EXHIBIT 10.6
SECURITIES PURCHASE AGREEMENT
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THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 17th day of November, 1999, by and between HARRY'S FARMERS
MARKET, INC., a Georgia corporation ("Harry's"), and XXXXXXXX XXXXXXX
("Xxxxxxx").
BACKGROUND
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WHEREAS, on December 30, 1994, Ashford purchased 11,111 shares of Series A
Redeemable Convertible Preferred Stock, stated value $9.00 per share, of Harry's
(the "Series A Stock");
WHEREAS, on December 30, 1994, Ashford purchased warrants to purchase an
aggregate of 4,306 shares of Series A Stock as represented by that certain
Warrant Certificate dated December 30, 1994 to purchase up to 3,750 shares of
the Class A Common Stock, no par value, of Harry's (the "Common Stock") and that
certain Performance Warrant Certificate dated December 30, 1994 to purchase up
to 556 shares of Common Stock (collectively, the "Warrants").
WHEREAS, on January 31, 1997, in contemplation of Harry's entering into a
relationship with Progressive Food Concepts, Inc., Harry's and Ashford entered
into that certain Preferred Stock Exchange Agreement dated January 31, 1997
pursuant to which each share of Series A Stock held by Ashford was exchanged for
one share of Series AA Preferred Stock, stated value $9.00 per share, of Harry's
(the "Preferred Stock") and the shares of Series A Stock previously held by
Ashford were canceled;
WHEREAS, on January 31, 1997, the Warrants were amended to change the
exercise price to $4.00 per share;
WHEREAS, Ashford owns and desires to sell to Harry's, and Harry's desires
to purchase from Ashford, the 11,111 shares of Preferred Stock, which is all of
the Preferred Stock owned by Ashford, and the Warrants, which, together,
comprise all the securities of Harry's owned by Ashford.
In consideration of the foregoing, the mutual representations, warranties,
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. TERMS OF ACQUISITION
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1.1 Sale and Transfer of Securities.
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(a) The closing for the purchase and sale contemplated by this Agreement
shall be held at the offices of Xxxxxx & Bird, One Atlantic Center, 0000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx, 00000, as soon as practicable following the
satisfaction of the conditions set forth in Section 8 herein, but in no event
later than December 15, 1999, or at such other place as the parties hereto may
agree in writing (the date on which the closing actually occurs is hereinafter
referred to as the "Closing Date").
(b) On the Closing Date and upon the terms and subject to the conditions of
this Agreement, Ashford will sell, convey, transfer, assign and deliver to
Harry's, and Harry's will purchase and accept from Ashford, 11,111 shares of
Preferred Stock (the "Shares"), as evidenced by stock certificate number P-1,
and the Warrants (collectively, the Shares and the Warrants are referred to
herein as the "Securities").
(c) On the Closing Date, Ashford will convey to Harry's good, valid and
marketable title to the Securities free and clear of any and all liabilities,
obligations, liens, encumbrances, restrictions or rights of others of any
character whatsoever. On the Closing Date, Ashford will deliver to Harry's (i)
stock certificate number P-1 evidencing the Shares registered in the name of
Ashford, duly endorsed in blank on the reverse thereof or accompanied by a duly
executed stock power and (ii) the original executed Warrants.
2. PURCHASE PRICE
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2.1 Purchase Price. In full payment of the purchase price for the
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Securities, on the Closing Date, Harry's will pay Ashford Twenty Seven Thousand
Five Hundred Ten Dollars ($27,510) (the "Purchase Price") by wire transfer of
immediately payable funds to an account previously designated in writing by
Ashford.
3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
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Ashford represents and warrants to Harry's as follows:
3.1 Ownership of Securities. Ashford is the record and beneficial owner
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of the Securities free and clear of any liens, claims, options, charges,
encumbrances or rights of others. At no time since December 30, 1994 has
Ashford assigned the Warrants in whole or in part or transferred the Warrants.
The Securities constitute Ashford's only interest in or to Harry's, its business
or any of its assets.
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3.2 Consents. Ashford may enter into this Agreement and perform its
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obligations under this Agreement without the necessity of obtaining any consent
from anyone, including any governmental authority, and all of the Securities may
be sold by him to Harry's without the imposition of any lien, charge or
encumbrance with respect to such Securities.
