STOCK AND WARRANT PURCHASE AGREEMENT
STOCK AND WARRANT PURCHASE AGREEMENT ("Agreement") by and between FIDELITY
NATIONAL FINANCIAL, INC. ("Purchaser"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Seller") and GB
FOODS CORPORATION, a Delaware corporation (the "Company") dated this _____ day
of July, 1997.
RECITALS:
This Agreement is made with reference to the following facts and
circumstances:
(a) Purchaser desires to purchase shares and warrants to purchase shares
of the common stock, par value $.08 ("Common Stock") of the Company; and
(b) Seller desires to sell to Purchaser shares of Common Stock.
AGREEMENT:
In consideration of the foregoing Recitals which are incorporated with and
are made a part of this Agreement, and in further consideration of the mutual
covenants and agreements hereinafter contained, the parties hereto agree,
subject to the terms and conditions hereinafter set forth, as follows:
1. SALE AND PURCHASE. Subject to the terms and conditions contained
herein, at the Closing (as hereinafter defined), Seller shall sell, transfer,
assign, convey and deliver to Purchaser and Purchaser shall purchase free and
clear of all liens, claims and encumbrances good, complete and marketable title
to the following:
(i) 1,000,000 shares of Common Stock (the "Shares");
(ii) warrants to purchase 1,500,000 shares of Common Stock with an
exercise price of $5.00 per share evidenced by that certain
Warrant Certificate dated April 23, 1992, as amended, and all
rights in, to and under that certain Warrant Agreement dated
April 23, 1992 (the "$5.00 Warrants");
(iii) warrants to purchase 1,000,000 shares of Common Stock with an
exercise price of $7.00 per share evidenced by that certain
Warrant Certificate dated May 1, 1995 and all rights in, to and
under that certain Warrant Agreement dated May 1, 1995 (the $7.00
Warrants").
Seller represents and warrants that the Shares, $5.00 Warrants and
$7.00 Warrants (collectively the "Securities") sold pursuant to this Agreement
are duly authorized, validly issued and fully paid and non-assessable and that
Seller has good, complete and marketable title to the Securities, free and clear
of all liens, claims and encumbrances.
2. CONSIDERATION. The Purchaser shall pay to Seller, as consideration
for (i) the Shares, a cash amount of $5,000,000, (ii) the $5.00 Warrants, a cash
amount of $600,000 and (iii) the $7.00 Warrants, a cash amount of $100,000. The
foregoing payments (collectively the "Purchase Price") shall be made by
Purchaser in immediately available funds at the Closing against delivery of duly
endorsed Securities.
3. CERTAIN MATTERS WITH RESPECT TO SELLER'S SECURITIES.
3.1 UNDERTAKING OF PURCHASER AND CERTIFICATE LEGENDS. The Purchaser
represents and undertakes that:
(i) The Securities are being acquired by the Purchaser for its
own account and are not for other persons and are not being
and will not be acquired with a view to the distribution
thereof, except to the extent permitted by the Securities
Act of 1933, as amended, (the "1933 Act") and the rules and
regulations thereunder.
(ii) None of the Securities will be transferred by or through
the Purchaser in violation of the 1933 Act, any state
securities laws, the securities laws of any other country
or province or the terms of this Agreement.
(iii) The Purchaser understands that the Securities have not been
registered under the 1933 Act and, therefore, cannot be
resold or otherwise transferred in the United States unless
such shares are registered under the 1933 Act, or unless an
exemption from registration is available.
(iv) The certificates representing the Securities to be
delivered to the Purchaser pursuant to this Agreement will
bear a restrictive legend in substantially the following
form and an appropriate stop transfer order may, and will,
be placed against the transfer of the share certificates
and no transfer of the shares will be valid unless made in
accordance with this Agreement:
"The securities represented by this certificate have been
issued or transferred to the registered holder as a result
of a transaction to which the exemption provided by
Section 4(2) under the Securities Act of 1933, as amended
(the "1933 Act") applied. The securities represented by this
certificate have not been registered under the 1933 Act and
may not be sold, transferred or assigned, and the issuer is
not required to give effect to any attempted sale, transfer
or assignment, except (i) pursuant to a current registration
statement under the 1933 Act; (ii) in a transaction
permitted by Rule 144 under the 1933 Act and as to which the
issuer has received reasonably satisfactory evidence of
compliance with the provisions of Rule 144; or (iii) upon
receipt of a legal opinion acceptable to the issuer to the
effect that the transaction does not require registration
under the 1933 Act.
