STOCK PURCHASE AGREEMENT
Dated as of November 23, 1999
by and between
SYNERGY BRANDS INC.
AND
XXXXXXXX BROADCAST GROUP, INC.
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TABLE OF CONTENTS
ARTICLE IDEFINITIONS.......................................................1
SECTION 1.1. DEFINITIONS.....................................1
SECTION 1.2. ACCOUNTING TERMS................................4
ARTICLE IIPURCHASE, SALE AND EXCHANGE OF COMMON STOCK;.....................4
SECTION 2.1. AUTHORIZATION OF COMMON STOCK...................4
SECTION 2.2. PURCHASE AND SALE OF COMMON STOCK...............4
SECTION 2.3. THE CLOSING.....................................6
SECTION 2.4. EXCHANGE OF COMMON STOCK. .....................6
SECTION 2.5. REGISTRATION RIGHTS.............................6
SECTION 2.6. BOARD PRESENCE..................................7
ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF THE COMPANY...................7
SECTION 3.1. ORGANIZATION, STANDING, ETC.....................7
SECTION 3.2. AUTHORIZATION AND EXECUTION.....................7
SECTION 3.3. GOVERNMENTAL AUTHORIZATIONS.....................8
SECTION 3.4. NON-CONTRAVENTION...............................8
SECTION 3.5. CAPITALIZATION..................................8
SECTION 3.6. SUBSIDIARIES....................................9
SECTION 3.7. LITIGATION......................................9
SECTION 3.8. INVESTMENT COMPANY..............................9
SECTION 3.9. SEC REPORTS; FINANCIAL STATEMENTS...............9
SECTION 3.10. INTELLECTUAL PROPERTY..........................10
SECTION 3.11. EMPLOYMENT AGREEMENTS..........................10
SECTION 3.12. REAL PROPERTY..................................10
SECTION 3.13. TAX MATTERS....................................10
SECTION 3.14. EMPLOYEE BENEFIT PLANS.........................11
ARTICLE IVREPRESENTATIONS AND WARRANTIES OF PURCHASER.....................11
SECTION 4.1. ORGANIZATION, STANDING, ETC....................11
SECTION 4.2. AUTHORIZATION AND EXECUTION....................12
SECTION 4.3. GOVERNMENTAL AUTHORIZATIONS....................12
SECTION 4.4. NON-CONTRAVENTION..............................12
SECTION 4.5. PRIVATE PLACEMENT..............................12
ARTICLE VCONDITIONS PRECEDENT TO CLOSING BY THE PURCHASER.................13
SECTION 5.1......................................................13
ARTICLE VICONDITIONS PRECEDENT TO CLOSING BY THE COMPANY..................14
SECTION 6.1......................................................14
ARTICLE VIIMISCELLANEOUS..................................................15
SECTION 7.1. LEGENDS; OPINIONS REQUIREMENT..................15
SECTION 7.2. REGISTER OF SECURITIES.........................15
SECTION 7.3. REMOVAL OF LEGEND..............................15
SECTION 7.4. RULE 144.......................................16
SECTION 7.5. NOTICES........................................16
SECTION 7.6. CONFIDENTIALITY................................18
SECTION 7.7. BROKERS; FINDERS...............................18
SECTION 7.8. AMENDMENT; WAIVER..............................19
SECTION 7.9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
COVENANTS AND AGREEMENTS.......................19
SECTION 7.10. SEVERABILITY...................................19
SECTION 7.11. HEADINGS; EXHIBITS.............................19
SECTION 7.12. ENTIRE AGREEMENT...............................19
SECTION 7.13. SUCCESSORS AND ASSIGNS.........................19
SECTION 7.14. CHOICE OF LAW..................................20
SECTION 7.15. COUNTERPARTS...................................20
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TABLE OF EXHIBITS
EXHIBIT
A Description of Registration Rights
B Form of Non-Competition and Proprietary Information Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (THIS "AGREEMENT"), dated as of November 23, 1999,
by and between SYNERGY BRANDS INC., A Delaware corporation (the "COMPANY"), and
XXXXXXXX BROADCAST GROUP, INC., a Maryland corporation (the "PURCHASER").
W I T N E S S E T H:
WHEREAS, the Company proposes to sell, and the Purchaser desire to
purchase, 2,200,000 shares OF THE COMPANY'S COMMON STOCK, $.001 PAR VALUE (THE
"SYNERGY SHARES") for a subscription price of $4,400,000,
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 is hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"ADVERTISING" AND "ADVERTISING TIME" shall have the respective meanings set
forth in SECTION 2.2(b).
"AFFILIATE" means, with respect to any Person, any Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"AGREEMENT" means this Agreement, as the same may be amended in accordance
with its terms.
"BEAUTYBUYS" means XxxxxxXxxx.Xxx Inc., a New Jersey corporation, all of
the outstanding Capital Stock of which is owned by SYBR.
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"BB AGREEMENT" means that certain Stock Purchase Agreement entered into by
and among the PURCHASER AND BEAUTYBUYS, PROVIDING, INTER ALIA, for the issuance
and sale of shares of Class B Common Stock by BeautyBuys to Purchaser, on the
terms and conditions set forth herein.
"BB SHARES" SHALL HAVE THE MEANING SET FORTH IN SECTION 2.4.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in either the State of New York or the State of Maryland
are authorized, required or permitted by law to close.
"CAPITAL STOCK" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of capital stock and
warrants, options and similar rights to acquire such capital stock.
"CLOSING" AND "CLOSING DATE" HAVE THE MEANINGS SET FORTH IN SECTION 2.3
hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission or any successor
thereof.
"COMMON STOCK" means the common stock, $.001 par value, of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
"FINANCIAL STATEMENTS" SHALL HAVE THE MEANING SET FORTH IN SECTION 3.9
hereof.
"GOVERNMENTAL BODY" means any Federal, state, municipal, local or other
governmental body, department, commission, board, bureau, agency or
instrumentality, political subdivision or taxing authority, domestic or foreign.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof, any sale of
receivables with recourse against the seller or any other person except account
debtors, any filing or agreement to file a financing statement as debtor under
the Uniform Commercial Code or any similar statute of any jurisdiction other
than to reflect ownership by a third party of property leased to the Company or
its Subsidiaries under a lease which is not in the nature of a conditional sale
or title retention agreement).
"LIMITATION DATE" AND "LIMITATION NOTICE" shall have the respective
meanings set forth in SECTION 2.2(C)(II).
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"MATERIAL ADVERSE EFFECT" shall have the meaning provided in SECTION 3.1
hereof.
"NEW ERA" means New Era Foods, Inc., a Nevada corporation, all of the
outstanding Capital Stock of which is owned by the Company.
"PERMITS" means all permits, licenses, orders, approvals, franchises,
registrations and any other authorizations of any Governmental Body.
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"PHS GROUP" means PHS Group Inc., a Pennsylvania corporation, all of the
outstanding Capital Stock of which is owned by New Era.
"PHS GROUP INDEBTEDNESS" means the indebtedness of PHS Group in the
aggregate original principal amount of $600,000, evidenced by promissory notes
issued in favor of the investors and in the amounts set forth in SCHEDULE 3.5
hereto.
"PREFERRED STOCK" means the Class A $2.20 cumulative preferred stock, $.001
par value, of the Company.
"PROMOS" shall have the meaning set forth in SECTION 2.2(b).
"REGISTRATION RIGHTS" means the registration rights of purchaser pursuant
to SECTION 2.5, a description of which is set forth in EXHIBIT A hereto.
"REQUIREMENT OF LAW" means any statute, law, ordinance, rule, regulation,
order decree, judicial or administrative decision or directive.
"RESTRICTED SECURITIES" means the Synergy Shares which may not be publicly
sold or transferred without registration under the Securities Act.
"SEC REPORTS" means all forms, reports and documents filed by the Company
or the Purchaser with the Commission pursuant to the Securities Act and the
Exchange Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"STATE" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
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"SUBSIDIARY" means, with respect to any Person, any corporation or other
entity of which a majority of the capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person.
