[EXECUTION COPY]
NOTE AND WARRANT PURCHASE AGREEMENT
Dated as of February 1, 1994
_________________________________________
By and Between
Kash N' Karry Food Stores, Inc.
and
Green Equity Investors, L.P.
NOTE AND WARRANT PURCHASE AGREEMENT
This Note and Warrant Purchase Agreement ("Agreement") is
entered into as of February 1, 1994 by and between Kash N' Karry
Food Stores, Inc., a Delaware corporation (the "Company") and
Green Equity Investors, L.P., a Delaware limited partnership (the
"Purchaser").
In consideration of the mutual covenants and agreements
herein contained, the parties hereto covenant and agree as
follow:
1. Purchase and Sale of Note and Warrants. Subject
to the terms and conditions herein set forth, in case the Company
shall give notice to the Purchaser on or before February 4, 1994,
as hereinafter provided, the Company shall sell to the Purchaser,
and the Purchaser shall purchase from the Company, a note in
substantially the form of Exhibit A hereto (the "Note") in an
aggregate principal amount not exceeding $2,000,000 at a price
equal to the principal amount thereof, together with the Initial
Warrant (as defined in Section 3 below).
Subject to satisfaction of the conditions in
Section 5 hereof, the purchase and delivery of the Note and
Initial Warrant shall take place at the offices of Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel, New York, New York upon the
irrevocable notice (which may be telephonic) of the Company
(which notice must be received by the Purchaser prior to 12:00
noon, New York time) on the requested borrowing date (the
"Closing Date") specifying the amount to be borrowed under the
Note and the account or accounts to which the purchase price
therefor is to be transferred.
2. Fees and Expenses. In consideration of the
commitment of Purchaser to purchase the Note and the Warrants and
its arrangement of financing therefor, concurrently with the
execution hereof, the Company shall pay to the Purchaser, in
immediately available funds, a fee in the amount of $50,000. The
Company hereby agrees in addition to pay, promptly upon receipt
of request therefor, all out-of-pocket fees and expenses (other
than commitment fees) incurred by the Purchaser in connection
with the preparation and negotiation of this Agreement and the
financing therefor (including reasonable attorneys' fees and
expenses) and to pay or reimburse the Purchaser, promptly upon
receipt of request therefor, all costs and expenses (including
reasonable attorneys' fees and expenses) incurred by it in
connection with the enforcement or attempted enforcement of this
Agreement or the Note, and any expenses incurred as a result of
the purchase of a participation contemplated by the Seventh
Amendment to the Credit Agreement.
3. Issuance of Warrants. In the event the Company
elects to cause the Purchaser to acquire the Note, the Company
shall concurrently issue to the Purchaser, for no additional
consideration, a warrant in substantially the form of Exhibit B
hereto (the "Initial Warrant") to purchase the number of shares
of common stock, $.01 par value, of the Company (the "Shares,"
which term shall include all securities issuable under the
warrant) equal to 2% of the Fully Diluted Shares of the Company
as of the Closing Date. "Fully Diluted Shares" shall mean and
include all shares of common stock outstanding on any relevant
date of determination, and all shares of common stock issuable
upon exercise of warrants, options (including employee stock
options) and any other securities convertible (whether or not
presently convertible or exercisable) into or exercisable for the
purchase of common stock of the Company, including the Shares
issuable upon exercise of the Warrants. If the Closing Date were
the Date hereof and the entire $2,000,000 were borrowed, the
number of Shares purchasable with the Initial Warrant would be
63,235.
In the event the Note is not, for any reason, paid
in full on the date that payment thereunder is due, the Company
hereby agrees to issue, for no additional consideration, an
additional warrant substantially in the form of Exhibit B hereto
(the "Additional Warrant") to purchase such number of Shares as,
when added to the number of Shares purchasable with the Initial
Warrant, is equal to 5% of the Fully Diluted Shares of the
Company. To the extent that less than $2,000,000 is borrowed
pursuant to this Agreement, the number of Shares subject to the
Initial Warrant and Additional Warrant shall be proportionately
reduced.
The Company hereby agrees that the holders of the
Shares issuable pursuant to the Initial Warrant and, if issued,
the Additional Warrant (collectively, the "Warrants") shall have
registration rights with respect to such Shares which are
equivalent to the most favorable such rights as have been, or
hereafter may be, granted to any holder of the common stock (or
other class of securities into which common stock of the Company
may hereafter be converted) of the Company.
4. Representations and Warranties. In order to
induce the Purchaser to enter into this Agreement and to purchase
the Note and the Warrants, the Company represents and warrants to
the Purchaser as follows:
(a) Authority. (i) The Company has the
requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Note, and the
Warrants. The execution, delivery and performance of this
Agreement, the Note and the Warrants, and the consummation of the
transactions contemplated thereby have been duly authorized by
all necessary corporate action on the part of the Company.
(ii) Each of the Agreement,
the Note and the Warrants is or will be, as the case may be, duly
executed and delivered by the Company and constitutes a legal,
valid and binding obligation, enforceable against it in
accordance with its terms (except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by
equitable principles relating enforceability).
(b) No Conflict. The execution, delivery and
performance by the Company of this Agreement, the Note and the
Warrants do not and will not (i) conflict with or violate the
Company's certificate of incorporation or bylaws, (ii) conflict
with or result in a breach of or constitute (with or without
notice or lapse of time or both) a default under a Requirement of
Law or material Contractual Obligation of the Company, or require
termination of any material Contractual Obligation, (iii) result
in or require the creation or imposition of any Lien whatsoever
upon any of the properties or assets of the Company or (iv)
require any approval of stockholders of the Company.
