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GOLDEN STATE ACQUISITION CORPORATION
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PREFERRED STOCK EXCHANGE AGREEMENT
6% CUMULATIVE EXCHANGEABLE PREFERRED STOCK
DATED AS OF APRIL 27, 1995
PREFERRED STOCK EXCHANGE AGREEMENT
This Preferred Stock Exchange Agreement (this "Agreement") is entered into
as of April 27, 1995 by and among Golden State Acquisition Corp., a Delaware
corporation (the "Company"), and the parties signatory hereto (collectively, the
"Junior Investors").
WHEREAS, concurrently herewith, pursuant to that certain Stock Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), the Company
is acquiring up to 100% of the issued and outstanding capital stock (the "GSV
Shares") of Golden State Vintners, a California corporation ("GSV"); and
WHEREAS, pursuant to the Purchase Agreement, the Junior Investors have
agreed that the Company may pay a portion of the purchase price through the
issuance of Junior Preferred Stock (as hereinafter defined);
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms not otherwise defined herein shall
have the respective meanings assigned to such terms in the Purchase Agreement.
"CERTIFICATE OF INCORPORATION" shall mean the Certificate of
Incorporation of the Company, as amended, modified or restated from time to
time.
"COMMON STOCK" shall mean the issued and outstanding Class A Common
Stock, Class B Common Stock, Class D Common Stock and Class E Common Stock.
"ESCROW AGREEMENT" shall mean that certain escrow agreement entered by
and among the Junior Investors, the Company and Xxxxxxxx Kill Xxxxx & Xxxxxxxx,
P.C., as escrow agent, dated the date hereof.
"EXCHANGE STOCK" shall mean the unissued Class B Common Stock into
which the Junior Preferred Stock is exchangeable and the Class B Common Stock
issued upon such exchange.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, business trust, unincorporated
organization or government or other agency or political subdivision thereof or
other entity of any kind.
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"REGISTRATION RIGHTS AGREEMENT" shall mean that certain Registration
Rights Agreement by and among the Company and the Stockholders (as defined
therein), dated the date hereof.
"SECURITIES" shall mean, collectively, the Junior Preferred Stock and
the Exchange Stock.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES PURCHASE AGREEMENT" shall mean that certain Securities
Purchase Agreement by and among the Company, Golden State Vintners and Xxxx
Xxxxxxx Mutual Life Insurance Company, dated the date hereof.
"STOCK APPRECIATION RIGHTS AGREEMENT" shall mean that certain Stock
Appreciation Rights Agreement by and among the Company and Xxxxxxx X. X'Xxxxx,
dated the date hereof.
"STOCKHOLDER AGREEMENT" shall mean that certain agreement, dated the
date hereof, among the Company, FAC, Ltd., a Cayman Islands corporation, and the
Investors (as defined therein).
2. AUTHORIZATION OF SECURITIES. On the terms and subject to the
conditions of this Agreement, the Company proposes to issue 523,980 shares of
its six percent (6%) Junior Exchangeable Preferred Stock (the "Junior Preferred
Stock"), having the rights, preferences and privileges set forth in the
Company's Certificate of Powers, Designations, Preferences and Relative,
Participating, Optional and other Special Rights of Junior Preferred Stock and
Qualifications, Limitations and Restrictions thereof (the "Junior Preferred
Stock Certificate of Designations"), attached hereto as ANNEX A, and the Company
has authorized the sale of the Junior Preferred Stock to the Junior Investors.
The Company has also authorized the issuance of 200,000 shares of its 12%
Cumulative Convertible Senior Preferred Stock (the "Senior Preferred Stock"),
having the rights, preferences and privileges set forth in the Company's
Certificate of Powers, Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Senior Preferred Stock and Qualifications,
Limitations and Restrictions Thereof (the "Senior Preferred Stock Certificate of
Designations"). Under the terms and subject to the conditions set forth herein
and in the Junior Preferred Stock Certificate of Designations, the Junior
Preferred Stock is exchangeable at any time by the Junior Investors into 136,278
shares of the Company's Class B common stock, par value $.0l per share (the
"Class B Common Stock").