"SYBR" means XXXX.XXX Inc., a New Jersey corporation, all of the
outstanding Capital Stock of which is owned by the Company.
"SYNERGY SHARES" shall have the meaning set forth in the first WHEREAS
clause hereof.
"SYNERGY TERM" shall have the meaning set forth in SECTION 2.2(b).
"TRANSACTION DOCUMENTS" means, collectively, this Agreement and any other
instrument, certificate, agreement or other document executed or delivered in
connection therewith.
"WARRANT" means the warrants issued by the Company to purchase 112,500
shares of Common Stock, at an exercise price of $1.10, expiring at various dates
through 2002.
SECTION 1.2. ACCOUNTING TERMS. All accounting terms used herein and not
expressly defined in this Agreement shall have the respective meanings given to
them in accordance with generally accepted accounting principles applied on a
consistent basis.
ARTICLE II
PURCHASE, SALE AND EXCHANGE OF COMMON STOCK; CERTAIN RIGHTS
SECTION 2.1. AUTHORIZATION OF COMMON STOCK. The Company has authorized the
issuance and sale of up to 29,900,000 shares of Common Stock, of which
11,131,428 shares are issued and outstanding.
SECTION 2.2. PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and
conditions set forth in this Agreement, the Company shall issue and sell to the
Purchaser and the Purchaser shall purchase 2,200,000 Synergy Shares for an
aggregate subscription price of $4,400,000 (the "PURCHASE PRICE"). The Purchase
Price shall be paid at Closing as follows:
(a) $1,400,000 paid in cash (the "CASH PAYMENT") at the Closing;
(b) a credit of at least $2,000,000, of radio advertising (the
"ADVERTISING") and promotional support ("the PROMOS"), from Purchaser's
inventory of Advertising and Promos, valued as if each spot was being sold at
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current street rates (which is net of commissions) at the time of the airing, on
those radio stations from time to time owned, operated, or programmed by the
Purchaser or any of its Subsidiaries. From and after December 31, 2000 and for
the balance of the five (5) year period from the Closing Date (such five-year
period is referred to herein as the "SYNERGY TERM"), the Company shall receive a
credit for any unused Advertising and Promos, which credit shall apply, in the
Company's discretion, to radio Advertising and Promos or to television
Advertising and Promos, from Purchaser's inventory of Advertising and Promos, on
those television stations from time to time owned, operated, or programmed by
the Purchaser or any of its Subsidiaries, or to both radio Advertising and
Promos and television Advertising and Promos. All radio and television
Advertising and Promos shall be supplied as available over the Purchaser's
various markets in a commercially reasonable manner. The airing of all
Advertising and Promos shall be in accordance with Purchaser's standard terms
and conditions applicable to the airing of such Advertising and the rendering of
such Promos. All such Advertising and Promos are collectively referred to herein
as the "ADVERTISING TIME"). Both the Company and the Purchaser shall work
together in a commercially reasonable manner to effect the airing of Advertising
Time for the economic benefit of each other. Such Advertising Time may be used,
at the Company's sole discretion, by the Company, BeautyBuys or any of the
company's direct or indirect, wholly-owned subsidiaries, over the synergy term ;
PROVIDED that in the EVENT all or any portion of the Advertising Time is used by
BeautyBuys:
(i) the amount of Advertising Time used by BeautyBuys, up to but
not in excess of the first $300,000 of such Advertising Time, shall be accounted
for as a contribution to the capital of BeautyBuys; and
(ii) any amount of Advertising Time used by BeautyBuys in excess
of the first $300,000 of such Advertising Time shall be accounted for, in the
discretion of the Company, either (A) as a sale by the Company to BeautyBuys in
the amount of such Advertising Time and paid for in cash by BeautyBuys, or (B)
as a loan from the Company to BeautyBuys in the amount of such Advertising Time,
on terms mutually acceptable to the Company, BeautyBuys and the Purchaser; and
(c) a credit of at least $1,000,000, to be applied toward the payment
for certain services (the "IN-KIND SERVICES"), as more fully described on
SCHEDULE 2.2. Such credit shall be applied and used as the Company shall
determine, over the Synergy Term. Notwithstanding the amount of In-Kind Services
stated in the preceding sentence and the value thereof set forth on SCHEDULE
2.2, the Company may utilize the In-Kind Services in an aggregate amount:
(i) less than $1,000,000, without any recourse to, or additional
consideration from, the Purchaser or any of its Subsidiaries; and
(ii) greater than $1,000,000, without any cost to or additional
consideration from the Company or any of its Subsidiaries, but only to the
extent permitted by a further written agreement between the parties hereto.
Purchaser shall have the responsibility to notify the Company in writing when
the $1,000,000 limit has been, or is expected to be, exceeded (the "LIMITATION
NOTICE"), and notwithstanding any failure of the parties to reach such a further
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written agreement, the Company shall have the right to continue to utilize
In-Kind Services in excess of such limit until the later of (A) three (3)
Business Days after the date of receipt of the limitation notice, or (B) the
effective date set forth therein (the "LIMITATION DATE"), and shall further have
the right to complete, after the Limitation Date, any item or items of In-Kind
Services commenced prior to the Limitation Date, without any cost to, or
additional consideration from, the Company or any of its Subsidiaries.
SECTION 2.3. THE CLOSING. (a) The purchase and sale of the Synergy Shares
will take place at a closing (the "CLOSING") at the offices of Meltzer, Lippe,
Xxxxxxxxx & Xxxxxxxxx, P.C., 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000, on such
date and time, not later than November 23, 1999, as the parties shall mutually
agree. the date of closing is referred to herein as the "CLOSING DATE."
(b) On the Closing Date, the Purchaser shall deliver (i) by certified
or bank check or by wire transfer to the account number designated by the
Company, same day funds (federal funds) in an amount equal to the cash payment,
and (ii) a credit for advertising time and in-kind services, as set forth in
SECTION 2.2(b) AND 2.2(c), respectively.
(c) On the Closing Date, the Company shall issue and deliver to the
Purchaser, against payment of the Purchase Price therefor, certificates
representing the number of Synergy Shares purchased by the Purchaser from the
Company. Each such certificate shall be registered in the name of the Purchaser
or such nominee name as the Purchaser shall have designated in writing to the
Company.
SECTION 2.4. EXCHANGE OF COMMON STOCK. Upon the written request of
Purchaser delivered at any time prior to the fifth (5TH) anniversary of the
Closing Date, the Company agrees to cause SYBR to exchange all or any portion of
the Synergy Shares as shall be tendered for exchange by Purchaser for shares of
Class A Common Stock, $.001 par value (the "BB SHARES"), of BeautyBuys.
Purchaser shall receive from SYBR, in exchange for the Synergy Shares exchanged,
that number of BB Shares which shall be equal to X/Y x Z, where:
(a) X = the number of Synergy Shares being surrendered by Purchaser for
exchange;
(b) Y = the total number of shares of Capital Stock of Synergy
outstanding immediately prior to the exchange; and
(c) Z = the total number of BB Shares then owned by SYBR immediately
prior to the exchange.
SECTION 2.5. REGISTRATION RIGHTS. The Purchaser shall have the right to
have the Synergy Shares included in any registration statements of the Company
filed after the first anniversary of the Closing Date relating to public
offerings of securities (including, but not limited to, registration statements
relating to secondary offerings of securities by the Company, but excluding
registration statements relating to employee benefit plans or with respect to
corporate reorganizations or other transactions under Rule 145 of the Securities
ACT). a more complete description of such piggyback registration rights is set
forth in EXHIBIT A hereto.
