of such Board of Directors.
Business Day. Each day of the week except Saturdays, Sundays and days
on which banking institutions are authorized by law to close in the
State of Texas.
Buyer. This term is defined in Section 3.03(a)(ii).
----- -------------------
Capital Stock. As to any Person, its common stock and any other capital
stock of such Person authorized from time to time, and any other
shares, options, interests, participations or other equivalents
(however designated) of or in such Person, whether voting or nonvoting,
including, without limitation, common stock, options, warrants,
preferred stock, phantom stock, stock appreciation rights, preferred
stock, convertible notes or debentures, stock purchase rights and all
agreements, instruments, documents, and securities convertible,
exercisable or exchangeable, in whole or in part, into any one or more
of the foregoing.
Cayman. This term is defined in the preamble to this Agreement.
------
Certificate of Designation. This term is defined in Article I of the
Purchase Agreement.
Change in Control. The occurrence of either of the following: (a) the
Holders shall cease to have the ability to elect, directly, a majority
of the members of the Board of Directors; or (b) the Holders shall
cease to own and to control, directly or indirectly, at least
seventy-five percent (75%) of the issued and outstanding shares of
Capital Stock of the Company (in either case, other than (i) as a
result of a transaction approved by the Holders or (ii) solely as a
result of the voluntary sale by a Holder of all or any part of its
Capital Stock; provided, however, that upon the consummation of any
such sale, the percentage of Capital Stock of the Company set forth in
clause (b) above shall be automatically reduced by the aggregate
percentage of Capital Stock of the Company so transferred).
Closing Date. This term is defined in Article I of the Purchase
Agreement.
Closing Price.
-------------
(a) If the primary market for the security in question is a
national securities exchange registered under the Exchange Act or other
market or quotation system in which last sale transactions are reported
on a contemporaneous basis, then the last reported sales price, regular
way, of such security for such day, or, if there has not been a sale on
such trading day, then the highest closing or last bid quotation
therefor on such trading day (excluding, in any case, any price that is
not the result of bona fide arm's length transaction); or
4
(b) If the primary market for such security is not an exchange
or quotation system in which last sale transactions are
contemporaneously reported, then the highest closing or last bona fide
bid quotation by disinterested Persons in the over-the-counter market
on such trading day as reported by the National Association of
Securities Dealers or such other generally accepted source of publicly
reported bid quotations as the Holders designate.
Common Stock. The common stock, par value $.01 per share, of the
Company.
Common Stock Equivalent. Any option, warrant, right or other security
exercisable into, exchangeable for, or convertible into Common Stock.
Company. Fresh America Corp., a Texas corporation, and its successors
or assigns. Unless the context requires otherwise, the term "Company"
includes any Subsidiary of the Company.
Co-Sell Shares. This term is defined in Section 3.03(c).
-------------- ---------------
Co-Sellers. This term is defined in Section 3.03(c).
---------- ---------------
Election Notice. This term is defined in Section 3.03(b).
--------------- ---------------
Excess Compensation. Any cash, securities or other remuneration payable
during any period subsequent to the closing of a Sale Transaction,
including cash, securities or other remuneration related to future
performance or payable subsequent to the closing of a Sale Transaction,
to (a) any officers, directors or employees of the Company or any
Affiliate thereof (other than reasonable compensation paid in the
ordinary course of business to such officer, director or employee in
his/her capacity as an officer, director or employee of the Company or
any Affiliate thereof) or (b) any Person (other than the Purchasers)
who owns, directly or indirectly, five percent (5%) or more of the
Capital Stock of the Company at the time of the closing of the Sale
Transaction. To the extent such cash, securities or other remuneration
is payable subsequent to the closing of a Sale Transaction, the amount
of Excess Compensation will be an amount equal to the present value of
such excess cash, securities or other remuneration, discounted to the
time of the closing of the Sale Transaction at the then prevailing
prime rate of interest as set forth in the "Money Rates" or similar
listing in The Wall Street Journal. To the extent such cash, securities
or other remuneration payable subsequent to the closing of the Sale
Transaction is unliquidated or contingent, the amount of such cash,
securities or other remuneration, for purposes of computing Excess
Compensation, will be equal to the maximum amount that may be payable
at such future time. Excess Compensation shall not include that portion
of any equity based compensation resulting from an increase in the
value of the equity underlying such compensation that occurs after the
closing of a Sale Transaction.
5
Exchange Act. The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Fair Market Value.
-----------------
(a) As to securities regularly traded in the organized
securities markets, the Average Market Value; and
(b) as to all securities not regularly traded in the
securities markets and other property, the fair market value of such
securities or property as determined in good faith by the Board of
Directors at the time it authorizes the transaction (a "Valuation
Event") requiring a determination of Fair Market Value under this
Agreement; provided, however, that, at the election of the Holders, the
Fair Market Value of such securities and other property will be the
Appraised Value.
Freely Tradeable Securities, Securities:
---------------------------------------
(a) which are of a class:
(i) of Securities issued or fully guaranteed
by the United States of America or any agency thereof
and entitled to the full faith and credit of the
United States of America, for which price quotations
are routinely quoted and for which, in the opinion of
the Hancock Entities, there is a ready liquid market;
or
(ii) both registered pursuant to either
section 12(b) or section 12(g) of the Exchange Act
and either listed on a national securities exchange
or on the NASDAQ National Market; and
(b) which may be resold immediately in the public
markets by each and every holder of Registrable Securities
without requirement of further registration under the
Securities Act.
GAAP. Generally accepted accounting principles, applied on a consistent
basis, as set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in
statements of the Financial Accounting Standards Board and/or their
respective successors and that are applicable in the circumstances as
of the date in question. Accounting principles are applied on a
"consistent basis" when the accounting principles observed in a current
period are comparable in all material respects to those accounting
principles applied in a preceding period.
Hancock Director. This term is defined in Section 5.02.
---------------- ------------
6
Hancock Entities. This term is defined in the preamble to this
Agreement and includes any successors or assigns of each such Hancock
Entity.
