Exhibit 1.2
CAPITAL STOCK PURCHASE AGREEMENT
CAPITAL STOCK PURCHASE AGREEMENT, dated December 31, 2001, by and among
FOUNTAIN PHARMACEUTICALS, INC., a Delaware corporation maintaining a mailing
address at 0000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 (the "Company"), PARK
STREET ACQUISITION CORPORATION, a Florida corporation maintaining a mailing
address at 0000 00xx Xxx, Xxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000 (the "Purchaser")
and XXXXXX X. XXXXXXXXX, XX., an individual maintaining a mailing address at 00
Xxxx Xxxxx, Xxx Xxxx, Xxxxxxx, 00000 ("Xxxxxxxxx").
BACKGROUND INFORMATION
This Agreement sets forth the terms and conditions upon which Purchaser
is acquiring from the Company and the Company is selling and delivering to the
Purchaser, free and clear of all liabilities, obligations, claims, liens and
encumbrances, 3,500,000 shares of the Company's Class A common capital stock,
par value $.001 per share and 100,000 shares of the Company's Class B common
stock, par value $.001 per share (the "Shares").
OPERATIVE PROVISIONS
ARTICLE 1
Purchase and Sale of Shares
1.1 Shares to be Sold. Subject to the terms and conditions of this
Agreement, at the Closing referred to in Section 1.4 hereof, the Company shall
sell and deliver to the Purchaser good, valid and marketable title to the
Shares, free and clear of all liabilities, obligations, claims, liens and
encumbrances, by delivering to the Purchaser one or more stock certificates
representing the Shares, registered in the name of the Purchaser and
countersigned by the Company's transfer agent.
1.2 Purchase Price of the Shares. The purchase price to be paid by the
Purchaser to the Company for the Shares shall be One Hundred and Eighty Thousand
and No/100 Dollars ($180,000.00) (the "Purchase Price").
1.3 Payment of Purchase Price. Subject to the terms and conditions of
this Agreement, in reliance on the representations, warranties and agreements of
the Company contained herein, and in consideration of the sale and delivery of
the Shares, the Purchaser shall pay the Purchase Price at the Closing by
delivery of a certified or cashier's check, made payable to the Company, or by
wire transfer to a bank account designated by the Company.
1.4 Closing. The closing of the sale and purchase of the Shares shall
take place at such time and place as may be agreed to by the parties but no
later than December 31, 2001 (the "Closing"). At the Closing, the Company shall
deliver to the Purchaser one or more certificates for the Shares, in negotiable
form, with all requisite stock transfer stamps or the funds therefore attached.
Simultaneously with such delivery, the Purchaser shall deliver the Purchase
Price to the Company. Each party shall be responsible for all fees and costs
incurred by it or on its behalf in connection with the negotiation of this
Agreement and the Closing.
If at the Closing the Company shall fail to tender the Shares, or if
any of the conditions specified hereunder shall not have been fulfilled, the
Purchaser shall, at its option, be relieved of its obligations under this
Agreement without thereby waiving any rights it may have by reason of such
failure or non-fulfillment. Conversely, if the Purchaser fails to close the
transactions herein contemplated for any reason other than a default or breach
occasioned by the Company under the terms hereof, or a failure of performance of
any of the conditions recited in Article 2 below, the Company may pursue any
legal rights or remedies then available to it, expressly including the right to
require the Purchaser's specific performance of this Agreement.
ARTICLE 2
Representations and Warranties of the Company
The Company represents, warrants and agrees as follows:
2.1 Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and operate its properties and to carry on its business as now conducted and
as proposed to be conducted.
2.2 Authorization. When executed and delivered by the Company, this
Agreement will constitute the valid and binding obligation of the Company,
enforceable in accordance with its terms.
2.3 Securities Exchange Act Reports. All reports filed by the Company
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, are true and correct and contain no material misstatements or
omissions.
