EXECUTION VERSION
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT ("Agreement") is dated as of December 14,
2001 ("Closing Date") by and between FRESH BRANDS, INC., a Wisconsin corporation
("Company"), and the undersigned purchasers or their successors and assigns as
contemplated and allowed by Section 7.6 of the Agreement ("Purchasers" or in the
singular, "Purchaser").
W I T N E S S E T H :
WHEREAS, the Company desires to sell to Purchasers, and Purchasers
desire to buy from the Company, a total of 200,000 shares of the Company's
common stock, $0.05 par value ("Common Stock"), and the associated common share
purchase rights (together, the "Shares"), pursuant to the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein made and mutual benefits to be derived from this Agreement, it is hereby
agreed as follows:
ARTICLE I AGREEMENT TO SELL AND PURCHASE SHARES.
Section 1.1. Subject to the terms and conditions of this Agreement, each
Purchaser is hereby purchasing and accepting from the Company, and the Company
is hereby selling and delivering to each Purchaser for the Purchaser's own
account, that number of Shares set forth opposite each Purchaser's name on
Exhibit A attached hereto.
Section 1.2. The Company is hereby delivering, or causing to be delivered,
to the Purchasers, certificates representing the number of Shares set forth
opposite each Purchaser's name on Exhibit A. Delivery of the certificates
representing the Shares shall be made to the accounts designated by the
Purchasers in the form or process requested by the Purchasers.
Section 1.3. The cash purchase price of each Share is sixteen dollars and
fifty cents ($16.50) and the aggregate cash purchase price for all of the Shares
is three million and three hundred thousand dollars ($3,300,000) ("Aggregate
Purchase Price"). Each Purchaser is hereby delivering, or causing to be
delivered, its respective portion of the Aggregate Purchase Price set forth
opposite such Purchaser's name on Exhibit A by wire transfer of immediately
available funds to the account designated by the Company on Exhibit A.
ARTICLE II REPRESENTATIONS AND WARRANTIES.
Section 2.1. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Purchasers as follows:
(a) The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Wisconsin. The Company has full
power, legal right, capacity and authority to enter into, execute and deliver
this Agreement and to carry out the transactions contemplated hereby.
(b) As of their respective dates, the: (i) Form 10-K Annual Report and
amendment thereto filed by Company for the fiscal year ended December 30, 2000
(together, the "Form 10-K"), (ii) Company's 2000 Annual Report to Shareholders,
(iii) Company's Proxy Statement for its 2001 annual meeting of shareholders and
(iv) Form 10-Q Quarterly Reports filed by Company for the periods ended on April
21, 2001, July 14, 2001 and October 6, 2001: (a) complied in all material
respects with the provisions of the Securities Exchange Act of 1934 (as amended)
and the rules and regulations promulgated by the Securities and Exchange
Commission ("Commission") thereunder and (b) did not contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements therein not misleading in any material respect (the filings
referred to in clauses (i) through (iv) are herein called the "SEC Reports").
(c) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated in this Agreement
by the Company and the fulfillment of the terms of this Agreement by the Company
have been duly authorized by all necessary corporate action.
(d) This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against it in accordance with its terms.
(e) The Shares are validly issued, fully paid and nonassessable,
except to the extent provided by Section 180.0622(2)(b) of the Wisconsin
Business Corporation Law.
(f) The Company's audited consolidated financial statements as of
December 30, 2000, contained in the Form 10-K, including the notes contained
therein, fairly presented the consolidated financial position of the Company and
its subsidiaries at the date thereof and the results of its consolidated
operations for the periods purported to be covered thereby. Such financial
statements were prepared in conformity with generally accepted accounting
principles consistently applied with prior periods, subject to any comments and
notes contained therein. All liabilities, contingent and other, of the Company
and its subsidiaries, on a consolidated basis, as of the accounting period ended
on October 6, 2001, were set forth in the financial statements contained in the
Form 10-Q Quarterly Report filed by Company for the period ended on October 6,
2001 ("Recent Form 10-Q"), excepting only liabilities (i) incurred in the
ordinary course of business subsequent to October 6, 2001, (ii) liabilities of
the type not required under generally accepted accounting principles to be
reflected in such interim financial statements and (iii) not required to be
included in financial statements accompanying a Form 10-Q by the Securities
Exchange Act of 1934 (as amended) and the rules and regulations promulgated by
the Commission thereunder. Since October 6, 2001, there has been no adverse
change in the consolidated financial condition of the Company and its
subsidiaries from the consolidated financial condition stated the Company's
financial statements in the Recent Form 10-Q and no adverse change has occurred
with respect to the prospects, operations, properties or other assets, other
than changes which would not have a material adverse effect on the Company and
its subsidiaries taken as a whole. The authorized capital stock, the number of
shares issued and outstanding (excluding the Shares), the number of shares
issuable and reserved for issuance pursuant to the Company's stock option plans,
the number of shares issuable and reserved for issuance pursuant to securities
exercisable for, or convertible into or exchangeable for any shares of capital
stock as of the Closing Date, is as described in Exhibit B.