Holders. The Purchasers and all other Persons holding Registrable
Securities (other than the Company or any Affiliate of the Company).
Unless otherwise provided in this Agreement, in each instance that the
Holders are required to request or consent in concert to an action, the
Holders will be deemed to have requested or consented to such action if
the Holders of a majority-in-interest of the Registrable Securities so
request or consent.
Holder Observer. This term is defined in Section 5.02.
--------------- ------------
Holder Representative. This term is defined in Section 5.02.
--------------------- ------------
Independent Director. This term is defined in Section 5.02.
-------------------- ------------
Indemnified Party. This term is defined in Section 9.01.
----------------- ------------
Initiating Shareholder. This term is defined in Article IV.
---------------------- ----------
Investors. This term is defined in the preamble to this Agreement.
---------
JH Life. This term is defined in the preamble to this Agreement.
JH Variable. This term is defined in the preamble to this Agreement.
Negotiation Period. This term is defined in the definition of Appraised
Value.
New Securities. Any Capital Stock of the Company other than (a) the
Shares and Other Securities, (b) Capital Stock issued in a Qualified
Public Offering and (c) Permitted Stock.
Non-Selling Shareholders. Any Holders that are not Initiating
Shareholders for the purposes of Article IV.
Notice of Acceptance. This term is defined in Section 3.01(c).
-------------------- ---------------
Notice of Intent. This term is defined in Section 3.01(a).
---------------- ---------------
Notice of Sale. This term is defined in Section 3.03(a).
-------------- ---------------
NTOF. This term is defined in the preamble to this Agreement and shall
include any successor or assign of NTOF.
NTOF Directors. This term is defined in Section 5.02.
--------------
7
Offer Notice. This term is defined in Section 3.01(b).
------------ ---------------
Offer Price. This term is defined in Section 3.01(b).
----------- ---------------
Offered Securities. This term is defined in Section 3.01(a).
------------------ ---------------
Other Parties. This term is defined in Section 3.01(a).
------------- ---------------
Other Securities. Any stock, other securities, property or rights that
any Holder becomes entitled to receive as a result of owning any of the
Shares.
Permitted Acquisition. This term is defined in Section 2.04.
--------------------- ------------
Permitted Stock. This term is defined in Article I of the Purchase
Agreement.
Person. This term will be interpreted broadly to include any
individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, company,
institution, entity, party or government (whether national, federal,
state, county, city, municipal or otherwise), including, without
limitation, any instrumentality, division, agency, body or department
of any of the foregoing.
Preemptive Rights Notice. This term is defined in Section 2.02.
------------------------ ------------
Preferred Stock. The Series D Cumulative Redeemable Preferred Stock,
$1.00 par value per share, issued to the Purchasers pursuant to the
terms of the Purchase Agreement.
Pull-Along Sale. This term is defined in Article IV.
--------------- ----------
Pull-Along Sale Date. This term is defined in Article IV.
-------------------- ----------
Pull-Along Sale Notice. This term is defined in Article IV.
---------------------- ----------
Purchase Agreement. This term is defined in the recitals to this
Agreement.
Purchaser and Purchasers. These terms are defined in the preamble to
this Agreement.
Qualified Public Offering. A firm underwritten public offering of the
Company's Common Stock under the Securities Act completed by the
Company and resulting in gross cash proceeds (before underwriting
discounts and commissions) of at least twenty million dollars
($20,000,000).
"Register," "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance
with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
8
Registrable Securities. This term is defined in Article I of the
Purchase Agreement.
Related Party. With respect to any Holder, any partnership, corporation
or limited liability company all of the interests or equity of which
are at all times held by such Holder and that agrees in writing to be
bound by the terms of this Agreement.
Sale Transaction. Any transaction pursuant to which (a) the Company
would sell or dispose (in one or a series of related sales or
dispositions) all or substantially all of its assets (other than
inventory in the ordinary course of business), including any sale or
disposition of the equity interests or assets of any Subsidiaries of
the Company, or (b) the Company, or the holders of the Capital Stock of
the Company, would sell, transfer, issue, assign, pledge or otherwise
dispose of or convey shares of Capital Stock of the Company, or the
Company would engage in any merger, consolidation, combination or
similar transaction, in one or a series of related transactions, such
that the beneficial owners of the shares of Capital Stock of the
Company immediately prior to the transaction or transactions will,
immediately after such transaction or transactions, beneficially own
less than a majority of the shares of Capital Stock of the Company, if
the Company is the surviving or resulting Person in such transaction or
transactions, or less than a majority of the outstanding Capital Stock
of the surviving or resulting Person, if the Company is not the
surviving or resulting Person in such transaction or transactions, or
(c) any transaction or series of related transactions that results in
any Change in Control.
Securities Act. The Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
Selling Shareholder. This term is defined in Section 3.03.
------------------- ------------
Shares. (a) The Preferred Stock, (b) any shares of Common Stock or
Other Securities issued or issuable to the Holders upon exercise of the
Warrants, (c) all securities issued upon the subdivision, combination
or reclassification, or in respect of, or in substitution for, such
Preferred Stock or such shares of Common Stock or Other Securities and
(d) any other shares of Capital Stock owned from time to time by a
Holder that have not been previously sold to the public.
Signature 3. This term is defined in the preamble to this Agreement.
Subsidiary. Each Person of which or in which the Company or its
Subsidiaries own directly or indirectly fifty-one percent (51%) or more
of (a) the combined voting power of all classes of stock having general
voting power under ordinary circumstances to elect a majority of the
board of directors or equivalent body of such Person, if it is a
corporation or similar person, (b) the capital interest or profits
interest of such Person, if it is a partnership, joint venture or
similar entity, or (c) the beneficial interest of such Person, if it is
a trust, association or other unincorporated organization.
9
TBCA. The Texas Business Corporation Law, as the same may be amended
from time to time.
Third Party. A Person not a Holder or an Affiliate of a Holder.
-----------
Transfer. This term is defined in Section 3.01(a).