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SECTION 2.6. BOARD PRESENCE. For so long as the Purchaser holds at least
ten percent (10%) of the issued and outstanding Common Stock,
(a) the Company shall use its best efforts to cause the Board of
Directors of the Company (the "BOARD") to amend the bylaws of the Company to
increase the size of the Board to six (6) directors and to appoint one member of
the Board designated by the Purchaser who shall be an officer or director of the
Purchaser; and
(b) the Company shall not cause, and shall not permit its
representatives on the Board to cause, the number of directors comprising the
Board to exceed six (6), including the director designated by the Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser that:
SECTION 3.1. ORGANIZATION, STANDING, ETC. Each of the Company and its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own its assets and to carry on its
business as presently conducted and (b) is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the nature of the properties owned or leased by it, or the nature of its
activities makes such qualification and good standing necessary, except where
the absence of such qualification or good standing would not have a material
adverse effect on the condition (financial or otherwise), properties, assets,
liabilities, business or results of operations (a "MATERIAL ADVERSE EFFECT") of
the Company and its Subsidiaries, taken as a whole. The Company has all
requisite power and authority (x) to execute, deliver and perform its
obligations under this Agreement and each of the other Transaction Documents,
and (y) to issue the Synergy Shares, in the manner and for the purpose
contemplated by this Agreement.
SECTION 3.2. AUTHORIZATION AND EXECUTION. The execution, delivery and
performance of this Agreement and each of the other Transaction Documents by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of the Company. Each Transaction Document
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as enforceability may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting the rights of creditors generally, (ii)
equitable principles (whether considered in an action at law or in equity) which
provide, among other things, that the remedies of specific performance and
injunctive and other forms of equitable relief are subject to equitable defenses
and to the discretion of the court before which any proceedings therefor may be
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brought and (iii) limitations imposed upon the specific enforceability of the
indemnification provisions in the registration rights set forth in EXHIBIT A
hereto under certain circumstances under state or federal law or court decisions
concerning indemnification of a party against liability for its own wrongful or
negligent acts or where such indemnification is contrary to public policy.
SECTION 3.3. GOVERNMENTAL AUTHORIZATIONS. The execution and delivery by the
Company of this Agreement and each other Transaction Document and the issuance
of and sale of the Synergy Shares by the Company, do not, and the consummation
of the transactions contemplated hereby and thereby will not, require any
approval, consent, waiver or authorization of, or filing or registration with,
any Governmental Body or third Person.
SECTION 3.4. NON-CONTRAVENTION. Neither the Company nor any of its
Subsidiaries is in violation or default of any provisions of its Articles of
Incorporation or the Company's By-Laws. Neither the Company nor any of its
Subsidiaries is in violation or default in any material respect under any
provision, instrument, judgment, order, writ, decree, contract or agreement to
which it is a party or by which it is bound or of any Requirement of Law
applicable to the Company or its Subsidiaries, which violation or default could
result in a Material Adverse Effect. The execution, delivery and performance of
this Agreement and each of the other Transaction Documents, the consummation of
the transactions contemplated hereby and thereby (including, without limitation,
the issuance and sale of the Synergy Shares) will not contravene or result in
any such violation or be in conflict with or constitute a default under (or an
event which, with notice or lapse of time, or both would conflict with or
constitute or result in a default under) any such provision, instrument,
judgment, order, writ, decree, contract or agreement or require any consent,
waiver or approval thereunder, or constitute an event that results in the
creation of any Lien upon any assets of the Company or any of its Subsidiaries.
SECTION 3.5. CAPITALIZATION. (a) The authorized Capital Stock of the
Company consists of Thirty Million (30,000,000) shares, consisting of Twenty
Nine Million, Nine Hundred Thousand (29,900,000) shares of Common Stock, of
which 11,131,428 shares are issued and outstanding, after giving effect to the
exchange of the PHS Group Indebtedness for Common Stock, and One Hundred
Thousand (100,000) shares of Class A $2.20 cumulative preferred stock, $.001 par
value (the "PREFERRED STOCK"), all of which shares are issued and outstanding.
The Company has issued a Warrant to purchase 112,500 shares of Common Stock, at
an exercise price of $1.10, expiring at various dates through 2002. Upon the
issuance of the Synergy Shares to the Purchaser, there will be 13,331,428 shares
of Common Stock and 100,000 shares of Preferred Stock issued and outstanding.
Other than as set forth in SCHEDULE 3.5, there are no outstanding securities of
the Company convertible into or evidencing the right to purchase or subscribe
for any shares of Capital Stock of the Company, there are no outstanding or
authorized options, warrants, calls, subscriptions, subscription rights,
commitments or any other agreements of any character obligating the Company to
issue any shares of its Capital Stock or any securities convertible into or
evidencing the right to purchase or subscribe for any shares of such stock, and
there are no agreements or understandings with respect to the voting, sale,
transfer or registration of any shares of Capital Stock of the Company.
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(b) The issued and outstanding shares of Capital Stock of the Company
are duly authorized, validly issued, fully paid and nonassessable. The shares of
Common Stock to be issued pursuant to this Agreement, will be, upon receipt by
the Company of the consideration therefor, (i) validly issued, fully paid and
nonassessable, (ii) free and clear of all Liens, other than any created by the
holder thereof, and (iii) assuming that the representations and warranties of
the Purchaser in Article IV hereof are true and correct, issued in compliance
with all applicable federal and state securities laws, as presently in effect.
SECTION 3.6. SUBSIDIARIES. SCHEDULE 3.6 sets forth a complete and accurate
list of all Subsidiaries of the Company. The outstanding shares of Capital Stock
of each Subsidiary are validly issued, fully paid and nonassessable and all such
shares represented as being owned by the Company are owned by it free and clear
of all liens. except as set forth in SCHEDULE 3.5 of the BB Agreement, there are
no outstanding securities of any Subsidiary convertible into or evidencing the
right to purchase or subscribe for any shares of Capital Stock of any
Subsidiary, there are no outstanding or authorized options, warrants, calls,
subscriptions, subscription rights, commitments or any other agreements of any
character obligating any Subsidiary to issue any shares of its Capital Stock or
any securities convertible into or evidencing the right to purchase or subscribe
for any shares of such stock, and there are no agreements or understandings with
respect to the voting, sale, transfer or registration of any shares of Capital
Stock of any Subsidiary.
SECTION 3.7. LITIGATION. Except as set forth in SCHEDULE 3.7, there is no
action, suit, proceeding or investigation pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, nor is there
any basis for the foregoing. No such action, suit, proceeding or investigation
questions the validity of the Transaction Documents or the right of the Company
to enter into them, or to consummate the transactions contemplated hereby or
thereby, or could reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect on the Company. Neither the Company nor any of
its Subsidiaries is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or governmental agency or
instrumentality, which could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Company.
SECTION 3.8. INVESTMENT COMPANY. The Company is not and, after giving
effect to the sale and issuance of the Synergy Shares pursuant to this
Agreement, will not be, an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 3.9. SEC REPORTS; FINANCIAL STATEMENTS. Since January 1, 1997, the
Company has filed all SEC Reports required to be filed by it pursuant to the
federal securities laws and the rules and regulations thereunder, all of which
have complied with all applicable requirements of the Securities Act and the
Exchange Act. The financial statements of the Company and its Subsidiaries
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included therein have been provided or made available to the Purchaser and were
prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods specified therein, and present
fairly the financial position of the company and its subsidiaries as at and for
the periods set forth therein. except as set forth on SCHEDULE 3.9 hereto, in
any filings by the Company with the Commission or in said financial statements,
since December 31, 1998 there has been no change in the business, financial
condition, operations or results of operations which would have a Material
Adverse Affect with respect to the Company. None of the SEC Reports filed since
January 1, 1997, including in each such case without limitation the financial
statements or schedules included therein, at the time filed, or if subsequently
amended, at the time so amended, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 3.10. INTELLECTUAL PROPERTY. The Company and each of its
Subsidiaries owns or has the valid right to use all patents, trademarks, trade
names, brand names, service marks, domain names, logos and copyrights (including
registrations and applications), licenses or royalty agreements ("INTELLECTUAL
PROPERTY") used in the conduct of its business as currently conducted, free and
clear of all encumbrances of any nature, a listing of which is set forth in
SCHEDULE 3.10 attached hereto. Neither the Company, nor any of its Subsidiaries
has received, during any period for which the applicable statute of limitations
has not yet expired, written notice of any claims relating to the validity,
enforceability, ownership or use of any Intellectual Property.