(g) Except as set forth in the SEC Reports, there are no legal actions
or administrative proceedings or investigations instituted, or to the best
knowledge of the Company threatened, against the Company or its subsidiaries
which would prohibit or challenge the transactions contemplated by this
Agreement, which would have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(h) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or
sales in any security or solicited any offers to buy any security under
circumstances that would require registration under the Securities Act of 1933,
as amended (the "Act"), of the issuance of the Shares to the Purchasers. The
issuance of the Shares to the Purchasers will not be integrated with any other
issuance of the Company's securities (past, current or future) for purposes of
the Act or any applicable rules of Nasdaq. The Company will not make any offers
or sales of any security (other than the Shares) that would cause the offering
of the Shares to be integrated with any other offering of securities by the
Company for purposes of any registration requirement under the Act or any
applicable rules of Nasdaq.
(i) Performance of this Agreement and compliance with the provisions
hereof will not violate any provision of any applicable law or of the Articles
of Incorporation or Bylaws of the Company, or of any of its subsidiaries, and,
will not conflict with or result in any breach of any of the terms,
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conditions or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon, any of the
properties or assets of the Company, or of any of its subsidiaries, pursuant to
the terms of any indenture, mortgage, deed of trust or other agreement or
instrument binding upon the Company, or any of its subsidiaries, other than such
breaches, defaults or liens which would not have a material adverse effect on
the Company and its subsidiaries taken as a whole. Except as set forth in the
SEC Reports, the Company is not in default under any provision of its charter or
by-laws or other organizational documents or under any provision of any
agreement or other instrument to which it is a party or by which it is bound or
of any law, governmental order, rule or regulation, other than defaults which
would not have a material adverse effect on the Company and its subsidiaries
taken as a whole.
Section 2.2. Representations, Warranties and Covenants of Purchasers. Each
Purchaser hereby represents, warrants and covenants to the Company as follows
with respect to itself:
(a) The Purchaser (i) is an "accredited investor" within the meaning
of Rule 501(a) of Regulation D promulgated under the Act, (ii) is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions
with respect to investments in equity securities representing an investment
decision like that involved in the purchase of its Shares, including investments
in securities issued by the Company, and (iii) has requested, received, reviewed
and considered all information it deems relevant in making a fully informed
investment decision to purchase its Shares. The Purchaser has, in connection
with its decisions to purchase its Shares, relied solely upon the SEC Reports
and the representations and warranties of the Company contained in this
Agreement.
(b) The Purchaser is acquiring its Shares for its account for
investment purposes only. The Purchaser has no present intention of distributing
such Shares or any arrangement or understanding with any other persons regarding
the distribution of such Shares within the meaning of Section 2(11) of the Act,
other than as contemplated in this Agreement.
(c) The Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of its Shares, except in
compliance with the Act and the Commission's rules and regulations promulgated
thereunder ("Rules and Regulations"), including, in the event of any resale
under the Resale Shelf Registration Statement, the methods of resale set forth
in the Resale Shelf Registration Statement and the prospectus delivery
requirements under the Act.
(d) The Purchaser has full power, legal right, capacity and authority
to enter into, execute and deliver this Agreement and to carry out the
transactions contemplated hereby.
(e) This Agreement has been duly executed and delivered by the
Purchaser and constitutes a valid and binding obligation of the Purchaser,
enforceable against it or him in accordance with its terms.
ARTICLE III DEMAND SHELF REGISTRATION.
Section 3.1. At any time prior to December 14, 2003 ("Second Anniversary"),
each Purchaser may make a written request of the Company ("Shelf Registration
Request") to file with the Commission (and all applicable state securities
authorities) under Rule 415 of the Act a Form S-3 resale shelf Registration
Statement covering the Purchaser's resale of the Shares ("Resale Shelf
Registration Statement").