3.3 Authorization and Binding Effect. Ashford has the capacity and the
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power to execute, deliver, enter into and perform this Agreement and to
consummate the transactions contemplated by this Agreement. This Agreement
constitutes a legal, valid and binding agreement enforceable against Ashford in
accordance with the terms hereof. Upon consummation of the transactions
contemplated herein, Harry's will own the Securities sold by Ashford pursuant to
this Agreement free and clear of any liens, claims, options, charges,
encumbrances or rights of others.
3.4 No Breach. The execution, delivery and performance of this Agreement
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and the consummation of the transactions contemplated hereby will not violate or
result in a breach of or default under (i) any instrument or agreement to which
Ashford is a party or is bound or (ii) any law, rule, regulation, judgment,
order, injunction, decree, or award against or binding upon Ashford.
3.5 Access to Information. Ashford has owned the Securities since
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December 30, 1994 and at all times since such date has had full and free access
to Harry's, its management personnel and its financial statements and
information. Ashford has had the opportunity to ask questions of and receive
answers or obtain additional information from Harry's concerning the financial
and other affairs and prospects of Harry's and the terms and conditions of the
sale of the Securities. Ashford is familiar with Harry's and the business in
which it is engaged. Ashford is fully aware that future events could impact the
value of the Securities, and Ashford has conducted his own analysis in deciding
to enter into this Agreement. Ashford acknowledges that the negotiations
culminating in this Agreement have been at arm's length. Ashford has made his
own investigation of Harry's, its business, its financial statements and
information, has solely relied on the results of such investigation in entering
into this Agreement and has not relied on any statements or representations by
Xxxxx`s or any of its representatives, counsel or agents other than those
representations and warranties contained in Section 4 of this Agreement.
3.6 Certain Prior Actions. Prior to the date of this Agreement, Ashford
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has not taken any actions, or failed to take any actions, that if taken or not
taken immediately after the execution and delivery of this Agreement would
violate the provisions of Section 5 hereof.
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4. REPRESENTATIONS AND WARRANTIES OF HARRY'S
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Harry's represents and warrants to Ashford as follows:
4.1 Consents. Harry's may enter into this Agreement and perform its
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obligations under this Agreement without the necessity of obtaining any consent
from anyone, including any governmental authority.
4.2 Authorization and Binding Effect. Harry's has the corporate power and
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authority to execute, deliver, enter into and perform this Agreement and to
consummate the transactions contemplated by this Agreement. The officers
executing this Agreement are the duly elected officers of Harry's and are duly
authorized to execute this Agreement on Harry's behalf. This Agreement
constitutes a legal, valid and binding obligation of Harry's enforceable against
Harry's in accordance with its terms.
4.3 No Breach. The execution, delivery and performance of this Agreement
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and the consummation of the transactions contemplated hereby will not violate or
result in a breach of or default under (i) any instrument or agreement to which
Harry's is a party or is bound, (ii) its Articles of Incorporation or its
Bylaws, or (iii) any law, rule, regulation, judgment, order, injunction, decree,
or award against or binding upon Harry's.
4.4 Corporate Existence, Power and Authority.
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(a) Harry's is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Harry's is duly
qualified, licensed and authorized to do business and is in good standing in
each jurisdiction in which it owns or leases any property or in which the
conduct of its business requires it to so qualify or be so licensed, except for
such jurisdictions where the failure to so qualify or be so licensed would not
have a material adverse effect on Harry's assets, properties, liabilities,
business, results of operations or condition (financial or otherwise).
(b) No proceeding has been commenced looking toward the dissolution or
merger of Harry's or the amendment of its certificate of incorporation. Harry's
is not in violation in any material respect of its certificate of incorporation
or by-laws.
(c) Harry's has all requisite power, authority (corporate and other) and
legal right to own or to hold under lease and to operate the properties it owns
or holds and to conduct its business as now being conducted.
4.5 Litigation. Other than has been disclosed in its filings with the
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Securities and Exchange Commission, there is no action, suit, proceeding,
investigation or claim pending, to which Harry's has received any oral or
written notice, or, to the best knowledge of Harry's, threatened in law, equity
or otherwise before any court,
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administrative agency or arbitrator which questions the validity of this
Agreement or any action taken or to be taken pursuant hereto.