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Transfer Closing. This term is defined in Section 3.01(c).
---------------- ---------------
Transferor. This term is defined in Section 3.01(a).
---------- ---------------
Unlocking Proposal. Any bona fide proposal made to the Company by a
Third Party pursuant to which a Sale Transaction would occur.
Unlocking Put. This term is defined in Section 6.02.
------------- ------------
Valuation Event. This term is defined in the definition of Fair Market
Value.
Warrants. This term is defined in Article I of the Purchase Agreement.
--------
Article II
Holders' Preemptive Rights
2.01 Preemptive Right. The Company will not issue or sell any New
Securities without first complying with this Article II; provided, however, that
all rights granted to Holders pursuant to the provisions of this Article II
shall expire upon the consummation of a Qualified Public Offering. The Company
hereby grants to each Holder the preemptive right to purchase, pro rata, all or
any part of the New Securities that the Company may, from time to time, propose
to sell or to issue. If New Securities are offered or sold as part of a unit
with other New Securities, then the preemptive right granted by this Article II
will apply to such units and not to the individual New Securities composing such
units. Each Holder's pro rata share for purposes of Article II is the ratio that
the total number of Shares of the Company held by such Holder immediately prior
to the issuance of the New Securities, bears to the sum of (a) the total number
of shares of Common Stock of the Company then outstanding, plus (b) the total
number of shares of Preferred Stock of the Company then outstanding, plus (c)
the total number of shares of Common Stock of the Company issuable upon exercise
or conversion of all Common Stock Equivalents then outstanding.
2.02 Notice to Holders. If the Company proposes to issue or to sell New
Securities, then it will give each Holder written notice of its intention (each,
a "Preemptive Rights Notice"), which Preemptive Rights Notice shall describe the
type of New Securities and the price and terms upon which the Company proposes
to issue or to sell the New Securities. Each Holder will have twenty (20) days
from the date of receipt of any such Preemptive Rights Notice (or, if
applicable, twenty (20) days from the date of receipt of such other information
as such Holder may reasonably request to facilitate its investment decision) to
agree to purchase up to its respective pro rata share of the New Securities for
the price (valued at Fair Market Value for any noncash consideration) and upon
the terms specified in the applicable Preemptive Rights Notice by giving written
notice to the Company stating the quantity of New Securities agreed to be
purchased.
10
2.03 Allocation of Unsubscribed New Securities. If any Holder fails to
exercise such preemptive right within such twenty (20) day period, then the
other Holders, if any, will have an additional five (5) day period to purchase
such Holder's portion not so agreed to be purchased in the same proportion in
which such other Holders were entitled to purchase the New Securities (excluding
for such purposes such non-purchasing Holder). Thereafter, the Company will have
ninety (90) days to sell the New Securities not elected to be purchased by the
Holders at the same price and upon the same terms specified in the applicable
Preemptive Rights Notice. If the Company has not sold the New Securities within
such ninety (90) day period, then the Company will not issue or sell any New
Securities without first offering such securities in the manner provided in this
Article II.
2.04 Permitted Acquisitions. Notwithstanding any other provision of
this Agreement to the contrary, the provisions of this Article II shall not
apply to any issuance or sale of New Securities by the Company if such New
Securities are paid as non-cash consideration for (a) the merger of any Person
with and into the Company, (b) the acquisition by the Company of all of the
Capital Stock of any Person or (c) the sale of all or substantially all of the
assets of any Person to the Company, in each case provided such transaction is
approved by the Board of Directors and by all Holders (each such issuance or
sale, a "Permitted Acquisition").
Article III
Right of First Offer; Co-Sale Rights
3.01 Right of First Offer.
--------------------
(a) If any Purchaser desires to sell, convey or transfer (a "Transfer";
and any such Purchaser desiring to so sell, convey or transfer being a
"Transferor") any Capital Stock of the Company or any portion thereof to any
Person other than an Affiliate of the Transferor, the Transferor shall give
written notice (a "Notice of Intent") to the other Purchasers (such entities
being the "Other Parties") (i) stating that the Transferor desires to make such
Transfer, and (ii) setting forth the amount of the Capital Stock of the Company
proposed to be transferred (any such Capital Stock proposed to be so transferred
being the "Offered Securities").
(b) Each of the Other Parties may, within fifteen (15) days of receipt
of the Notice of Intent, deliver or cause to be delivered a written notice (the
"Offer Notice") to the Transferor stating (i) that it offers to purchase the
Offered Securities and the cash price that it proposes to pay for such Offered
Securities (the "Offer Price"), and (ii) that such offer is irrevocable.
(c) The irrevocable offer to purchase the Offered Securities contained
in any Offer Notice will remain open for a period of fifteen (15) days from
delivery to the Transferor of such Offer Notice. Within such fifteen (15) day
period, the Transferor may elect to accept such offer (in whole or in part) by
delivering to such Other Party written notice of its irrevocable election to
accept such offer (the "Notice of Acceptance"). If Transferor accepts such
offer, (i) such Other Party shall deliver to Transferor, within thirty (30) days
of receipt of the Notice of Acceptance, a written notice identifying the source
11
of financing for such purchase by such Other Party, and (ii) the closing of the
purchase and sale contemplated by the Notice of Acceptance shall occur on or
before the forty-fifth (45th) Business Day following delivery of the Notice of
Acceptance or on such date and at such time and place as mutually agreed by such
Other Party and Transferor (the "Transfer Closing"). At the Transfer Closing,
such Other Party will deliver to Transferor the cash purchase price of such
Offered Securities, against delivery by Transferor of the Offered Securities
being so purchased together with reasonably appropriate transfer documentation
and representations related thereto.
(d) If Transferor does not deliver a Notice of Acceptance to the
Company within the fifteen (15) day period specified in Section 3.01(c) above,
such Other Party's offer to Transferor will be deemed to have been rejected and
Transferor will, subject to Sections 3.02 and 3.03 below, be free to Transfer
(or enter into a written agreement to Transfer) such Offered Securities to the
Company or one or more third parties within one-hundred twenty (120) days of the
expiration of such fifteen (15) day period on terms acceptable to Transferor.