3. SALE AND PURCHASE OF PREFERRED STOCK. Upon the terms and subject to
the conditions contained herein, on the Closing Date (as hereinafter defined)
the Company agrees to issue 523,980 shares of Junior Preferred Stock in partial
payment of the purchase price to be paid by the Company to the Junior Investors
for the GSV Shares pursuant to the Purchase Agreement,
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which shares of Junior Preferred Stock shall be held in escrow for the Junior
Investors pursuant to the terms of the Escrow Agreement, a copy of which is
attached hereto as ANNEX B.
4. CLOSING. The closing of the issuance to the Junior Investors of the
Junior Preferred Stock (the "Closing") shall take place at the offices of
Xxxxxxxx, Kill, Olick & Xxxxxxxx, P.C., 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, at 10:00 a.m., New York City time, on April 27, 1995, or at such
other time or day as the parties hereto shall agree (the "Closing Date"). At
the Closing, the Company shall deliver to the Escrow Agent (as defined in the
Escrow Agreement) a certificate evidencing the number of shares of Junior
Preferred Stock set forth below each such Junior Investor's name on the
signature pages hereto. Each certificate shall be registered in each such
Junior Investor's name to be held by the Escrow Agent for such Investor's
benefit.
5. RESTRICTIONS ON TRANSFER.
5.1. REGISTRATION. Each Junior Investor understands and agrees
that the Securities it will be acquiring have not been registered under the
Securities Act and that, accordingly, will not be transferable except as
permitted under exemptions available under the Securities Act, or upon
satisfaction of the registration and prospectus delivery requirements thereof.
Each Junior Investor acknowledges and agrees that it must bear the economic risk
of its investment in the Securities for an indefinite period of time, since the
Securities have not been registered under the Securities Act and, therefore,
cannot be sold unless they are subsequently registered or an exemption from
registration is available.
5.2. LEGEND. Each Junior Investor agrees with the Company that the
certificate or certificates evidencing the Securities, and each certificate
issued in any transfer thereof, will bear the following legends:
"THE SECURITIES REPRESENTED HEREBY (A) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN AVAILABLE EXEMPTION THEREFROM UNDER SAID ACT OR THE RULES
AND REGULATIONS PROMULGATED THEREUNDER, AND (B) ARE SUBJECT TO THE
PROVISIONS, INCLUDING THE LIMITATIONS ON TRANSFER, SET FORTH IN THAT
CERTAIN STOCKHOLDER AGREEMENT BY AND AMONG THE COMPANY AND THE SIGNATORIES
THERETO, AS AMENDED AND MODIFIED FROM TIME TO TIME. A COPY OF SUCH
STOCKHOLDER AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO
THE HOLDER HEREOF UPON WRITTEN REQUEST."
and
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"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Junior Investors that, as of the Closing Date:
6.1. CORPORATE EXISTENCE, POWER, ETC. The Company has been duly
incorporated and is validly existing and in good standing under the laws of the
State of Delaware and is duly qualified as a foreign corporation in good
standing in each jurisdiction where the nature of its activities or of its owned
or leased properties makes such qualification necessary, except where the
failure to so qualify would not have a material adverse effect on the Company.
The Company has all requisite power and authority to carry on its business, to
own and hold its properties and assets, to enter into this Agreement, to issue
the Securities and to carry out the provisions of this Agreement and the terms
and conditions of the Securities. The Company has taken all actions necessary
to authorize it to enter into and perform its obligations under this Agreement,
to issue the Securities and to consummate the transactions contemplated hereby.
This Agreement is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject (i) to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors, rights, (ii) to general
equitable principles and (iii) to the discretion of the court before which any
proceeding therefor may be brought.
6.2. NO VIOLATION. The execution and delivery by the Company of
this Agreement and the performance hereof and the consummation of the
transactions contemplated hereby do not and will not result in a material breach
or violation of any of the terms and provisions of, or constitute a default
under (i) any material agreement or instrument to which the Company is a party
or by which it is bound or (ii) the charter or by-laws of the Company.
