Exhibit 10.70
EXECUTION COPY
VOTING RIGHTS AGREEMENT
VOTING AGREEMENT, dated as of December __, 1997 (this "Agreement"),
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by and among POLYPHASE CORPORATION (the "Stockholder"), THE LONG HORIZONS FUND,
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L.P., a New York limited partnership (the "Purchaser") and OVERHILL FARMS, INC.,
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a Nevada corporation (the "Company").
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WHEREAS, the Purchaser, the Company and the Stockholder, the corporate
parent of the Company, have entered into a Term Loan Agreement, dated as of the
date hereof (as the same may be amended or modified from time to time, the "Term
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Loan Agreement"), which provides, among other things, that the Purchaser will
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provide the Company with a term loan (the "Loan") in the principal amount of
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$24,175,000;
WHEREAS, in connection with the Term Loan Agreement, the Company has
issued a Common Stock Purchase Warrant, dated as of the date hereof, to the
Purchaser, granting the Purchaser the option to purchase up to 30% of the common
stock, par value $0.01 per share, of the Company (the "Company Common Stock") on
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a fully-diluted basis as of the date hereof;
WHEREAS, as of the date hereof, the Stockholder owns all of the issued
and outstanding shares of Company Common Stock; and
WHEREAS, it is a condition precedent to the making of the Loan by the
Purchaser pursuant to the Term Loan Agreement that the Stockholder agrees, and
in order to induce Purchaser to enter into the Term Loan Agreement and make the
Loan the Stockholder does hereby agree, to enter into this Agreement pursuant to
which the Stockholder agrees (i) to cause designees and nominees of the
Purchaser to constitute approximately 30% of the directors of the Board of
Directors of the Company (the "Board"), and (ii) to grant to the Purchaser
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certain tag-along rights.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
PROXY OF THE STOCKHOLDER
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SECTION 1.01. Voting Agreement. The Stockholder hereby agrees that
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during the time this Agreement is in effect, at any meeting of the shareholders
of the Company, however called, and in any action by consent of the shareholders
of the Company, the Stockholder shall vote all shares of Company Common Stock
and other securities of the Company owned by the Stockholder (the "Shares") in
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order that designees and nominees of the Purchaser shall constitute
approximately 30% of the directors of the Board.
SECTION 1.02. Irrevocable Proxy. The Stockholder hereby irrevocably
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appoints the Purchaser as its attorney and proxy, with full power of
substitution, to vote and otherwise act
(by written consent or otherwise) with respect to the Shares which the
Stockholder is entitled to vote at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed meeting)
or consent in lieu of any such meeting or otherwise, on the matters and in the
manner specified in Section 1.01 hereof. THIS PROXY AND POWER OF ATTORNEY IS
IRREVOCABLE AND COUPLED WITH AN INTEREST. The Stockholder hereby revokes all
other proxies and powers of attorney with respect to the Shares which they may
have heretofore appointed or granted, and no subsequent proxy or power of
attorney shall be given or written consent executed (and if given or executed,
shall not be effective) by the Stockholder with respect to the matters specified
in Section 1.01 hereof. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the Stockholder and any
obligation of the Stockholder under this Agreement shall be binding upon the
heirs, representatives, successors and assigns of the Stockholder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
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The Stockholder and the Company hereby represent and warrant to the
Purchaser as follows:
SECTION 2.01. Authority Relative to This Agreement. Each of the
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Stockholder and the Company has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of the Stockholder and the Company and constitutes a legal,
valid and binding obligation of each of the Stockholder and the Company,
enforceable against the Stockholder and the Company in accordance with its
terms.
SECTION 2.02. No Conflict. (a) The execution and delivery of this
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Agreement by the Stockholder and the Company do not, and the performance of this
Agreement by the Stockholder and the Company does not and shall not, (i)
conflict with or violate any federal, state or local law, statute, ordinance,
rule, regulation, order, judgment or decree applicable to the Stockholder or the
Company or by which the Shares owned by the Stockholder are bound or affected or
(ii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the Shares owned by the
Stockholder pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Stockholder or the Company is a party or by which the Stockholder
or the Shares owned by the Stockholder are bound or affected.
(b) The execution and delivery of this Agreement by the Stockholder
and the Company do not, and the performance of this Agreement by the Stockholder
and the Company do not and shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
entity except for applicable requirements, if any, of the Securities Exchange
Act of 1934, as amended.
SECTION 2.03. Title to the Shares. As of the date hereof, the
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Stockholder is the record and beneficial owner of the number of shares of
Company Common Stock set forth
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opposite the Stockholder's name on Appendix A hereto, which Shares represent on
the date hereof the percentage of the outstanding Company Common Stock set forth
on such Appendix. Such Shares are all the securities of the Company owned,
either of record or beneficially, by the Stockholder. Such Shares are owned
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on the Stockholder's voting
rights, charges and other encumbrances of any nature whatsoever, except for the
liens granted to (i) the Purchaser pursuant to the Pledge and Security
Agreement, dated as of the date hereof, by the Stockholder in favor of the
Purchaser (the "Purchaser Pledge Agreement") and (ii) Finova Capital Corporation
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pursuant to the Pledge Agreement dated as of May 5, 1995, made by the
Stockholder in favor of Finova Capital Corporation (the "Finova Pledge
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Agreement", collectively with the Purchaser Pledge Agreement, the "Pledge
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Agreements"). The Stockholder has not appointed or granted any proxy, which
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appointment or grant is still effective, with respect to the Shares owned by the
Stockholder except as expressly granted in the Pledge Agreements, in each case
subject to the Intercreditor Agreement dated as of the date hereof between the
Purchaser and Finova Capital Corporation.