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Section 3.2. Subject to Section 3.4, the Company shall use its commercially
reasonably best efforts to have the Resale Shelf Registration Statement declared
effective under the Act by the Commission (and under applicable state securities
laws by all applicable state securities authorities) within ninety (90) days of
the Shelf Registration Request and keep the Resale Shelf Registration Statement
continuously effective until the earlier of the Second Anniversary or the date
that all of the Shares have been sold.
Section 3.3. The Company may include, from time to time or at any time, as
part of the Resale Shelf Registration Statement, additional shares of Common
Stock proposed to be sold by the Company and/or other holders of Common Stock
(or its equivalent or securities convertible thereinto).
Section 3.4. The Company shall be entitled, in its reasonable judgment,
from time to time or at any time, to delay filing a Resale Shelf Registration
Statement and suspend resales under the Resale Shelf Registration Statement for
limited periods ("Grace Periods") if events or circumstances at or affecting the
Company would make the Resale Shelf Registration Statement inaccurate or
misleading in any material respect; provided, however, that during any
consecutive 365 day period, such Grace Periods shall not, in total, exceed 120
days. The Company shall give prompt written notice to the Purchasers of each
such suspension and shall likewise give prompt written notice to the Purchasers
of termination of each suspension. Each Purchaser hereby agrees to postpone the
sale of any Shares pursuant to the Resale Shelf Registration Statement during
each such suspension of sales.
Section 3.5. The Purchasers shall pay the expenses of any attorneys,
accountants or other advisors or professionals which they engage in connection
with the sale of Shares pursuant to the Resale Shelf Registration Statement and
all brokerage commissions, fees and discounts, if any, associated with the
Shares being sold by the Purchasers pursuant to the Resale Shelf Registration
Statement. The Company shall pay all other costs and expenses incurred by the
Company directly associated with the Resale Shelf Registration Statement.
ARTICLE IV PIGGY BACK REGISTRATION.
Section 4.1. If, at any time prior to the Second Anniversary, the Company
shall determine to register shares of Common Stock under the Act for the purpose
of effecting a firmly underwritten public offering thereof for cash, then the
Company shall give written notice thereof to each of the Purchasers (a "Piggy
Back Notice"); provided, however, that the Company shall not be required to give
a Piggy Back Notice to the Purchasers, and the Purchasers shall not have the
rights set forth in this Article IV, if (i) the proposed registration is not to
be made on Commission Forms X-0, X-0 or S-3 (or any successor or similar forms);
or (ii) is primarily a registration of (a) securities other than Common Stock;
(b) a stock option, incentive compensation, profit sharing, dividend
reinvestment, director or employee stock purchase or other employee benefit plan
or of securities issued or issuable pursuant to any such plan; or (c) securities
proposed to be issued in exchange for securities or assets of, or in connection
with a merger, share exchange, consolidation or other business acquisition or
combination involving another corporation or entity (the types of registrations
and registration statements described in clauses (i) and (ii) are herein called
the "Excluded Registrations").
Section 4.2. If a Purchaser desires to participate in a firmly underwritten
public offering being evidenced by a registration statement that is not an
Excluded Registration, then such Purchaser shall provide written notice of such
desire to the Company ("Piggy Back Registration Request") within fifteen (15)
days after the date of such Purchaser's receipt of a Piggy Back Notice. If the
Company timely receives such a Piggy Back Registration Request, then the Company
shall use its commercially reasonable best efforts to register all of the Shares
requested to be registered by each participating Purchaser pursuant to its Piggy
Back Registration Request concurrently with the registration of Common Stock by
the Company on its own behalf and on the same terms and conditions of offering
and sale as contemplated and agreed to by the Company ("Piggy Back
Registration"). Each Purchaser requesting to participate in a Piggy Back
Registration hereby agrees that it will sell its Shares subject thereto on the
same terms and conditions of offering and sale (including, without limitation,
purchase price and underwriting discount or
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commission per share, but excluding any differing allocation agreed to by the
Company with respect to any over-allotment option granted) as agreed to by the
Company in connection with its sale of Common Stock thereunder.