SECTION 3.11. EMPLOYMENT AGREEMENTS. Other than for the obligation to at
will employees for the payment of salaries or hourly wages, except as may be
disclosed in any filings by the Company with the Commission, the Company is not
currently a party to any employment or compensation agreement with any of its
employees, including any of its officers, nor is it obligated under any
incentive compensation plan or policy.
SECTION 3.12. REAL PROPERTY. The Company owns no real property and, to the
best of its knowledge, is not in default of any of the material terms or
conditions of any leases of real property to which it is a party.
SECTION 3.13. TAX MATTERS. except as set forth on SCHEDULE 3.13 hereto, in
any filing by the Company at the Commission, or in the Company's Financial
Statements:
(a) All Federal and state income, sales and use, payroll, withholding,
employment, social security and workers compensation tax returns ("TAX RETURNS")
required to be filed by or with respect to the Company have been filed when due
in a timely fashion, or valid extensions of the time to file have been duly
obtained, and all such Tax Returns are true, correct and complete.
(b) The Company has paid in full on a timely basis all Taxes owed by
it, except to the extent being contested in good faith and by appropriate
proceedings.
SECTION 3.14. EMPLOYEE BENEFIT PLANS. With respect, as applicable, to
Benefit Plans and Benefit Arrangements neither Company nor any ERISA Affiliate
has ever maintained or contributed to any Qualified Plans. As used herein:
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"Benefit Arrangement" shall mean any benefit arrangement, obligation, custom or
practice, whether or not legally enforceable, to provide benefits, other than
salary, as compensation for services rendered, to present or former directors,
employees, agents, or independent contractors, other than any obligation,
arrangement, custom or practice that is a Benefit Plan, including without
limitation, employment agreements, severance agreements, executive compensation
arrangements, including but not limited to stock options, restricted stock
rights and performance unit awards, incentive programs or arrangements, sick
leave, vacation pay, several pay policies, plant closing benefits, salary
continuation for disability, consulting or other compensation arrangements,
workers' compensation, retirement, deferred compensation, bonus, stock purchase,
hospitalization, medical insurance, life insurance, tuition reimbursement or
scholarship programs, employee discounts, employee loans, employee banking
privileges, any plans subject to Section 125 of the code, and any plans
providing benefits or payments in the event of a change of control, change in
ownership or sale of a substantial portion (including all or substantially all)
of the assets of any business or portion thereof, in each case with respect to
any present or former employees, directors or agents.
"Benefit Plan" shall have the meaning given in Section 3(3) of ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any Person that together with the Company would be
or was at any time treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA and any general partnership of which the Company is or has
been a general partner.
"Qualified Plan" shall mean any Company Plan that meets, purports to meet, or is
intended to meet the requirements of Section 401(a) of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 4.1. ORGANIZATION, STANDING, ETC.. Each of the Purchaser and its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own its assets and to carry on its
business as presently conducted and (b) is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the nature of the properties owned or leased by it, or the nature of its
activities makes such qualification and good standing necessary, except where
the absence of such qualification or good standing would not have a Material
Adverse Effect on the Purchaser and its Subsidiaries, taken as a whole. The
Purchaser has all requisite power and authority (x) to execute, deliver and
perform its obligations under this Agreement and each of the other Transaction
Documents, and (y) to purchase the Synergy Shares, in the manner and for the
purpose contemplated by this Agreement.
SECTION 4.2. AUTHORIZATION AND EXECUTION. The execution, delivery and
performance of this Agreement and each of the other Transaction Documents by the
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Purchaser and the consummation by the Purchaser of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of the Purchaser. Each Transaction Document
constitutes a legal, valid and binding agreement of the Purchaser enforceable
against the Purchaser in accordance with its terms (except as enforceability may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting the rights of creditors generally, (b)
equitable principles (whether considered in an action at law or in equity) which
provide, among other things, that the remedies of specific performance and
injunctive and other forms of equitable relief are subject to equitable defenses
and to the discretion of the court before which any proceedings therefor may be
brought and (c) limitations imposed upon the specific enforceability of the
indemnification provisions in the registration rights set forth in EXHIBIT A
hereto under certain circumstances under state or federal law or court decisions
concerning indemnification of a party against liability for its own wrongful or
negligent acts or where such indemnification is contrary to public policy.
SECTION 4.3. GOVERNMENTAL AUTHORIZATIONS. The execution and delivery by the
Purchaser of this Agreement and each other Transaction Document and the purchase
of the Synergy Shares by the Purchaser, do not, and the consummation of the
transactions contemplated hereby and thereby will not, require any approval,
consent, waiver or authorization of, or filing or registration with, any
Governmental Body or third Person.
SECTION 4.4. NON-CONTRAVENTION. Neither the Purchaser nor any of its
Subsidiaries is in violation or default of any provisions of its Articles of
Incorporation or the By-Laws. Neither the Purchaser nor any of its Subsidiaries
is in violation or default in any material respect under any provision,
instrument, judgment, order, writ, decree, contract or agreement to which it is
a party or by which it is bound or of any Requirement of Law applicable to the
Purchaser or its Subsidiaries, which violation or default could result in a
Material Adverse Effect. The execution, delivery and performance of this
Agreement and each of the other Transaction Documents, the consummation of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance and sale of the Synergy Shares) will not contravene or result in any
such violation or be in conflict with or constitute a default under (or an event
which, with notice or lapse of time, or both would conflict with or constitute
or result in a default under) any such provision, instrument, judgment, order,
writ, decree, contract or agreement or require any consent, waiver or approval
thereunder, or constitute an event that results in the creation of any Lien upon
any assets of the Purchaser or any of its Subsidiaries.
SECTION 4.5. PRIVATE PLACEMENT. (a) The Purchaser understands and agrees
with the Company that (i) the offer and sale of the Synergy Shares is intended
to be exempt from registration under the Securities Act by virtue of the
provisions of Section 4(2) of the Securities Act and (ii) there is no existing
public or other market for the Synergy Shares and there can be no assurance that
the Purchaser will be able to sell or dispose of the Synergy Shares.
(b) The Purchaser represents and warrants to the Company that:
-E 15-
(i) the Synergy Shares to be acquired by it pursuant to this
Agreement are being acquired for its own account and without a view to the
distribution or resale of the Synergy Shares or any interest therein; PROVIDED,
that the provisions of this Section shall not prejudice the Purchaser's right at
all times to sell or otherwise dispose of all or any part of the Synergy Shares
so acquired by the Purchaser pursuant to a registration under the Securities Act
or an exemption from such registration available under the Securities Act;
(ii) the Purchaser is an "Accredited Investor" as such term is
defined in Rule 501 of Regulation D promulgated by the Commission under the
Securities Act; and
(iii) the Purchaser is not a broker or dealer (as defined in
Sections 3(a)(4) and 3(a)(5) of the Exchange Act), member of a national
securities exchange, or person associated with a broker or dealer as defined in
Section 3(a)(18) of the Exchange Act, other than a business entity controlling
or under common control with such broker, dealer, member or associated person.