ARTICLE III
COVENANTS OF THE STOCKHOLDER
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SECTION 3.01. No Disposition or Encumbrance of Shares. Except as
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otherwise provided in this Agreement, the Stockholder hereby covenants and
agrees that it shall not offer or agree to sell, transfer, tender, assign,
hypothecate or otherwise dispose of, grant a proxy or power of attorney with
respect to, or create or permit to exist any security interest, lien, claim,
pledge, option, right of first refusal, agreement, limitation on its voting
rights, charge or other encumbrance of any nature whatsoever with respect to the
Shares or, directly or indirectly, initiate, solicit or encourage any person to
take actions which could reasonably be expected to lead to the occurrence of any
of the foregoing. Each Stockholder further agrees that a legend to the
foregoing effect shall be placed on each certificate representing the Shares and
a corresponding entry shall be made on the records of the Company and any
transfer agent for the Shares.
ARTICLE IV
TAG-ALONG RIGHTS
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4.01 General Restrictions. In the event the Stockholder wishes to
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transfer shares of Company Common Stock, either directly or indirectly, to any
person (such person being hereinafter referred to as a "Third Party"), other
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than the Stockholder or the Purchaser, who has agreed in writing to be bound by
the terms of this Agreement, it must first comply with all of the provisions of
this Article 4.
4.02 Tag-Along Right. (a) Tag Along. If the Stockholder shall
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desire to sell, assign, transfer or otherwise dispose of all or any of its
shares of Company Common Stock, the Purchaser shall have the right to require
the Third Party to purchase from the Purchaser that number of shares of Company
Common Stock (and, if necessary, the Stockholder shall reduce the number of its
shares of Company Common Stock to be sold by a corresponding amount), which is
equal to the product of (i) the total number of shares of Company Common Stock
to be
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purchased or repurchased by the Third Party and (ii) a fraction, the numerator
of which is (A) the total number of shares of Company Common Stock owned by the
Purchaser and the denominator of which is (B) the sum of (x) the number of
shares of Company Common Stock owned by the Purchaser and (y) the number of
shares of Company Common Stock owned by the Stockholder immediately before the
transaction.
(b) Terms of Sale. All shares of Company Common Stock purchased from
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the Purchaser pursuant to Section 4.02(a) shall be purchased at the same price
and on the same terms and conditions as the proposed transfer by the Stockholder
(except that the only representation and warranty that the Purchaser shall be
required to make in connection with any transfer is a warranty with respect to
its own ownership of the shares of Company Common Stock to be sold by it and its
ability to convey title thereto free and clear of liens, encumbrances or adverse
claims).
(c) Notice Requirements. If the Stockholder proposes to transfer any
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Company Common Stock pursuant to Section 4.02(a), it shall notify, or cause to
be notified, the Purchaser in writing of each such proposed transfer not less
than ten (10) business days nor more than thirty (30) business days prior to the
time of such proposed transfer (the "Transferor Tag-Along Notice"). The
Transferor Tag-Along Notice shall set forth: (i) the name and address of the
Third Party, (ii) the number of shares of Company Common Stock proposed to be
transferred, (iii) the proposed amount and form of consideration and terms and
conditions of payment offered by the Third Party (the "Third Party Terms") and
(iv) that the Third Party has been informed of the tag-along right provided for
in this Article 4 and has agreed to purchase shares of Company Common Stock in
accordance with the terms hereof.
(d) Exercise of Tag-Along Right. The tag-along right provided for in
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this Article 4 may be exercised by the Purchaser by delivery of a written notice
to the Company, the Stockholder and the Third Party (the "Acceptance Notice")
within ten (10) business days following receipt of the Transferor Tag-Along
Notice (the "Tag-Along Period"). The Acceptance Notice shall state the maximum
number of shares of Company Common Stock that the Purchaser wishes to include in
such transfer to the Third Party.
(e) Effect of Exercise of Tag-Along Right. Upon the giving of the
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Acceptance Notice, the Purchaser shall be obligated to sell to the Third Party
the number of shares of Company Common Stock set forth in the Acceptance Notice
on the Third Party Terms (or, if the Purchaser is not entitled to sell such
number of shares under the terms of this Article 4, the Purchaser shall be
obligated to sell the maximum number of shares the Purchaser is permitted to
sell hereunder); provided, however, that neither the Stockholder nor the
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Purchaser shall consummate the sale of any shares of Company Common Stock owned
by it unless the Third Party purchases all of the shares contained in the
Transferor Tag-Along Notice which the Purchaser is entitled to sell under the
terms of this Article 4. If the Third Party does not purchase the shares of
Company Common Stock from the Purchaser as required pursuant to this Article 4,
then any transfer by the Stockholder and the Purchaser to such Third Party shall
be null and void and of no effect whatsoever.