Section 4.3. The Company shall not be required to include any Shares which
have been requested to be registered by the Purchasers in any Piggy Back
Registration under this Article IV if the lead managing underwriter(s) thereof
believe(s) that, in its (or their) judgment, the inclusion of the Shares
proposed to be included by the Purchasers would interfere with the timing,
pricing or marketing of the Common Stock being offered by the Company; provided,
however, any reduction in the number of Shares requested to be included by the
Purchasers in any such Piggy Back Registration will be made as closely as
equitably possible on a pro rata basis (based on the relative number of shares
of Common Stock requested to be included) amongst the Purchasers and any other
holders of Common Stock (or its equivalent or securities convertible thereinto)
also requesting participation in such Piggy Back Registration. The Company may,
in its discretion for any reason whatsoever and without the consent of
Purchasers, withdraw, delay or suspend any such Piggy Back Registration and/or
abandon any proposed Piggy Back Registration in which any of the Purchasers has
requested to participate.
Section 4.4. Purchasers shall pay the expenses of any attorneys,
accountants or other advisors or professionals which they engage in connection
with the sale of Shares pursuant to such Piggy Back Registration and all
underwriting or brokerage commissions, fees and discounts, if any, associated
with the Shares being sold by the Purchasers pursuant to the Piggy Back
Registration. The Company shall pay all other reasonable costs and expenses
incurred by the Company directly associated with any such Piggy Back
Registration.
Section 4.5. The Company shall have the sole right to choose the managing
underwriters (including the lead managing underwriter(s)) to underwrite any
Piggy Back Registration.
ARTICLE V OTHER REGISTRATION MATTERS.
Section 5.1. Each Purchaser hereby agrees that, prior to the Second
Anniversary, such Purchaser will not offer, sell or otherwise dispose of any
Shares, in the open market or otherwise, during any period when such Purchaser
beneficially owns more than 100,000 Shares and has knowledge that a Company
registration statement is contemplated or pending or within ninety (90) days
after the effective date under the Act with the Commission of any Company
registration statement, in each case relating to a public offering or
distribution of Common Stock (other than an Excluded Registration), other than
as allowed under this Agreement.
Section 5.2. In connection with the Resale Shelf Registration Statement or
any Piggy Back Registration in which a Purchaser participates, such Purchaser
shall furnish, or cause to be furnished, such information with respect thereto,
and render such cooperation reasonably requested by the Company or any
underwriter or broker-dealer involved in such offering. In addition, Purchasers
hereby agree to execute and enter into such additional agreements of indemnity,
the lead managing underwriter(s)' customary underwriting agreement and any other
underwriting documents in connection therewith as are reasonably requested by
the lead managing underwriter(s) of such offering or by the Company.
Section 5.3. Upon receiving any notice hereunder respecting any
contemplated or pending registration statement of the Company relating to a
public offering or distribution of Common Stock, the Purchasers shall strictly
maintain the confidentiality of such contemplated or pending registration
statement, shall make no public disclosures or comments with respect thereto and
shall not trade in the Company's Common Stock while in possession of such
confidential information.
Section 5.4. In connection with the Resale Shelf Registration Statement and
any Piggy Back Registration in which a Purchaser participates, (a) such
Purchaser shall indemnify and hold harmless the Company and any underwriters of
such offering and their respective officers, directors and controlling
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persons from any and all loss, liability, claims, damages and expenses
(including reasonable attorneys fees and disbursements) incurred by them and
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact furnished by such Purchaser for use in such registration
statement or by the omission or alleged omission by such Purchaser to furnish
material facts required to be stated therein or necessary to make the statements
therein not misleading, in light of the circumstances under which they were
made, and (b) the Company shall indemnify and hold harmless such Purchaser from
any and all loss, liability, claims, damages and expenses (including reasonable
attorneys fees and disbursements) incurred by them and arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
furnished by the Company for use in such registration statement or by the
omission by the Company or alleged omission to furnish material facts pertaining
to the Company and required to be stated therein or necessary to make the
statements therein not misleading, in light of the circumstances under which
they were made.
Section 5.5. The Company shall provide each Purchaser a reasonable
opportunity to review and comment upon any registration statement that
references such Purchaser prior to the time it is filed with the Commission, and
provide the Purchasers with prompt notice of any comment or inquiry by the SEC
staff that relates the Purchasers or the Agreement.
Section 5.6. With a view to making available to the Purchasers the benefits
of Rule 144 under the Act or any other similar rule or regulation of the
Commission that may at any time permit the Purchasers to sell securities of the
Company to the public without registration ("Rule 144"), prior to the Second
Anniversary, the Company agrees to:
(a) comply with the provisions of paragraph (c) (1) of Rule 144; and
(b) file with the Commission in a timely manner all reports and other
documents required to be filed by the Company pursuant to Section 13 or 15(d)
under the Exchange Act; and, if at any time it is not required to file such
reports but in the past had been required to or did file such reports, it will,
upon the request of any Purchaser, make available other information as required
by, and so long as necessary to permit sales of such Purchaser's Shares pursuant
to Rule 144.