2.4 Consent. No consent, approval or authorization of or registration,
qualification, designation, declaration or filing with any governmental
authority or private person or entity on the part of the Company is required in
connection with the execution and delivery of this Agreement or the consummation
of any other transaction contemplated hereby, except as shall have been duly
taken or effected prior to the Closing.
2.5 Number of Issued and Outstanding Shares; Title to Shares. As of the
date of execution hereof, there are _____ shares of Class A common stock issued
and outstanding, _________ shares of Class B common stock issued and outstanding
and 2,000,000 shares of Class A convertible preferred stock issued and
outstanding. The Shares are free and clear of all liens, claims, encumbrances
and restrictions, legal or equitable, of every kind, except for certain
restrictions on transfer imposed by federal and state securities laws. The
Company has full and unrestricted legal right, power and authority to sell,
2
assign and transfer the Shares to Purchaser without obtaining the consent or
approval of any other person or governmental authority, and the delivery of such
Shares to Purchaser pursuant to this Agreement will transfer valid title
thereto, free and clear of all liens, encumbrances, claims and restrictions of
every kind, except for certain restrictions on transferability imposed by
federal and state securities laws. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
default under any provision of any agreement by which the Company is bound.
2.6 Compliance with Laws. The Company is and will be at Closing in
compliance with all applicable federal, state and local laws and the Company is
current in all of its reports required to be filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended.
2.7 Litigation. Except as otherwise disclosed in the Company's reports
filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Company is not a party or is not threatened to be made a party to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or agency of any federal, state or local jurisdiction or before any
arbitrator.
2.8 Absence of Operations; Absence of Liabilities. The Company has no
present business operations, and no debts, liabilities or obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including, without limitation, tax liabilities and interest due or
to become due.
2.9 Taxes.
(i) All federal, state, local and foreign tax returns and
reports required to be filed to date, and which are properly
open for examination under applicable statutes of limitation,
with respect to the operation of th Company have been
accurately prepared and duly filed, and all taxes shown as
payable on such returns and report have been paid when due,
including, without limitation income, withholding, payroll,
sales and use, and real and personal property taxes; and
(ii) The Company has not executed or filed with any taxing
authority any agreement extending the period for assessment or
collection of any tax to a date subsequent to the date hereof;
and
(iii) No issue has been raised by any federal, state, local or
foreign taxing authority in connection with an audit or
examination of the tax returns, business or properties of the
Company that has not been settled or resolved; and
(iv) There is no pending claim, asserted deficiency or
assessment for additional taxes that has not been paid, nor is
there any basis for the assertion of any such claim,
deficiency, or assessment; and
3
(v) No material special charges, penalties or fines have ever
been asserted against the Company with respect to payment of
or failure to pay any taxes.
2.10 Employees and Consultants. The Company currently has neither
consulting or employment agreements, nor other material agreements, either
written or oral, with individual consultants or employees to which the Company
is a party. The Company is not a party to any pension, retirement, profit
sharing, bonus, incentive, deferral compensation, group health insurance or
group life insurance plan or obligation.
2.11 Leases. Schedule 2.11 attached hereto, contains an accurate and
complete list and description of the terms of all leases to which either the
Company or any of its subsidiaries is a party (as lessee or lessor). Each lease
set forth on Schedule 2.11 (or required to be set forth on Schedule 2.11) is in
full force and effect; all rents and additional rents due to date on each such
lease have been paid; in each case, the lessee has been in peaceable possession
since the commencement of the original term of such lease and is not in default
thereunder and no waiver, indulgence or postponement of the lessee's obligations
thereunder has been granted by the lessor; and there exists no event of default
or event, occurrence, condition or act (including the consummation of the
transactions contemplated hereby) which, with the giving of notice, the lapse of
time or the happening of any further event or condition, would become a default
under such lease. Neither the Company nor any of its subsidiaries has violated
any of the terms or conditions under any such lease in any material respect,
and, to the best knowledge, information and belief of the Company, all of the
covenants to be performed by any other party under any such lease have been
fully performed. The property leased by the Company or any of its subsidiaries
is in a state of good maintenance and repair and is adequate and suitable for
the purposes for which it is presently being used.