(c) The Purchaser further represents that:
(i) the Purchaser has such knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
its investment in the Synergy Shares and the Purchaser is capable of bearing the
economic risks of such investment and is able to bear a complete loss of its
investment in the Synergy Shares; and
(ii) In evaluating the suitability of an investment in the Synergy
Shares, the Purchaser has not relied upon any representations or other
information (whether oral or written) made by or on behalf of the Company other
than as set forth in the SEC Reports, this Agreement and the other Transaction
Documents.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING BY THE PURCHASER
SECTION 5.1. The obligation of the Purchaser to purchase the Synergy Shares
and complete the transactions contemplated hereby is subject to the satisfaction
or waiver by Purchaser, in it sole discretion, of the following conditions
precedent:
(a) the Company shall have delivered to the Purchaser, the following:
(i) such counterpart original and certified or other copies of
this Agreement as the Purchaser shall reasonably request;
(ii) stock certificates representing the Synergy Shares; and
(iii) a certificate of an authorized officer of the Company as to
the truth and accuracy of the representations and warranties set forth in
-E 16-
ARTICLE III, the performance of all conditions required to be performed by the
Company, and such other matters as counsel for the Purchaser may reasonably
request, which matters shall be customary for transactions of the type
contemplated by this Agreement;
(b) there shall have been no change in the financial condition or
results of operations of the Company which shall have a Material Adverse Effect
on the Company and its Subsidiaries, taken as a whole, since the date of this
Agreement;
(c) the Closing shall have occurred under the BB Agreement;
(d) the bylaws of the Company shall have been amended to provide for an
increase in the number of members of the Board from five (5) members to six (6)
members and the Board shall fill the vacancy created by the increase in the
number of members on the Board by a person designated by the Purchaser as
provided IN SECTION 2.6; and
(e) the Company shall have entered into a Non-Competition and
Proprietary Information agreement with xxxx xxxxxxx and xxxxx xxxxxx,
respectively, substantially in the form set forth in EXHIBIT B hereto.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING BY THE COMPANY
SECTION 6.1. The obligation of the Company to issue and sell Synergy Shares
and complete the transactions contemplated hereby is subject to the satisfaction
or waiver by the Company, in it sole discretion, of the following conditions
precedent:
(a) the Purchaser shall have delivered to the Company the following:
(i) the cash payment for the synergy shares, as provided in
SECTION 2.2 hereof;
(ii) evidence of the credits for Advertising Time and In-Kind
Services, as provided IN SECTION 2.2 hereof, satisfactory in form and substance
to the Company; and
(iii) a certificate of an authorized officer of the Purchaser as
to the truth and accuracy of the representations and warranties set forth in
ARTICLE IV, the performance of all conditions required to be performed by the
Purchaser, and such other matters as counsel for the Company may reasonably
request, which matters shall be customary for transactions of the type
contemplated by this Agreement; and
(b) the Closing shall have occurred under the BB Agreement.
-E 17-
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. LEGENDS; OPINIONS REQUIREMENT. The certificates evidencing the
Common Stock and each certificate issued in transfer thereof, will bear the
following legend and any applicable legend required by any other Transaction
Document:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION IN EFFECT WITH RESPECT TO THE SECURITIES OR AN EXEMPTION
BEING APPLICABLE UNDER THE ACT."
If the Purchaser desires to sell or otherwise dispose of all or any part of
the Synergy Shares owned by it under an exemption from registration under the
Securities Act, and if requested by the Company, the Purchaser shall deliver to
the Company an opinion of counsel, which may be counsel for the Company, that
such exemption is available.
SECTION 7.2. REGISTER OF SECURITIES. The Company or its duly appointed
agent shall maintain a separate register for the Common Stock, in which it shall
register the issue and sale of all such Synergy Shares. All transfers of Synergy
Shares shall be recorded on the register maintained by the Company or its agent,
and the Company shall be entitled to regard the registered holder of the Synergy
Shares as the actual holder of the Synergy Shares so registered until the
Company or its agent is required to record a transfer of the synergy shares on
its register. Subject to SECTION 7.3 hereof, the Company or its agent shall be
required to record any such transfer when it receives such security to be
transferred duly and properly endorsed by the registered holder thereof or by
its attorney duly authorized in writing.
SECTION 7.3. REMOVAL OF LEGEND. Any legend endorsed on a certificate
pursuant to SECTION 7.1 hereof, and any stop transfer instructions and record
notations with respect thereto shall be removed and the Company shall issue a
certificate without such legend to the holder thereof at such time as (a) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) such securities
shall have been distributed to the public pursuant to Rule 144 (or any successor
provision) promulgated by the Commission under the Securities Act, or (c) such
securities are otherwise sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Section 4(1)
thereof so that all transfer restrictions with respect to such securities are
removed upon the consummation of such sale and the seller of such securities
provides the Company an opinion of counsel (which may be counsel for the
Company), which shall be in form and content reasonably satisfactory to the
Company, to the effect that such securities in the hands of the purchaser
thereof are freely transferable without restriction or registration under the
Securities Act in any public or private transaction.
-E 18-
SECTION 7.4. RULE 144. The Company agrees to timely file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder, to the extent
required from time to time to enable the Purchaser to sell shares of Common
Stock and the shares of Common Stock into which the Common Stock may be
converted without registration under the Securities Act within the limitation of
the exemptions provided in (a) Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of the
Purchaser, the Company will deliver a written statement as to whether it has
complied with such requirements.
SECTION 7.5. NOTICES. All notices, advises and communications to be given
or otherwise made to any party to this Agreement shall be deemed to be
sufficient if contained in a written instrument delivered in person, by
facsimile confirmed by telecopier answer back, sent by air courier or sent by
first class registered or certified mail, postage prepaid, addressed to such
party at the address set forth below or at such other address as may hereafter
be designated in writing by the addressee to the other parties listed below:
If to the Company: Synergy Brands Inc.
00 Xxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Attn: Chief Executive Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Meltzer, Lippe, Xxxxxxxxx & Xxxxxxxxx, P.C.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
E-MAIL:XXXXXX@XXX.XXX
---------------------
and a copy to: Xxxxxxx X. Xxxxx, Esq.
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
E-MAIL:XXXXXXX@XXXXXXX.XXX
--------------------------
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If to the Purchaser: Xxxxxxxx Broadcast Group,Inc.
00000 Xxxxxx Xxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attn: President
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxxxxx Broadcast Group,Inc.
00000 Xxxxxx Xxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attn: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
and a copy to: Xxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
E-MAIL:XXXXXXX@XXXXXXXXXXXXXXXXX.XXX
------------------------------------
All such notices, advises and communications shall be deemed to have been
received, (a) in the case of personal delivery, on the date of such delivery,
(b) in the case of delivery by facsimile, on the date of such delivery and
receipt of telecopier answer back, (c) in the case of delivery by air courier,
on the business day following the day of dispatch and (d) in the case of
mailing, on the third business day following such mailing.
SECTION 7.6. CONFIDENTIALITY. Except as and to the extent required by law,
the Purchaser shall not disclose or use, and will direct its representatives not
to disclose or use to the detriment of the Company or any of its Subsidiaries,
any confidential information (as defined below) with respect to the Company or
any of its Subsidiaries, furnished, or to be furnished, by either the Company or
any of its Subsidiaries, or their respective representatives to the Purchaser or
its representatives at anytime or in any manner other than in connection with
the Purchaser's evaluation of the transactions proposed by this Agreement. For
the purposes of this paragraph, 'Confidential Information" means any information
about either the Company or any of its Subsidiaries stamped "Confidential" or
identified in writing as such to the Purchaser by the Company or any of its
Subsidiaries promptly following its disclosure, unless:
(a) such information is already known to Purchaser or its
representatives or to others not bound by duty of confidentiality or such
information becomes publicly available through no fault of Purchaser's
representatives; or
(b) the use of such information is necessary or appropriate in making
and filing or obtaining any consent or approval required for the consummation of
the acquisition of the Synergy Shares; or
(c) The furnishing of use of such information as required by, or is
necessary or appropriate in connection with, legal proceedings.
Upon the termination of this Agreement and at the written request of
the Company or any of its Subsidiaries, the Purchaser will promptly return to
the requesting party or, at the requesting party's express direction, destroy
and Confidential Information in its possession and certify in writing to the
issuer that it has done so.
-E 20-
SECTION 7.7. BROKERS; FINDERS. The Company and the Purchaser each
represents and warrants that it has dealt with no broker, finder, commission
agent or advisor in connection with the transactions contemplated by this
Agreement or the BB Agreement, except that the Company has so dealt with Capital
Vision GROUP, INC. (THE "ADVISOR"). The Company and the Purchaser each agrees to
indemnify, defend and hold harmless the other against any brokerage fee,
commission, finder's fee, or financial advisory fee due to any person, firm or
corporation acting on the indemnifying party's or the indemnifying party's
principals or employees behalf in connection with the transactions contemplated
by this Agreement. The Company shall be solely responsible for the payment of
all compensation due to the Advisor in connection with its services hereunder
and under the BB Agreement in the manner set forth in the BB Agreement.
SECTION 7.8. AMENDMENT; WAIVER. Neither this Agreement, nor any provision
hereof, may be amended, modified, supplemented or waived, except by a written
instrument executed by the Company and the Purchaser.
