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EXHIBIT 5
WARRANT AGREEMENT
BETWEEN
AUTHENTIC SPECIALTY FOODS, INC.
AND
SHANSBY PARTNERS, L.L.C.
Dated as of September 2, 1997
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TABLE OF CONTENTS
1. ISSUANCE OF WARRANTS; FORM OF WARRANT . . . . . . . . . . . . 1
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY . . . 2
(A) EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . 2
(B) POWER AND AUTHORITY . . . . . . . . . . . . . . . . . . 2
(C) RESERVATION, ISSUANCE AND DELIVERY OF COMMON STOCK . . 2
(D) EXECUTION AND DELIVERY . . . . . . . . . . . . . . . . 2
(E) VALID AND BINDING OBLIGATIONS . . . . . . . . . . . . . 2
(F) AUTHORIZATION AND CONSENTS . . . . . . . . . . . . . . 3
3. REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. EXCHANGE OF WARRANT CERTIFICATES . . . . . . . . . . . . . . . 3
5. TRANSFER OF WARRANTS . . . . . . . . . . . . . . . . . . . . . 3
6. TERM OF WARRANTS; EXERCISE OF WARRANTS . . . . . . . . . . . . 3
7. COMPLIANCE WITH GOVERNMENT REGULATIONS . . . . . . . . . . . . 4
8. PAYMENT OF TAXES . . . . . . . . . . . . . . . . . . . . . . . 5
9. MUTILATED OR MISSING WARRANTS . . . . . . . . . . . . . . . . 5
10. RESERVATION OF WARRANT SHARES; PURCHASE AND CANCELLATION OF
WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES . . 5
11.1. MECHANICAL ADJUSTMENTS . . . . . . . . . . . . . . . . 6
11.2. NOTICE OF ADJUSTMENT . . . . . . . . . . . . . . . . . 11
11.3. PRESERVATION OF PURCHASE RIGHTS UPON MERGER,
CONSOLIDATION, ETC . . . . . . . . . . . . . . . . . . 11
11.4. STATEMENT ON WARRANTS . . . . . . . . . . . . . . . . . 12
11.5. COMPANY TO PREVENT DILUTION . . . . . . . . . . . . . . 12
12. FRACTIONAL INTERESTS . . . . . . . . . . . . . . . . . . . . . 12
13. REGISTRATION UNDER THE SECURITIES ACT OF 1933 . . . . . . . . 12
14. CERTIFICATE TO BEAR LEGENDS . . . . . . . . . . . . . . . . . 12
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15. NO RIGHTS AS STOCKHOLDERS; NOTICE TO WARRANT HOLDERS . . . . . 13
16. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
17. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
18. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 15
19. SUPPLEMENTS AND AMENDMENTS . . . . . . . . . . . . . . . . . . 15
20. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . 15
21. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
22. MERGER OR CONSOLIDATION OF THE COMPANY . . . . . . . . . . . . 15
23. BENEFITS OF THIS WARRANT AGREEMENT . . . . . . . . . . . . . . 16
24. CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
25. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 16
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WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of September 2, 1997, between Authentic
Specialty Foods, Inc., a Texas corporation (the "Company"), and Shansby
Partners, L.L.C., a Delaware limited liability company ("Shansby Partners").
WHEREAS, the Company currently contemplates undertaking an initial
public offering (the "Initial Public Offering") of shares of its Common Stock,
par value $1.00 per share ("Common Stock"); and
WHEREAS, in connection with the Initial Public Offering the Company
proposes to issue to Shansby Partners, common stock purchase warrants (the
"Warrants") to purchase up to 350,000 shares of Common Stock (the "Warrant
Shares"), each Warrant entitling the holder thereof to purchase one share of
Common Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. ISSUANCE OF WARRANTS; FORM OF WARRANT. The Company will issue
and deliver the Warrants to Shansby Partners, or to an affiliate thereof
designated by Shansby Partners (together with successors of Shansby Partners,
the "Warrant Holder(s)"), upon the consummation of the Initial Public Offering.
The number of Warrants to be issued and delivered shall be 350,000. The text
of each Warrant, as well as the purchase form and each assignment form to be
printed on the reverse thereof shall be substantially as set forth in Exhibit A
attached hereto. The Warrants shall be executed on behalf of the Company by
the signature of the present or any future Chairman of the Board, President,
Treasurer or Vice President of the Company, under its corporate seal, affixed
or in facsimile, attested by the signature of the present or future Secretary
or an Assistant Secretary of the Company. A Warrant bearing the signature of
individuals who were at any time the proper officers of the Company shall bind
the Company notwithstanding that such individuals or any of them shall have
ceased to hold such offices prior to the delivery of such Warrant or did not
hold such offices on the date of this Warrant Agreement.