4.03 Right to Transfer to Third Party. After expiration of the Tag-
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Along Period, if the provisions of this Article 4 have been complied with in all
respect and no Acceptance Notice has been given, the Stockholder shall have the
right for ninety (90) days to transfer such shares of Company Common Stock to
the Third Party on the Third Party Terms
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without further notice, but after such ninety (90) days, no such transfer may be
made without again giving notice to the Purchaser of the proposed transfer and
complying with all of the requirements of this Article 4. Notwithstanding
anything herein to the contrary, nothing in this Agreement shall permit the
Stockholder to transfer any shares of Company Common Stock to any Person to the
extent prohibited by the Purchaser Pledge Agreement or any other Loan Document
(as defined in the Term Loan Agreement).
ARTICLE V
DIRECTOR ACTIONS
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5.01 Director Approval Required For Certain Action. The Company
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hereby agrees that none of the following actions may be taken by the Company
without the consent of the director(s) nominated or designated by the Purchaser:
(a) the acquisition or disposition of any assets or business
of the Company with a book value or cost in excess of $50,000;
(b) the merger or consolidation of the Company with or into
any corporation or other entity;
(c) the issuance or redemption (other than scheduled
redemptions) of shares of capital stock of the Company or any debt
securities of the Company, other than (A) pursuant to commercial
borrowing facilities and (B) pursuant to any stock option or stock
bonus plan or agreement adopted or approved by the Stockholder
pursuant to Section 5.01(f) below;
(d) an initial public offering of shares of Company Common
Stock pursuant to a registration statement filed with, and declared
effective by, the Securities and Exchange Commission ("SEC), other
than a registration on Form S-4 or S-8 (or its equivalent);
(e) adoption of the annual budget of the Company, and the
taking of any action which would constitute a material deviation, on a
line by line basis, from such budget;
(f) adoption of any stock option or stock bonus plan or
agreement, provided, however, that in no event shall the total number
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of shares of Company Common Stock issuable pursuant to all such plans
or agreements exceed 10% of the capital stock of the Company on a
fully diluted basis;
(g) appointment, removal or replacement of a President,
Chief Operating Officer and Chief Financial Officer (which consent
will not be unreasonably withheld);
(h) the Stockholder entering into an affiliated transaction
with the Company;
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(i) the acceptance of additional capital contributions by
the Stockholder or the issuance of additional Company Common Stock,
any preferred stock or any debt in the Company to persons not a party
to this Agreement on the date hereof;
(j) the adopting, altering or amending of the by-laws of the
Company;
(k) the amending or altering of the Company's Certificate of
Incorporation;
(l) the borrowing of money over the amount permitted by the
Term Loan Agreement;
(m) the entering into a new line of business other than the
Company's current line of business;
(n) the selection of an independent accounting firm to
provide general accounting services other than Ernst & Young;
(o) the determination on behalf of the Company that any cash
dividend payments shall be made to the Stockholder out of net income
in respect of either Company Common Stock or any preferred stock of
the Company; and
(p) the taking of any other action that could reasonably be
expected to materially impair the rights or obligations of the
Purchaser hereunder.
ARTICLE VI
MISCELLANEOUS
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SECTION 6.01. Further Assurances. The Stockholder and the Purchaser
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will execute and deliver all such further documents and instruments and take all
such further action as may be necessary in order to consummate the transactions
contemplated hereby.
SECTION 6.02. Specific Performance. The parties hereto agree that
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irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity. The Purchaser shall be entitled to its reasonable
attorneys' fees in any action brought to enforce this Agreement in which it is
the prevailing party.
SECTION 6.03. Entire Agreement. This Agreement constitutes the
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entire agreement between the Purchaser, the Company and the Stockholder with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, between the Purchaser, the Company and
the Stockholder with respect to the subject matter hereof.
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SECTION 6.04. Amendment. This Agreement may not be amended except by
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an instrument in writing signed by the parties hereto.
SECTION 6.05. Severability. If any term or other provision of this
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Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
SECTION 6.06. Governing Law. This Agreement shall be governed by,
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and construed in accordance with, the laws of the State of New York applicable
to contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any New York state or federal court.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
POLYPHASE CORPORATION
By:________________________________
Name:
Title:
Agreed and Accepted:
THE LONG HORIZONS FUND, L.P.
By:____________________________
Name:
Title:
FOR PURPOSES OF BEING BOUND BY
THE PROVISIONS OF ARTICLE V HEREOF:
Agreed and Accepted:
OVERHILL FARMS, INC.
By:____________________________
Name:
Title:
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APPENDIX A
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Approximate Percentage of
Outstanding Company
Shares Shares
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Polyphase Corporation 775 100%
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