(c) Government Consent. The execution, delivery
and performance by the Company of this Agreement, the Note and
the Warrants do not and will not require any registration with,
consent or approval of, or notice to, or other action with or by,
any governmental authority, except filing, consents or notices
which have been, or will in due course be, made, obtained or
given.
(d) Capitalization. On the date hereof, the
capital stock of the Company is as set forth on Exhibit C hereto.
All of such outstanding shares were duly and validly issued and
are fully paid and nonassessable. Except as set forth on Exhibit
C hereto, there are outstanding no rights to subscribe for or
purchase, or any warrants or options for the purchase of, or any
agreements (contingent or otherwise) providing for the issuance
of, or any calls, commitments or claims of any character relating
to any of the Company's capital stock or any securities
convertible into or exchangeable for any of its capital stock.
The Shares to be issued to the Purchaser upon exercise of the
Warrants have been duly authorized for issuance and, when sold
and delivered against payment therefor as provided therein, will
be validly issued, fully paid and nonassessable. There are no
preemptive rights as to any of the outstanding shares of the
Company's capital stock.
(e) Financial Statements and Projections. The
audited financial statements for the fiscal year ended August 1,
1993, and unaudited financial statements for the quarter ended
October 1, 1993 of the Company were prepared in accordance with
GAAP, except as otherwise noted therein, and fairly represent the
consolidated financial position of the Company as of the
respective dates thereof, and the results of operations and
changes in the financial position of the Company for each of the
periods covered thereby, subject, in the case of any unaudited
interim financial statements, to changes resulting from audit and
normal year-end adjustments. The Company has no material
obligations, contingent liabilities or liabilities for taxes,
long term leases or material or unusual forward or long term
commitments which are not reflected in such financial statements
and the notes thereto. The "Daily Cash Availability/Revolver
Projections" were prepared in a manner consistent with the
current accounting practices of the Company, are based upon
reasonable assumptions, and represent the Company's good faith
estimates as to the matters set forth therein.
(f) Other Representations and Warranties. The
Company hereby incorporates by reference as if set forth herein
in full, and restates to the Purchaser, all of the
representations and warranties set forth in that certain Credit
Agreement dated as of October 12, 1988 among the Company, Bank of
America and the other senior lenders named therein, as amended to
date (the "Credit Agreement"), except to the extent any such
representation or warranty is not required to be restated by the
Company in connection with any reborrowing under the aforesaid
Credit Agreement.
5. Conditions Precedent. The Purchaser's obligation
to purchase and pay for the Note and to acquire the Initial
Warrant shall be subject to fulfillment on or before the Closing
Date of the following conditions:
(a) Opinion of Counsel. The Purchaser shall have
received from Kramer, Levin, Naftalis, Nessen, Kamin & Frankel,
counsel for the Company, an opinion, dated the Closing Date, in
substantially the form of Exhibit D attached hereto.
(b) Financing. The Purchaser shall have
completed arrangements with a financial institution, or shall
have issued a call for and received the requisite capital from
its limited partners, in each case in an amount sufficient to
fund the purchase of the Note at 100% of its face amount.
(c) Representations and Warranties. The
representations and warranties in Section 4 hereof shall be true
and correct in all material respects as if made on the Closing
Date, and the Company shall deliver to the Purchaser a
certificate of its Chief Executive Officer to such effect.
(d) Seventh Amendment. The Seventh Amendment to
the Credit Agreement shall have been executed and delivered by
the parties thereto and shall have become effective by its terms.
(e) Documents. The Purchaser shall have received
(i) an executed Note in the amount being borrowed, (ii) an
executed Initial Warrant representing the appropriate number of
Shares and (iii) such other documents or instruments as the
Purchaser may reasonably request.
6. General Provisions.
(a) Notices. Except as set forth in Section 1
hereof, all communications provided for hereunder shall be in
writing and delivered by hand or sent by first-class mail or
telecopy to the parties at the addresses set forth underneath
their signatures below. All such communications shall be deemed
to have been given or made when so delivered by hand or telecopy,
or five Business Days after being so mailed.
(b) Governing Law. This Agreement, the Note and
the Warrants shall be construed in accordance with and governed
by the laws of the State of New York.
(c) Indemnification. In consideration of the
execution and delivery of this Agreement by the Purchaser, the
Company hereby agrees to indemnify and hold each of the
Purchaser's affiliates, partners, employees and agents (herein
called the "Indemnitees") free and harmless from and against any
and all actions, cause of action, suits, losses, liabilities and
damages, and expenses in connection herewith, including without
limitation, reasonable counsel fees and disbursement (herein
called the "Indemnified Liabilities") incurred by the Indemnitees
or any of them as a result of, or arising out of, or relating to
the execution, delivery, performance or enforcement of this
Agreement, the Note or the Warrants, provided, however, that the
Indemnified Liabilities shall not include any liabilities arising
on account of any Indemnitee's gross negligence or willful
misconduct.
(d) Representation and Warranty. The Purchaser
represents and warrants to the Company that it is acquiring the
Note and Warrants for its own account and with no intention of
distributing any part thereof in any transaction that would be in
violation of the registration requirements of the Securities Act
of 1933, as amended.
(e) Assignment. Neither party may assign its
obligations hereunder without the prior written consent of the
other. The Purchaser may assign it rights (including the Note
and the Warrants) hereunder, however, without notice to or the
consent of the Company. In connection with any such assignment,
the Company hereby expressly waives and agrees not to assert, as
to the assignee of the Note and/or any Warrant, any defenses,
rights, claims or setoffs it may otherwise have in respect of the
Purchaser.
(f) Defined Terms. Terms used in this Agreement
without definition shall have the meanings ascribed thereto in
the Credit Agreement.
