1
EXHIBIT 10.9
REDEMPTION AGREEMENT
WHEREAS, as a result of the bankruptcy of Eaglespeed Oil &
Lube, Inc., a New Jersey corporation ("EAGLESPEED"), ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
("▇▇▇▇▇") has been called upon to discharge his guaranty of the indebtedness of
Eaglespeed to National Westminster Bank NJ ("BANK"); and
WHEREAS, ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇"), in
order to discharge their guaranty obligations to the Bank, have executed and
delivered to the Bank their Renewal Term Loan Promissory Note in the principal
amount of $720,064.41 (the "LOAN"); and
WHEREAS, in connection with the Loan, ▇▇▇▇▇ is required to
pledge as collateral for the Loan due the Bank by ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ certain
shares of Cal-Maine Foods, Inc. ("CAL-MAINE"), a Delaware corporation, owned
personally by ▇▇▇▇▇, and Bank is requiring a procedure whereby Bank will be
assured of a purchaser of such stock in the event ▇▇▇▇▇ and other guarantors of
Eaglespeed default in the payment of their Loan due the Bank.
NOW, THEREFORE, Cal-Maine and ▇▇▇▇▇, intending to be legally
bound hereby, agree as follows:
1. Cal-Maine acknowledges and consents to the pledge by
▇▇▇▇▇ of 162 shares of the common stock (par value $1.00) of Cal-Maine to Bank
which stock shall serve as collateral to secure the payment of the indebtedness
owing to the Bank on the Loan.
2. Cal-Maine agrees that in the event of default as
defined in paragraph 10 of the Loan Agreement dated March 4, 1994 by and among
Bank, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ and all collateral loan documents executed
thereunder, including but not limited to the Renewal Term Loan Promissory Note
("Loan Documents") in the payment to Bank of the Loan, Cal-Maine or its
designee agrees to purchase from ▇▇▇▇▇ the shares of common stock of Cal-Maine
which, at the time of such default, are pledged by ▇▇▇▇▇ to Bank.
3. The purchase price to be paid by Cal-Maine to ▇▇▇▇▇
pursuant to paragraph 2 aforesaid, shall be the per share book value of such
stock computed by dividing (A) the issued and outstanding shares of Cal-Maine
common stock less shares held in the treasury of Cal-Maine into (B) the net
stockholders' equity computed in accordance with generally accepted accounting
principles, consistently applied, as of the last day of the immediately
preceding fiscal year of Cal-Maine as reflected in the audited financial
statements of Cal-Maine prepared in the ordinary course of Cal-Maine's
business. In this connection, Cal-
1
2
Maine agrees to provide to the Bank annually no later than one-hundred twenty
(120) days after the close of each of its fiscal years, a copy of its financial
statements audited and certified by a certified public accountant and including
but not limited to a balance sheet, statement of income and statement of cash
flows for the year then ended.
4. Cal-Maine's obligation to purchase the stock, as
herein set forth, shall be contingent upon Bank notifying ▇▇▇▇▇ and -Cal-Maine
in writing of default under the terms of the Loan as evidenced by the Loan
Documents including but not limited to the Renewal Term Loan Promissory Note in
favor of Bank in the original principal amount of $720,064.41 and dated the 4th
day of March, 1994, a copy of which shall have been sent to Cal-Maine by Bank,
or as evidenced by the Extended Renewal Term Loan Promissory Note if the term
of the Loan is extended on March 4, 1997 by the Bank, a copy of which shall
have been sent to Cal-Maine by the Bank.
5. Upon compliance with paragraph 6 hereof, Cal-Maine
expressly consents to the assignment by ▇▇▇▇▇ of this Agreement, and
Cal-Maine's obligation to purchase the shares of common stock of Cal-Maine
expressed herein, to Bank as has been requested by Bank.
6. The parties hereto recognize and confirm that, under
certain loan agreements or other financing transactions, Cal-Maine is
restricted in its ability to redeem or otherwise acquire shares of its own
stock. Therefore, it is expressly understood and agreed that except as
provided in paragraph 7 below, under no circumstances shall Cal-Maine be
required to redeem, or otherwise acquire shares of its common stock under the
terms hereof in an amount exceeding $300,000 in any one fiscal year of
Cal-Maine and to the extent otherwise permitted under the laws of the State of
Delaware. Any assignee of this Agreement, or the benefits resulting haywire,
shall, as a condition of such assignment, expressly agree to the limitation on
Cal-Maine's obligation to redeem as set forth in this paragraph 6.