3.2 REPRESENTATIONS OF THE PURCHASER. The Purchaser represents and
warrants that:
(i) It is familiar with Section 4(2) of the 1933 Act and with
Regulation D issued by the Securities and Exchange
Commission ("SEC") pursuant to the 1933 Act.
(ii) It has been furnished before the execution of this
Agreement by the Company with (i) the Company's annual
report to stockholders for fiscal year ended December 31,
1996; (ii) the definitive proxy statement filed in
connection with the Company's annual stockholders' meeting
held on May 5, 1997; (iii) Form 10-K for fiscal year ended
December 30, 1996; and (iv) the Company's Form 10-Q for the
quarter ended March 31, 1997. The Purchaser has made such
further
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investigation of the Company as was deemed appropriate
and has been given the opportunity to ask questions of and
receive answers from the Company or any person acting on
its behalf concerning the terms and condition of the
transactions contemplated herein and has obtained such
additional information deemed necessary to verify the
accuracy of the information that was obtained by the
Purchaser.
(iii) The Purchaser has access to, and has reviewed and
understood, all material information, including financial
statements, concerning the Company which it deems necessary
or advisable in order to evaluate the risks and merits of
entering into this transaction and acquiring the
Securities.
(iv) The Purchaser has such knowledge and experience in
financial and business matters that it is capable of
evaluating the merits and risks of acquiring the
Securities.
(v) The Purchaser is an "accredited investor" as that term is
defined in SEC Rule 501(a)(5) because it is a corporation
with total assets in excess of $5,000,000.
(vi) Purchaser acknowledges that the Securities are being
acquired without any representations or warranties of
Seller except as set forth in Section 1, above, and
Sections 5 and 7 below.
4. CLOSING. Subject to the terms and conditions contained herein, the
transfer of the Securities by Seller to the Purchaser ("Closing") will take
place on the date hereof at the offices of Seller, or such other date and place
as the parties may mutually agree ("Closing Date").
4.1 SELLER'S OBLIGATION. At Closing, Seller shall deliver the
Securities.
4.2 PURCHASER'S OBLIGATION AT CLOSING. At Closing, Purchaser shall pay
the Purchase Price in immediately available funds to Seller.
4.3 COMPANY OBLIGATIONS. At Closing, Company shall issue replacement
Warrant Agreements and Warrant Certificates to Purchaser for the $5.00 Warrants
and $7.00 Warrants transferred by Seller to Purchaser pursuant to this Agreement
and to Seller for the $5.00 Warrants he will own following the Closing as
described in Section 5(ii) below, all such replacement Warrant Agreements and
Warrant Certificates to preserve for the holders all rights, to and under, in
the case of the $5.00 Warrants, the Warrant Certificate dated April 23, 1992, as
amended, and the related Warrant Agreement dated April 23, 1992, and in the case
of the $7.00 Warrants, the Warrant Certificate dated May 1, 1995 and the related
Warrant Agreement dated May 1, 1995.
5. SECURITIES OWNERSHIP AND STANDSTILL AND RIGHT OF FIRST REFUSAL.
Seller represents and warrants that:
(i) He beneficially owns 1,269,826 shares of Common Stock, $5.00
Warrants to purchase 2,000,000 shares of Common Stock at an
exercise price of $5.00 per share and $7.00 Warrants to purchase
1,000,000 shares of Common Stock at $7.00 per share;
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(ii) Following the Closing, he will beneficially own 269,826 shares of
Common Stock and $5.00 Warrants to purchase 500,000 shares of
Common Stock (such remaining securities, including the Common
Stock issuable upon exercise of the $5.00 Warrants, referred to
herein as "▇▇▇▇▇▇▇ Securities").