6.3. CAPITAL STOCK. After the Closing, the authorized capital
stock of the Company will consist of: (i) 1,000,000 shares of Class A Common
Stock, par value $0.01 per share (the "Class A Common Stock"), 650,000 shares of
which will be issued and outstanding pursuant to the Common Stock Subscription
Agreement; (ii) 2,000,000 shares of Class B Common Stock, 1,300,000 shares of
which will be issued and outstanding pursuant to the Common Stock Subscription
Agreement and 136,210 shares of which will be reserved for exchange pursuant to
this Agreement; (iii) 3,500,000 shares of Class D Common Stock, par value $0.01
per share (the "Class D Common Stock"), none of which will be issued and
outstanding, but 2,086,210 shares of which will be reserved for issuance upon
conversion of the Class A Common Stock and Class B Common Stock pursuant to the
Corporation's Certificate of Incorporation; (iv) 200,000 shares of Senior
Preferred Stock, 100,000 shares of which shall be issued and outstanding
pursuant to the terms of the Securities Purchase Agreement; (v) 750,000
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shares of Junior Preferred Stock, 523,980 shares of which shall be issued and
outstanding pursuant to the terms hereof; and (vi) 1,000,000 shares of Class E
Common Stock, par value $0.01 per share (the "Class E Common Stock"), 414,079
shares of which will be issued and outstanding pursuant to the Securities
Purchase Agreement. After the Closing, all of the outstanding shares of capital
stock of the Company will upon their issuance be duly authorized, validly
issued, fully paid and nonassessable.
6.4 PRIVATE OFFERING.
(i) The offer and sale of the Junior Preferred Stock
hereunder are exempt from the registration and prospectus delivery requirements
of the Securities Act. The Company has not sold any shares of the Junior
Preferred Stock to anyone other than the Junior Investors. The Company agrees
that it, or anyone acting on its behalf, will neither offer any of the Junior
Preferred Stock so as to bring the issuance and sale thereof within the
provisions of Section 5 of the Securities Act, nor offer any similar securities
for issuance of sale to, or solicit any offer to acquire any of the same from,
or otherwise approach or negotiate with respect thereto with, anyone if the sale
of any of the Junior Preferred Stock and any such securities would be integrated
as a single offering for the purposes of the Securities Act, including, without
limitation, Regulation D promulgated thereunder. Each share of Junior Preferred
Stock shall have a legend or legends setting forth the restrictions on
transferability and sale set forth in Section 5.2 hereof for at least so long as
such restrictions apply. Notwithstanding any provision to the contrary
contained herein, any representations and warranties of the Company in this
Agreement are based upon and subject to the accuracy of the representations and
warranties of the Junior Investors contained in Section 7 hereof.
(ii) In the case of the offer and sale of the Junior
Preferred Stock, no form of general solicitation or general advertising was used
by the Company, including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
were invited by any general solicitation or general advertising.
7. REPRESENTATIONS AND AGREEMENTS OF THE JUNIOR INVESTORS. Each Junior
Investor represents, warrants and agrees for the benefit of the Company as of
the Closing Date as follows:
7.1 The Junior Investor has had an opportunity to discuss the
business, management and financial affairs of the Company, and the terms and
conditions of the proposed purchase, with the management of the Company.
7.2 The Junior Investor qualifies as an "accredited investor"
within the meaning of Rule 501(a) of Regulation D under the Securities Act, and
has such knowledge and experience in financial and business matters that such
Junior Investor is capable of evaluating the merits and risks of its purchase of
the Junior Preferred Stock.
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7.3 The Junior Investor is acquiring the Junior Preferred Stock
for its own account and not with a view to any resale or distribution of the
Junior Preferred Stock that would violate the Securities Act, and acknowledges
that there are substantial restrictions on the transferability of the Junior
Preferred Stock; and the Junior Investor understands that the Securities have
not been registered under the Securities Act and that certificates representing
the Securities initially will bear the legend and be subject to the restrictions
on transfer and sale set forth in Section 5.2 of this Agreement.
8. DOCUMENTS DELIVERED AT THE CLOSING. On the Closing Date, the Company
will deliver to the Junior Investors a certificate from the Company signed by an
appropriate officer of the Company, dated the Closing Date, to the effect that,
to the best of such officer's knowledge, the representations and warranties of
the Company in this Agreement are true and correct as of the Closing Date and
that Company has complied in all material respects with all the agreements and
satisfied all the material conditions on its part to be performed or satisfied
at or prior to the Closing Date.