2.12 Material Contracts. Except as set forth on Schedule 2.12 attached
hereto, neither the Company or its subsidiaries has nor is bound by:
(a) any agreement, contract or commitment relating to the
employment of any person by the Company or its subsidiaries,
or any bonus, deferred compensation, pension, profit sharing,
stock option, employee stock purchase, retirement or other
employee benefit plan;
(b) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock;
(c) any loan or advance to, or investment in, any individual,
partnership, joint venture, corporation, trust, unincorporated
organization, government or other entity (each a "Person") or
any agreement, contract or commitment relating to the making
of any such loan, advance or investment;
(d) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person (other than the
endorsement of negotiable instruments for collection in the
ordinary course of business);
4
(e) any management service, consulting or any other similar type
contract;
(f) any agreement, contract or commitment limiting the freedom of
the Company or any subsidiary to engage in any line of
business or to compete with any Person;
(g) any agreement, contract or commitment not entered into in the
ordinary course of business which involves $100,000 or more
and is not cancelable without penalty or premium within 30
days; or
(h) any agreement, contract or commitment which might reasonably
be expected to have a potential adverse impact on the business
or operations of the Company or any subsidiary; or
(i) any agreement, contract or commitment not reflected in the
Financial Statement under which the Company or any subsidiary
is obligated to make cash payments of, or deliver products or
render services with a value greater than $50,000 individually
or $100,000 in the aggregate, or receive cash payments of, or
receive products or services with a value greater than $50,000
individually or $100,000 in the aggregate, and any other
agreement, contract or commitment which is material to the
conduct of the business of the Company.
Each contract or agreement set forth on Schedule 2.12 (or not required to be set
forth on Schedule 2.12) is in full force and effect and there exists no default
or event of default or event, occurrence, condition or act (including the
consummation of the transactions contemplated hereby) which, with the giving of
notice, the lapse of time or the happening of any other event or condition,
would become a default or event of default thereunder. Neither the Company or
any subsidiary has violated any of the terms or conditions of any contract or
agreement set forth on Schedule 2.12 (or not required to be set forth on
Schedule 2.12) in any material respect, and, to the best knowledge, information
and belief of the Company, all of the covenants to be performed by any other
party thereto have been fully performed. Except as set forth on Schedule 2.12,
the consummation of the transactions contemplated hereby does not constitute an
event of default (or an event, which with notice or the lapse of time or both
would constitute a default) under any such contract or agreement.
2.13 Employee Benefit Plans.
(a) Schedule 2.13 contains a true and complete list and accurate
description of each employee welfare benefit plan (an
"Employee Welfare Plan"), as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained currently or at any time by the Company
or any other organization which as of the Closing Date is a
member of a controlled group of organizations within the
meaning of Section 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended, (the "Code"), of which the
Company is a member (an "ERISA Affiliate"), or to which the
Company or any ERISA Affiliate contributes or is required to
5
contribute or contributed or was required to contribute at any
time. Schedule 2.13 contains a true and complete list and
accurate description of each employee pension benefit plan, as
defined in Section 3(2) of ERISA (an "Employee Pension Plan"),
maintained currently or at any time by the Purchaser or any
ERISA affiliate or to which the Company or any ERISA Affiliate
contributes or is required to contribute or contributed or was
required to contribute at any time. The Employee Welfare
Plans, the Employee Pension Plans and the other plans listed
on Schedule 2.13 are collectively referred to herein as the
"Plans." Neither the Company nor any ERISA Affiliate has
maintained at any time, nor does it contribute to or has it
contributed to or is or was required to contribute to: (i) any
multi-employer plan (as defined in Section 3(37) of ERISA); or
(ii) any funded or unfunded medical, health or life insurance
plans or arrangements for current or future retirees or
terminated employees.
