STOCK PURCHASE AGREEMENT
Exhibit 99.1
THE SECURITIES TO BE ISSUED PER THE TERMS OF THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED,
OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, UNLESS EITHER THE SAID SECURITIES HAVE
BEEN REGISTERED UNDER SAID ACT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT IS AVAILABLE. IF
THE SAID SECURITIES ARE TO BE SOLD OR TRANSFERRED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENT, THE ISSUER MAY, AT ISSUER’S SOLE COST AND EXPENSE, REQUIRE WRITTEN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO COUNSEL FOR SAID ISSUER, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
AND THAT SUCH TRANSFER WILL NOT VIOLATE SAID ACT OR APPLICABLE STATE SECURITIES LAW.
This Agreement is made this 21st day of December, 2007, by and among SYNERGY BRANDS INC., a
Delaware corporation with offices at 000 Xxxxxxxxx Xxxx., Xxxxxxx, XX 00000, (hereinafter referred
to as the “Purchaser”), and MILFAM I L.P., a Georgia Limited Partnership, whose address is 0000
Xxxxxx Xxxxx, Xxxxxx, Xxxxxxx 34102(hereinafter referred to as the “Seller”), and provides for the
Purchaser to acquire any and all of the Seller’s right, title and interest in, to and under that
certain common stock purchase warrant (the “Warrant”) to acquire up to fifteen percent (15%) of the
shares of common stock, $0.001 par value (the “Company Common Stock”) on a fully diluted basis, of
QUALITY FOOD BRANDS Inc., a Nevada Corporation, (hereinafter referred to as the “Company”), with
offices at 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, owned by Seller.
WHEREAS, Purchaser is a publicly traded and Securities and Exchange Commission (“SEC”)
reporting company, and, presently, through its wholly owned subsidiary, PHS Group Inc., a
Pennsylvania corporation, owns a majority of the presently outstanding Company Common Stock and
historically has had and continues to have a significant participation in the Company’s business
but does not presently own a sufficient stock interest in the Company to consolidate with the
Company for financial reporting purposes, but such reporting consolidation could be accomplished
through the purchase the Warrant and such is the designed purpose of this agreement; and
WHEREAS, the Seller owns the Warrant referenced above consisting of a right to purchase up to
fifteen percent (15%), on a fully diluted basis, of Company Common Stock and, upon request of
Purchaser, Seller has offered to sell to Purchaser and Purchaser has expressed an interest in
buying all of Seller’s interest in the Warrant; and
WHEREAS, the Purchaser desires to acquire, on the terms and subject to the conditions
reflected below, the Warrant, to seek
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consolidation with the Company for financial reporting purposes; and
WHEREAS, the Seller believes that it is desirable and in the best interests of the Seller and
the Company that it sell the Warrant to the Purchaser;
NOW, THEREFORE, the Parties to this Agreement do hereby agree as follows:
ARTICLE I
THE TRANSACTION
THE TRANSACTION
1.1 The Transaction. Subject in all instances to each of the terms, conditions, provisions
and limitations contained in this Agreement, the Seller shall sell, transfer, convey and assign to
the Purchaser, by instruments reasonably satisfactory in form and substance to the Purchaser and
its counsel, and the Purchaser shall acquire from the Seller, the Warrant in exchange for the
Consideration (as hereinafter defined) (such securities transaction hereinafter being referred to
as the “Transaction”) thereby assisting the Company to becoming a consolidated reporting subsidiary
of Purchaser.
1.2 Consideration. The Consideration shall be the due and valid issuance to the Seller of four
hundred and eighty thousand shares (480,000) (the “Consideration Shares”) of the Purchaser’s
authorized but not yet issued common stock, $0.001 par value (the “Purchaser Common Stock”)
issuable through authorization to be given to the Purchaser’s transfer agent to issue the
Consideration Shares with restrictive legend which authorization shall be provided
contemporaneously with the Purchaser’s receipt of the Warrant duly assigned to the Purchaser. By
signing this Agreement Purchaser, Synergy Brands Inc., acknowledges and accepts such plan of
possible stock issuance and confirms the value likely to be derived by said company from the
Transaction being consummated which Transaction is designed to directly benefit Purchaser and its
wholly owned above referenced subsidiary, PHS Group Inc., through, among other benefits, the
combined disclosure of their financial results of operations with that of the Company. The
obligation of the Seller to enter into this Transaction is subject to the issuance and delivery of
a stock certificate, registered in the name of the Seller (the “Certificate”), representing the
Consideration Shares.