SECTION 7.9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; COVENANTS AND
AGREEMENTS. (a) All representations and warranties made in, pursuant to or in
connection with this Agreement shall survive the execution and delivery of this
Agreement, any investigation at any time made by or on behalf of the Purchaser,
and the sale and purchase of the Common Stock and payment therefor for a period
of one year from the Closing Date.
(b) All covenants and agreements of the parties made in, pursuant to or
in connection with this Agreement shall survive the Closing, except (i) to the
extent by their terms they are not intended to survive, or (ii) as otherwise
expressly set forth herein or agreed in writing by the parties.
SECTION 7.10. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
SECTION 7.11. HEADINGS; EXHIBITS. (a) The Section headings contained in
this Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or any term or prevision hereof.
(b) The Exhibits attached hereto are a part of this Agreement as if
fully set forth herein.
-E 21-
SECTION 7.12. ENTIRE AGREEMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersede and cancel all prior representations, alleged warranties,
statements, negotiations, undertakings, letters, acceptances, understandings,
contracts and communications, whether verbal or written, among the parties
hereto and thereto or their respective agents with respect to or in connection
with the subject matter hereof.
SECTION 7.13. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
permitted successors and assigns of the parties hereto, including, without
limitation, each transferee of all or any portion of the Common Stock. No party
hereto may assign its rights or delegate its obligations under this Agreement
without the prior written consent of the other party hereto, except that the
Purchaser may assign this Agreement to any of its direct or indirect
SUBSIDIARIES; PROVIDED, the Purchaser shall continue to be liable for all terms
and provisions of this Agreement.
SECTION 7.14. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED THEREIN BY AND AMONG RESIDENTS OF SUCH STATE.
SECTION 7.15. 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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date written above.
COMPANY:
SYNERGY BRANDS INC.
BY:
-----------------------
Name:
Title:
PURCHASER:
XXXXXXXX BROADCAST GROUP, INC.
BY:
--------------------------
Name:
Title:
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Schedule 2.2
In-Kind Services
1. MEDIA PLANNING AND MEDIA BUYING - media planning and media buying, to
be provided as available and as needed to the Company by employees or
agents of the Purchaser reasonably acceptable to the Company -
$353,000.
2. COMMERCIAL PRODUCTION - commercial production at the facilities or
studios of the Purchaser or any of its direct or indirect subsidiaries,
valued at $20,000.
3. COMMERCIAL DISTRIBUTION - commercial distribution to any and all of
radio and television stations licensed, owned or operated by Purchaser
or any of its direct or indirect subsidiaries, valued at $2,000.
4. WEB SITE ADVERTISING - web site advertising on any and all of
Purchaser's web sites, or the web sites of any of its direct or
indirect subsidiaries, including without limitation, banner
advertisements and direct links to the Company's sites, including the
value of customary commissions for each link (which will not be charged
to the Company), valued at $500,000. The size of such banners,
frequency, location and link to other web sites to be mutually
determined by the Company and the Purchaser, and all technical
specifications to be provided by the Company at its sole cost.
5. INVESTMENT AND FINANCIAL PLANNING ASSISTANCE - assistance with
financial planning and reporting, capital structure, credit facilities,
systems development and integration, and investment banking activities
- $50,000.
6. PERIODIC TECHNOLOGY AND MARKETING CONSULTING - $75,000.
The value allocated to the services described above (a) are determined as if all
amounts were paid in cash, (b) are on an annual basis, and (c) shall increase
over the Synergy Term consistent with the market value of such services on the
actual date such services are supplied.
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Schedule 3.5
Capitalization
Outstanding Options, Warrants, Etc.
Options to purchase up to 6,100,000 shares of Common Stock were granted under
the Company's 1994 Services and Consulting Compensation Plan, as amended, for
eligible participants who are employees, consultants, non-employee members of
the Board of the Company or any of its subsidiaries or affiliates. All options
were exercised prior to the date hereof.
-E 24-
Schedule 3.6
Subsidiaries
1. New Era Foods, Inc., a Nevada corporation ("New Era Foods").
2. PHS Group Inc., a Pennsylvania corporation, 100% owned by New Era
Foods.
3. Premium Cigar Wrappers, Inc., a New York corporation, 66 2/3% owned by
New Era Foods.
4. XXXX.XXX Inc., a New Jersey corporation ("SYBR").
5. XxxxxxXxxx.Xxx Inc., a New Jersey corporation, 100% owned by SYBR.
6. Net Xxxxx.Xxx Inc., a Florida corporation, 100% owned by SYBR.
7. Island Wholesale Grocers, Inc., a Florida corporation.
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Schedule 3.7
Litigation
None.
-E 26-
Schedule 3.9
SEC Reports; Financial Statements
None.
-E 27-
Schedule 3.10
Intellectual Property
The tradenames "BeautyBuys" and "NetCigar", for which U.S. trademark
applications have been filed.
THE COMPANY OR ITS SUBSIDIARIES ARE LICENSED TO USE THE FOLLOWING TRADEMARKS:
Xxxxxx Gran Reserve Breton Legend Breton Corojo Vintage
Corojo 2000 Andulleros Alimerante
Xxx Xxxxxx
THE COMPANY OR ITS SUBSIDIARIES OWN THE ADDITIONAL DOMAIN NAMES:
REGISTERED TO KRANTOR CORP.:
XXXXXXX.XXX XXXXXXXXXXXX.XXX XXXXXXXXXXX.XXX
REGISTERED TO SYNERGY BRANDS, INC.:
XXXX.XXX XXXXXXXXXX.XXX** XXX0XXXX.XXX
XXXXXXXXXXXXX.XXX XXXXXXXXX.XXX** XXXXXXXXX.XXX
XXXXXXXXXXX.XXX** XXXXXXXXXXXXX.XXX XXXXXXXXX.XXX
XXXXXXXXXXXX.XXX** XXXXXXXXXX.XXX XXXXXXXX.XXX**
XXXXXXXXXXXXX.XXX** XXXXXXXXXX.XXX XXXXXXXXXX.XXX**
XXXXXXXXXXX.XXX** XXXXXXXXXXX.XXX XXXXXXXXX.XXX**
XXXXXXXXXXXXXX.XXX** XXXXXXXXXXXX.XXX XXXXXXXX.XXX
XXXXXXXXXXXXXX.XXX** XXXXXXXXXXXX.XXX XXXXXXXX.XXX
XXXXXXXXXXXX.XXX** XXXXXXXXXXXX.XXX XXXXXXXXXX.XXX
XXXXXXXXXXXX.XXX** XXXXXXXXXXXXX.XXX XXXXXXXX.XXX
XXXXXXXXXXX.XXX** XXXXXXXXXXXXX.XXX XXXXXXX.XXX
XXXXXXXXXXXXX.XXX** XXXXXXXXXXXX.XXX XXXXXXXX.XXX
XXXXXXXXXXX.XXX** XXXXXXXXXXXXX.XXX XXXXXXXX.XXX
XXXXXXXXXXXXXX.XXX XXXXXXXXXXX.XXX XXXXXXXX.XXX
XXXXXXXXXX.XXX
REGISTERED TO XXXXXXXX.XXX, INC.:
XXXXXXXXXXXX.XXX XXXXXXXX.XXX XXXXXX.XXX
XXXXXX0000.XXX
REGISTERED TO XXXXXXXXXX.XXX, INC.:
XXXXXXXXXXX0X.XXX** XXXXXXXXXXXXXXX.XXX**
XXXXXXXXXXXXXX.XXX** XXXXXXXXXXXXXXXXXXX.XXX**
XXXXXXXXXXXXXXX.XXX** XXXXXXXXXXXXXXXXXXX.XXX**
** Denotes ownership by BeautyBuys regardless of which entity registered the
domain name.
-E 28-
Schedule 3.13
Tax Matters
None.
-E 29-
EXHIBIT A
(SYNERGY)
REGISTRATION RIGHTS
1. CERTAIN DEFINITIONS. As used herein, unless the context otherwise
requires (a) all capitalized terms not defined herein shall have the meanings
set forth in the respective Agreements to which this document is an Exhibit, and
(b) the following terms shall have the following respective meanings:
"HOLDER" shall mean the Purchaser holding Registrable Stock and any
other Person holding shares of registrable stock to whom the rights under this
agreement have been transferred in accordance with SECTION 5 below.