Warrants shall be dated as of the date of execution thereof by the
Company either upon initial issuance or upon division, exchange, substitution
or transfer.
The number of shares of Common Stock purchasable hereunder and the
Exercise Price (as defined in Section 6 hereof) payable therefor, are subject
to adjustment as hereinafter set forth.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents, warrants and covenants as follows:
(a) EXISTENCE. The Company is a corporation, duly organized
and validly existing under the laws of the State of Texas and is
authorized to do business and is in good standing as a foreign
corporation in every jurisdiction in which it owns or leases real
property
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or in which the nature of its business requires it to be so qualified,
except where the failure to so qualify, individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect.
(b) POWER AND AUTHORITY. The Company has all requisite
corporate power and authority, and has taken all corporate action
necessary, to execute, deliver and perform this Warrant Agreement, to
grant, issue and deliver this Warrant and to authorize and reserve for
issuance and, upon payment from time to time of the Exercise Price, to
issue and deliver the shares of Common Stock or other securities
issuable upon exercise of the Warrant. This Warrant Agreement has been
duly executed and delivered by the Company.
(c) RESERVATION, ISSUANCE AND DELIVERY OF COMMON STOCK. There
have been reserved for issuance, and the Company shall at all times keep
reserved, out of the authorized and unissued shares of Common Stock, a
number of shares sufficient to provide for the exercise of the rights of
purchase represented by the Warrant, and such shares, when issued upon
receipt of payment therefor in accordance with the terms of the Warrant
and of this Warrant Agreement, will be legally and validly issued, fully
paid and nonassessable and will be free of any preemptive rights of
shareholders or any restrictions.
(d) EXECUTION AND DELIVERY. Neither the execution or delivery
of this Warrant Agreement nor the consummation of the transactions
herein contemplated does or will result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company is
bound or to which any o the property or assets of the Company is
subject, nor will such action result in any violation of any provision
of the Articles of Incorporation or Bylaws of the Company or any statute
or any order, rule or regulation or any court or governmental agency or
body having jurisdiction over the Company or any of its properties; and
no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issuance and sale of the Warrant or the consummation
by the Company of the transactions contemplated by this Warrant
Agreement.
(e) VALID AND BINDING OBLIGATIONS. This Warrant Agreement and
all related documents, when duly executed and delivered, will be legal,
valid and binding obligations of the Company, enforceable in accordance
with their respective terms, subject to any applicable bankruptcy,
insolvency or other laws of general application affecting creditors'
rights and judicial decisions interpreting any of the foregoing.
(f) AUTHORIZATION AND CONSENTS. No authorization, consent,
approval, exemption, franchise, permit or license of, or filing with,
any governmental authority or other person is required to authorize, or
is otherwise required in connection with, the valid execution and
delivery by the Company of this Warrant Agreement and all related
documents and the performance by the Company of its obligations
hereunder.
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3. REGISTRATION. The Warrants shall be numbered and shall be
registered on the books of the Company (the "Warrant Register") as they are
issued. The Warrants shall be registered initially in such names and such
denominations as Shansby Partners has specified to the Company.
4. EXCHANGE OF WARRANT CERTIFICATES. Subject to any restriction
upon transfer set forth in this Warrant Agreement, each Warrant certificate may
be exchanged at the option of the Warrant Holder thereof for another
certificate or certificates of different denominations entitling the Warrant
Holder thereof to purchase upon surrender to the Company or its duly authorized
agent a like aggregate number of Warrant Shares as the certificate or
certificates surrendered then entitle such Warrant Holder to purchase. Any
Warrant Holder desiring to exchange a Warrant certificate or certificates shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, the certificate or certificates to be so exchanged.
Thereupon, the Company shall execute and deliver to the person entitled thereto
a new Warrant certificate or certificates, as the case may be, as so requested.
Any Warrant issued upon exchange, transfer or partial exercise of the Warrants
shall be the valid obligation of the Company, evidencing the same generic
rights and entitled to the same generic benefits under this Warrant Agreement
as the Warrants surrendered for such exchange, transfer or exercise.
5. TRANSFER OF WARRANTS. Subject to the provisions of Section 14
hereof, the Warrants shall be transferrable only on the Warrant Register upon
delivery to the Company of the Warrant certificate or certificates duly
endorsed by the Warrant Holder or by his duly authorized attorney-in-fact or
legal representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. In all cases of transfer by an attorney-
in-fact, the original power of attorney, duly approved, or an official copy
thereof, duly certified, shall be deposited with the Company. In case of
transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited with the Company in its
discretion. Upon any registration of transfer, the Company shall deliver a new
Warrant or Warrants to the person entitled thereto.