(b) With respect to each current Plan, the Purchaser has been
provided heretofore with true and complete copies of: (i) all
Plan documents and all documents or instruments establishing
or constituting any related trust, annuity contract or other
funding instrument, and any amendments thereto; (ii) the most
recent determination letter received from the IRS; (iii) the
most recent financial statement; (iv) the most recent IRS Form
5500; and (v) written descriptions of all non-written
agreements relating to the Plans. All current Plans, all Plan
documents and all documents or instruments establishing or
constituting any related trust, annuity contract or other
funding instrument, and any amendments thereto, comply in all
material respects with the provisions of ERISA and the Code
and applicable laws, rules and regulations. All necessary
governmental approvals for all current Plans have been
obtained and favorable determinations as to the qualification
under the Code of each of the current Plans, and for any Code
Section 501(c)(9) trust maintained in connection with any
current Employee Welfare Plan, and each amendment thereto,
6
have been made by the IRS, or have been applied for and no
event has occurred and no facts or circumstances exist that
may cause the loss of any such qualification or may cause any
such application to be denied.
(c) Except as set forth on Schedule 2.13, the administration of
all Plans has been consistent with, and in compliance in all
material respects with, applicable requirements of the Code
and ERISA, including, without limitation, compliance on a
timely basis with all requirements for reporting, disclosure
and requirements for the continuation of group health
insurance. Neither the Company, any ERISA Affiliate nor any
Plan fiduciary (as defined in Section 3(21) of ERISA), with
respect to any Plan, has engaged in any transaction or acted
or failed to act in any manner that violates Section 404 or
406 of ERISA or engaged in any prohibited transaction (as
defined in Section 4975(c)(1) of the Code) for which there
exists neither a statutory nor regulatory exemption or for
which an exemption has not been obtained. All obligations
required to be performed by the Company or any ERISA Affiliate
under each Plan have been performed, and the Company is not in
violation of the terms of any Plan, nor does the Company have
any knowledge of any existing violation by any other party of
any term or requirement of or applicable to any current Plan.
All contributions required by law to have been made under any
Plan, or to any trusts or funds established thereunder or in
connection therewith, have been made by the due dates thereof
(including any valid extensions).
(d) No claims, suits or other proceedings are pending or
threatened, and no facts or circumstances exist that could
provide a basis for any such claim, suit or other proceeding,
by the Company's or any ERISA Affiliate's current or former
employees, any participant (as defined in Section 3(7) of
ERISA) to any Plan maintained at any time by the Company or
any ERISA Affiliate to which the Company contributes or has
contributed or is or was required to contribute, any fiduciary
of any Plan, any beneficiary (as defined in Section 3(8) of
ERISA) of any such person or by any governmental body, agency
or instrumentality thereof relating to or affecting any Plan,
other than usual and ordinary claims for benefits by eligible
persons. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby
will constitute: (i) a termination of employment or other
event entitling any person to any additional or other
benefits, or that would otherwise modify any benefits or the
vesting of any benefits, under any Plan maintained at any time
by the Company or any ERISA affiliate, or to which the Company
or any ERISA Affiliate contributes or has contributed or is or
was required to contribute; or (ii) a violation of Section 404
or 406 of ERISA or a prohibited transaction (as defined in
Section 4975(c)(1) of the Code) for which there exists neither
a statutory nor regulatory exemption or for which an exemption
has not been obtained.
(e) Neither the Company nor any ERISA Affiliate maintains any
Plans that are subject to the requirements of Section 412 of
the Code.
2.14 Environmental Laws and Regulations.
(a) Neither the Company nor any of its subsidiaries has generated,
transported or disposed of any hazardous material (defined
below) during the past three years.
(b) Neither the Company nor any of its subsidiaries has Hazardous
Materials at any site or facility owned or operated presently
or at any previous time by the Company or any of its
subsidiaries.