7. During the term of the Loan due the Bank by ▇▇▇▇▇,
▇▇▇-Maine agrees that if any shares of Cal-Maine common stock owned by ▇▇▇▇▇
are sold by ▇▇▇▇▇ other than to members of the ▇▇▇▇▇ family (as "family" is
defined in Section 447 of the Internal Revenue Code)in an amount in excess of
Five Hundred Thousand ($500,000.00) Dollars in any fiscal year of Cal-Maine
(excluding any sales the proceeds of which are used by ▇▇▇▇▇ to make payments
to Bank), Cal-Maine shall, upon written request by the Bank, redeem from Bank
the percentage of the Collateral held by the Bank computed by multiplying the
number of shares held by the Bank by a fraction, the numerator of which is the
number of shares then sold, transferred, redeemed or otherwise disposed of by
▇▇▇▇▇, and the denominator of which is the total number of shares of Cal-Maine
common stock owned by ▇▇▇▇▇ immediately prior to such sale.
2
3
8. Nothing contained herein shall be construed or
interpreted in any manner as constituting a guaranty by Cal-Maine of the
obligations of ▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ which underlie the pledge of the stock of
Cal-Maine by ▇▇▇▇▇ as hereinbefore described and nothing herein contained shall
be in any manner construed as agreement by Cal-Maine to pay such indebtedness
or any costs relating thereto, it being expressly agreed that the sole
obligation of Cal-Maine pursuant to this Agreement shall be to redeem the
shares of its common stock pledged by ▇▇▇▇▇ to Bank under the terms and
conditions expressly set forth herein.
9. Notice to ▇▇▇▇▇ shall be sent to:
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Notice to Cal-Maine shall be sent to:
Cal-Maine Foods, Inc.
Attn: -▇. ▇. ▇▇▇▇▇▇, Vice President
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇ III
Wells, Moore, ▇▇▇▇▇▇▇ & Neeld
1300 Deposit Guaranty Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
10. In the event that, during the term of the Loan and
until the Loan is paid in full, any share dividend, recapitalization,
reclassification, readjustment, issuance and/or sale of additional classes or
series of capital stock or securities, or other change is declared or made in
the capital structure of Cal-Maine, all new, substituted and additional shares,
or other securities, issued in ▇▇▇▇▇' name with respect to the Cal-Maine shares
pledged by ▇▇▇▇▇ to the Bank by reason of any such change, shall be delivered
by Cal-Maine directly to the Bank under the terms of the Stock
Pledge/Hypothecation and Security Agreement between ▇▇▇▇▇ and the Bank, in the
same manner as the Cal-Maine shares originally pledged thereunder by ▇▇▇▇▇.
The parties agree that this paragraph is intended to prevent the dilution of
the shares of Cal-Maine pledged by ▇▇▇▇▇ to the Bank. In the event of an
occurrence as provided herein, ▇▇▇▇▇ shall be permitted to make an additional
written
3
4
request (in addition to the written request set forth in paragraph 4(c)(ii) of
the Pledge/Hypothecation and Security Agreement (the "Pledge Agreement")
between ▇▇▇▇▇ and the Bank for the re-assignment and re-transfer ff necessary
of the number of whole shares (but not fractional shares) of the Collateral
representing the value of the Collateral exceeding one hundred twenty (120%)
percent of the obligations then due the Bank as provided in paragraphs
4(c)(i)(ii) and (iii) of the Pledge Agreement.
11. This Redemption Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their heirs, "executors,
administrators, successors and assigns.
IN WITNESS WHEREOF, ▇▇▇▇▇ and Cal-Maine have executed this
Agreement effective as of the 7th day of March, 1994.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
----------------------- ---------------------------------------
Witness ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
CAL-MAINE FOODS, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Chief Executive Officer
(Corporate Seal)
Attest:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Assistant Secretary
4