6. TERM OF WARRANTS; EXERCISE OF WARRANTS.
(a) Each Warrant entitles the Warrant Holder thereof to
purchase one share of Common Stock at any time after September 2, 1998
until 5:00 P.M., Houston time, on September 3, 2002 (the "Expiration
Date") at a purchase price equal to the price to public of shares of
Common Stock received in the Initial Public Offering ($8.00 per share),
subject to adjustment in accordance with Section 11 hereof (the
"Exercise Price"). The Exercise Price and the number of shares issuable
upon exercise of Warrants are subject to adjustment upon the occurrence
of certain events, pursuant to the provisions of Section 11 of this
Warrant Agreement.
(b) Subject to the provisions of this Warrant Agreement, each
Warrant Holder shall have the right, which may be exercised as expressed
in such Warrants, to purchase from the Company (and the Company shall
issue and sell to such Warrant Holder) the number of
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fully paid and nonassessable shares of Common Stock specified in such
Warrants, upon surrender to the Company, or its duly authorized agent,
of such Warrants, with the purchase form on the reverse thereof duly
filled in and signed, and upon payment to the Company of the Exercise
Price, as adjusted in accordance with the provisions of Section 11 of
this Warrant Agreement or upon a net exercise as described below in
clause (ii), for the number of shares in respect of which such Warrants
are then exercised. The Warrant Holder may (i) pay the Exercise Price
in cash, by certified check, official bank check or wire transfer,
payable to the order of the Company, or by the surrender to the Company
of Common Stock of the Company having a Market Price equal to the
Exercise Price or (ii) exercise the Warrants for "Net Warrant Shares."
The number of Net Warrant Shares will be determined as described by the
following formula: Net Warrant Shares = [WS x (MP-EP)]/MP. "WS" is the
number of Warrant Shares issuable upon exercise of the Warrants or
portion of Warrants in question. "MP" is the Market Price of the Common
Stock on the last trading day preceding the date of the request to
exercise the Warrants. "Market Price" shall mean the then current
market price per share of Common Stock, as determined in paragraph
11.1(e). "EP" shall mean the Exercise Price.
Upon such surrender of Warrants, and payment of the Exercise
Price, with cash or securities, or upon a net exercise as aforesaid, the
Company at its expense shall issue and cause to be delivered with all
reasonable dispatch (but in any event within 5 business days) to or upon
the written order of the Warrant Holder and in such name or names as the
Warrant Holder may designate, a certificate or certificates for the
number of full shares of Common Stock so purchased upon the exercise of
such Warrants, together with cash, as provided in Section 12 of this
Warrant Agreement, in respect of any fraction of a share of such stock
otherwise issuable upon such surrender. Such certificate or
certificates shall be deemed to have been issued and any person so
designated to be named therein shall be deemed to have become a holder
of record of such shares as of the date of the surrender of such
Warrants and payment of the Exercise Price or receipt of shares by net
exercise as aforesaid. The rights of purchase represented by the
Warrants shall be exercisable, at the election of the Warrant Holders
thereof, either in full or from time to time in part (but not as to a
fractional share of Common Stock) and, in the event that any Warrant is
exercised in respect of less than all of the shares purchasable on such
exercise at any time prior to the Expiration Date, a new certificate
evidencing the remaining Warrant or Warrants will be issued.
7. COMPLIANCE WITH GOVERNMENT REGULATIONS. The Company covenants
that if any share of Common Stock required to be reserved for purposes of
exercise or conversion of Warrants require, under any federal or state law or
applicable governing rule or regulation of any national securities exchange,
registration with or approval of any governmental authority, or listing on any
such national securities exchange, before such shares may be issued upon
exercise, the Company will use its best efforts to cause such shares to be duly
registered, approved or listed on the relevant national securities exchange, as
the case may be.
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8. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants and any securities issued pursuant to Section 11 hereof;
provided, however, that the Company shall not be required to pay any tax or
taxes that may be payable in respect of any transfer involved in the issuance
or delivery of any Warrants or certificates for Warrant Shares and any
securities issued pursuant to Section 11 hereof in a name other than that of
the Warrant Holder of such Warrants.
9. MUTILATED OR MISSING WARRANTS. In case any of the Warrants shall
be mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant,
or in lieu of and in substitution for the Warrant lost, stolen or destroyed, a
new Warrant of like tenor and representing an equivalent right or interest.