(g) Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an
original but all of which shall together constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
COMPANY: KASH N' KARRY FOOD STORES, INC.
6422 Harney Road
Tampa, Florida 33610
Attention: Raymond P. Springer
Telecopy: 813-626-9550
By: /s/ R.P. Springer
Name: R.P. Springer
Title: Executive Vice President
PURCHASER: GREEN EQUITY INVESTORS, L.P.
333 South Grand Avenue, Suite 5400
Los Angeles, California 90071
Telecopy: (213) 625-2043
By: LEONARD GREEN & PARTNERS, L.P.
By: /s/
General Partner
EXHIBIT A
New York City
$2,000,000 February __, 1994
FOR VALUE RECEIVED, the undersigned, KASH N' KARRY FOOD
STORES, INC., a corporation organized and existing under the laws
of the State of Delaware (the "Company"), hereby absolutely and
unconditionally promises to pay, in immediately available funds,
to the order of GREEN EQUITY INVESTORS, L.P., a Delaware limited
partnership (the "Holder"), at the office of its general partner,
Leonard Green & Partners, L.P. 333 South Grand Avenue, Los
Angeles, California, on May 2, 1994, the principal sum of
$2,000,000 or so much thereof as shall be outstanding, together
with interest on the principal balance outstanding hereunder from
time to time from the date hereof through and including the
maturity hereof on May 2, 1994. The principal balance
outstanding hereunder from time to time shall bear interest from
the date advanced until paid at a rate per annum equal to the
Base Rate plus 1%. The "Base Rate" means the higher of:
(a) the rate of interest publicly announced
from time to time by Bank of America National
Trust and Savings Association, a national banking
association (the "Bank") in San Francisco,
California, as its "reference rate," or
(b) one-half percent per annum above the
latest Federal Funds Rate.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board
(including any such successor, "H.15(519)") for such day opposite
the caption "Federal Funds (Effective)." If on any relevant day
such rate is not yet published in H.15(519), the rate for such
day will be the rate set forth in the daily statistical release
designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by
the Federal Reserve Bank of New York (including any such
successor, the "Composite 3:30 p.m. Quotation") for such day
under the caption "Federal Funds Effective Rate." If on any
relevant day the appropriate rate for such previous day is not
yet published in either H.15(519) or the Composite 3:30 p.m.
Quotations, the rate for such day will be the arithmetic mean of
the rates for the last transaction in overnight Federal Funds
arranged prior to 9:00 a.m. (New York time) on that day by each
of three leading brokers of Federal Funds transactions in New
York City selected by the Holder. All computations of interest
A-1
at all times as the Base Rate is determined by the Bank's
"reference rate" shall be made on the basis of a year of 365 or
366 days, as the case may be, and actual days elapsed. All other
computations of interest shall be made on the basis of a 360-day
year and actual day elapsed. Interest shall accrue during each
period during which interest is computed from the first day
thereof to the last day thereof. This Note is issued pursuant to
a Note and Warrant Purchase Agreement between the Company and the
Holder dated as of February 1, 1994 (the "Loan Agreement") and is
subject to the terms and provisions thereof, which are hereby
incorporated in this Note by reference.
This Note may be prepaid, without premium, in full at
any time and in part, from time to time, on one (1) day's notice
to the Holder provided that no amount so prepaid may be
reborrowed. All prepayments shall be in amounts of $100,000 or
any multiple of $50,000 in excess thereof. All prepayments shall
be accompanied by a payment of accrued interest to the date of
such prepayment on the amount so prepaid. Notwithstanding the
foregoing, no prepayment hereunder may be made if at the time or
as a result thereof, there shall be a Potential Event of Default
or Event of Default (as those terms are defined in the Credit
Agreement, as in turn defined in the Loan Agreement). The entire
unpaid principal balance and all accrued and unpaid interest
shall be paid in full on May 2, 1994. Any overdue principal and
any overdue interest from time to time outstanding shall bear
interest payable on demand at a rate which is 3% per annum in
excess of the Base Rate.
If(x) the Company shall fail to make any payment when
due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) on any indebtedness of the
Company other than under this Note, and the aggregate amount of
such indebtedness is $1,000,000 or more, or (y) any other breach,
default or event of default shall occur under any instrument,
agreement or indenture pertaining to any such indebtedness, and
as a result the holder thereof shall accelerate the maturity of
such indebtedness, the entire unpaid principal amount of this
Note and all of the unpaid interest accrued hereon may be
declared due and, thereupon, shall become immediately payable,
upon notice from the Holder to the Company.
The Company promises to pay all costs and expenses,
including reasonable attorney's fees and disbursements, incurred
in the collection and enforcement of this Note or any appeal of a
judgment rendered thereon. The Company hereby waives
presentment, demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance
and enforcement of this Note, and also hereby assents to
extensions of the time of payment or forbearance or other
indulgences without notice.
This Note and the obligations of the Company hereunder
shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
A-2
IN WITNESS WHEREOF, KASH N' KARRY FOOD STORES, INC. has
caused this Note to be executed by its duly authorized officer on
the ____ day of _____, 1994.
KASH N' KARRY FOOD STORES, INC.
By:____________________________
Name:__________________________
Title:_________________________
A-3
EXHIBIT B
[FORM OF WARRANT]
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES
OF COMMON STOCK OR OTHER SECURITIES ISSUABLE UPON EXERCISE
THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT, OR (ii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THIS CORPORATION, THAT AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
IS AVAILABLE.
No._________ Warrant to Purchase
_________________________
Shares of Common Stock
KASH N' KARRY FOOD STORES, INC.