1.3 Closing. The issuance and transfer of the securities as provided herein shall be
consummated within 5 days of the date of this Agreement (which may be accomplished by mail) and
shall be conditioned upon all parties hereto having fulfilled all covenants and responsibilities
stated as applicable to them herein. The date upon which the Seller receives the Certificate
representing the Consideration Shares shall be referred to herein as the “Closing Date.” The
parties hereto represent that the number of
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Consideration Shares to be issued to Seller has been determined at arm’s length with no guaranty as
to marketability or value.
ARTICLE II
REPRESENTATIONS AND
WARRANTIES OF PURCHASER
REPRESENTATIONS AND
WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Seller (which representations and warranties
shall be confirmed as of the Closing Date):
2.1 Authority Relative to this Agreement.
(a) The Purchaser has the power and authority to enter into and to perform this Agreement in
its name and has received the requisite approval of its Board of Directors and otherwise
understands there to be no necessity of any other third party approval, including governmental.
This Agreement has been duly and validly executed and delivered by the Purchaser, and constitutes a
valid and binding Agreement of the Purchaser, enforceable in accordance with its terms.
(b) The Consideration Shares have been duly authorized and, when issued in accordance with
this Agreement, will be free and clear of all liens, charges, restrictions, claims and encumbrances
imposed by or through the Purchaser. The issuance and delivery of the Consideration Shares are
not subject to any preemptive right of shareholders of the Purchaser or to any right of first
refusal or other right in favor of any person. When issued in accordance with this Agreement, the
Consideration Shares will be duly authorized, validly issued, fully paid and nonassesable.
2.2 Absence of Breach. The execution, delivery and performance of this Agreement, and the
performance by the Purchaser of its obligations hereunder do not (1) conflict with or result in a
breach of any of the provisions of the Articles of Incorporation or By-Laws of the Purchaser and
all other applicable organizational and operational prerequisites; (2) contravene any law, rule or
regulation known to Purchaser of any State or Commonwealth or of the United States, or of any
applicable foreign jurisdiction, or any order, writ, judgment, injunction, decree, determination,
or award affecting or binding upon the Purchaser, in such a manner as to provide a basis for
enjoining or otherwise preventing consummation of the Transaction; (3) conflict with or result in a
material breach of or default under any material indenture or loan or credit agreement or any other
material agreement or instruments to which Purchaser is a party, in such a manner as to provide a
basis for enjoining or otherwise preventing consummation of the Transaction; or (4) require the
authorization, consent, approval or license of any third party of such a nature that the failure to
obtain the same would provide a basis for
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enjoining or otherwise preventing consummation of the Transaction.
2.3 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with this Agreement or the Transaction or any related
transaction of Purchaser based upon any agreements, written or oral, made by or on behalf of
Purchaser.
2.4 Investment Intent. Purchaser is acquiring the Warrant for its own account without a view
to the sale or other public distribution thereof. The Company is an indirect majority owned
subsidiary of the Purchaser and the Purchaser is acquiring the Warrant to, among other benefits,
allow the consolidated disclosure of the Purchaser’s financial results with the financial results
of operations with that of the Company (as one of the consolidated subsidiaries of the Purchaser).
2.5 Current in Reporting. Purchaser is an SEC Exchange Act and NASDAQ listed reporting public
company current in its reporting obligations and in good standing to the best of its knowledge with
those and all other applicable regulatory authorities.
2.6 Authorized Capital Stock. The authorized capital stock of the Purchaser consists of
shares of Purchaser Common Stock. As of the date of this Agreement, 9,913,700 shares of Purchaser
Common Stock were validly issued and outstanding, fully paid and nonassessable. Except as
disclosed in SEC Reports (as defined below), there are no options, warrants and convertible
securities of the Purchaser, and any other rights to acquire securities of the Purchaser. All
outstanding securities of the Parent Company are validly issued, fully paid and nonassessable.
2.7 Issuance of the Consideration Shares. Assuming the accuracy of the representations and
warranties of the Seller contained in this Agreement, the offer and issuance of the Consideration
Shares will be exempt from the registration requirements of the Securities Act, and will have been
registered or qualified (or are exempt from registration and qualification) under the registration,
permit or qualification requirements of all applicable federal and state securities laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
The Seller represents and warrants to the Purchaser as follows, (which representations and
warranties shall be confirmed as of the Closing Date):
3.1 Organization and Qualification. The Seller, if being an
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entity, is an entity duly organized, validly existing, and in good standing under the laws of its
State of domicile and otherwise is in good standing with the requisite power and authority to enter
into and to perform this Agreement.