5. COVENANTS OF ASHFORD From and after the date hereof, Ashford shall
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perform and comply with the following covenant:
5.1 Nondisclosure of Trade Secrets and Confidential Information. As used in
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this Agreement, the term "Confidential Information" shall mean all information
regarding Harry's or its activities, business and current or prospective
customers or suppliers that are not generally known to persons not employed by
Harry's, including without limitation, information regarding Harry's products,
contracts, corporate records or proceedings, current or prospective employees,
pricing, costs, financial results or condition, relationships with its customers
and suppliers, and relationships with its employees. Confidential Information
shall not include information that has become generally available to the public
by the act of one who has the right to disclose such information without
violating any right or privilege of Harry's. For one (1) year after the date
hereof with respect to Confidential Information, Ashford shall not directly or
indirectly transmit or disclose any Confidential Information to any person,
concern or entity, and shall not make use of any such Confidential Information,
directly or indirectly, for itself or others. In the event that Ashford is
requested in any proceeding to disclose any Confidential Information, Ashford
shall give Harry's prompt notice of such request so that Harry's may seek an
appropriate protective order. If, in the absence of a protective order, Ashford
is nonetheless compelled by law to disclose Confidential Information, Ashford
may disclose such information in such proceeding without liability hereunder;
provided, however, that Ashford gives Harry's written notice of the Confidential
Information to be disclosed as far in advance of its disclosure as is
practicable and, upon Harry's request and at Harry's expense, uses its best good
faith efforts to obtain assurances that confidential treatment will be accorded
to the information provided by Ashford or its agents.
5.2 Injunctive Relief. Ashford acknowledges that the nondisclosure covenant
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contained in this Section 5 is a reasonable means of protecting and preserving
Harry's interests and the confidentiality of the Confidential Information.
Ashford agrees that any breach of this covenant will result in irreparable
damage and injury to Harry's and that Harry's will be entitled to injunctive
relief in any court of competent jurisdiction without the necessity of posting
any bond. Ashford also agrees that any injunctive relief shall be in addition to
any damages that may be recoverable by Harry's.
5.3 Enforceability of Covenants. Ashford and Harry's agree that Ashford's
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obligations under the nondisclosure covenant are separate and distinct from its
obligations under other provisions of this Agreement, are material, and a
failure or alleged failure of Harry's to perform its obligations under any
provision of this Agreement shall not constitute a defense to the enforceability
of the nondisclosure covenant.
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6. INDEMNIFICATION
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6.1 Indemnity by Ashford. Ashford hereby agrees to indemnify Harry's, and
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each of its officers, directors, shareholders, employees, agents and counsel
against, and to hold each of the foregoing harmless from, any and all losses,
liabilities, costs, damages and expenses (including but not limited to
reasonable attorneys' fees, including attorneys' fees necessary to enforce its
rights to indemnification hereunder) arising from or resulting by reason of any
material inaccuracy in any of the representations or warranties, or any breach
of any of the covenants or agreements, made or to be performed by Ashford
pursuant to this Agreement.
6.2 Indemnity by Harry's. Harry's hereby agrees to indemnify Ashford
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against, and to hold Ashford harmless from, any and all losses, liabilities,
costs, damages and expenses (including but not limited to reasonable attorneys'
fees, including attorneys' fees necessary to enforce his rights to
indemnification hereunder) arising from or resulting by reason of any material
inaccuracy in any of the representations or warranties, or any breach of any of
the covenants or agreements, made or to be performed by Harry's pursuant to this
Agreement.
6.3 Termination of Existing Agreements. Subject to the foregoing sentence,
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on and as of the Closing Date all agreements of any kind and nature between
Ashford and Harry's, including, without limitation, that certain Amended and
Restated Investors Agreement dated January 31, 1997 and that certain
Registration Rights Agreement dated December 30, 1994, as amended, will be
terminated and of no further force or effect without any further action on the
part of the parties hereto.
7. NEGATIVE COVENANT OF ASHFORD From the date hereof to the Closing Date,
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which shall be no later than December 15, 1999, Ashford shall not sell any of
the Shares, assign the Warrants in whole or in part or transfer the Warrants.
8. CONDITIONS PRECEDENT TO PARTIES' OBLIGATIONS TO CLOSE The obligations of
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Ashford and Harry's to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction of each of the following
conditions, unless waived in whole or in part by the parties.
8.1 Financing Commitments. Harry's shall have obtained financing in such
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amount and on such terms as the Board of Directors of Harry's, in its reasonable
discretion, shall have determined is acceptable.
8.2 Ashford Representations and Warrants. The representations and
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warranties made by Ashford in Article 3 hereof shall be true and correct on and
as of the
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Closing Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date.