(iii) To the knowledge of the Seller, no material adverse fact with
respect to the Company, including any litigation or threat of
pending litigation, has arisen since March 31, 1997, the last
date of the period covered by the Company's last quarterly report
filed under the Securities Exchange Act of 1934, which would make
the information provided by the Company to the Purchaser
misleading.
Seller agrees that he will not for a period of two years following
the Closing, directly or indirectly, without the prior written consent of the
Company, acquire or agree, offer, seek or propose to acquire, or cause to be
acquired, ownership (including beneficial ownership as defined in Rule 13d-3
under the Exchange Act of 1934) of any of the Company's assets or businesses or
securities issued by the Company or any rights or options to acquire such
ownership, PROVIDING, HOWEVER the foregoing shall not restrict or prohibit
Seller, with respect solely to the ▇▇▇▇▇▇▇ Securities, from exercising his right
to purchase Common Stock or to sell Common Stock.
If at any time during the two years following the Closing, Seller
desires to sell any of the ▇▇▇▇▇▇▇ Securities, Seller shall notify Purchaser of
the price, terms and conditions on which the ▇▇▇▇▇▇▇ Securities are to be sold,
and Purchaser shall have the right and option, exercisable only within the first
four (4) business hours after receipt of Seller's notice, to purchase such
securities on the same price, terms and conditions offered by the third party.
Seller's notice and Purchaser's acceptance shall be deemed received if
transmitted by facsimile to the receiving party in the same manner as provided
in this Agreement for notices. If Purchaser timely notifies Seller of its
acceptance, then Purchaser shall consummate the purchase of the offered ▇▇▇▇▇▇▇
Securities by the close of the next business day, or the date stated in Seller's
notice, whichever is later. If Seller does not consummate the sale to the third
party on the same (or no less favorable to Seller) price, terms and conditions
within one (1) month following Purchaser's non-exercise of its right and option
hereunder, then Purchaser's right and option shall reapply to such securities.
6. MUTUAL RELEASES. Except for claims or obligations under this
Agreement, Purchaser, the Company and their respective affiliates, jointly and
severally forever discharge and release Seller, his employees and attorneys
(except as may be otherwise provided in an agreement of even date herewith with
▇▇▇▇▇▇▇, North, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.) from any and all rights, claims, demands,
damages, debts, liabilities, accounts, reckonings, liens, attorneys fees, costs,
expenses, actions and causes of every kind and nature whatsoever, whether in
contract, tort, at law or in equity, or otherwise, suspected or unsuspected,
whether currently existing or which may hereafter arise, which Purchaser,
Company or their respective affiliates owns or holds or at anytime heretofore
has ever had, owned or held, or may hold in the future, related to or arising
out of or in any way connected to the Company or the Securities.
Notwithstanding the foregoing, to the extent Company has a claim against Seller
which would otherwise be covered by insurance carried by Company but for this
release, then the claim shall not be deemed to be released to the extent of such
insurance coverage provided the payment of the claim by the insurance company or
anyone on its behalf does not result in Seller being liable to the party or
company paying the claim by reason of rights of subrogation, contribution,
indemnity or any other reason.
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Except as provided in Section 8 below and for claims or obligations
under this Agreement, Seller forever discharges and releases Purchaser, the
Company and their respective affiliates, and attorneys, from any and all rights,
claims, demands, damages, debts, liabilities, accounts, reckonings, liens,
attorneys fees, costs, expenses, actions and causes of action of every kind and
nature whatsoever, whether in contract, tort, at law or in equity, or otherwise,
suspected or unsuspected, whether currently existing or which may hereafter
arise, which Seller owns or holds, or may hold in the future, or at any time
heretofore has ever had, owned or held, related to or arising out of or in any
way connected to the Company or the Securities, including Company's obligations
under Stock Purchase Agreement dated October 29, 1992 with Seller and others.