STOCK PURCHASE WARRANTS
This certifies that, for value received, GREEN EQUITY
INVESTORS, L.P. (the "Holder"), is entitled to purchase from KASH
N' KARRY FOOD STORES, INC., a Delaware corporation (the
"Company"), the aggregate number of shares of Common Stock, at
the option of the Holder, shown above at any time after 9:00
a.m., New York City time, on February ___, 1994 (the "Issue
Date") until 5:00 p.m., New York City time, on the Expiration
Date, at a purchase price per share equal to the Warrant Price.
Section 1. Definitions. As used in this Warrant, and
unless the context requires otherwise, the following terms have
the meaning indicated:
"Common Stock" means the Common Stock of the Company,
par value $.01 per share.
"Expiration Date" means the fifth anniversary of the
Issue Date.
"Warrant Price" has the meaning assigned in Section 8
hereof, subject to adjustment as provided in Section 9.
"Warrant" means this Warrant, as the same may be
amended, supplemented or modified in accordance with the terms
hereof.
"Warrant Shares" means the shares of Common Stock
issued or issuable upon exercise of this Warrant.
Section 2. Term of Warrant; Exercise of Warrant.
2.1 Term of Warrant. Subject to the terms hereof, the
Holder shall have the right, which may be exercised at any time
from and after 9:00 a.m., New York City time, on the Issue Date
and until 5:00 p.m., New York City time, on the Expiration Date,
to purchase from the Company the number of fully paid and non-
assessable Warrant Shares which the Holder may at the time be
entitled to purchase on exercise hereof. If and to the extent
this Warrant not exercised prior to 5:00 p.m., New York City
time, on the Expiration Date, it shall become void and all rights
hereunder and all rights in respect hereof shall cease as of such
time.
2.2 Exercise of Warrant. The Warrant may be exercised
upon surrender to the Company at its office at 6422 Harney Road,
Tampa, Florida 33610, or such other office as the Company shall
notify the Holder, in writing, of this Warrant, together with the
Purchase Form included herein duly completed and signed and upon
payment to the Company of the Warrant Price (as defined in and
determined in accordance with the provisions of Sections 8 and 9
hereof), for the number of Warrant Shares in respect of which
this Warrant is then being exercised.
Unless otherwise agreed to by the Company, all payments
of such Warrant Price shall be made by certified of official bank
check payable to the order of the Company.
Subject to Section 3 hereof, upon the surrender of the
Warrant and payment of the Warrant Price as aforesaid, the
Company shall cause to be issued and delivered with all
reasonable dispatch to or upon the written order of the Holder
and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares
so purchased upon the exercise of this Warrant, together with
cash, as provided in Section 10 hereof, in respect of any
fractional Warrant Shares otherwise issuable upon surrender. If
permitted by applicable law, 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 Warrant Shares as of the date of the surrender of
this Warrant and payment of the Warrant Price, as aforesaid.
Each share of Common Stock that may be issued upon exercise of
this Warrant will, upon such issuance, be validly issued, fully
paid, non-assessable, and free from all taxes, liens and charges
with respect to the issue thereof. The rights of purchase
represented by this Warrant shall be exercisable, at the election
of the Holder hereof (subject to Section 2.1 hereof), either in
full or from time to time in part and, in the event that this
Warrant is exercised in respect of less than all of the Warrant
Shares purchasable on such exercise at any time prior to the
Expiration Date, a new Warrant evidencing the right to purchase
the remaining Warrant Shares will be issued.
2.3 Compliance with Government Regulations. The
Company shall have the right to refuse to honor the exercise of
this Warrant, in whole or any part, unless the Holder shall
represent to the Company in writing that its purchase of stock or
other securities pursuant thereto is for its own account and for
investment purposes only and not with a view to distribution or
resale in violation of the registration requirements of state or
federal securities laws.
The Company shall not be required to issue or deliver
any certificates representing shares of stock or other securities
purchased upon the exercise of this Warrant prior to (a) the
completion at the expense of the Company of any registration or
other qualification of such shares or other securities under any
state or federal law or rules or regulation of any governmental
regulatory body or self-regulatory organization which counsel for
the Company shall reasonably determine to be necessary or
advisable, (b) the obtaining from the Holder of a written
agreement and representations with respect to the disposition of
the shares or other securities, or with respect to any other
matters, which counsel for the Company shall reasonably determine
to be necessary or advisable to comply with the terms on which
the shares or other securities have been qualified or registered
under any such law, rules or regulations or to exempt the shares
from such qualification or registration, and (c) the obtaining at
the expense of the Company of any approval or other clearance
from any governmental regulatory body or self-regulatory
organization which such counsel may reasonably determine to be
necessary or advisable; provided, however, that compliance with
the provisions of clauses (a), (b) and (c) of this sentence shall
not be required for the issuance of such certificates if the
Holder shall deliver to the Company an opinion of counsel, which
counsel shall be reasonably acceptable to the Company and which
opinion shall be in form and substance reasonably satisfactory to
the Company, to that effect. If compliance with the provisions
of clauses (a), (b) and/or (c) or the preceding sentence shall be
required, the Company shall use its best efforts, at its expense,
promptly to effect such compliance.
Section 3. Payment of Taxes. The Company will pay all
documentary stamp and other taxes, if any, attributable to the
initial issuance of Warrant Shares upon the exercise hereof;
provided, however, that the Company shall not be required to pay
any tax or other governmental charge which may be payable in
respect of any transfer involved in the issue or delivery of any
certificates or certificates for Warrant Shares in a name other
than that of the Holder, and the Company shall not register any
such transfer or issue any such certificate until such tax or
governmental charge, if required, shall have been paid.