9. TAX TREATMENT. The issuance of 523,980 shares of Junior Preferred
Stock pursuant to this Agreement is part of an integrated series of transactions
constituting the initial funding and capitalization of the Company. As such,
the transfer of property by the Junior Investors to the Company and the transfer
of the Junior Preferred Stock by the Company to the Junior Investors will be
subject to the provisions of Section 351 ET. SEQ. of the Internal Revenue Code
of 1986, as amended, and corresponding applicable state statutes. The Company
and the Junior Investors will report the issuance of the Junior Preferred Stock
hereunder in proper conformity with this tax treatment.
10. FINANCIAL STATEMENTS. At the written request of any Junior Investor,
the Company shall deliver, at no expense to such Junior Investor, a copy of the
Company's most recent (a) quarterly unaudited financial statements and (b)
annual audited financial statements, in each case, substantially in the form as
required to be delivered by the Company under the Securities Purchase Agreement.
11. MISCELLANEOUS.
11.1. NOTICES. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
hand delivered or mailed postage prepaid by registered or certified mail,
(a) if to any Junior Investor, addressed to such
Junior Investor at its address shown on the applicable signature pages
hereof, or at such other address as such Junior Investor may specify by
written notice to the Company, or
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(b) if to the Company, at the address first above
written or at such other address as the Company may specify by written
notice to the Junior Investors, and each such notice, request, consent and
other communication shall for all purposes of the Agreement be treated as
being effective or having been given when delivered if delivered
personally, or, if sent by mail, at the earlier of its receipt or 4 days
after the same has been deposited in a regularly maintained receptacle for
the deposit of United States mail, addressed and postage prepaid as
aforesaid.
11.2. SEVERABILITY. Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to or in connection
with this Agreement or any of the transactions contemplated hereby shall be
given effect separately from the provision or provisions determined to be
illegal or unenforceable and shall not be affected thereby.
11.3. PARTIES IN INTEREST. Except as otherwise set forth herein, all the
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto. This Agreement shall not run to the benefit of or be
enforceable by any Person other than a party to this Agreement and its
successors and assigns.
11.4. HEADINGS. The headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
11.5. CHOICE OF LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York, without regard to
conflict of law provisions thereof.
11.6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed and accepted this
Agreement on the day and year first above written.
GOLDEN STATE ACQUISITION CORP.
By:
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Name:
Title:
[ADDITIONAL SIGNATURE PAGES TO FOLLOW]
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as if all parties had signed the same document. All such counterparts shall be
deemed an original, shall be construed together and shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and accepted this
Agreement on the day and year first above written.
GOLDEN STATE ACQUISITION CORP.
By: /s/ XXXX X. XXXXXXXXX
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Name: Xxxx X. XxXxxxxxx
Title:
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CGW ASSOCIATES LIMITED PARTNERSHIP
By: ARDSHIEL, INC.
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Its General Partner
By: /s/ XXXXX X.
---------------------------------
Name: Xxxxx X.
Title: Attorney-in-Fact
Number of shares of Junior Preferred Stock to be issued to Junior Investor by
the Company: 219,229
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Exact name of Junior Investor or Junior Investor's nominee as it should appear
on Junior Preferred Stock certificate: CGW ASSOCIATES, L.P.
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Address for notices:
CGW Associates Limited Partnership
c/o Ardshiel, Inc.