10. RESERVATION OF WARRANT SHARES; PURCHASE AND CANCELLATION OF
WARRANTS. The Company shall at all times reserve, out of the authorized and
unissued shares of Common Stock, a number of shares sufficient to provide for
the exercise of the rights of purchase represented by the Warrants and every
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of any of the rights of purchase aforesaid are hereby irrevocably
authorized and directed at all times until the Expiration Date to reserve such
number of authorized and unissued shares as shall be requisite for such
purpose. The Company will keep a copy of this Warrant Agreement on file with
every transfer agent for any shares of the Company's capital stock issuable
upon the exercise of the rights of purchase represented by the Warrants. The
Company will supply any transfer agent with duly executed stock certificates
for such purpose and will itself provide or otherwise make available any cash
which may be issuable as provided by Section 12 of this Warrant Agreement. The
Company will furnish to the Transfer Agent and any such subsequent transfer
agent a copy of all notices of adjustments, and certificates related thereto,
transmitted to each Warrant Holder pursuant to Section 11.2 hereof. All
warrants surrendered in the exercise of the rights thereby evidenced shall be
canceled, and such canceled Warrants shall constitute sufficient evidence of
the number of shares of stock which have been issued upon the exercise of such
Warrants (subject to adjustment as herein provided). No shares of stock shall
be subject to reservation in respect of the Warrants subsequent to the
Expiration Date except to the extent necessary to comply with the terms of this
Warrant Agreement.
11. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
number and kind of securities purchasable upon the exercise of each Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as hereinafter defined.
11.1. MECHANICAL ADJUSTMENTS. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price
shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in
shares of Common Stock or make a distribution in shares of Common
Stock, (ii) subdivide its outstanding shares of Common Stock into
a larger number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number
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of shares of Common Stock or (iv) issue by reclassification of
its shares of Common Stock other securities of the Company
(including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon
exercise of each Warrant immediately prior thereto shall be
adjusted so that the Warrant Holder shall be entitled to receive
the kind and number of Warrant Shares or other securities of the
Company which he would have owned or have been entitled to
receive after the happening of any of the events described above,
had such Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto
regardless of whether the Warrants are exercisable at the time of
the happening of such event or at the time of any record date
with respect thereto. An adjustment made pursuant to this
paragraph (a) shall become effective immediately after the
effective date of such event retroactive to the record date, if
any, for such event.
(b) In case the Company shall issue rights, options or
warrants to holders of its outstanding Common Stock, without any
charge to such holders, entitling them to subscribe for or
purchase shares of Common Stock at a price per share that is
lower at the record date mentioned below than the greater of (a)
the Exercise Price or (b) the then current Market Price per share
of Common Stock (as determined in accordance with paragraph (e)
below) (the "Greater Price"), then in each such case the number
of Warrant Shares thereafter purchasable upon the exercise of
each Warrant shall be determined by multiplying the number of
Warrant Shares theretofore purchasable upon exercise of each
Warrant by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding on the date of issuance of
such rights, options or warrants plus the number of additional
shares of Common Stock offered for subscription or purchase, and
of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights, options
or warrants plus the number of shares that the aggregate offering
price of the total number of shares of Common Stock offered for
subscription or purchase would purchase at the Greater Price.
Such adjustment shall be made whenever such rights, options or
warrants are issued, and shall become effective immediately after
the record date for the determination of stockholders entitled to
receive such rights, options or warrants.
(c) In case the Company shall distribute to holders of
its shares of Common Stock evidences of its indebtedness or
assets (including cash dividends or other cash distributions) or
rights, options or warrants, or convertible or exchangeable
securities containing the right to subscribe for or purchase
shares of Common Stock (excluding those referred to in paragraph
(b) above), then in each case the number of Warrant Shares
thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Warrant Shares
theretofore purchasable upon the exercise of each Warrant by a
fraction, of which the
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numerator shall be the then current Market Price per share of
Common Stock (as determined in accordance with paragraph (e)
below) on the date of such distribution, and of which the
denominator shall be the then current Market Price per share of
Common Stock, less the then fair value (as determined in good
faith by the Board of Directors of the Company, whose
determination shall be conclusive) of the portion of the assets
or evidences of indebtedness so distributed or of such
subscription rights, options or warrants, or of such convertible
or exchangeable securities applicable to one share of Common
Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination
of stockholders entitled to receive such distribution.
In the event of a distribution by the Company to holders
of its shares of Common Stock of stock of a subsidiary or
securities convertible into or exercisable for such stock, then
in lieu of an adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant, the Warrant
Holder, upon the exercise thereof at any time after such
distribution, shall be entitled to receive from the Company, such
subsidiary or both, as the Company shall determine, the stock or
other securities to which such Warrant Holder would have been
entitled if such Warrant Holder had exercised such Warrant
immediately prior thereto regardless of whether the Warrants are
exercisable at such time, all subject to further adjustment as
provided in this subsection 11.1; provided, however, that no
adjustment in respect of dividends or interest on such stock or
other securities shall be made during the term of a Warrant or
upon the exercise of a Warrant.