The Company and its subsidiaries are in compliance in all material respects with
all applicable federal, state and local laws and regulations relating to product
registration, pollution control and environmental contamination including, but
not limited to, all laws and regulations governing the generation, use,
collection, discharge, or disposal of Hazardous Materials and all laws and
regulations with regard to record keeping, notification and reporting
7
requirements respecting Hazardous Materials. Neither the Company nor any of its
subsidiaries has been alleged to be in violation of, and has not been subject to
any administrative or judicial proceeding pursuant to, such laws or regulations
either now or any time during the past three years. There are no facts or
circumstances which the Company reasonably expects could form the basis for the
assertion of any Environmental Claim (as defined below) against the Company or
any of its subsidiaries relating to environmental matters including, but not
limited to, any Environmental Claim arising from past or present environmental
practices asserted under CERCLA (as defined below) and RCRA (as defined below),
or any other federal, state or local environmental statute, which the Company
believes might have an adverse effect on the business, results of operations,
financial condition or prospects of the Company and its subsidiaries taken as a
whole.
For purposes of this Section 2.14, the following terms shall have the following
meanings: (A) "Hazardous Materials" shall mean materials defined as "hazardous
substances", "hazardous wastes" or "solid wastes" in (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. xx.xx.
9601--5657, and any amendments thereto ("CERCLA"); (ii) the Resource
Conservation and Recovery Act, 42 U.S.C. ss.ss.6901-6987 and any amendments
thereto ("RCRA"); and (iii) any similar federal, state or local environmental
statute; and (B) "Environmental Claim" shall mean any and all claims, demands,
causes of actions, suits, proceedings, administrative proceedings, losses,
judgments, decrees, debts, damages, liabilities, court costs, attorneys' fees
and any other expenses incurred, assessed or sustained by or against the
Company.
ARTICLE 3
Representations, Warranties and Covenants of the Purchaser
The Purchaser represents and warrants to, and covenants with, the
Company as follows:
3.1 Authorization. When executed and delivered by the Purchaser, this
Agreement will constitute the valid and binding obligations of the Purchaser,
enforceable in accordance with their respective terms.
3.2 No Contractual Violation. Neither the execution, delivery nor
performance of this Agreement by the Purchaser, including the consummation by
the Purchaser of the transactions contemplated hereby, will constitute a
violation of or a default under, or conflict with, any term or provision of the
any contract, commitment, indenture or other agreement, or of any other private
restriction of any kind, to which the Purchaser is a party or by which it is
otherwise bound.
3.3 Access to Information. Purchaser has had access to all material and
relevant information concerning the Company, its management, financial
condition, capitalization, market information, properties and prospects
necessary to enable Purchaser to make an informed investment decision with
respect to its investment in the Shares, Purchaser acknowledges that it has had
the opportunity to ask questions of and receive answers from and to obtain
additional information from the Company or its representatives concerning the
terms and conditions of the acquisition of the Shares and the present and
proposed business and financial condition of the Company and has had all such
questions answered to its satisfaction and has been supplied all information
requested.
3.4 SEC Reports. Purchaser acknowledges that it has been provided with
and has carefully reviewed a copy of the Company's periodic reports and
registration statements filed with the Securities and Exchange Commission since
January 1, 2000 (the "SEC Reports").
8
3.5 Financial Matters and Sophistication. Purchaser has such knowledge
and experience in business and financial matters, such that it is capable of
evaluating the merits and risks of purchasing the Units. Purchaser represents
that it is an "accredited investor," as such term is defined in Rule 501 under
the Securities Act.
3.6 Investment Intent. (i) Purchaser is acquiring the Shares for its
own account and not on behalf of any other person; (ii) Purchaser is acquiring
the Shares for investment and not with a view to distribution or with the intent
to divide its participation with others by reselling or otherwise distributing
the Shares; and (iii) Purchaser will not sell the Shares without registration
under the Act and any applicable state securities laws, or unless the Company
receives an opinion of counsel reasonably acceptable to it (as to both counsel
and the opinion) to the effect that such registration is not necessary.