8.3 Harry's Representations and Warrants. The representations and
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warranties made by Harry's in Article 4 hereof shall be true and correct on and
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
8.4 Compliance by Ashford. Ashford shall have duly performed in all
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material respects all of the covenants and negative covenants contained in this
Agreement to be performed by Ashford.
9. MISCELLANEOUS
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9.1 Representations and Warranties. All of the representations, warranties,
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covenants and agreements made by any of the parties in or pursuant to this
Agreement shall survive the consummation of the transactions contemplated by
this Agreement.
9.2 Successors and Assigns. No party may assign any of its rights hereunder
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without the prior written consent of the other party hereto.
9.3 Governing Law. This Agreement shall be controlled, construed and
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enforced in accordance with the substantive laws of the State of New York,
without regard to the laws related to choice or conflict of laws.
9.4 Counterparts. This Agreement may be executed in one or more
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counterparts, all of which shall be one and the same Agreement and shall become
effective when one or more counterparts have been signed by all of the parties
and delivered to the other parties.
9.5 Further Assurances. Ashford shall at any time and from time to time
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after the date hereof take whatever actions Harry's may reasonably request to
effectuate, record or perfect its transfer of the Securities to Harry's pursuant
to this Agreement or to otherwise effectuate or consummate any of the
transactions contemplated hereby.
9.6 Interpretations. Neither this Agreement nor any uncertainty or
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ambiguity herein shall be construed or resolved against Harry's or Ashford
whether under any rule of construction or otherwise. No party to this Agreement
shall be considered the draftsman. On the contrary, this Agreement has been
reviewed, negotiated and accepted by both parties and their attorneys and shall
be construed and interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of all parties hereto.
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9.7 Notices. All notices, requests, demands and other communications
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hereunder shall be (i) delivered by hand, (ii) mailed by registered or certified
mail, return receipt requested, first class postage prepaid and properly
addressed, (iii) sent by national overnight courier service, or (iv) sent by
facsimile, graphic scanning or other telegraphic communications equipment to the
parties, addressed as follows:
To Ashford: Xx. Xxxxxxxx Xxxxxxx
c/o Ashford Capital Partners, L.P.
0000 Xxxxxxx Xxxx, Xxxxx X-000
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
To Harry's: Harry's Farmers Market, Inc.
0000 Xxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxx
Telecopy: (000) 000-0000
with copies to: Xxxxxx & Bird LLP
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(b) All notices, requests, instructions or documents given to any
party in accordance with this Section 9.7 shall be deemed to have been given (i)
on the date of receipt if delivered by hand, overnight courier service or if
sent by facsimile, graphic scanning or other telegraphic communications
equipment or (ii) on the date three (3) business days after depositing with the
United States Postal Service if mailed by United States registered or certified
mail, return receipt requested, first class postage prepaid and properly
addressed.
(c) Any party hereto may change its address specified for notices
herein by designating a new address by notice in accordance with this Section
9.7.
9.8 Entire Agreement. This Agreement constitutes the entire
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agreement among the parties relating to the subject matter hereof and thereof
and supersedes all prior oral and written, and all contemporaneous oral
negotiations, discussions, writings, correspondence and agreements relating to
the subject matter of this Agreement.
9.9 Modifications, Amendments and Waivers. The failure or delay of
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any party at any time or times to require performance of any provision of this
Agreement shall in no manner affect its right to enforce that provision. No
single or partial waiver by any party of any condition of this Agreement, or the
breach of any term, agreement or
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covenant or the inaccuracy of any representation or warranty of this Agreement,
whether by conduct or otherwise, in any one or more instances shall be construed
or deemed to be a further or continuing waiver of any such condition, breach or
inaccuracy or a waiver of any other condition, breach or inaccuracy.
9.10 Severability. Should any one or more of the provisions of this
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Agreement be determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith to replace any provisions determined to be invalid,
illegal or unenforceable with valid, legal and enforceable provisions the
economic effect of which comes as close as practicable to that of the invalid,
illegal or unenforceable provisions.
[SIGNATURES CONTINUED ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties have caused this Securities Purchase
Agreement to be duly executed and delivered under seal as of the date first
above written.
HARRY'S FARMERS MARKET, INC.
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: Sr. Vice President and CFO
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[CORPORATE SEAL]
/s/ Xxxxxxxx Xxxxxxx
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Xxxxxxxx Xxxxxxx
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