THE TERMS "REGISTER", "REGISTERED" AND "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"REGISTRABLE STOCK" shall mean (i) the Synergy Shares owned by
Purchaser; and (ii) any shares of Common Stock issuable with respect to the
Synergy Shares upon any stock split, or stock dividend, or in connection with a
combination of shares, recapitalization, merger, consolidation or reorganization
or otherwise.
2. PIGGYBACK REGISTRATION. If (a) at any at any time after the first
anniversary of the Closing Date, the Company shall file a registration statement
with the Commission for the offering of securities by the Company, except for an
IPO (including, but not limited to, registration statements relating to
secondary offerings of securities by the Company, but excluding registration
statements on Forms X-0, X-0 or any successor OR SIMILAR FORM) (A "COVERED
REGISTRATION STATEMENT"), or (b) at any time after the Closing Date, the Company
shall file a Covered Registration Statement for the offering of securities of
the Company by any of its officers or directors and/or Xxxxxxxx X. Xxxxxxxxxx,
his successors or assigns, either separately or in addition to the securities of
the Company, the Company shall each such time give prompt prior written notice
to the Holder. In either event set forth in (a) or (b) above, the Holder shall
have the right, upon the written request of any such Holder, received by the
Company within 30 days after the receipt of any such notice given by the
Company, to register any of its Registrable Stock (which request shall state the
intended method of disposition thereof). Thereafter, the Company shall use its
best efforts to cause the Registrable Stock as to which registration shall have
been so requested to be included in the securities to be covered by the Covered
Registration Statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the Holder (in accordance
with its written request) of such Registrable Stock.
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Notwithstanding anything to the contrary contained herein, no request
may be made under this Section within 180 days after the effective date of a
registration statement filed by the Company covering a firm commitment
underwritten public offering in which the Holder of Registrable Stock shall have
been entitled to join pursuant to this Section and in which there shall have
been effectively registered and sold all shares of Registrable Stock as to which
registration shall have been so requested.
3. UNDERWRITTEN PUBLIC OFFERING; AGREEMENTS. In the event that any
registration shall be, in whole or in part, an underwritten public offering of
Class A Common Stock, the number of shares of Registrable Stock to be included
in such an underwriting may be reduced to the extent that the managing
underwriter shall be of the opinion (a written copy of which shall be delivered
to the Holder) that such inclusion would materially adversely affect the
marketing of the securities to be sold by the Company under such registration
statement.
In connection with each registration covering an underwritten public
offering, the Company and the Holder agree to enter into a written agreement
with the managing underwriter selected in the manner herein provided in such
form and containing such provisions as are customary in the securities business
for such an arrangement between such underwriter and companies of the company's
size and investment stature; PROVIDED, however, that the Holder of Registrable
Stock shall not be required to make any representations or warranties or
agreements other than representations, warranties and agreements regarding such
Holder, such Holder's Registrable Stock and the intended method of distribution
and provided further that such Holder may require that any or all
representations, warranties, conditions precedent and other agreements by the
Company for the benefit of the underwriter shall also be for the benefit of such
Holder. Each registration shall also be subject to the execution of a written
agreement between the Company and the Holder containing provisions for
indemnification and contribution and such other provisions as are customary for
such an arrangement between the Company and holders of piggyback registration
rights.
4. EXPENSES. All expenses incurred by the Company in connection with
all registration statements under SECTION 2 shall be paid by the company,
provided, that, all underwriting discounts and selling commissions applicable to
the sale of Registrable Stock and all fees and expenses of counsel for the
Holder shall be paid by the Holder.
5. TRANSFERABILITY OF REGISTRATION RIGHTS. The registration rights set
forth in this Agreement are transferable to each transferee of Registrable Stock
who receives at least 25% of the aggregate Registrable stock owned by a holder
on the date hereof, PROVIDED, that such transferee's activities, products and
services are not competitive in any material respect with activities, products
or services of the Company as reasonably determined by the Board of Directors.
Each subsequent holder of Registrable Stock must consent in writing to be bound
by the terms and conditions of this Agreement in order to acquire the rights
granted pursuant to this Agreement.
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EXHIBIT B
SYNERGY BRANDS INC.
NON-COMPETITION AND PROPRIETARY
INFORMATION AGREEMENT
THIS AGREEMENT IS ENTERED INTO AS OF THE 23RD day of November, 1999 by
and between _________________________, residing at
________________________________ (herein called the "Employee"), and SYNERGY
BRANDS INC., a Delaware corporation having its principal place of business at 00
Xxxxxxxxx Xxxxxxxxx, XXXXXXX, XXX XXXX 00000-0000 (THE "COMPANY", which term
includes any subsidiaries or affiliates thereof).
W I T N E S S E T H:
WHEREAS, the Employee is employed by the Company as of the date hereof,
and it is a condition to such continued employment and to the grant of any
increases in compensation, stock options or other incentive compensation that
the Employee enter into an agreement with the Company upon the terms set forth
herein.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows.
(i) FULL TIME EMPLOYMENT; NON-COMPETITION
(i) The Employee shall devote all of his business time and
energies to the business of the Company and shall not at any time while employed
by the Company and for a period of one year after termination of such employment
from the Company (the "Non-Competition Period"), engage in any business on
behalf of any other company or himself and shall not directly or indirectly own
an interest in, manage, operate, join, control, be employed by or participate
either directly or indirectly in the ownership, management, operation or control
of, or be connected in any manner with, any business whose activities conflict
with, are competitive with, or are similar to, that of the e-commerce business
of the Company or any of its Subsidiaries. As used herein, a "Subsidiary" means
(i) any corporation or other entity of which a majority of the voting capital
stock or other voting ownership interests are directly or indirectly owned by
the Company, (ii) XxxxxxXxxx.xxx Inc. so long as thirty (30%) percent of the
voting capital stock of XxxxxxXxxx.xxx Inc. is owned directly or indirectly by
the Company, and (iii) PHS Group Inc. so long as thirty (30%) percent of the
voting capital stock of PHS Group Inc. is owned directly or indirectly by the
Company.
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(ii) While employed by the Company, and during the Non-Competition
Period, the Employee shall not, directly or indirectly:
(i) perform services for or render advice to any person or
business wherever located, which currently has, or is contemplating having, any
products, or which currently performs, or is contemplating the performance of,
any services, which competes with the e-commerce business of the Company or any
of its Subsidiaries; and
(ii) on his own behalf or on behalf of or as an employee of any
other person or business, contact or approach any person or business wherever
located, with a view to selling or assisting others to sell products or services
competing with the e-commerce business of the Company or any of its
Subsidiaries.
(ii) NON BUSINESS SOLICITATION; NON-HIRING OF EMPLOYEES.
Except for the customers listed on Schedule "A" annexed hereto and made
a part hereof, the Employee shall not during the time employed by the Company
and during the Non-Competition Period, engage in e-commerce business of the type
conducted by the Company or any of its Subsidiaries with or solicit e-commerce
business of the type conducted by the Company or any of its Subsidiaries from
any person, firm or entity which was a customer of the Company or any of its
Subsidiaries at any time within one year preceding the termination of his
employment, induce or attempt to induce any such customer to reduce its business
with the Company, solicit or attempt to solicit any employees of the Company to
leave the employ of the Company or offer or cause to be offered employment to
any person who was employed by the Company at any time during the six months
prior to the termination of his employment with the Company. While employed by
the Company, and during the Non-Competition Period, the Employee shall also not
engage in e-commerce business of the type conducted by the Company or any of its
Subsidiaries with any prospective customer of the Company. For this purpose a
"prospective customer" shall mean potential customers which the Company or any
of its Subsidiaries has solicited or with which the Company or any of its
Subsidiaries has had active discussions concerning potential business at any
time during the one year preceding the end of the Employee's employment by the
Company. The Employee acknowledges that (a) in the event his employment with the
Company terminates for any reason, he will be able to earn a livelihood without
violating the foregoing restrictions and (b) his ability to earn a livelihood
without violating such restrictions is a material condition of his employment
with the Company.