(e) If such Other Party fails to deliver an Offer Notice within the
fifteen (15) day period specified in Section 3.01(b) above, then Transferor may
(subject to Sections 3.02 and 3.03 below), within a period of one hundred twenty
(120) days following the expiration of such fifteen (15) day period, Transfer
(or enter into a written agreement to Transfer) all Offered Securities to one or
more third parties, on terms acceptable to Transferor.
(f) If Transferor shall not have Transferred or entered into a written
agreement to Transfer the Offered Securities to one or more third parties prior
to the expiration of the one hundred twenty (120) day period specified in
Section 3.01(d) or (e) above, as applicable, the right of first offer under this
Section 3.01 shall again apply in connection with any subsequent Transfer by
such Purchaser.
(g) If Transferor delivers a timely Notice of Acceptance in compliance
Section 3.01(c) above and the applicable Other Party fails to purchase the
Offered Securities by the close of business on the date set for the Transfer
Closing, the right of first offer under this Section 3.01 shall not apply to any
subsequent Transfer by such Purchaser of Capital Stock of the Company (or any
portion thereof that is the subject of such Notice of Acceptance).
(h) Each Other Party shall keep confidential the terms of any proposed
Transfer contained in any Notice of Intent or Offer Notice, except as otherwise
required by law or as necessary to finance the purchase of the Offered
Securities subject to such proposed Transfer.
(i) All rights of any Other Party pursuant to this Section 3.01 shall
survive the exercise of any Warrant.
12
(j) None of the provisions of this Section 3.01 will apply to any sale
by a Holder of shares of Capital Stock of the Company in a Qualified Public
Offering, so long as all Holders have had an opportunity to participate in such
offering in accordance with the registration rights granted by the Purchase
Agreement.
3.02 Rights of Co-Sale. If any Holder intends to sell or to transfer,
directly or indirectly, any shares of any class of Capital Stock of the Company
held by it to any Person, then each other Holder will have the right to
participate in such sale or transfer on the terms set forth in Section 3.03;
provided, however, that the provisions of Section 3.03 will not apply (i) to any
sale by any Holder of shares of Capital Stock of the Company in a Qualified
Public Offering, so long as all Holders have had an opportunity to participate
in such offering in accordance with the registration rights granted by the
Purchase Agreement, or (ii) to any sale or other transfer by any of the Hancock
Entities (as Selling Shareholders) occurring after the date that is three (3)
years from the date hereof.
3.03 Method of Electing Sale; Allocation of Sales. No sale or transfer
by any Holder of any shares of Capital Stock of the Company will be valid unless
the transferee of such Capital Stock first agrees in writing to be bound by the
same terms and conditions that apply to such Holder under this Agreement. In
addition, before any shares of Capital Stock of the Company held, directly or
indirectly, by any Holder may be sold or transferred to any Person, such Holder
(as such, the "Selling Shareholder") will comply with the following provisions:
(a) The Selling Shareholder will deliver or cause to be
delivered a written notice (the "Notice of Sale") to each other Holder
at least ten (10) Business Days prior to making any such sale or
transfer. The Company agrees to provide the Selling Shareholder with a
list of the names and addresses of each such Holder for such purpose.
The Notice of Sale will include (i) a statement of the Selling
Shareholder's bona fide intention to sell or to transfer, (ii) the name
and address of the prospective transferee (the "Buyer"), (iii) the
number of shares of Capital Stock of the Company to be sold or
transferred, (iv) the terms and conditions of the contemplated sale or
transfer, (v) the purchase price in cash that the Buyer will pay for
such shares of Capital Stock, (vi) the expected closing date of the
transaction and (vii) such other information as any Holder may
reasonably request to facilitate their decision as to whether or not to
exercise the rights granted by this Section 3.03.
(b) Any Holder receiving the Notice of Sale may elect to
participate in the contemplated sale or transfer by exercising its
right to co-sell its Capital Stock of the Company pursuant to Section
3.03(c). Such rights may be exercised in the sole discretion of such
Holder by delivering a written notice (each, an "Election Notice") to
the Company and the Selling Shareholder within ten (10) Business Days
after receipt of the applicable Notice of Sale stating the election of
such Holder to exercise its right of co-sale pursuant to Section
3.03(c).
(c) Each Holder (excluding the Selling Shareholder) may elect
to sell or to transfer in the contemplated transaction up to the total
of the number of shares of Capital Stock of the Company then held by
it. Promptly after the receipt of an Election Notice exercising such
right, the Selling Shareholder will use its commercially reasonable
best efforts to cause the Buyer to amend its offer so as to provide for
the Buyer's purchase, upon the same terms and conditions as those
contained in the Notice of Sale, of all of the shares of Capital Stock
of the Company elected to be sold in such Election Notices (the
"Co-Sell Shares"). If the Buyer is unwilling to amend its offer to
13
purchase all of the Co-Sell Shares in addition to the shares of Capital
Stock described in the related Notice of Sale and if the Selling
Shareholder desires to proceed with the sale, then the total number of
shares that such Buyer is willing to purchase will be allocated to the
Selling Shareholder and each Holder having given an Election Notice
exercising its right pursuant to this Section 3.03(c) (collectively,
the "Co-Sellers") in proportion to the aggregate number of shares of
Capital Stock of the Company held by each such Person; provided,
however, that no such Person will be so allocated a number of shares
greater than the number of shares that it has sought to sell or to
transfer to such Buyer in the related Notice of Sale or Election
Notice. All Capital Stock sold or transferred by the Selling
Shareholder and the Co-Sellers with respect to a single Notice of Sale
will be sold or transferred to the Buyer in a single closing on the
terms described in such Notice of Sale, and each such share will
receive the same per share consideration. If, for whatever reason, the
Buyer declines to purchase any shares from any Holder delivering an
Election Notice, then the Selling Shareholder will not be permitted to
sell or to transfer any shares of Capital Stock to such Buyer.