Section 4. Transfer. Subject to compliance with the
restrictions on transfer set forth herein and subject to Section
3, this Warrant shall be transferable upon delivery of the
Warrant duly endorsed by the Holder or by his duly authorized
attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. In all cases of
transfer by an attorney, the original power of attorney, duly
approved, or a copy thereof, duly certified, shall be deposited
and remain 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 and remain with the Company in
its discretion.
Section 5. Exchange of Warrant Certificates. Subject
to the restrictions on transfer contained herein and to such
requirements as the Company may reasonably request to ensure
compliance with applicable law, this Warrant may be exchanged for
another certificate or certificates entitling the Holder hereof
to purchase a like aggregate number of Warrant Shares as this
Warrant shall then entitle the Holder to purchase. The Holder
shall make such request in writing delivered to the Company, and
shall surrender this Warrant, properly endorsed. Thereupon, the
Company shall countersign and deliver to the Holder a new
certificate or certificates, as the case may be, as so requested.
Section 6. Mutilated or Missing Warrants. In case
this Warrant shall be mutilated, lost, stolen or destroyed, the
Company shall issue, countersign and deliver in exchange or
substitution hereof, a new Warrant of like tenor and representing
an equivalent right or interest, but only upon, in case this
Warrant is lost, stolen or destroyed, receipt of evidence
reasonably satisfactory to the Company of such loss, theft or
destruction and a reasonable indemnity therefor. The Holder
shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe.
Section 7. Reservation of Warrant Shares; Purchase of
Warrants.
7.1 Reservation of Warrant Shares. The Company has
reserved out of its authorized Common Stock the number of shares
of Common Stock set forth on the first page hereof for issuance
upon exercise of this Warrant. The Company shall at all times
hereafter until the Expiration Date keep reserved out of its
authorized Common Stock, for issuance upon exercise of this
Warrant, all of the shares not theretofore issued upon such
exercise. If at any time the number of shares of authorized
Common Stock shall not be sufficient to effect the exercise of
this Warrant, the Company will take such corporate action as may
be necessary to increase its authorized but unissued Common
Stock, to such number of shares as shall be sufficient for such
purpose.
Section 8. Warrant Price. Subject to Section 9
hereof, the price at which Warrant Shares shall be purchasable
upon exercise of Warrants (the "Warrant Price") shall be $.435
per share.
Section 9. Adjustment of Warrant Price and Number of
Warrant Shares. The number and kind of securities purchasable
upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time upon the happening of
certain events, in each case occurring on and after the date
hereof, as hereinafter described.
9.1 Adjustment. The number and kind of securities
purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend on
its outstanding Common Stock in shares of Common Stock or make a
distribution to all holders of its outstanding Common Stock in
shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock into a greater number of shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a
smaller number 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 hereof immediately prior thereto shall be adjusted
so that the Holder upon exercise hereof shall be entitled to
receive the kind and number of such Warrant Shares or other
securities of the Company which it would have owned or have been
entitled to receive after the happening of any of the events
described above had this Warrant been exercised immediately prior
to the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this paragraph (a) shall
become effective on the date of the dividend payment,
subdivision, combination or issuance retroactive to the record
date with respect thereto, if any, for such event. Such
adjustment shall be made successively whenever such an issuance
is made.
(b) In the case the Company shall distribute to all
holders of its outstanding Common Stock evidences of its
indebtedness or assets or securities other than such Common Stock
(excluding regular cash dividends and dividends or distributions
referred to in paragraph (a) above) or rights, options or
warrants, or convertible or exchangeable securities, containing
the right to subscribe for or purchase shares of Common Stock,
then in each case the number of Warrant Shares thereafter
purchasable upon the exercise of this Warrant shall be determined
by multiplying the number of such Warrant Shares theretofore
purchasable upon the exercise of this Warrant by a fraction, of
which the numerator shall be the then current market price per
share of Common Stock (as determined in accordance with paragraph
(e)(3) 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 per share of outstanding
Common Stock (as determined by the Board of Directors of the
Company, whose good faith determination shall be conclusive) of
the evidences of indebtedness, assets or securities so
distributed or of such rights, options or warrants, or of such
convertible or exchangeable securities. Such adjustment shall be
made successively 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. No further adjustment shall be made
for the actual issuance of Common Stock upon the conversion,
exercise or exchange of any rights, options, warrants or other
securities in respect of which adjustment has been made pursuant
to this paragraph (b).
(c) In case the Company shall issue shares of Common
Stock (or rights, options, warrants or other securities
convertible into or exercisable or exchangeable for Common Stock)
(excluding (i) shares of Common Stock issued in or as a result of
any of the transactions described in paragraph (a) or (b) above,
(ii) shares of Common Stock issuable upon exercise of stock
options or similar rights granted or to be granted to directors,
employees, consultants, contractors or other agents,
representatives or professionals of the Company pursuant to a
stock option or similar plan approved by the stockholders of the
Company, (iii) shares of Common Stock issued to directors,
employees, consultants, contractors, licensees or other agents,
representatives or professionals of the Company pursuant to any
compensation plan or agreement approved by the stockholders of
the Company, (iv) shares of Common Stock issued pursuant to a
dividend or interest reinvestment plan, or (v) shares of Common
Stock issued in a public offering at a price per share that is
not less than 95% of the then current market price) at a price
per share below the then current market price, then in each such
case the number of Warrant Shares thereafter purchasable upon the
exercise of this Warrant shall be determined by multiplying the
number of Warrant Shares theretofore purchasable upon the
exercise of this Warrant by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on the
date of such issuance (including the shares of Common Stock
issued on the date of such issuance) and the denominator of which
shall be an amount equal to the sum of (i) the total number of
shares of Common Stock outstanding immediately prior to such
issuance plus (ii) the number of shares which the aggregate
consideration received for such issuance would purchase at the
current market price per share of Common Stock (as determined in
accordance with paragraph (e)(3) below) at such record date.