3.2 Authority Relative to this Agreement. This Agreement has been duly and validly executed
and delivered by the Seller and constitutes a valid and binding Agreement of the Seller enforceable
in accordance with its terms. The Seller, has all requisite corporate power and/or other authority
as necessary to enter into this Agreement and to carry out the Transaction contemplated hereby, and
their doing so has been duly and sufficiently authorized.
3.3 Absence of Breach; No Consents. The execution, delivery and performance of this
Agreement, and the performance by the Seller of their obligations hereunder, do not (1) conflict
with or result in a breach of any of the applicable organizational documents of the Seller; (2)
contravene any law, ordinance, rule or regulation of any State or Commonwealth or political
subdivision of either; (3) conflict with or result in a material breach of or default under any
material indenture or loan or credit agreement or any other material agreement or instrument to
which the Seller is a party; or (4) require the authorization, consent, approval, or license of any
third party, governmental or otherwise.
3.4 Investment Representations.
a) The Consideration Shares to be issued to Seller hereunder have not been registered under
the Securities Act of 1933, as amended (the “Act”), and are not freely tradeable. The Consideration
Shares must be held indefinitely unless the shares are sold pursuant to an effective registration
statement under the Act or pursuant to an available exemption from the registration requirement of
the Act.
b) The Purchaser has no obligation to Seller to register for resale any of the Consideration
Shares.
c) The Consideration Shares are being acquired for investment for Seller’s own account and not
with a view to s distribution thereof in violation of the Act.
d) A legend in substantially the following form shall be affixed to the certificates
evidencing the Consideration Shares:
The securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the “Act”), and may not be sold, pledged,
hypothecated, donated, or otherwise transferred, whether or not for consideration,
unless either the securities
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have been registered under said Act or an exemption from such
registration requirement is available. If the securities are to be sold or
transferred pursuant to an exemption from the registration requirement, the issuer
may, at issuer’s sole cost and expense, require a written opinion of counsel,
reasonably satisfactory to counsel for the issuer, to the effect that registration
is not required and that such transfer will not violate said Act or applicable State
securities law.
3.5 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with this Agreement or the Transaction or any related
transaction of Seller based upon any agreements, written or oral, made by or on behalf of Seller.
ARTICLE VI
COVENANTS OF PURCHASER
COVENANTS OF PURCHASER
4.1 Affirmative Covenants. From the date hereof through the Closing Date, the Purchaser will
take every action reasonably required of it in order to satisfy the conditions to closing set forth
in this Agreement and otherwise to ensure the prompt and expedient consummation of the Transaction
substantially as contemplated by this Agreement, and will exert all reasonable efforts to cause the
Transaction to be consummated, provided in all instances that the representations and warranties of
the Seller in this Agreement are and remain true and accurate and that the covenants and agreements
of the Seller in this Agreement are honored and that the conditions to the obligations of the
Purchaser set forth in this Agreement are not incapable of satisfaction.
4.2 Cooperation. The Purchaser shall cooperate with the Seller and its counsel, accountants
and agents in every way in carrying out the transactions contemplated herein, and in delivering all
documents and instruments deemed reasonably necessary or useful by Counsel to the Seller.
4.3 Expenses. The parties agree to bear their own respective legal and other costs and
expenses for preparing, negotiating, executing and delivering this Agreement and consummating the
Transaction.
4.4 Publicity. Prior to the Closing any written news releases or other public disclosure by
the Purchaser and/or the Company pertaining to this Agreement or the Transaction shall be submitted
to the Seller for review and approval prior to release by the Purchaser and/or the Company, and
shall be released only in a form approved by the Seller, provided, however, that (a) such approval shall
not be unreasonably withheld, and (b) such review and
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approval shall not be required of
releases and as to reporting, and/or other disclosure required under applicable SEC, NASDAQ and/or
other applicable governmental and/or other regulatory compliance mandates by the Purchaser if prior
review and approval would prevent the timely and accurate dissemination of such release as required
to comply, in the judgment of Purchaser’s counsel, with any applicable law, rule or policy and as
to reporting, and/or other disclosure required under applicable SEC, NASDAQ and/or other applicable
governmental and/or other regulatory compliance mandates.
4.5 Current Reporting. Purchaser shall remain current through the Closing on all of its
regulatory reporting obligations.