(d) No Prejudice to Put Option. Nothing contained in Section
3.02 or 3.03 above shall limit, impair or restrain in any way the
rights of any Holder to exercise the Put Option under any of the
circumstances described in Article V of the Purchase Agreement, except
with respect to Co-Sell Shares elected to be sold by a Holder pursuant
to Section 3.03(c).
3.04 Sales to Related Parties. No sale or transfer of shares of Capital
Stock of the Company by any Holder to a Related Party of any Holder will be
subject to the provisions of Section 3.02 or 3.03, provided that such Related
Party first agrees to assume the obligations of such Holder (without relieving
such Holder of any obligations under this Agreement) under this Agreement with
respect to the shares of Capital Stock of the Company thereby acquired by it and
to be bound by the same terms and conditions that apply to such Holder under
this Agreement, the Amended and Restated Articles and the Purchase Agreement, in
each case pursuant to a written instrument in a form and substance satisfactory
to the other Holders.
Article IV
Pull-Along Rights
Subject to the provisions of Article III, if, prior to a Qualified
Public Offering, the holders of fifty percent (50%) or more of the total Capital
Stock of the Company elect to sell all of their shares of Capital Stock of the
Company in a bona fide sale to a third party that is not an Affiliate,
Subsidiary or Related Party of the Company or such holders (such selling
shareholders being hereinafter referred to as the "Initiating Shareholders") on
Acceptable Pull-Along Sale Terms, then all Non-Selling Shareholders shall be
obligated to sell all of the Capital Stock of the Company then held by
14
Non-Selling Shareholders in such sale (each, a "Pull-Along Sale"); provided,
however, that not less than thirty (30) days prior to the date such Pull-Along
Sale is to take place (the "Pull-Along Sale Date"), the Initiating Shareholders
shall deliver a written notice (each, a "Pull-Along Sale Notice") to the Company
and each Non-Selling Shareholder, which Pull-Along Sale Notice shall state that
a Pull-Along Sale is to take place and shall set forth the identity of the Buyer
and the terms of the proposed Pull-Along Sale (including the date of the
proposed sale and the purchase price per share of Capital Stock of the Company).
On the Pull-Along Sale Date and so long as the Pull-Along Sale remains on
Acceptable Pull-Along Sale Terms, at the time and place designated in the
Pull-Along Sale Notice, the Initiating Shareholders and each Non-Selling
Shareholder shall deliver to the Buyer certificates representing the number of
shares of Capital Stock of the Company desired or required to be sold by them
pursuant to this Article IV, each such certificate to be properly endorsed for
transfer, against payment therefor by certified check or wire transfer of
immediately available funds to such accounts as the Initiating Shareholders and
each Non-Selling Shareholder shall specify in writing. All Capital Stock of the
Company sold or transferred by the shareholders of the Company with respect to a
Pull-Along Sale will be sold or transferred in a single closing on the terms
described in such Pull-Along Sale Notice, and all Capital Stock of the Company
sold by the Non-Selling Shareholders in any Pull-Along Sale will receive the
same per share consideration as the Capital Stock of the Company sold by the
Initiating Shareholder.
Article V
Directors
5.01 Voting Agreement. To ensure compliance with this Article V, each
Holder hereby irrevocably covenants and agrees to vote, or to give or to
withhold consent with respect to, all shares of Capital Stock of the Company now
owned or later acquired by such Holder, all in accordance with the terms of this
Article V. The agreement to vote contained in this Article V will expire on the
earlier to occur of (a) the day prior to the maximum period permitted under
applicable law or (b) the last date on which any Holder ceases to hold any
Capital Stock of the Company. A counterpart of this Agreement will be deposited
with the Company at its principal place of business or registered office and
will be subject to the same right of examination by a shareholder of the
Company, in person or by agent or attorney, as are the books and records of the
Company.
5.02 Board Observation and Membership. The Company will deliver to each
Purchaser, each Holder Observer and to each Holder Representative (a) a
certified copy of all materials distributed at or prior to all meetings of the
Board of Directors, certified as true and accurate by the Secretary of the
Company, promptly following each such meeting and (b) a certified copy of the
minutes of each of the meetings of the Board of Directors, certified as true and
accurate by the Secretary of the Company, as soon as available but in any event
promptly following the end of the next subsequent regular meeting of the Board
of Directors. The Company will permit each Holder, at all times during which
such Holder owns any Capital Stock of the Company, to designate, by written
notice, one (1) Person to attend and to observe all meetings of the Board of
Directors (each, a "Holder Observer"). The Board of Directors shall consist of
five (5) members. For so long as NTOF owns any Capital Stock of the Company,
NTOF shall have, subject to the immediately succeeding sentence, the right to
15
designate three (3) such members to serve on such Board of Directors (the "NTOF
Directors"). For so long as any Hancock Entity owns any Capital Stock of the
Company, such Hancock Entities shall have the right, upon written notice to
NTOF, to designate one (1) member to serve on the Board of Directors (the
"Hancock Director" and together with the NTOF Directors, collectively, the
"Holder Representatives" and individually, a "Holder Representative"); provided,
however, that at all times prior to the Hancock Entities giving such written
notice to NTOF, NTOF shall have the right to designate an additional member to
the Board of Directors. In addition, the holders of Common Stock other than
Purchasers shall be entitled to elect one (1) director of the Company (the
"Independent Director"). The Company will (x) provide each Holder Observer and
each Holder Representative notice of all meetings of the Board of Directors not
less than five (5) Business Days in advance, except that (i) if longer advance
notice is given to any member of the Board of Directors, then the same advance
notice will be given to each Holder Observer and each Holder Representative and
(ii) if exceptional circumstances arise that make it prudent for a special
meeting of the Board of Directors to be called on less than five (5) Business
Days' notice, then such meeting may be called with such notice as may be
reasonable at the time, and the earliest advance notice given to any member of
the Board of Directors will be given to each Holder Observer and each Holder
Representative and (y) provide to each Holder Observer and each Holder
Representative a copy of all materials distributed at such meetings. Such
meetings shall be held in person at least every two months (unless otherwise
agreed to by the Holders), and shall be called by the Chief Executive Officer of
the Company at any time upon the request of a Holder Representative on up to
four (4) additional occasions per calendar year on seven (7) calendar days'
actual notice to the Company. Any Holder may change its Holder Observers and/or
Holder Representatives, as the case may be, by written notice to the Company and
each other Holder. The Company shall reimburse each Holder Observer and each
Holder Representative for all reasonable expenses incurred in connection with
traveling to and from such meetings and attending such meetings.
