EXHIBIT 10.3
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 ORBIS PENSION TRUSTEES LTD.
("Orbis").
BACKGROUND
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WHEREAS, on December 30, 1994, Orbis purchased 111,111 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, Orbis purchased warrants to purchase an
aggregate of 43,056 shares of Series A Stock as represented by that certain
Warrant Certificate dated December 30, 1994 to purchase up to 37,500 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 5,556 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 Orbis entered
into that certain Preferred Stock Exchange Agreement dated January 31, 1997
pursuant to which each share of Series A Stock held by Orbis 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
Orbis were canceled;
WHEREAS, on January 31, 1997, the Warrants were amended to change the
exercise price to $4.00 per share;
WHEREAS, Orbis owns and desires to sell to Harry's, and Harry's desires to
purchase from Orbis, the 111,111 shares of Preferred Stock, which is all of the
Preferred Stock owned by Orbis, and the Warrants, which, together, comprise all
the securities of Harry's owned by Orbis.
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, Orbis will sell, convey, transfer, assign and deliver to
Harry's, and Harry's will purchase and accept from Orbis, 111,111 shares of
Preferred Stock (the "Shares"), as evidenced by stock certificate number P-3,
and the Warrants (collectively, the Shares and the Warrants are referred to
herein as the "Securities").
(c) On the Closing Date, Orbis 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, Orbis will deliver to Harry's (i)
stock certificate number P-3 evidencing the Shares registered in the name of
Orbis, 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 Orbis Two Hundred Fifty
Thousand Three Hundred Forty Four Dollars ($250,344) (the "Purchase Price") by
wire transfer of immediately payable funds to an account previously designated
in writing by Orbis.
3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
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Orbis represents and warrants to Harry's as follows:
3.1 Ownership of Securities. Orbis is the record and beneficial owner of
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the Securities free and clear of any liens, claims, options, charges,
encumbrances or rights of others. At no time since December 30, 1994 has Orbis
assigned the Warrants in whole or in part or transferred the Warrants. The
Securities constitute Orbis' only interest in or to Harry's, its business or any
of its assets.
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3.2 Consents. Orbis 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 it to Harry's without the imposition of any lien, charge or
encumbrance with respect to such Securities.
3.3 Authorization and Binding Effect. Orbis 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 Orbis and are duly
authorized to execute this Agreement on Orbis' behalf. This Agreement
constitutes a legal, valid and binding agreement enforceable against Orbis in
accordance with the terms hereof. Upon consummation of the transactions
contemplated herein, Harry's will own the Securities sold by Orbis 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
Orbis is a party or is bound, (ii) Orbis' corporate documents or (iii) any law,
rule, regulation, judgment, order, injunction, decree, or award against or
binding upon Orbis.
3.5 Access to Information. Orbis has owned the Securities since December
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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.
Orbis 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. Orbis is familiar with Harry's and the business in which it is
engaged. Orbis is fully aware that future events could impact the value of the
Securities, and Orbis has conducted its own analysis in deciding to enter into
this Agreement. Orbis acknowledges that the negotiations culminating in this
Agreement have been at arm's length. Orbis has made its 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, Orbis has
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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 Orbis 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
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the 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 ORBIS From and after the date hereof, Orbis shall
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perform and comply with the following covenant:
5.1 Nondisclosure of Trade Secrets and Confidential Information. As
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used in 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, Orbis 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 Orbis is
requested in any proceeding to disclose any Confidential Information, Orbis
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, Orbis
is nonetheless compelled by law to disclose Confidential Information, Orbis may
disclose such information in such proceeding without liability hereunder;
provided, however, that Orbis 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 Orbis or its agents.
5.2 Injunctive Relief. Orbis acknowledges that the nondisclosure
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covenant contained in this Section 5 is a reasonable means of protecting and
preserving Harry's interests and the confidentiality of the Confidential
Information. Orbis 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. Orbis 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. Orbis and Harry's agree that Orbis'
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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 Orbis. Orbis hereby agrees to indemnify Harry's,
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and 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 Orbis pursuant
to this Agreement.
6.2 Indemnity by Harry's. Harry's hereby agrees to indemnify Orbis
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and 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 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
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sentence, on and as of the Closing Date all agreements of any kind and nature
between Orbis 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 ORBIS From the date hereof to the Closing Date, which
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shall be no later than December 15, 1999, Orbis 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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Orbis 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
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such amount and on such terms as the Board of Directors of Harry's, in its
reasonable discretion, shall have determined is acceptable.
8.2 Orbis Representations and Warrants. The representations and
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warranties made by Orbis 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 Orbis. Orbis 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 Orbis.
9. MISCELLANEOUS
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9.1 Representations and Warranties. All of the representations,
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warranties, 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
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hereunder 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. Orbis shall at any time and from time to
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time 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 Orbis,
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 Orbis: Orbis Pension Trustees Ltd.
c/o Chatsworth Management Services, Ltd.
Xxx Xxxxxxxxx Xxxxx
Xxxxxx X0 0XX
Attention: Mr. Xxxxx Xxxxx
Telecopy: 011-44-71-298-0002
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
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party of any condition of this Agreement, or the breach of any term, agreement
or 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]
ORBIS PENSION TRUSTEES LTD.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
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Title: Investment Manager
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[SEAL]
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