(d) In case the Company shall sell and issue shares of
Common Stock (other than pursuant to rights, options, warrants,
or convertible securities initially issued before the date of
this Warrant Agreement) or rights, options, warrants or
convertible securities containing the right to subscribe for or
purchase shares of Common Stock (excluding shares, rights,
options, warrants or convertible securities issued in any of the
transactions described in paragraphs (a), (b) or (c) above) at a
price per share of Common Stock (determined, in the case of such
rights, options, warrants or convertible securities, by dividing
(w) the total of the amount received or receivable by the Company
(determined as provided below) in consideration of the sale and
issuance of such rights, options, warrants or convertible
securities, by (x) the total number of shares of Common Stock
covered by such rights, options, warrants or convertible
securities) lower than the Greater Price in effect immediately
prior to such sale and issuance, then the number of Warrant
Shares thereafter purchasable upon the exercise of the Warrants
shall be determined by multiplying the number of Warrant Shares
theretofore purchasable upon exercise by a fraction, of which the
numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such shares, rights,
options, warrants or convertible securities plus the number of
additional shares of Common Stock sold or subject to issuance
pursuant
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to such rights, options, warrants or convertible securities, and
of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such shares, rights,
options, warrants or convertible securities plus the number of
shares of Common Stock which the aggregate consideration received
or receivable (determined as provided below) for such sale or
issuance would purchase at the Greater Price. Such adjustment
shall be made successively whenever such an issuance is made.
For the purposes of such adjustments, the consideration received
or receivable by the Company for rights, options, warrants or
convertible securities shall be deemed to be the consideration
received by the Company for such rights, options, warrants or
convertible securities, plus the consideration or premiums stated
in such rights, options, warrants or convertible securities to be
paid for the shares of Common Stock covered thereby. In case the
Company shall sell and issue shares of Common Stock, or rights,
options, warrants or convertible securities containing the right
to subscribe for or purchase shares of Common Stock, for a
consideration consisting, in whole or in part, of property other
than cash or its equivalent, then in determining the "price per
share of Common Stock" and the "consideration received or
receivable by the Company" for purposes of the first sentence of
this paragraph (d), the Board of Directors shall determine, in
its discretion, the fair value of said property, and such
determination, if made in good faith, shall be binding upon all
Holders.
(e) The "Market Price" on any day shall mean the
average of the daily market prices of Common Stock over a period
of 20 consecutive business days prior to the day as of which
"Market Price" is being determined. The Market Price for each
such business day shall be the average of the closing prices on
such day of the Common Stock on all domestic exchanges on which
the Common Stock is then listed, or, if there shall have been no
sales on any such exchange on such day, the average of the
highest bid and lowest asked prices on all such exchanges at the
end of such day, or, if the Common Stock shall not be so listed,
the average of the representative bid and asked prices quoted in
the NASDAQ National Market System ("NASDAQ System") as of 3:30
P.M., New York time, on such day, or if the Common Stock shall
not be quoted in the NASDAQ System, the average of the high and
low bid and asked prices on such day in the domestic over-
the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization. If the
Common Stock is listed on any domestic exchange the term
"business days" as used in this sentence shall mean business days
on which such exchange is open for trading. If at any time the
Common Stock is not listed on any domestic exchange or quoted in
the NASDAQ System or the domestic over-the-xxxxxxx market, the
"Market Price" shall be deemed to be the highest of (i) the book
value thereof, as determined by any firm of independent public
accountants of recognized standing selected by the Board of
Directors of the Company, as at the last day of any month ending
within 60 days preceding the date as of which the determination
is to be made, (ii) the fair value thereof, which shall be
reasonably
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determined by the Board of Directors of the Company as of a date
which is within 15 days of the date as of which the determination
is to be made, or (iii) the Exercise Price in effect immediately
prior to the determination of Market Price. Notwithstanding the
foregoing, for the purpose of any calculation under paragraph (d)
above (A) with respect to any issuance of options under the
Company's employee or director compensation stock option plans as
in effect or as adopted by the Board of Directors of the Company
on the date hereof, the term "current market price", in such
instances shall mean the fair market price on the date of the
issuance of any such option determined in accordance with the
Company's employee compensation stock option plans as in effect
or adopted by the Board of Directors of the Company on the date
hereof; and (B) with respect to any issuances of Common Stock (or
rights, options, warrants or convertible securities containing
the right to subscribe for or purchase shares of Common Stock) in
connection with bona fide corporate transactions (other than
issuances in such transactions for cash or similar
consideration), the term "fair market price" shall mean the fair
market price per share as determined in arm's-length negotiations
by the Company and such other parties (other than affiliates or
subsidiaries of the Company) to such transactions as reflected in
the definitive documentation with respect thereto, unless such
determination is not reasonably related to the closing market
price on the date of such determination.