5.03 Board of Directors.
------------------
(a) So long as the provisions of this Article V remain in effect and in
accordance with provisions of Section 5.02 of this Agreement and Section 2.4 of
the Certificate of Designation, each Holder will vote, or give or withhold
consent with respect to, all shares of Capital Stock of the Company now owned or
later acquired by such party so that at all times the Persons designated to
serve as members of the Board of Directors by the Holders pursuant to the
provisions of this Article V will be elected and remain members of the Board of
Directors; provided, however, that the Holders will not have any obligation to
designate, or to cause any individual to serve as, a Holder Representative. No
director designated by any Holder or Holders pursuant to the provisions of this
Article V may be removed from the Board of Directors by any party to this
Agreement without the prior written consent of such Holder or Holders, as
applicable. Any Holder may, at any time, terminate its rights under this Article
V by providing written notice of such termination to the Company and each other
Holder.
16
(b) If any director elected to the Board of Directors after being
designated as a candidate for membership by the Persons entitled to designate
candidates pursuant to this Article V dies, resigns, is removed or otherwise
ceases to serve as a member of the Board of Directors, then the Company shall
give notice thereof to the Person entitled to designate such candidate, and such
Person shall promptly designate a successor and notify the Board of Directors of
its selection, and the Board of Directors shall act promptly to fill the vacancy
with such designee in accordance with the Company's bylaws and applicable law;
provided, however, that no director designated as a candidate for membership by
any Holder or Holders pursuant to the provisions of this Article V may be
removed by any party to this Agreement without the prior written consent of such
Holder or Holders, as applicable.
(c) Within five (5) days after a record date is set for any
annual meeting for the election of directors or for the mailing of any consent
solicited for such purpose, the Secretary of the Company shall notify each
Person entitled to designate candidates pursuant to the terms hereof of the
upcoming election and anticipated date thereof and shall request that each
Person entitled to designate candidates take all necessary action to designate
its candidate(s). Each Person entitled to designate candidates pursuant to the
terms hereof shall notify the Secretary of the Company at least ten (10) days
before such election of such Person's respective candidate(s). A failure by a
Person entitled to designate candidates pursuant to the terms hereof to provide
such notification shall be deemed to be a designation by such Person of the same
candidates, if any, as were last designated by such Person. Any designation
pursuant to this Section 5.03(c) shall be made in writing.
(d) The parties hereto hereby agree to cast their votes for,
or to give their written consent to, the removal of a member of the Board of
Directors at any time upon receipt of instructions in writing to such effect
signed by the Person entitled to designate that member pursuant to the terms
hereof.
(e) The Board of Directors shall have no right to fill any
vacancy on the Board of Directors for which any Person has the right to
designate a candidate pursuant to the terms hereof unless such vacancy is filled
by the designee of the Person having the right to so designate such director.
(f) All rights granted to all Holders pursuant to the provisions of
this Article V shall expire upon the consummation of a Qualified Public
Offering.
Article VI
Personal Gain on Sale Transaction; Unlocking Proposal
6.01 Personal Gain on Sale Transaction. The Company shall not enter
into any Sale Transaction if any Person will receive any Excess Compensation in
connection with such Sale Transaction unless, in connection with and as a
condition to such Sale Transaction, proper provision is made such that the Buyer
in such Sale Transaction agrees to pay to each Holder an amount equal to the
amount of such Excess Compensation times such Holder's proportionate ownership
interest in the Company (on a fully-diluted basis).
17
6.02 Unlocking Proposal. If the Company receives an Unlocking Proposal,
then the Company shall promptly give notice of such proposal to each Holder,
including in such notice the terms and conditions of such proposal and any other
information material to an evaluation of such proposal. On or after the first
date on which a Holder may exercise the Put Option pursuant to the provisions of
Article V of the Purchase Agreement, if the Company receives any Unlocking
Proposal and if, within thirty (30) days after receipt of notice of such
proposal, any Holder notifies the Company that such Holder desires to accept the
Unlocking Proposal, then either (i) the Company shall accept the Unlocking
Proposal within thirty (30) days of receipt of such Holder's notice and shall
use good faith and commercially reasonable efforts to consummate the
transactions described in the Unlocking Proposal or (ii) if the Company fails to
accept the Unlocking Proposal within such 30-day period, then such Holder shall
have the right, exercisable by written notice to the Company within thirty (30)
days after expiration of the first 30-day period, to require the Company to
purchase all of the Capital Stock of the Company owned by such Holder for cash
(the "Unlocking Put"), and the Company hereby agrees to make such purchase and
payment. The purchase price in the Unlocking Put shall be the value of the
applicable Capital Stock of the Company based upon the amount that would have
been paid to such Holder if the Unlocking Proposal had been accepted. Such
Holder shall select a settlement date and shall set forth such date in its
notice to the Company, which date shall be not earlier than ten (10) days nor
later than sixty (60) days after the date of such notice. On such settlement
date, upon surrender any certificates evidencing the applicable shares of
Capital Stock of the Company, the Company shall pay the purchase price to such
Holder in immediately available funds by the method specified in such Holder's
notice.
Article VII
Representations and Warranties
7.01 Representations and Warranties of the Company. The Company, to the
same extent set forth in the Purchase Agreement, hereby represents and warrants
to the Purchasers that each of the representations and warranties of the Company
set forth in Section 7.01 of the Purchase Agreement, all of which are hereby
incorporated herein by reference, is true and correct on and as of the date
hereof as if made herein.
