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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
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ARTICLE I DEFINITIONS................................................................................................1
SECTION 1.1. Definitions..............................................................................1
SECTION 1.2. Accounting Terms.........................................................................4
ARTICLE II PURCHASE, 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..........................................................................6
ARTICLE III REPRESENTATIONS 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................................................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER..............................................................11
SECTION 4.1. Organization, Standing, etc............................................................11
SECTION 4.2. Authorization and Execution............................................................11
SECTION 4.3. Governmental Authorizations............................................................12
SECTION 4.4. Non-Contravention......................................................................12
SECTION 4.5. Private Placement......................................................................12
ARTICLE V CONDITIONS PRECEDENT TO CLOSING BY THE PURCHASER..........................................................13
SECTION 5.1...............................................................................................13
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING BY THE COMPANY...........................................................14
SECTION 6.1..............................................................................................14
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ARTICLE VII MISCELLANEOUS...........................................................................................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.......................................................................17
SECTION 7.7. Brokers; Finders......................................................................18
SECTION 7.8. Amendment; Waiver.....................................................................18
SECTION 7.9. Survival of Representations and Warranties;
Covenants and Agreements........................................................18
SECTION 7.10. Severability..........................................................................18
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.........................................................................19
SECTION 7.15. Counterparts..........................................................................19
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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).
"MATERIAL ADVERSE EFFECT" shall have the meaning provided in
SECTION 3.1 hereof.
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"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.
"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
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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
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,
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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 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.
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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.
SECTION 2.6. BOARD PRESENCE. For so long as the Purchaser
holds at least ten percent (10%) of the issued and outstanding Common Stock,
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(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
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.
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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.
(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
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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 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,
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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:
"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
10
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 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
11
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:
(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;
12
(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 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;
13
(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.
14
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.
15
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
16
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:
17
(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.
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
18
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.
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.
19
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:____________________
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 Assistanceassistance 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.
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.
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.
Schedule 3.7
Litigation
None.
Schedule 3.9
SEC Reports; Financial Statements
None.
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.
21
Schedule 3.13
Tax Matters
None.
Exhibit A
Description of Registration Rights
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.
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.
Exhibit B
Form of Non-Competition and Proprietary Information Agreement
AGREEMENT REGARDING INTERCOMPANY INDEBTEDNESS
AGREEMENT REGARDING INTERCOMPANY INDEBTEDNESS (this "AGREEMENT") dated
as of November 23, 1999, by and among SYNERGY BRANDS INC., a Delaware
corporation ("SYNERGY"), XXXX.XXX INC., a New Jersey corporation ("SYBR"),
XXXXXXXXXX.XXX INC., a New Jersey corporation ("BEAUTYBUYS"), NEW ERA FOODS,
INC., a Nevada corporation ("NEW ERA"), and PHS GROUP INC. , a Pennsylvania
corporation ("PHS").
RECITALS
1. Synergy is today entering into a Stock Purchase Agreement
(the "SYNERGY AGREEMENT") with Xxxxxxxx Broadcast Group, Inc., a Maryland
corporation ("XXXXXXXX").
2. BeautyBuys is today entering into a Stock Purchase
Agreement (the "BEAUTYBUYS AGREEMENT" and, together with the Synergy Agreement,
collectively the "PURCHASE AGREEMENTS"; capitalized terms used herein without
definition shall have the respective meanings set forth in the Purchase
Agreements).
3. SYBR is a wholly-owned subsidiary of Synergy and, prior to
the Closing under the BeautyBuys Agreement, BeautyBuys is a wholly-owned
subsidiary of SYBR.
4. New Era is a wholly-owned subsidiary of Synergy and, prior
to the Closing under the BeautyBuys Agreement, PHS is a wholly-owned subsidiary
of New Era.
5. BeautyBuys and PHS are indebted in varying amounts to any
or all of Synergy, SYBR or other Subsidiaries or Affiliates of Synergy (the
"INTERCOMPANY INDEBTEDNESS").
6. Xxxxxxxx is providing substantial value to Synergy and its
Subsidiaries, including BeautyBuys, as provided in the Purchase Agreements, and
Xxxxxxxx is relying upon the representations made to it prior hereto and as set
forth herein in making its investment in Synergy and BeautyBuys, and requires,
as additional consideration for its execution of the Purchase Agreements and the
consummation of the transactions contemplated thereby, that the parties hereto
enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
A. Intercompany Indebtedness. As promptly as possible on or after the
Closing Date under the Purchase Agreements, (i) all Intercompany Indebtedness of
BeautyBuys outstanding on the date hereof shall be contributed to the capital of
BeautyBuys or the appropriate Affiliates of BeautyBuys, or in the discretion of
Synergy, otherwise forgiven (without any income tax consequence to BeautyBuys)
by the appropriate creditors of BeautyBuys, and (ii) all Intercompany
Indebtedness of PHS outstanding on the date hereof shall be contributed to the
capital of PHS or the appropriate
Affiliates of PHS, or in the discretion of Synergy, otherwise forgiven (without
any income tax consequence to PHS) by the appropriate creditors of PHS.
B. Third-Party Beneficiary. This Agreement is being made expressly for
the benefit of Xxxxxxxx as a third-party beneficiary hereof.
C. Representations and Warranties. Each of the parties hereto represent
and warrant that the obligation to contribute or forgive indebtedness as of the
date hereof under PARAGRAPH A above shall continue in full force and effect
after the date hereof
D. 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.
E. Headings;. 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.
F. Entire Agreement. This Agreement constitutes 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.
G. 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.
H. 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.
I. 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.
SYNERGY BRANDS INC.
By:_____________________________
Name:_____________________
Title:____________________
XXXX.XXX INC.
By:_____________________________
Name:_____________________
Title:____________________
XXXXXXXXXX.XXX INC.
By:_____________________________
Name:_____________________
Title:____________________
NEW ERA FOODS, INC.
By:_____________________________
Name:_____________________
Title:____________________
PHS GROUP INC.
By:_____________________________
Name:_____________________
Title:____________________