(iii) PROPRIETARY INFORMATION.
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(i) The Employee has not and unless authorized or instructed in writing
by the Company, the Employee shall not, except as required in the conduct of the
Company's business, during or after his employment by the Company, disclose to
others, or use, any of the Company's inventions or discoveries or its secret or
confidential information, knowledge or data (oral, written, or in
machine-readable form) which the Employee may have obtained or will obtain
during the course of or in connection with the Employee's employment, including
such inventions, discoveries, information, knowledge, know-how or data relating
to machines, equipment, products, services, systems, software, research and/or
development, designs, compositions, formulae, processes, manufacturing
procedures or business methods, whether or not developed by the Employee, by
others in the Company or obtained by the Company from third parties, and
irrespective of whether or not such inventions, discoveries, information,
knowledge, know-how or data have been identified by the Company as secret or
confidential, unless and until, and then only to the extent that, such
inventions, discoveries, information, knowledge, know-how or data become
available to the public otherwise than by the Employee's act or omission.
(ii) During the course of his employment by the Company and thereafter,
the Employee shall not, except as required in the conduct of the Company's
business, disclose to others, or use, any of the information relating to present
and prospective marketing, sales and advertising programs and agreements with
representatives or prospective representatives of the Company, present or
prospective sources of supply or any other business arrangements of the Company,
including but not limited to customers, customer lists, costs, prices and
earnings, whether or not such information is developed by the Employee, by
others in the Company or obtained by the Company from third parties, and
irrespective of whether or not such information has been identified by the
Company as secret or confidential, unless and until, and then only to the extent
that, such information becomes available to the public otherwise than by the
Employee's act or omission.
(iv) ASSIGNMENT OF INVENTIONS.
The Employee agrees to assign to the Company or its affiliates,
successors or assigns, all of his rights to inventions, or discoveries
trademarks, tradenames and intellectual property which, during the period of his
employment with the Company or its affiliates, successors or assigns, the
Employee has made or conceived, either solely or jointly with others, in the
time or course of his employment with the Company or its affiliates, successors
or assigns, or with the use of the Company's or their time, materials or
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facilities, or relating to any subject matter with which his work for the
Company, its affiliates, successor or assigns is or may be concerned. The
Employee further agrees without charge to the Company, its affiliates,
successors or assigns, but at the Company's or their expense, to execute,
acknowledge and deliver all such papers or documents, including applications for
patents, trademarks, registrations and copyrights, and to perform such other
acts as the Employee lawfully may perform, as may be necessary in the opinion of
the Company, its affiliates, successors or assigns, to obtain or maintain
patents, trademarks, registrations and copyrights for said inventions,
trademarks, tradenames and intellectual property in any and all countries and to
vest title thereto to the Company, its affiliates, successors or assigns.
(v) PRIOR EMPLOYMENT.
(i) Employee represents that his performance of any and all the terms
of this Agreement and as an employee of the Company does not and will not breach
any agreement to keep in confidence proprietary information acquired by him in
confidence or in trust prior to his employment by the Company. The Employee has
not entered into, and he agrees he will not enter into, any agreement either
written or oral in conflict herewith.
(ii) Employee understands as part of the consideration for his
continued employment by the Company, that he has not brought and will not bring
with him to the Company or use in the performance of his responsibilities at the
Company any materials or documents of a former employer which are not generally
available to the public, unless he has obtained written authorization from the
former employer for their possession and use.
(iii) In the event that prior to entering the employ of the Company,
the Employee had terminated employment with one or more prior employers, the
Employee agrees to indemnify and hold harmless the Company, its directors,
officers and employees, against any liabilities and expenses, including amounts
paid in settlement, incurred by any of them in connection with any claim by any
of his prior employers that the termination of his employment with such
employer, his employment by the Company, or use of any skills and knowledge by
the Company is a violation of contract or law. On or prior to the date hereof,
Employee has delivered to the Company a copy of any contract of employment
between Employee and each such prior employer.
(vi) RETURN OF PROPERTY.
All computer software, computer programs, source codes, object codes,
magnetic tapes, printouts, samples, notes, records, reports, documents, customer
lists, photographs, catalogs and other writings, whether copyrightable or not,
relating to or dealing with the Company's business and plans, and those of
others entrusted to the Company which are prepared or created by the Employee or
which may come into his possession at any time during or as a result of his
employment, are the property of the Company, and upon termination of his
employment, the Employee agrees to return all such computer software, computer
programs, source codes, object codes, magnetic tapes, printouts, samples, notes,
records, reports, documents, customer lists, photographs, catalogs and writings
and all copies thereof to the Company. The Company may withhold any amounts due
to the Employee against return of these materials and any other materials of the
Company or its customers.
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(vii) SURVIVAL.
The covenants in this Agreement on the part of the Employee shall
survive termination of this Agreement, and the existence of any claim or cause
of action of the Employee against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of such covenants. The Employee agrees that a remedy at law for any
breach of the foregoing covenants would be inadequate and that the Company shall
be entitled to a temporary and permanent injunction or an order for specific
performance of such covenants without the necessity of proving actual damage to
the Company, and to recover from the Employee its legal fees and expenses in
connection therewith.
(viii) UNENFORCEABILITY.
(i) If any of the rights or restrictions contained or provided for in
this Agreement shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope, or other provisions hereof, or any other
provisions of this Agreement, the parties hereto contemplate that the court
shall reduce such extent, duration, geographical scope or other provisions and
enforce this Agreement in its reduced form for all purposes in the manner
contemplated hereby.
(ii) The Company and the Employee intend to and hereby confer
jurisdiction to enforce the covenants contained in this Agreement upon the
courts of any jurisdiction within the geographical scope of such covenants. If
the courts of any one or more of such jurisdictions hold such covenants wholly
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the Company and the Employee that such determination not bar or in
any way affect the Company's right to the relief provided above in the courts of
any other jurisdiction within the geographical scope of such covenants as to
breaches of such covenants as they relate to each jurisdiction, such covenants
as they relate to each jurisdiction being, for this purpose, severable into
diverse and independent covenants.
(ix) MISCELLANEOUS.
(i) The rights and obligations of the Company under this Agreement may
be assigned by the Company to the successors in interest of the Company or of
that part of the business of the Company to which this Agreement applies. This
Agreement may not be assigned by the Employee.
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(ii) All notices provided for hereunder shall be deemed adequate if
delivered personally to the Employee or if given to either party by first-class
registered or certified postpaid mail, return receipt requested, addressed to
the person to whom such notice is directed at his residence or usual place of
business, or to such other address as such party may designate by notice
similarly given, and shall be effective upon receipt.
(iii) This Agreement and the rights and obligations of the parties
hereunder shall be construed, interpreted and enforced in accordance with, and
governed by the laws of, the State of New York, exclusive of the choice-of-laws
rules thereunder.
(iv) If any of the articles, sections, paragraphs or provisions of this
Agreement shall be held by a court of last resort to be invalid, the remainder
of this Agreement shall not be affected thereby.
(v) The foregoing contains the entire agreement between the parties
relating to the subject matter of this Agreement, and may not be altered or
amended except by an instrument in writing signed by both parties hereto, and
this Agreement supersedes all prior understandings and agreements relating to
the subject matter hereof.
(vi) The waiver by one party of a breach by the other of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by such party. No waiver shall be valid unless written and
signed by the party against whom the waiver is sought to be enforced.
(g) All headings and captions herein are for convenience only and shall
not influence the construction or interpretation of this Agreement.
(h) As used in this Agreement, the singular shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
and vice versa, unless the context requires otherwise.
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(1) Nothing in this Agreement shall confer upon the Employee any right
to continued employment, nor interfere with the right of the Company to
terminate the employment of the Employee at any time.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Employee has hereunto set his
hand to be effective as of the date first above written.
SYNERGY BRANDS INC.
BY:
-------------------
Name:
Title:
-------------------
,Employee
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