7.02 Representations and Warranties of the Purchasers. Each Purchaser
hereby represents and warrants to the Company that each of the representations
and warranties of such Purchaser set forth in Section 7.02 of the Purchase
Agreement, all of which are hereby incorporated herein by reference, is true and
correct on and as of the date hereof as if made herein.
Article VIII
Covenants
The Company hereby covenants and agrees that, for the applicable time
periods set forth in the Purchase Agreement, the Company shall comply with any
and all covenants and agreements set forth in Article VIII of the Purchase
Agreement, all of which covenants and agreements are hereby incorporated herein
by reference.
18
Article IX
Miscellaneous
9.01 Indemnification. In addition to any other rights or remedies to
which the Purchasers and all other Holders may be entitled, the Company agrees
to and will indemnify and hold harmless each Purchaser, each other Holder and
each of their respective Affiliates (other than the Company or any Subsidiary),
successors, assigns, officers, directors, employees, attorneys and agents
(individually and collectively, an "Indemnified Party") from and against any and
all losses, claims, obligations, liabilities, deficiencies, diminutions in
value, penalties, causes of action, damages, costs and expenses (including,
without limitation, costs of investigation and defense and attorneys' fees and
expenses), including, without limitation, those arising out of the sole or
contributory negligence of any Indemnified Party (but excluding the gross
negligence or willful misconduct of such Indemnified Party), that any
Indemnified Party may suffer, incur or be responsible for, arising or resulting
from (a) any misrepresentation, breach of warranty or nonfulfillment of any
covenant or agreement on the part of the Company under this Agreement, the
Purchase Agreement, the Amended and Restated Articles or any other agreement to
which the Company is a party in connection with the transactions contemplated
hereby or thereby or (b) any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished by the Company to
the Purchasers or any other Holder under this Agreement, the Purchase Agreement
or the Amended and Restated Articles.
9.02 Equitable Relief. It is agreed that a violation by any party of
the terms of this Agreement cannot be adequately measured or compensated in
money damages and that any breach or threatened breach of this Agreement by a
party to this Agreement would do irreparable injury to the nonbreaching party.
It is, therefore, agreed that, in the event of any breach or threatened breach
by a party to this Agreement of the terms and conditions set forth in this
Agreement, the nondefaulting party will be entitled, in addition to any and all
other rights and remedies that it may have in law or in equity, to apply for and
to obtain injunctive relief requiring the defaulting party to be restrained from
any such breach, or threatened breach, or to refrain from a continuation of any
actual breach.
9.03 Integration and Amendments. This Agreement, the Purchase Agreement
and the Amended and Restated Articles constitute the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
previous written, and all previous or contemporaneous oral, negotiations,
understandings, arrangements, and agreements. This Agreement may not be amended
or supplemented except by a writing signed by the Company and all Holders.
19
9.04 Headings. The headings in this Agreement are for convenience and
reference only and are not part of the substance of this Agreement. References
in this Agreement to Sections and Articles are references to the Sections and
Articles of this Agreement unless otherwise specified.
9.05 Severability. The parties to this Agreement expressly agree that
it is not their intention to violate any public policy, statutory or common law
rules, regulations or decisions of any governmental or regulatory body. If any
provision of this Agreement is judicially or administratively interpreted or
construed as being in violation of any such policy, rule, regulation or
decision, then the provision, section, sentence, word, clause or combination
thereof causing such violation will be inoperative (and in lieu thereof there
will be inserted such provision, sentence, word, clause or combination thereof
as may be valid and consistent with the intent of the parties under this
Agreement), and the remainder of this Agreement, as amended, will remain binding
upon the parties to this Agreement, unless the inoperative provision would cause
enforcement of the remainder of this Agreement to be inequitable under the
circumstances.
9.06 Notices. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication be given to or
served upon any of the parties by another, such notice, demand, request,
consent, approval, declaration or other communication will be in writing and
will be deemed to have been validly served, given or delivered (and "the date of
such notice" or words of similar effect will mean the date) five (5) days after
deposit in the United States mails, certified mail, return receipt requested,
with proper postage prepaid, or upon receipt thereof (whether by non-certified
mail, telecopy, telegram, express delivery or otherwise), whichever is earlier,
and addressed to the party to be notified as follows:
If to NTOF, at: North Texas Opportunity Fund LP
13355 Noel Road, Suite 2210
Dallas, Texas 75240
Attn: Arthur W. Hollingsworth
Fax: (972) 702-7391
with courtesy copies to: Patton Boggs LLP
2001 Ross Avenue, Suite 3000
Dallas, Texas 75201
Attn: R. Jeffery Cole, Esq.
Fax: (214) 758-1550
If to the Hancock Entities, at John Hancock Life Insurance Company
3030 LBJ Freeway, Suite 240
Dallas, Texas 75234
Attn: William Hasson
Fax: (972) 404-3003
and
20
John Hancock Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attn: Pamela Memishian (T30)
Fax: (617) 572-9269
and
John Hancock Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attn: David Johnson (T57)
Fax: (617) 572-1165
with courtesy copies to: Bingham Dana LLP
One State Street
Hartford, Connecticut 06103
Attn: Thomas F. O'Connor, Esq.
Fax: (860) 240-2800
If to the Company, at Fresh America Corp.
6600 LBJ Freeway, Suite 180
Dallas, Texas 75240
Attn: Chief Executive Officer
Fax: (972) 774-0515
with courtesy copies to: Vinson & Elkins, L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201-2975
Attn: Alan Bogdanow
Fax: (214) 220-7716
or to such other address as each party may designate for itself by like notice.
Notice to any Holder other than the Purchasers will be delivered as set forth
above to the address shown on the stock register of the Company unless such
Holder has advised the Company in writing of a different address to which
notices are to be sent under this Agreement.
Failure or delay in delivering the courtesy copies of any notice,
demand, request, consent, approval, declaration or other communication to the
persons designated above to receive copies of the actual notice will in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
No notice, demand, request, consent, approval, declaration or other
communication will be deemed to have been given or received unless and until it
sets forth all items of information required to be set forth therein pursuant to
the terms of this Agreement.