(f) In any case in which this Section 11.1 shall require
that any adjustment in the number of Warrant Shares be made
effective as of immediately after a record date for a specified
event, the Company may elect to defer until the occurrence of the
event the issuing to the holder of any Warrant exercised after
that record date the shares of Common Stock and other securities
of the Company, if any, issuable upon the exercise of any Warrant
over and above the shares of Common Stock and other securities of
the Company, if any, issuable upon the exercise of any Warrant
prior to such adjustment; provided, however, that the Company
shall deliver to such Warrant Holder a due xxxx or other
appropriate instrument evidencing the holder's right to receive
such additional shares or securities upon the occurrence of the
event requiring such adjustment.
(g) No adjustment in the number of Warrant Shares
purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one percent
(1%) in the number of Warrant Shares purchasable upon the
exercise of each Warrant; provided, however, that any adjustments
which by reason of this paragraph (g) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one-
thousandth of a share.
(h) Whenever the number of Warrant Shares purchasable
upon the exercise of each Warrant is adjusted, as herein
provided, the Warrant Price payable upon the exercise of each
Warrant shall be adjusted by multiplying such Warrant Price
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immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Warrant Shares purchasable upon
the exercise of such Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of
Warrant Shares purchasable immediately thereafter.
(i) No adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant need be made under
paragraphs (b), (c) and (d) if the Company issues or distributes
to each Warrant Holder the rights, options, warrants, or
convertible or exchangeable securities, or evidences of
indebtedness or assets referred to in those paragraphs which each
Warrant Holder would have been entitled to receive had the
Warrants been exercised prior to the happening of such event or
the record date with respect thereto regardless of whether the
Warrants are exercisable at the time of the happening of such
event or at the time of any record date with respect thereto. No
adjustment need be made for a change in the par value of the
Warrant Shares.
(j) No adjustment need be made for rights to purchase
Warrant Shares pursuant to an employee or director benefit plan
approved by the Company's Board of Directors.
(k) For the purpose of this Section 11.1, the term
"shares of Common Stock" shall mean (i) the class of stock
designated as the Common Stock of the Company at the date of this
Warrant Agreement, or (ii) any other class of stock resulting
from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to
no par value, or from no par value to par value. In the event
that at any time, as a result of an adjustment made pursuant to
paragraph (a) above, the Warrant Holders shall become entitled to
purchase any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so
purchasable upon exercise of each Warrant and the Exercise Price
of such securities shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Warrant Shares contained in
paragraphs (a) through (i), inclusive, above, and the provisions
of Section 6 and Sections 11.2 through 11.4, inclusive, with
respect to the Warrant Shares, shall apply on like terms to any
such other securities. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of
any such shares shall be considered an issue or sale of Common
Stock for the purposes of this Section 11.
(l) Upon the expiration of any rights, options, warrants
or conversion or exchange privileges, if any thereof shall not
have been exercised, the Warrant Price and the number of shares
of Common Stock purchasable upon the exercise of each Warrant
shall, upon such expiration, be readjusted and shall thereafter
be such as it
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would have been had it been originally adjusted (or had the
original adjustment not been required, as the case may be) as if
(A) the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the exercise
of such rights, options, warrants or conversion or exchange
rights and (B) such shares of Common Stock, if any, were issued
or sold for the consideration actually received by the Company
upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant
of all such rights, options, warrants or conversion or exchange
rights whether or not exercised; provided, however, that no such
readjustment shall have the effect of increasing the Warrant
Price or decreasing the number of Warrant Shares by an amount in
excess of the amount of the adjustment initially made with
respect to the issuance, sale or grant of such rights, options,
warrants or conversion or exchange rights.
11.2. NOTICE OF ADJUSTMENT. When the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Exercise Price of
such Warrant Shares is adjusted, as herein provided, the Company shall
promptly mail by first class, postage prepaid, to each Warrant Holder
notice of such adjustment or adjustments and a certificate of a firm of
independent public accountants selected by the Board of Directors of the
Company (who may be the regular accountants employed by the Company)
setting forth the number of Warrant Shares purchasable upon the exercise
of each Warrant and the Exercise Price of such Warrant Shares after such
adjustment and setting forth a brief statement of the facts requiring
such adjustment and setting forth the computation by which such
adjustment was made. Such certificate, absent manifest error, shall be
conclusive evidence of the correctness of such adjustment.
11.3. PRESERVATION OF PURCHASE RIGHTS UPON MERGER,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or
merger of the Company into another person, or in case of any sale,
transfer or lease to another person of all or substantially all of the
assets of the Company or in the case of any share exchange involving the
Common Stock of the Company, the Company or such successor or purchaser,
as the case may be, shall execute with each Warrant Holder an agreement
that each Warrant Holder shall have the right thereafter upon payment of
the Exercise Price in effect immediately prior to such action to
purchase upon exercise of each Warrant the kind and amount of shares and
other securities and property which the Warrant Holder would have owned
or have been entitled to receive after the happening of such
consolidation, merger, share exchange, sale, transfer or lease had such
Warrant been exercised immediately prior to such action regardless of
whether the Warrants are exercisable at the time of such action. Such
agreement shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 11. The provisions of this Section 11.3 shall similarly apply
to successive consolidations, mergers, share exchanges, sales, transfers
or leases.