4.6 Reissuance of Consideration Shares. Purchaser agrees to reissue certificates representing
the Consideration Shares without the legends set forth above at such time as: (a) the holder
thereof is permitted to dispose of such Consideration Shares pursuant to Rule 144(k) under the
Securities Act; or (b) upon resale subject to an effective registration statement after such
Consideration Shares are registered under the Securities Act. The Purchaser agrees to cooperate
with the Seller in connection with all resales pursuant to Rule 144(d) and Rule 144(k) and provide
legal opinions deemed reasonably necessary by the Seller to allow such resales provided the
Purchaser and its counsel receive reasonably requested representations from the selling Seller and
broker, if any, and the Purchaser and its counsel are reasonably satisfied with the validity of
such representations.
ARTICLE V
COVENANTS OF THE SELLER
COVENANTS OF THE SELLER
5.1 Affirmative Covenants. From the date hereof through the Closing Date, the Seller will take
every action reasonably required of it to satisfy the conditions to Closing set forth in this
Agreement and otherwise to ensure the prompt and expedient consummation of the Transaction
substantially as contemplated hereby, and will exert all reasonable efforts to cause the
Transaction to be consummated, provided in all instances that the representations and warranties of
the Purchaser in this Agreement are and remain true and accurate and that the covenants and
agreements of the Purchaser in this Agreement are honored and that the conditions to the
obligations of the Seller set forth in this Agreement are not incapable of satisfaction.
5.6 Cooperation. The Seller shall cooperate with the Purchaser and its counsel, accountants
and agents in every way in carrying out the transactions contemplated herein, and in delivering all documents and instruments deemed reasonably
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necessary or useful by Counsel to the Purchaser.
5.7 Expenses. Whether or not the Transaction is consummated, all costs and expenses incurred
by the Seller in connection with this Agreement and the Transaction contemplated hereby shall be
the responsibility of and be paid by the Seller, except as otherwise provided herein.
5.8 Publicity. Prior to the Closing any written news releases or other public disclosure by
the Seller pertaining to this Agreement or the Transaction shall be submitted to the Purchaser for
review and approval prior to release by the Seller, and shall be released only in a form approved
by the Purchaser, provided, however, that (a) such approval shall not be unreasonably withheld, and
(b) such review and approval shall not be required of releases and as to reporting, and/or other
disclosure required under applicable SEC, NASDAQ and/or other applicable governmental and/or other
regulatory compliance mandates by the Seller if prior review and approval would prevent the timely
and accurate dissemination of such release as required to comply, in the judgment of Seller’s
counsel, with any applicable law, rule or policy and as to reporting, and/or other disclosure
required under applicable SEC, NASDAQ and/or other applicable governmental and/or other regulatory
compliance mandates.
ARTICLE VI
CONDITIONS TO CLOSING
CONDITIONS TO CLOSING
6.1 Conditions to Obligation of Purchaser. The obligation of the Purchaser to effect the
Transaction shall be subject to the fulfillment at or prior to the Closing of the following
conditions, unless Purchaser shall waive such fulfillment:
1. This Agreement and the Transaction contemplated hereby shall have received all approvals,
consents, authorizations and waivers from governmental and other regulatory agencies and other
third parties as applicable and required to consummate the Transaction.
2. There shall not be in effect a preliminary or permanent injunction or other order by any
federal or State court which prohibits the consummation of the Transaction.
3. The Seller shall have performed in all material respects each of its agreements and
obligations contained in this Agreement and required to be performed on or prior to the Closing and
shall have complied with all material requirements, rules, and regulations of all regulatory
authorities having jurisdiction relating to the Transaction.
4. The representations and warranties of the Seller set forth in this Agreement shall be true in all material respects as
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of the date of this Agreement and as of the Closing Date as if made as of such time.
6.2 Conditions to Obligation of the Seller. The obligation of the Seller to effect the
Transaction shall be subject to the fulfillment at or prior to the Closing of the following
conditions, unless the Seller shall waive such fulfillment:
1. This Agreement and the Transaction shall have received all applicable approvals, consents,
authorization and/or waivers from governmental and other regulatory agencies and other third
parties (including lenders, holders of debt securities, lessors and the shareholders of the
Purchaser, if and as applicable) required by law to consummate the Transaction.
2. There shall not be in effect a preliminary or permanent injunction or other order by any
federal or State authority which prohibits the consummation of the Transaction.
3. The Purchaser shall have performed in all material respects its agreements and obligations
contained in this Agreement required to be performed on or prior to the Closing.
4. The representations and warranties of the Purchaser set forth in this Agreement shall be
true in all material respects as of the date of this Agreement and as of the Closing Date as if
made as of such time.