It is the intention of the parties hereto that the foregoing releases
shall be effective as a bar to all demands, liens, assignments, contracts,
covenants, actions, suits, causes of action, obligations, costs, expenses,
attorneys fees, damages, losses, claims, controversies, judgments, orders and
liabilities of whatsoever character, nature and kind, known or unknown,
suspected or unsuspected and whether or not concealed or hidden, here and above
specified to be so barred; in furtherance of this intention, the parties hereto
expressly, knowingly, and voluntarily waive any and all rights and benefits
conferred upon them by the provisions of Section 1542 of the California Civil
Code, which are as follows:
"A general release does not extend to claims which the creditor does
not know or suspect exist in his favor at the time of executing the
release, which if known by him must have materially affected the
settlement with the debtor."
The parties hereto expressly consent that this release shall be given
full force and effect in accordance with each and all of its express terms and
provisions, relating to unknown and unsuspected claims, demands, causes of
actions, if any, to the same effect as those terms and provisions relating to
any other claims, demands, and causes of action here and above specified.
7. RIGHTS REDEMPTION AND BOARD OF DIRECTORS. The Company represents and
warrants that its board of directors has approved the acquisition of the
Securities and other transactions contemplated in this Agreement, and approved
the issuance of the warrants and issuance of the Common Stock thereunder upon
exercise and has redeemed certain share purchase rights issued pursuant to the
Company's Stockholder Rights Agreement dated as of July 9, 1996 between the
Company and the American Securities Transfer Incorporated, as Rights Agent, and
no other agreement is contravened by the transactions herein. At Closing, the
Company will deliver the resignations of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ and the
appointments, as approved by the Company's board of directors, of ▇▇▇▇▇▇▇ ▇▇▇▇▇
II, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as directors of the Company, all
effective as of the Closing.
8. RESIGNATION. At Closing, Seller will resign as Chairman, Director
and Chief Executive Officer of the Company, and as an inducement for Seller to
so resign, the parties agree as follows:
8.1 Company will pay a fee to ▇▇▇▇▇▇ ▇▇▇▇▇▇ or Pauli & Company
Incorporated in the amount of $30,000 cash on or before July 30, 1997.
8.2 Company will pay Seller at Closing any unpaid salary actually accrued
on the Company's books, which amount shall not exceed $50,000.
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8.3 The Company shall cause all rights to indemnification (including
rights relating to the payment or advancement of expenses) now existing in favor
of Seller and any current or former director or officer of the Company,
including for purposes of this subsection any subsidiary or any predecessor of
the Company, or any controlling person of any of the foregoing (the "Indemnified
Parties"), as now provided in their respective Certificates of Incorporation or
Bylaws, shall survive this agreement and shall continue in full force and effect
for a period of not less than five (5) years after the date of this Agreement
(provided, however, that in the event any claim or claims are asserted or made
within such five year period, all rights to indemnification in respect of any
such claim or claims shall continue until final disposition of any and all such
claims). Purchaser agrees that Purchaser shall cause Purchaser's nominees or
designees who become directors of the Company to vote, and shall vote or cause
to be voted all voting shares of stock of Company in favor of the
indemnification of and advancement of expenses to the Indemnified Parties to the
full extent permitted by applicable law and such certificates of incorporation
or bylaws. The obligations under this subparagraph include the Company using
best efforts to provide continuous, uninterrupted officers' and directors'
liability insurance covering the officers and directors of the Company,
including the Indemnified Parties, with respect to their actions or omissions to
act occurring prior to the date of their resignation, on terms and coverage no
less favorable than are provided under such insurance currently in effect and
carried by the Company on the date hereof provided, however, that in no event
shall the Company be required to pay aggregate annual premiums for such coverage
in excess of one hundred fifty percent (150%) of the current premiums for the
same. If Company changes insurance carriers or policies, the Company shall also
use best efforts to maintain "tail" liability coverage for the duration of the
aforesaid five year period with respect to any "claims made" directors' and
officers' liability insurance policies in effect prior to expiration of said
five year period.