3.7 Understanding of Investment Risks. An investment in the Shares
should not be made by a purchaser who cannot afford the loss of its entire
Purchase Price. The Purchaser acknowledges that the securities offered hereby
have not been approved or disapproved by the Securities and Exchange Commission,
or any state securities commission, nor has the Securities and Exchange
Commission or any state securities commission passed upon the adequacy or
accuracy of this Capital Stock Purchase Agreement. Prior to making an investment
in the Shares, the Purchaser has fully considered, among other things, the risk
factors enumerated in the Company's filings with the Securities and Exchange
Commission, and acknowledges that these risk factors have been considered prior
to making this investment decision.
3.8 Understanding the Nature of Securities. Purchaser understands that:
(a) The Shares have not been registered under the Act or any state
securities laws and are being issued and sold in reliance upon certain of the
exemptions contained in the Act and under applicable state securities laws.
(b) The Shares are "restricted securities" as that term is defined in
Rule 144 promulgated under the Act.
(c) The Shares cannot be sold or transferred without registration under
the Act and applicable state securities laws or unless the Company receives an
opinion of counsel reasonably acceptable to it (as to both counsel and the
opinion) that such registration is not necessary.
(d) The Shares and any certificates issued in replacement therefor
shall bear the following legend in addition to any other legend required by law
or otherwise:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN BY
THE REGISTERED OWNER FOR INVESTMENT AND WITHOUT A VIEW TO
RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED OR
DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE RULES AND
REGULATIONS THEREUNDER."
9
(e) Only the Company can register the Shares under the Act and
applicable state securities laws.
ARTICLE 4
Additional Agreements and Covenants
The parties further agree and covenant as follows:
4.1 Delivery of Additional Instruments on Request. Each party agrees to
execute and deliver or cause to be executed and delivered at the Closing, and at
such other times and places as shall be reasonably agreed to, such additional
instruments as the other party may reasonably request for the purpose of fully
effecting the transactions herein contemplated.
4.2 Preservation of Organization; No New Issuance. The Company shall
use its best efforts to preserve the business organization of the Company
intact, to operate prudently and in the ordinary course, and to maintain its
goodwill. The Company will not issue any additional shares of stock between the
execution hereof and Closing.
4.3 Agreements as to Conditions. Each party agrees to use its best
efforts to satisfy each and every of the conditions set forth in Sections 6. and
7., respectively, of this Agreement.
4.4 Satisfaction of Obligations. The Company shall use the proceeds
from the sale of the Shares to satisfy any obligations it may owe to any third
party creditors, including those obligations which have been guaranteed by
officers of the Company, and shall, upon receipt of written request from the
Purchaser, provide evidence that such satisfaction has occurred in form
sufficient to counsel for the Purchaser by that date which is 5 days from the
date such written request is received.
4.5 Officer Resignations; Board Resignations. At the Closing, all
officers and members of the Board of Directors serving as of the date of
execution of this Agreement will tender their resignations. The Company shall
take all necessary action to cause the designees of the Purchaser to be elected
to the Board of Directors, including making all necessary disclosures pursuant
to Rule 14(f) promulgated under the Securities Exchange Act of 1934.
4.6 Brokerage Fee. Each party agrees to indemnify and hold harmless the
other from and against any and all claims, losses, liabilities or expenses which
may be asserted against or suffered by either as a result of any broker, finder
or other person claiming any fee or commission by reason of services rendered or
alleged to have been rendered for or at the instance of a particular party
hereto with respect to the negotiation or execution of this Agreement or to the
delivery of the consideration herein specified.
4.7 Confidentiality; No Shopping. Purchaser and the Company will
maintain in confidence and the Company will cause the directors, officers,
employees, agents and advisors of the Company to maintain in confidence written,
oral or other information obtained in confidence from the other party regarding
10
this transaction or any other information unless such information is or becomes
publicly available through no fault of such party or the furnishing or use of
such information is required by or necessary or appropriate in connection with
legal proceedings. Additionally, between the date of execution hereof and
Closing, the Company and its directors, officers, employees, agents and advisors
will not seek to enter into any discussions with any third party for the sale of
the Shares or for the sale of all of the assets of the Company.