5. Purchaser shall be current in all applicable regulatory reporting.
6. Seller and its counsel will have received (a) the Certificate and (b) copies of a
certificate of the Secretary or an authorized officer of the Purchaser dated as of the date of this
Agreement and certifying that attached thereto is a true and complete copy of all resolutions
adopted by the Board of Directors of the Purchaser authorizing the execution, delivery and
performance by the Purchaser of this Transaction and the issuance, payment and delivery of the
Consideration Shares by the Purchaser to the Seller.
7. Seller will have received an opinion of counsel from counsel for the Purchaser reasonably
satisfactory to the Seller and the Seller’s counsel.
ARTICLE VII
AMENDMENT, WAIVER
AMENDMENT, WAIVER
No amendment of any provision of this Agreement shall be effective unless it is in writing and
signed by the parties, and no waiver of any provision of this Agreement, nor consent to any
departure by either party from it, shall be effective unless it is
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in writing and signed by the affected party, and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No failure on the part of a party to exercise, and
no delay in exercising, any right or remedy under this Agreement shall operate as a waiver by such
party, nor shall any single or partial exercise of any right or remedy under this Agreement
preclude any other or further exercise thereof or the exercise of any other right or remedy. The
rights and remedies of each party provided herein (a) are cumulative and are in addition to, and
are not exclusive of, any rights or remedies provided by law and (b) are not conditional or
contingent on any attempt by such party to exercise any of its rights or remedies under any other
related document or against the other party or any other entity.
ARTICLE VIII
CONFIDENTIALITY
CONFIDENTIALITY
The existence of this Agreement and all confidential information furnished by one party to the
other related thereto will be kept in confidence. This confidentiality requirement does not relate
to information that (i) was known to a party prior to the disclosure by the other party; (ii) is or
becomes generally available to the public other than by breach of this Agreement; (iii) is provided
by one party for disclosure concerning such party in a proxy statement, information statement or
registration statement; (iv) otherwise becomes lawfully available to a party on a non-confidential
basis from a person not under an obligation of confidence to the other party or (v) is disclosed if
required to do so by any law, court, regulation, subpoena or other legal process (including any
public filings required to be made to the SEC) or if its attorneys advise it that it has a legal
obligation to do so or that failure to do so may result in it incurring a liability to any other
entity.
ARTICLE IX
GENERAL PROVISIONS
GENERAL PROVISIONS
9.1 Notices. All notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or mailed by registered or certified mail (return receipt
requested), or is sent by telefax to the parties at the address as stated at the outset hereof (or
at such other address for a party as shall be specified by like notice given at least five (5) days
prior thereto).
9.2 Interpretation. The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
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9.3 Survival of Representations, Warranties, Et Cetera. The representations, warranties,
covenants, and agreements of the parties contained herein shall survive the Closing.
9.4 Miscellaneous. This Agreement (1) constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written and oral, between the parties, with respect
to the subject matter hereof, except as specifically provided otherwise or referred to herein, so
that no such external or separate agreements relating to the subject matter of this Agreement shall
have any effect or be binding, unless the same is referred to specifically in this Agreement, or is
executed by the parties after the date hereof; (2) is not intended to confer upon any other person
any rights or remedies hereunder; (3) shall not be assigned by operation of law or otherwise except
as specifically authorized herein; and (4) shall be governed in all respects, including validity,
interpretation and effect, by the internal laws of the State of New York without regard to the
principles of conflict of laws thereof and all parties submit themselves to the jurisdiction of the
courts in the State of New York if such courts are called upon to decide any issue relating to this
Agreement and Counsel for the respective parties are authorized to accept service of process to
such parties in such court proceedings. This Agreement may be executed in two or more counterparts
which together shall constitute a single agreement.
9.5 Further Assurances. The parties hereto agree to (i) execute and deliver, or cause to be
executed and delivered, all such other and further agreements, documents and instruments and (ii)
take or cause to be taken all such other and further actions as any party may reasonably request to
effectuate the intent and purposes, and carry out the terms, of this Agreement.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed on the date first
written above by their respective officers thereunto duly authorized.
MILFAM I L.P., as the Seller
| By: | Milfam LLC | |||||
| Its: | General Partner | |||||
| By: | /s/ Xxxxx X. Xxxxxx, III | |||||
| Name: | Xxxxx X. Xxxxxx, III | |||||
| Title: | Manager | |||||
SYNERGY BRANDS INC., as the Purchaser
| By: | /s/ Xxxx Xxxxxxx | |||||
| Name: | Xxxx Xxxxxxx | |||||
| Title: | CEO | |||||
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