9. MISCELLANEOUS. The following miscellaneous provisions shall apply to
this Agreement:
9.1 NOTICES. All notices or other communications required or permitted
to be given, pursuant to this Agreement, shall be in writing and shall be deemed
duly given when received if delivered in person or by facsimile transmission,
telex, telegram or cable and confirmed by mail, or mailed by registered or
certified mail (return receipt requested) or express mail, postage prepaid, as
follows:
If to Purchaser: Fidelity National Financial, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to: Stradling, Yocca, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
If to Seller: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Business Ventures
▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-▇-
▇▇▇▇▇▇▇▇▇ No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, North, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Company: GB Foods Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the party to whom notice is to be
given furnishes in writing to the other party in a manner set
forth above.
9.2 AMENDMENTS AND WAIVERS. This Agreement may not be modified or
amended, except by instruments or instruments in writing, signed by the party
against whom enforcement of such modification or amendment is sought. A party
by an instrument in writing, may waive compliance by the other party with any
terms or provision of this Agreement on the part of such other party to be
performed or complied with. No action taken, pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty or agreement contained herein. The waiver by any party
hereto of a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.
9.3 EXPENSES. Whether or not this Agreement shall be consummated, each
party shall pay their own expenses incident to the preparation, execution and
consummation of this Agreement. Purchaser and Seller acknowledge that, other
than ▇▇▇▇▇▇ ▇▇▇▇▇▇ of Pauli & Company, Incorporated ("Pauli"), no broker or
finder is entitled to any brokerage or finders fees or other commission in
connection with the proposed purchase and sale of the Securities. In the event
the purchase and sale of the Securities is consummated as contemplated herein,
other than the $30,000 to be paid to Pauli pursuant to Section 8.2 above, the
balance of any fee owed to Pauli in connection with this transaction will be
paid by Purchaser.
9.4 ENTIRE AGREEMENT. Except for the letter agreement between Seller and
Company dated July 16, 1997, this Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral and written, among the
parties hereto with respect to the subject matter hereof.
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9.5 APPLICABLE LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Delaware applicable to contracts made and performed in Delaware.
9.6 BINDING EFFECT, BENEFITS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns; nothing in this Agreement, express or implied, is intended to confer on
any person other than the parties hereto or their respective successors and
assigns, any rights, remedies, obligations or liability under or by reason of
this Agreement.
9.7 ASSIGNABILITY. Neither this Agreement nor any of the parties' rights
hereunder shall be assignable by any party hereto without the prior written
consent of the other party hereto.
9.8 EFFECT OF HEADINGS. The headings of the various sections and
subsections herein are inserted merely as a matter of convenience and for
reference and shall not be construed as in any manner defining, limiting or
describing the scope or intent to particular sections to which they refer, or as
affecting the meaning or construction of the language in the body of such
sections.
9.9 SEVERABILITY. Any term or provision of this Agreement, which is
invalid or unenforceable in any jurisdiction, shall be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or other provisions of this
Agreement in any other jurisdiction.
9.10 CONSTRUCTION. The language of all parts of this Agreement shall in
all cases be construed as a whole according to its fair meaning, strictly
neither for nor against any party hereto, and without implying a presumption
that the terms thereof shall be more strictly construed against one party by
reason of the rule of construction that a document is to be construed more
strictly against the person who himself drafted same. It is hereby agreed that
the representatives of both parties have participated in the preparation hereof.
9.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by facsimile transmitted signatures, each of which shall be
regarded as an original and all of which shall constitute one and the same
instrument.
9.12 TIME OF THE ESSENCE. Time is of the essence of this Agreement. To
the extent the actions called for under this Agreement have not occurred as of
Closing, the parties shall cause them to occur as soon as practicable on
July 21, 1997.
9.13 FURTHER ASSURANCES. At any time and from time to time after Closing,
at any party's request and without further consideration, the other parties
hereto shall execute and deliver such other instruments of sale, transfer,
assignment or confirmation, and take such other actions as the requesting party
may reasonably deem necessary or desirable, in order to more effectively carry
out and implement the provisions and purposes of this Agreement.
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IN WITNESS WHEREOF, Purchaser and Seller have executed this Agreement on
the date first above written.
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ FIDELITY NATIONAL FINANCIAL, INC.
By:
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Its:
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GB FOODS CORPORATION
By:
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Its:
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