000 Xxxx Xxxxxx - Xxxxx 0000
Xxx Xxxx, XX 00000
with a copy, which will not constitute notice to CGW Associates Limited
Partnership, to:
Xxxxxxx Xxxxx & Xxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Junior Investor is organized or incorporated under the laws of the State of:
----------------------------------------------------
Junior Investor's principal place of business is in the State of:
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MID-STATE HORTICULTURAL COMPANY
By: /s/ XXXXXX XXXXXXXXX
---------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
Number of shares of Junior Preferred Stock to be issued to Junior Investor by
the Company: 137,384
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Exact name of Junior Investor or Junior Investor's nominee as it should appear
on Junior Preferred Stock certificate: MID-STATE HORTICULTURAL COMPANY
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Address for notices:
0000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
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-------------------------------
Attention: Xxxxxx Xxxxxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
Telex:
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Junior Investor is organized or incorporated under the laws of the State of:
CALIFORNIA
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Junior Investor's principal place of business is in the State of:
CALIFORNIA
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MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: /s/ XXXX X. XXXXX
---------------------------------
Name: Xxxx X. Xxxxx
Title: VICE PRESIDENT
Number of shares of Junior Preferred Stock to be issued to Junior Investor by
the Company: TWO CERTIFICATES TOTALING 43,823
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Exact name of Junior Investor or Junior Investor's nominee as it should appear
on Junior Preferred Stock certificate: MASSMUTUAL LIFE INSURANCE COMPANY
---------------------------------
Address for notices:
Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Junior Investor is organized or incorporated under the laws of the State of:
MASSACHUSETTS
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Junior Investor's principal place of business is in the State of:
MASSACHUSETTS
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MASSMUTUAL PARTICIPATION INVESTORS
By: /s/ XXXX X. XXXXX
---------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
The foregoing is executed on behalf of
MassMutual Participation Investors,
organized under a Declaration of Trust,
dated April 7, 1988, as amended from
time to time. The obligations of such
Trust are not binding upon, nor shall
resort be had to the property of any of
the Trustees, shareholders, officers,
employees or agents of such Trust
individually, but the Trust's assets and
property only shall be bound.
Number of shares of Junior Preferred Stock to be issued to
Junior Investor by the Company: 5,056
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Exact name of Junior Investor or Junior Investor's nominee
as it should appear on Junior Preferred Stock Certificate:
MASSMUTUAL PARTICIPATION INVESTORS
----------------------------------
Address for notices:
c/o Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Junior Investor is organized or incorporated under the laws of the State of:
MASSACHUSETTS
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Junior Investor's principal place of business is in the State of:
MASSACHUSETTS
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MASSMUTUAL CORPORATE INVESTORS
By: /s/ XXXX X. XXXXX
---------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
The foregoing is executed on behalf of
MassMutual Corporate Investors,
organized under a Declaration of Trust,
dated September 13, 1985, as amended
from time to time. The obligations of
such Trust are not personally binding
upon, nor shall resort be had to the
property of, any of the Trustees,
shareholders, officers, employees or
agents of such Trust, but the Trust's
property only shall be bound.
Number of shares of Junior Preferred Stock to be issued to
Junior Investor by the Company: 10,113
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Exact name of Junior Investor or Junior Investor's nominee
as it should appear on Junior Preferred Stock Certificate:
MASSMUTUAL CORPORATE INVESTORS
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Address for notices:
c/o Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Junior Investor is organized or incorporated under the laws of the State of:
MASSACHUSETTS
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Junior Investor's principal place of business is in the State of:
MASSACHUSETTS
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ARDSHIEL, INC.
By: /s/ XXXXX X.
---------------------------------
Name: Xxxxx X.
Title: Attorney-in-Fact
Number of shares of Junior Preferred Stock to be issued to
Junior Investor by the Company: 12,961
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Exact name of Junior Investor or Junior Investor's nominee
as it should appear on Junior Preferred Stock Certificate:
ARDSHIEL, INC.
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Address for notices:
Ardshiel, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X.X. Xxxxxx
Junior Investor is organized or incorporated under the laws of the State of:
------------------------------
Junior Investor's principal place of business is in the State of:
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BANK OF AMERICA ILLINOIS
By: /s/ XXXXXXX X. XXXX
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: Principal
Number of shares of Junior Preferred Stock to be issued to
Junior Investor by the Company: TWO CERTIFICATES TOTALING 52,621
--------------------------------
Exact name of Junior Investor or Junior Investor's nominee
as it should appear on Junior Preferred Stock Certificate:
CONTINENTAL ILLINOIS COMMERCIAL CORPORATION
-------------------------------------------
Address for notices:
Bank of America Illinois
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx
Junior Investor is organized or incorporated under the laws of the State of:
------------------------------
Junior Investor's principal place of business is in the State of:
------------------------------
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/s/ XXXXXXX X. X'XXXXX
------------------------------
Xxxxxxx X. X'Xxxxx
Number of shares of Junior Preferred Stock to be issued to
Junior Investor by the Company: 42,793
------
Exact name of Junior Investor or Junior Investor's nominee
as it should appear on Junior Preferred Stock Certificate:
XXXXXXX X. X'XXXXX
------------------
Address for notices:
Golden State Vintners
00 Xxxx Xxx Xxxxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
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