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11.4. STATEMENT ON WARRANTS. Even though Warrants heretofore or
hereafter issued may continue to express the same price and number and
kind of shares as are stated in the Warrants initially issuable pursuant
to this Warrant Agreement; the parties understand and agree that such
Warrants will represent rights consistent with any adjustments in the
Exercise Price or the number or kind of shares purchasable upon the
exercise of the Warrants.
11.5. COMPANY TO PREVENT DILUTION. If any event or condition
occurs as to which other provisions of this Section 11 are not strictly
applicable or, if strictly applicable, would not fairly protect the
exercise or purchase rights of this Warrant in accordance with the
essential intent and principles of such provisions, or which might
materially and adversely affect the exercise or purchase rights of the
Warrant Holders under any provision of the Warrants, then the Company
shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect
such exercise and purchase rights as aforesaid, and any adjustment
necessary with respect to the Exercise Price and the number of Warrant
Shares purchasable hereunder so as to preserve without dilution the
rights of the holders of Warrants. In no event shall any such
adjustment have the effect of increasing the Exercise Price as otherwise
determined pursuant to this Section 11.
12. FRACTIONAL INTERESTS. The Company shall not be required to issue
fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Warrant Holder, the number of full Warrant Shares that shall be issuable upon
the exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section
12, be issuable on the exercise of any Warrant (or specified portion, thereof),
the Company shall pay an amount in cash equal to the Market Price for one share
of the Common Stock on the trading day immediately preceding the date the
Warrant is presented for exercise, multiplied by such fraction.
13. REGISTRATION UNDER THE SECURITIES ACT OF 1933. Shansby Partners
represents and warrants to the Company that it will not dispose of the Warrant
or Warrant Shares except pursuant to (i) an effective registration statement,
or (ii) an applicable exemption from registration under the Securities Act of
1933, as amended (the "Act"). In connection with any sale by Shansby Partners
pursuant to clause (ii) of the preceding sentence, it shall furnish to the
Company an opinion of counsel reasonably satisfactory to the Company, at
Shansby Partners expense, to the effect that such exemption from registration
is available in connection with such sale.
14. CERTIFICATE TO BEAR LEGENDS. The Warrants shall be subject to a
stop-transfer order and the certificate or certificates therefor shall bear the
following legend by which each Warrant Holder shall be bound:
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF
COMMON STOCK OR OTHER SECURITIES ISSUABLE
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UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO (i) AN EFFECTIVE REGISTRATION STATEMENT, OR (ii) AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. ANY SALE PURSUANT TO CLAUSE (ii) OF THE PRECEDING
SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH EXEMPTION
FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE."
The Warrant Shares or other securities issued upon exercise of the
Warrants shall, unless issued pursuant to an effective registration statement,
be subject to a stop-transfer order and the certificate or certificates
evidencing any such Warrant Shares or securities shall bear the following
legend by which the Warrant Holder thereof shall be bound:
"THE SHARES OR OTHER SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT, OR (i) AN APPLICABLE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. ANY
SALE PURSUANT TO CLAUSE (ii) OF THE PRECEDING SENTENCE MUST BE
ACCOMPANIED BY AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH
EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH
SALE."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution under a registration statement of the
securities represented thereby) shall also bear such legend unless in the
opinion of counsel satisfactory to the Company, the securities represented
thereby need no longer be subject to the restrictions contained herein. The
provisions of this Section 14 shall be binding upon all subsequent holders of
certificates bearing the above legend and shall also be applicable to all
subsequent holders of any Warrants.
15. NO RIGHTS AS STOCKHOLDERS; NOTICE TO WARRANT HOLDERS. Nothing
contained in this Warrant Agreement or in any of the Warrants shall be
construed as conferring upon the Warrant Holders or their transferees the right
to vote or to receive dividends or to consent or to receive notice as
stockholders in respect of any meeting of stockholders for the election of
directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company. If, however, at any time prior to the expiration
of the Warrants and prior to their exercise, any of the following events shall
occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution
(other than a cash dividend) to the holders of its shares of Common
Stock; or
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(b) the Company shall offer to the holders of its shares of
Common Stock any additional shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock or any right
to subscribe to or purchase any thereof; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger, sale, transfer
or lease of all or substantially all of its property, assets, and
business as an entirety) shall be proposed,
then in any one or more of said events the Company shall (a) give notice in
writing of such event to the Warrant Holders as provided in Section 17 hereof
and (b) if there are more than 100 Warrant Holders, cause notice of such event
to be published once in The Wall Street Journal (national edition), such giving
of notice and publication to be completed at least 15 days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution, or
subscription rights, or for the determination of stockholders entitled to vote
on such proposed dissolution, liquidation or winding up. Such notice shall
specify such record date or the date of closing the transfer books, as the case
may be. Failure to publish, mail or receive such notice or any defect therein
or in the publication or mailing thereof shall not affect the validity of any
action taken in connection with such dividend, distribution or subscription
rights, or such proposed dissolution, liquidation or winding up.