4.8 Cross Default. Any breach of that certain Capital Stock Purchase
Agreement by and among Fountain Holdings, LLC, Xxxxxx X. Xxxxxxxxx, Xx., and
Park Street Acquisition Corporation, the terms of which are incorporated herein
by reference, shall constitute a breach of this Agreement, including any breach
of the representations and warranties contained therein.
4.9 Public Announcements. The parties hereto agree that no disclosure
or public announcement with respect to this Agreement, or any transactions
contemplated by this Agreement, shall be made by any party hereto without the
prior written consent of the other party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, upon the Closing the
parties shall issue a press release announcing the consummation of the
transactions contemplated hereby and thereafter the Company shall file a Form
8-K as required by Section 13 of the Securities Exchange Act of 1934.
ARTICLE 5
Indemnification
5.1 Indemnification. Xxxxxxxxx shall indemnify and hold harmless the
Purchaser at all times from and after the date of this Agreement against and in
respect of all demands, claims, actions, liabilities, damages, losses,
judgments, assessments, costs and expenses (including without limitation
interest, penalties and attorney fees) asserted against, resulting to, imposed
upon or incurred by the Purchaser, directly or indirectly, and arising from:
(a) All liabilities of the Company of any nature, whether accrued,
absolute, contingent or otherwise, existing as of the Closing, or arising out of
transactions entered into or facts or circumstances existing prior to that date;
or
(b) a breach of any representation, warranty, covenant or agreement
made or to be performed by the Company under this Agreement ( a "Claim and
collectively, the "Claims").
Notwithstanding the foregoing, the Purchaser shall only be entitled to
indemnification hereunder if Purchaser gives notice of a Claim to Xxxxxxxxx in
accordance with Section 5.2 by that day which is one year from the date of
Closing. Additionally, in no event shall the aggregate amount of losses for
which the Purchaser has the right to seek indemnification from Xxxxxxxxx exceed
Ten Thousand and No/100 Dollars ($10,000).
5.2 Notification. The Purchaser shall, upon becoming aware or being put
on notice of the existence of a Claim with respect to which Purchaser may be
11
entitled to indemnification pursuant to this Article 5, promptly notify
Xxxxxxxxx in writing of such matter at the address specified in the preamble to
this Agreement.
5.3 Settlement and Defense of Claims. Except as hereinafter provided,
upon receiving notice in accordance with section 5.2, Xxxxxxxxx shall have the
right to settle at his own cost and expense all Claims which are susceptible of
being settled or defended, and to defend, through counsel of his own choosing
and at his own cost and expense, any third party action which may be brought in
connection therewith; provided, that Xxxxxxxxx shall be required to keep
Purchaser fully and currently informed as to all settlement negotiations and the
progress of any litigation; and provided further that the Purchaser shall have
the right to fully participate in the defense and settlement of any Claim at its
own expense.
ARTICLE 6
Conditions to Closing by the Purchaser
The obligation of the Purchaser to consummate the transactions herein
contemplated is subject to the satisfaction at or prior to the Closing of each
of the following conditions, and if the Purchaser shall not consummate such
transactions by reason of the failure of any of such conditions to be met as
herein provided, the Purchaser shall have no liability to the Company:
6.1 Inspection Period. The Purchaser shall have until Closing in order
to satisfy itself that the Company have been accurately represented to the
Purchaser (the "Inspection Period"). If at any time during this Inspection
Period the Purchaser determines not to proceed with the acquisition of the
Shares, the Purchaser shall so notify the Company in writing and the Purchaser
shall have no obligation to the Company, except as to the confidentiality
provisions set forth herein.
6.2 Truthfulness of Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement shall
be true and correct to the best knowledge of the Company as of the Closing with
the same effect as though such representations and warranties had been made on
and as of such date. Each such representation and warranty shall survive the
consummation of the transactions contemplated by this Agreement and shall remain
in full force and effect thereafter.
6.3 Performance. Each of the agreements of the Company to be performed
or complied with at or before the Closing pursuant to the terms hereof shall
have been duly performed or complied with.