21
9.07 Successors. Subject to the other provisions of this Agreement,
this Agreement will be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.
9.08 Remedies. The failure of any party to enforce any right or remedy
under this agreement, or to enforce any such right or remedy promptly, will not
constitute a waiver thereof, nor give rise to any estoppel against such party,
nor excuse any other party from its obligations under this Agreement. Any waiver
of any such right or remedy by any party must be in writing and signed by the
party against which such waiver is sought to be enforced.
9.09 Survival. All representations, warranties and covenants made by
any party in this Agreement or in any certificate or other instrument delivered
by such party or on its behalf under this Agreement will be considered to have
been relied upon by the party to which it is delivered, regardless of any
investigation made by such party or on its behalf. All statements in any such
certificate or other instrument will constitute representations warranties under
this Agreement.
9.10 Fees. The Company shall pay to each Holder promptly upon demand
the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include reasonable outside counsel
fees), expended or incurred by such Holder in connection with (a) the
negotiation and preparation of this Agreement, the Holders' continued
administration hereof, and the preparation of any amendments and waivers hereto,
(b) the enforcement of each Holder's rights and/or the collection of any amounts
which become due to any Holder under this Agreement, and (c) the prosecution or
defense of any action in any way related to this Agreement, including without
limitation, any action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by any Holder or any other person) relating to the Company or any other person
or entity.
9.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which, taken
together, will constitute one and the same instrument.
9.12 Other Business. It is understood and accepted that the Purchasers
and their respective Affiliates have interests in other business ventures that
may be in conflict with the activities of the Company and that nothing in this
Agreement will limit the current or future business activities of such parties
whether or not such activities are competitive with those of the Company. The
Company hereby agrees that all business opportunities in any field substantially
related to the business of the Company will be pursued exclusively through the
Company.
9.13 Choice of Law. THIS AGREEMENT HAS BEEN EXECUTED, DELIVERED, AND
ACCEPTED BY THE PARTIES, AND WILL BE DEEMED TO HAVE BEEN MADE, IN THE STATE OF
TEXAS AND WILL BE INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE THERETO AND THE
INTERNAL LAWS OF THE STATE OF TEXAS APPLICABLE TO AN AGREEMENT EXECUTED,
DELIVERED AND PERFORMED THEREIN, WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW
RULES THEREOF OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION OF THE
SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
22
9.14 Nominees for Beneficial Owners. If any Registrable Securities are
held by a nominee for the beneficial owner of such Registrable Securities, then
the beneficial owner of Registrable Securities may, at its election, 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, then the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
9.15 Fiduciary Duties. The Company acknowledges and agrees that, for so
long as a Purchaser own any Warrants or Shares, (a) the officers and directors
of the Company will owe the same duties (fiduciary and otherwise) to such
Purchaser as are owed to a shareholder of the Company and (b) such Purchaser
will be entitled to all rights and remedies with respect to such duties or that
are otherwise available to a shareholder of the Company under the TBCA.
9.16 Duties Among Holders. Each Holder agrees (i) that no other Holder
will by virtue of this Agreement be under any fiduciary or other duty to give or
to withhold any consent or approval under this Agreement or to take any other
action or omit to take any action under this Agreement and (ii) that each other
Holder may act or refrain from acting under this Agreement as such other Holder
may, in its discretion, elect.
9.17 Confidentiality. Each Holder agrees to keep confidential any
information delivered by the Company to such Holder pursuant to this Agreement;
provided, however, that nothing in this Section 9.17 will prevent such Holder
from disclosing such information (a) to any Affiliate of such Holder or any
actual or potential purchaser, participant, assignee or transferee of such
Holder's rights or obligations hereunder that agrees to be bound by the terms of
this Section 9.17, (b) upon order of any court or administrative agency, (c)
upon the request or demand of any regulatory agency or authority having
jurisdiction over such Holder, (d) that is in the public domain, (e) that has
been obtained from any Person that is not a party to this Agreement or an
Affiliate of any such party without breach by such Person of a confidentiality
obligation known to such Holder, (f) in connection with the exercise of any
remedy under this Agreement or (g) to the certified public accountants or
attorneys for such Holder. The Company agrees that such Holder will be presumed
to have met its obligations under this Section 9.17 to the extent that it
exercises the same degree of care with respect to information provided by the
23
Company as it exercises with respect to its own information of similar
character. Upon the request by the Company in connection with the delivery to
any Holder Observer of information required to be delivered to such Holder
Observer under Section 5.02 of this Agreement, such Holder Observer will enter
into an agreement with the Company embodying the provisions of this Section 9.17
and otherwise reasonably satisfactory to the Company and such Holder Observer.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
24
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written, to be effective for all purposes
as of the Closing Date.
THE COMPANY:
FRESH AMERICA CORP.
By:
------------------------------------------------
Name: Cheryl A. Taylor
Title: Chief Financial Officer
NTOF:
NORTH TEXAS OPPORTUNITY FUND LP
By: North Texas Opportunity Fund Capital Partners LP,
its general partner
By: NTOF LLC, its general partner
By:
----------------------------------------------
Arthur W. Hollingsworth
Manager
HANCOCK ENTITIES:
JOHN HANCOCK LIFE INSURANCE COMPANY
By:
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Name:
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Title:
------------------------------------------------------
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By:
---------------------------------------------------------
Name:
----------------------------------------------
Title:
------------------------------------------------------
SIGNATURE 1A (CAYMAN), LTD.
By: John Hancock Life Insurance Company, Portfolio Advisor
By:
---------------------------------------------------------
Name:
----------------------------------------------
Title:
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SIGNATURE 3 LIMITED
By: John Hancock Life Insurance Company, Portfolio Advisor
By:
---------------------------------------------------------
Name:
----------------------------------------------
Title:
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INVESTORS PARTNER LIFE INSURANCE COMPANY
By:
---------------------------------------------------------
Name:
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Title:
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