ARTICLE VI RIGHT TO PARTICIPATE.
Section 6.1. If, at any time prior to the Second Anniversary, the Company
proposes to sell additional shares of Common Stock to a third party for cash,
each Purchaser shall have the right to purchase, on the same terms and
conditions being offered to such third party, the number of additional shares of
Common Stock required to maintain its pre-transaction, fully diluted, ownership
percentage in the Company. The rights granted under this Section 6.1 shall not
apply to issuances or sales of Common Stock pursuant to: a public offering or
distribution, a transaction that is (or could be) registered under an Excluded
Registration, the Company's Rights Agreement, the Company's nonemployee director
compensation program or an offering or distribution for consideration other than
cash.
ARTICLE VII ADDITIONAL MATTERS.
Section 7.1. Except as provided in Section 3.5 and Section 4.4, each party
shall bear its own costs in connection with this Agreement and the transactions
contemplated by this Agreement.
Section 7.2. This Agreement shall be governed by and construed and
interpreted in accordance with the internal laws of the State of Wisconsin.
Section 7.3. Except as otherwise provided in this Agreement, all notices,
requests, demands and other communications hereunder shall be deemed to be duly
given and received if delivered by hand or if mailed by certified or registered
mail with postage prepaid: (a) if to the Company, to Fresh Brands, Inc., Attn:
Xxxxxx X. Xxxx, 0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 (with a copy to:
Xxxxxx X. Xxxxx, Esq., Xxxxx & Xxxxxxx, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxx 53202) and (b) if to a Purchaser, to the address set forth opposite
such Purchaser's name on Exhibit A. Notwithstanding the
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foregoing, each of the parties hereto may change its address at which notice is
to be received or designate another person to receive notice by giving notice to
all other parties and persons entitled to receive notice in the manner provided
in this Section 7.3.
Section 7.4. This Agreement embodies the entire agreement between the
parties hereto with respect to the transactions contemplated herein.
Section 7.5. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute but one and the same instrument. Executed signature pages may be
removed from counterpart agreements and attached to one or more fully executed
copies of this Agreement. Signature pages hereto may be validly and effectively
executed by facsimile.
Section 7.6. This Agreement shall not be assigned by the Purchasers,
without the Company's consent, which consent shall not be unreasonably withheld,
and any attempted assignment without such consent shall be null and void and
without legal effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties hereto, any successor and assign of the
Company and, if the consent required by this Section is properly secured, the
successors and assigns of the Purchasers.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
FRESH BRANDS, INC.
By: /s/ Xxxxxx X. Xxxx /s/ Xxxxxx X. Xxxxxx
------------------------------------ ------------------------------------
Xxxxxx X. Xxxx Xxxxxx X. Xxxxxx
President and Chief Executive Officer
CALM WATERS PARTNERSHIP
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
General Partner
Exhibit A
PURCHASER INFORMATION
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Number Price Per Price Paid by
Purchaser of Shares Share Purchaser
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Calm Waters Partnership 184,849 $16.50 $3,050,008.50
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Xxxxxx X. Xxxxxx 15,151 $16.50 $249,991.50
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TOTAL 200,000 $3,300,000.00
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COMPANY WIRE INSTRUCTIONS
Bank: M&I Xxxxxxxx & Ilsley Bank, Xxxxxxxxx, XX 00000
ABA: 000000000
Acct #: 18243940
Name on Acct. Fresh Brands, Inc.
Exhibit B
CAPITALIZATION SCHEDULE1
Common Stock ($.05 par)
Shares Authorized 20,000,000
Shares Issued 8,750,342
Shares Outstanding 5,039,174
Stock Option Plans
1995 Equity Incentive Plan
Shares of Common Stock Authorized 1,750,000
Grants Issued (adjusted for splits and net of those cancelled) 918,400
Net Grants Available 831,600
2001 Nonemployee Director Equity Incentive Plan
Shares of Common Stock Authorized 200,000
Grants Issued 25,000
Net Grants Available 175,000
Preferred Stock ($.05 par)
Shares Authorized 1,000,000
Shares Issued -
Shares Outstanding -
---------------------
1 Excludes 5,037,174 shares of Common Stock reserved for issuance under the
Company's Rights Agreement.