(d) (1) For the purposes of paragraph (c) above, if
the Company shall issue any security, option, warrant or other
right which directly or indirectly may be converted into or
exercised or exchanged for shares of Common Stock, the Common
Stock issuable upon conversion, exercise or exchange of such
securities or rights shall thereupon be deemed to have been
issued and to be outstanding, and the relevant price per share of
Common Stock and the consideration received by the Company upon
conversion, exercise or exchange of such securities or rights
shall be deemed to include the sum of the consideration received
for the issuance of such securities or rights and the minimum
additional consideration payable upon the conversion, exercise or
exchange of such securities or rights. No further adjustment
shall be made for the actual issuance of Common Stock upon the
conversion, exercise or exchange of any such security or right.
(2) For purposes of paragraph (c) above, the
following shall also be applicable: In case the Company shall
issue shares of its Common Stock for a consideration wholly or
partly other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair
value of such consideration as determined in good faith by the
Board of Directors of the Company. Consideration received by the
Company for issuance of its Common Stock shall be determined in
all cases without deduction therefrom of any expenses,
underwriting commissions or concessions incurred in connection
therewith.
(3) For the purpose of any computation under
paragraph (b) or (c) of this Section, the "current market price
per share" of Common Stock at any date shall be the average of
the daily closing prices for 20 consecutive trading days
commencing 30 trading days before the date of such computation.
The "closing price" for each day shall be the last such reported
sales price regular way or, in case no such reported sale takes
place on such day, the average of the closing bid and asked
prices regular way for such day, in each case on the principal
national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if not listed or admitted
to trading, the average of the high bid and low asked prices of
the Common Stock in the over-the-counter market as reported by
NASDAQ or any comparable system. In the absence of one or more
such quotations, the Board of Directors of the Company shall in
good faith determine the current market price on the basis of
such quotations or formula as it considers appropriate, which
determination shall be conclusive.
(e) In any case in which this Section 9.1 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 the Warrant
Shares or other capital stock of the Company issuable upon the
exercise over and above the Warrant Shares or other capital stock
of the Company issuable upon the exercise of this Warrant prior
to such adjustment; provided, however, that the Company shall
deliver to the Holder a due bill or other appropriate instrument
evidencing the Holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(f) 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 this Warrant; provided, however, that any adjustments
which by reason of this paragraph (f) 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
one-hundredth of a share.
(g) Whenever the number of shares of the Warrant
Shares purchasable upon the exercise of this Warrant is adjusted,
as provided in paragraph (a), (b) or (c) of this Section, the
Warrant Price payable upon exercise of this Warrant shall be
adjusted by multiplying such Warrant Price immediately prior to
such adjustment by a fraction, of which the numerator shall be
the number of Warrant Shares purchasable upon the exercise of
this Warrant immediately prior to such adjustment, and of which
the denominator shall be the number of such Warrant Shares
purchasable immediately thereafter; provided, however, that in no
event shall the Warrant Price be less than the par value, if any,
of a share of Common Stock.
(h) No adjustment in the number of Warrant Shares
purchasable upon the exercise of this Warrant need be made under
paragraph (b) of this Section if the Company issues or
distributes to the Holder the rights, options, warrants,
convertible or exchangeable securities, evidences of indebtedness
or assets referred to in those paragraphs which the Holder would
have been entitled to receive had the Warrant been exercised
prior to the happening of such event or the record date with
respect thereto. No adjustment need be made for a change in the
par value of the Warrant Shares.
(i) For the purpose of this subsection 9.1, the term
"shares of Common Stock," shall mean (i) the class of stock
designated as the Common Stock of the Company, par value $.01 per
share, or (ii) any other class of stock resulting from successive
changes or reclassification of such respective classes of 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 Holder shall become entitled to purchase
any securities other than shares of Common Stock, thereafter the
number of such other securities so purchasable upon exercise of
this Warrant and the Warrant 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
(h), inclusive, above, and the provisions of Section 3 and
subsections 9.2 through 9.6, inclusive, with respect to the
Warrant Shares, shall apply on like terms to any such other
securities.
9.2 Notice of Adjustment. Whenever the number of
Warrant Shares purchasable upon the exercise of this Warrant or
the Warrant Price of such Warrant Shares is adjusted, as herein
provided, the Company shall promptly mail by first class, postage
prepaid, to the Holder notice of such adjustment or adjustments.
9.3 No Adjustment for Dividends. Except as provided
in subsection 9.1, no adjustment in respect of any dividends or
other payments or distributions made to holders of securities
shall be made during the term of this Warrant or upon the
exercise of this Warrant.
9.4 Preservation of Purchase Rights upon Merger,
Consolidation, etc. In case of any consolidation of the Company
with or merger of the Company with or into another entity
(whether or not the Company is the surviving corporation) or in
case of any sale, transfer or lease to another entity of all or
substantially all the property of the Company, the Company or
such successor or purchasing corporation, as the case may be,
shall execute an agreement that the Holder shall have the right
thereafter upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon exercise of
this Warrant the kind and amount of securities, cash and property
which it would have owned or have been entitled to receive after
the happening of such consolidation, merger, sale, transfer or
lease had this Warrant been exercised immediately prior to such
action. Upon the execution of such agreement, this Warrant shall
be exercisable only for such securities, cash and property. The
Company shall furnish to the Holder notice of the execution of
any such agreement. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 9.