16. EXPENSES. The Company shall pay all legal and other reasonable
out-of-pocket expenses of the Warrant Holders and of their counsel. The
Company agrees to reimburse Shansby Partners upon demand for its reasonable
out-of-pocket costs and expenses incurred in connection with the preparation,
review, negotiation, execution and delivery of this Warrant Agreement and all
other related documents. Notwithstanding the foregoing provisions of this
Section 16, Shansby Partners shall pay, and shall not be reimbursed for, any
expenses incurred by Shansby Partners in connection with any legal opinion
regarding the transferability of the Warrant or the Warrant Shares required
pursuant to Section 13.
17. NOTICES. Any notice pursuant to this Warrant Agreement to be
given or made by the holder of any Warrant or Warrant Shares to or on the
Company shall be sufficiently given (i) when made, if by hand delivery, (ii)
upon confirmation, if made by telecopier, or (iii) one business day after being
deposited with a reputable next-day courier, postage prepaid, addressed as
follows:
Authentic Specialty Foods, Inc.
0000 Xxxxxx X
Xxxxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
Notices or demands authorized by this Warrant Agreement to be given or made to
or on the Warrant Holder of any Warrant or Warrant Shares shall be sufficiently
given or made (except as otherwise provided in this Warrant Agreement) if sent
by registered mail, return receipt requested, postage
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prepaid, addressed to such Warrant Holder at the address of such Warrant Holder
as shown on the Warrant Register or the Common Stock Register, as the case may
be.
18. GOVERNING LAW. THIS WARRANT AGREEMENT, THE WARRANTS AND ALL
RELATED DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
19. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant Holders
may from time to time supplement or amend this Warrant Agreement in order to
cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Warrant Holder may deem necessary or desirable and
which shall not be inconsistent with the provisions of the Warrants and which
shall not adversely affect the interests of the Warrant Holders. Any amendment
to this Warrant Agreement may be effected with the consent of Warrant Holders
of at least a majority of the total then outstanding Warrants (for this purpose
Warrant Shares shall be deemed to be Warrants in the proportion that Warrant
Shares are then issuable upon the exercise of Warrants); provided that, any
amendment which shall have the effect of materially adversely affecting the
interests of any Warrant Holder shall not be effective with respect to such
Warrant Holder if such Warrant Holder shall not have consented thereto.
20. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of the Company and all covenants and agreements
made herein shall survive the execution and delivery of this Warrant Agreement
and the Warrants and shall remain in force and effect until the Expiration
Date.
21. SUCCESSORS. All representations and warranties of the Company
and all covenants and agreements of this Warrant Agreement by or for the
benefit of the Company or the Warrant Holders shall bind and inure to the
benefit of their respective successors and assigns hereunder.
22. MERGER OR CONSOLIDATION OF THE COMPANY. So long as this Warrant
Agreement remains in effect, the Company will not merge or consolidate with or
into, or sell, transfer or lease all or substantially all of its property to,
or exchange shares with any other corporation unless the successor or
purchasing corporation, as the case may be (if not the Company), shall
expressly assume, by supplemental agreement executed and delivered to the
Warrant Holders, the due and punctual performance and observance of each and
every covenant and condition of this Warrant Agreement to be performed and
observed by the Company.
23. BENEFITS OF THIS WARRANT AGREEMENT. Nothing in this Warrant
Agreement shall be construed to give to any person or corporation other than
the Company and the Warrant Holders, any legal or equitable right, remedy or
claim under this Warrant Agreement, but this Warrant Agreement
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shall be for the sole and exclusive benefit of the Company and the holders of
the Warrants and Warrant Shares.
24. CAPTIONS. The captions of the sections and subsections of this
Warrant Agreement have been inserted for convenience and shall have no
substantive effect.
25. COUNTERPARTS. This Warrant Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts together shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed on the day, month and year first above written.
AUTHENTIC SPECIALTY FOODS, INC.
By: /s/ XXXXXX X. XXXXXX, XX.
---------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Chief Financial Officer
and Vice President
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