The provisions of this subsection 9.4 shall similarly apply to
successive consolidations, mergers, sales, transfers or leases.
9.5 Other Adjustment. If any event occurs as to which
in the reasonable opinion of the Holder, in good faith, the other
provisions of this Section 9 are not strictly applicable but the
lack of any adjustment of the number of Warrant Shares issuable
upon exercise of this Warrant and the Warrant Price would not in
the opinion of the Holder fairly protect the rights of the Holder
in accordance with the basic intent and principles of such
provisions, or if strictly applicable would not fairly protect
the rights of the Holder in accordance with the basic intent and
principles of such provisions, then the Holder may appoint a firm
of independent certified public accountants of recognized
national standing (which may be the independent auditors of the
Company), which shall give their opinion upon the necessity and
form of any required adjustment to the number of Warrant Shares
issuable upon exercise of this Warrant and the Warrant Price, on
a basis consistent with the basic intent and principles
established in the other provisions of this Section 9 necessary
to preserve, without dilution, the exercise rights of the Holder.
Upon receipt of such opinion, the Company shall forthwith make
the adjustments described therein.
9.6 Statement on Warrant. Irrespective of any
adjustments in the Warrant Price or the number or kind of
securities purchasable upon the exercise of this Warrant, this
Warrant may continue to express the same price and number and
kind of shares as are stated herein.
Section 10. Fractional Interests. The Company shall
not be required to issue fractional Warrant Shares on the
exercise of this Warrant. If (a) any fraction of a Warrant Share
would, except for the provisions of this Section 10, be issuable
on the exercise of this Warrant (or specified portion thereof),
and (b) the Holder shall have paid the amount due upon such
exercise with respect to such fractional share, then the Company
shall return to such Holder the amount so paid with respect to
such fractional Warrant Share.
Section 11. Registration under the Securities Act.
The Holder represents and warrants to the Company that it will
not dispose of this Warrant or any Warrant Shares except pursuant
to (i) an effective registration statement, or (ii) an opinion of
counsel, reasonably satisfactory to counsel for the Company, that
the proposed disposition of the Warrant or Warrant Shares would
not be in violation of the registration requirements of the
Securities Act. The Holder represents and warrants that it is
acquiring the Warrant and will acquire the Warrant Shares for its
own account and with no intention of distributing or reselling
this Warrant or Warrant Shares or any part thereof in any
transaction that would be in violation of the registration
requirements of the securities laws of the United States of
America or any state, without prejudice, however, to its rights,
consistent with the provisions of this Warrant, to sell or
otherwise dispose of all or any part of this Warrant or any
Warrant Shares under an effective registration statement under
the Securities Act or under an exemption from such registration
available under the Securities Act.
Section 12. Certificates to Bear Legends. The Warrant
Shares or other securities issued upon exercise of this Warrant
shall 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 Holder thereof shall
be bound:
"THE SHARES [OR OTHER SECURITIES] REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED, SOLD OR OTHERWISE EXCEPT PURSUANT
TO (i) AN EFFECTIVE REGISTRATION STATEMENT, OR (ii) AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION,
THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933 IS AVAILABLE."
Section 13. No Rights as Stockholders; Notices to
Holders. Nothing contained in this Warrant shall be construed as
conferring upon the Holder the right to vote or to receive
dividends or to consent or to receive notice as a stockholder in
respect of any meeting of stockholders of the Company for the
election of the directors of the Company or any matter, or any
rights whatsoever as a stockholder of the Company. If, however
at any time prior to the expiration of this Warrant and prior to
its exercise, any of the following events shall occur:
(a) the Company shall declare any dividend payable in
cash or in any securities upon its shares of Common Stock or
make any distribution to the holders of its shares of Common
Stock;
(b) the Company shall offer to all 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 for 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 give
notice to the Holder as provided in Section 14 hereof, such
giving of notice to be completed at least 10 days prior to the
record date in the event of a transaction described in clause (a)
above and at least 20 days prior to the record date in the case
of a transaction referred to in clause (b) or (c) above 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
the 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 mail or receive such notice or any defect therein
or in the 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.
Section 14. Notices. Any notice pursuant to this
Warrant shall be in writing and shall be given by first class,
registered or certified mail, return receipt requested, telecopy,
courier service or personal delivery, if to the Company, at 6422
Harney Road, Tampa, Florida 33610, Attn: Secretary (or such other
address as shall be communicated by the Company to the Holder by
notice in accordance with this Section 14), and if to the Holder,
at such address as shall be communicated by the Holder to the
Company by notice in accordance with this Section 14 (or, in the
absence of such notice, at such address as otherwise appears on
the books and records of the Company).
Section 15. Supplements and Amendments. The
provisions of this Warrant may not be amended, modified or
supplemented, and waiver or consents to departures from the
provisions hereof may not be given, without the written consent
of the Holder.
Section 16. Successors. All the covenants and
provisions of this Warrant by or for the benefit of the Company
and the Holder shall bind and inure to the benefit of their
respective successors and permitted assigns hereunder, provided
that the Company may not assign its rights and obligations
hereunder except by operation of law.
Section 17. Applicable Law. This Warrant shall be
governed by and construed in accordance with the laws of the
State of New York, without giving effect to principles of
conflicts of laws. The United States District Court for the
Southern District of New York or the courts of the State of New
York shall have jurisdiction in any action or proceeding arising
out of or relating to this Warrant.
Section 18. Benefits of this Agreement. Nothing in
this Warrant shall be construed to give to any person or entity
other than the Company and the Holder, any legal or equitable
right, remedy or claim under this Warrant.
Section 19. Captions. The captions of the Sections
and subsections of this Warrant have been inserted for
convenience only and shall have no substantive effect.
IN WITNESS WHEREOF, this Warrant has been duly
executed, as of February ___, 1994.
KASH N' KARRY FOOD STORES, INC.
By:____________________________
Name:_______________________
Title:______________________
ASSIGNMENT
(To be executed only upon assignment of Warrant)
For value received, ___________________ hereby sells,
assigns and transfers unto _________________ this Warrant,
together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _________________
attorney, to transfer this Warrant on the books of the within-
named Company with respect to the number of Warrant Shares set
forth below, with full power of substitution:
Name(s) of No. of
Assignee(s) Address Warrant Shares
And if said number of Warrant Shares shall not be all
the Warrant Shares issuable upon exercise of this Warrant, a new
certificate is to be issued in the name of said undersigned for
the balance remaining of the Warrant shares issuable upon
exercise of this Warrant.
Dated: ________________________, 19__
___________________________________
Note: The above signature
should correspond exactly
with the name on the face
of this Warrant.
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant)
Kash n' Karry Food Stores, Inc.:
The undersigned hereby irrevocably elects to exercise
the right of purchase represented by this Warrant for, and to
purchase hereunder, ______ shares of Common Stock, as provided
for herein, and tenders herewith payment of the exercise price in
full in the form of cash or a certified or official bank check in
the amount of $_______________.
Please issue a certificate or certificates for such
shares of Common Stock in the name of:
Name:________________________________
(Please Print Name, Address, and
(Social Security Number)
And if said number of shares shall not be all the
shares issuable under this Warrant, a new certificate is to be
issued in the name of said undersigned for the balance remaining
of the shares issuable thereunder.
Signature:__________________________
NOTE: The above signature should
correspond exactly with the
name on the first page of this
Warrant or with the name of
the assignee appearing in the
assignment form above.
EXHIBIT C
The Company's authorized capital stock consists of:
(i) 4,000,000 shares of its Common Stock, $.01 par
value, of which (A) 2,819,589 shares are issued and
outstanding and (B) (w) 146,744 are reserved for
issuance pursuant to the Company's employee stock
option plan, (x) 52,250 are reserved for issuance
pursuant to Warrants outstanding to Lucky Stores, Inc.,
(y) 77,500 are reserved for issuance upon the
conversion of the Company's Series C Preferred Stock
and (z) 2,442 shares are held in treasury and reserved
for issuance to members of management, and
(ii) 150,000 shares of Preferred Stock, $.01 par
value, of which (A) 50,000 shares have been designated
and authorized as Series B Cumulative Preferred Shares,
of which 38,750 shares are issued and outstanding, and
(B) 100,000 shares have been designated and authorized
as Series C Convertible Preferred Shares, of which
77,500 shares are issued and outstanding.
C-1
EXHIBIT D
[FORM OF OPINION OF KRAMER, LEVIN,
NAFTALIS, NESSEN, KAMIN & FRANKEL]
[To be subject to customary assumptions and qualifications]
1. The Company is validly existing as a corporation
in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own and operate
its properties, to carry on its business as conducted, to execute
and deliver the Agreement, the Note and the Warrants and to
perform its obligations thereunder. The execution, delivery and
performance of the Agreement, the Note and the Warrants has been
duly authorized by all necessary corporate action on the part of
the Company. The Agreement, the Note and the Warrants have been
duly executed and delivered by the Company and constitute the
valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms.
2. The authorized capital stock of the Company and,
to the best of our knowledge, the issued and outstanding shares
thereof are as described on Exhibit C to the Agreement. To the
best of our knowledge, and except as set forth on Exhibit C,
there are outstanding no rights to subscribe for or purchase, or
any warrants or options for the purchase of, or any agreement
(contingent or otherwise) providing for the issuance of, or any
calls, commitments or claims of any character relating to any of
the Company's capital stock or any securities convertible into or
exchangeable for any of its capital stock. The Shares to be
issued to the Purchaser upon exercise of the Warrants have been
duly authorized for issuance and, when sold and delivered against
payment therefor as provided therein, will be validly issued,
fully paid and nonassessable. There are no preemptive rights as
to any of the outstanding shares of the Company's capital stock.
3. No governmental consents, approvals,
authorizations, registrations, declarations or filings are
required to be obtained by the Company in connection with the
Agreement, the Note or the Warrants or the consummation of the
transactions contemplated thereby.
4. To the best of our knowledge, and without
independent inquiry, there are no actions, suits or proceedings
pending or threatened against the Company, in law or in equity,
before any court, arbitrator or administrative or governmental
body which are reasonably likely (either singly or in the
aggregate) to materially and adversely affect the Company.
5. None of the execution and delivery of the
Agreement, the Note or the Warrants, the consummation of the
transactions contemplated thereby and compliance with the terms
and conditions thereof (A) conflict with, or result in a breach
or violation of, or constitute a default under, any of the terms,
conditions or provisions of (i) the Certificate of Incorporation
of Bylaws of the Company, (ii) any Material Agreement or (iii)
any statute, rule or regulation binding on the Company, (B)
result in the creation of any lien upon any of the properties or
assets of the Company under any Material Agreement or (C) require
any approval of the stockholders of the Company. A "Material
Agreement" for purposes of this opinion shall mean the material
agreements, instruments and undertakings identified on Exhibit I
to this opinion, which have been identified to us by the Company
as the only such agreements, instruments or undertakings by which
the Company or its property is bound, breaches or defaults or
creation or imposition of Liens under which would affect or
purport to affect the Company's ability to execute, deliver and
perform the Agreement, Note or Warrants.
D-1