6.4 Consents. All consents to the consummation of the transactions
contemplated herein which are required in order to prevent a breach of, or a
default under, the terms of any agreement to which the Company is a party or is
bound shall have been obtained.
6.5 No Litigation Threatened. No action or proceeding shall have been
instituted or, to the knowledge of the Company, shall have been threatened
before a court or other governmental body or by any public authority to restrain
12
or prohibit the transactions contemplated herein. No governmental agency or body
shall have taken any other action or made any request of the Purchaser or the
Company as a result of which the Purchaser deems it inadvisable to proceed with
the transaction.
6.6 Simultaneous Closing of Stock Purchase Agreement. Subsequent to or
simultaneously with the Closing, there shall occur a closing on the transaction
contemplated by that certain Capital Stock Purchase Agreement by and among
Fountain Holdings, LLC, Xxxxxx X. Xxxxxxxxx, Xx., and Park Street Acquisition
Corporation.
ARTICLE 7
Conditions to Closing by the Company
The obligation of the Company to consummate the transactions herein
contemplated shall be subject to the satisfaction of the Company on or prior to
the Closing of each of the following conditions, and if the Company shall not
consummate such transactions by reason of the failure of any of such conditions
to be met as herein provided, the Company shall have no liability to the
Purchaser:
7.1 Truthfulness of Representations and Warranties. Each of the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct to the best knowledge of the Purchaser as of the
Closing with the same effect as though such representations and warranties had
been made on and as of such date. Each such representation and warranty shall
survive the consummation of the transactions contemplated by this Agreement and
shall remain in full force and effect thereafter.
7.2 Performance. Each of the agreements of the Purchaser to be
performed or complied with on or before the Closing pursuant to the terms hereof
shall have been duly performed and complied with.
7.3 No Litigation Threatened. No action or proceeding shall have been
instituted or, to the knowledge of the Purchaser, shall have been threatened
before a court or other governmental body or by any public authority to restrain
or prohibit the transactions contemplated herein. No governmental agency or body
shall have taken any other action or made any request of the Company or
Purchaser as a result of which the Company deems it inadvisable to proceed with
the transaction.
ARTICLE 8
Miscellaneous Provisions
8.1 Notices. All notices or other communications required or permitted
to be given pursuant to this Agreement shall be in writing and shall be
considered as properly given or made if hand delivered, mailed from within the
United States by certified or registered mail, or sent by prepaid telegram to
the applicable address appearing in the preamble to this Agreement, or to such
other address as either party may have designated by like notice forwarded to
the other party hereto. All notices, except notices of change of address, shall
be deemed given when mailed or hand delivered and notices of change of address
shall be deemed given when received.
13
8.2 Binding Agreements; Assignability. Each of the provisions and
agreements herein contained shall be binding upon and inure to the benefit of
the personal representatives, heirs, devisees and successors of the respective
parties hereto and shall be assignable by the Purchaser without the prior
written consent of the Company.
8.3 Entire Agreement. This Agreement, and the other documents
referenced herein, constitute the entire understanding of the parties hereto
with respect to the subject matter hereof, and no amendment, modification or
alteration of the terms hereof shall be binding unless the same be in writing,
dated subsequent to the date hereof and duly approved and executed by each
party.
8.4 Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.
8.5 Headings. The headings of this Agreement are inserted for
convenience and identification only, and are in no way intended to describe,
interpret, define or limit the scope, extent or intent hereof.
8.6 Application of Florida Law; Venue. This Agreement, and the
application or interpretation thereof, shall be governed exclusively by its
terms and by the laws of the State of Florida. Venue for any legal action which
may be brought hereunder shall be deemed to lie in Hillsborough or Pinellas
County, Florida.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.8 Legal Fees and Costs. If a legal action is initiated by any party
to this Agreement against another, arising out of or relating to the alleged
performance or non-performance of any right or obligation established hereunder,
or any dispute concerning the same, any and all fees, costs and expenses
reasonably incurred by each successful party or his, her or its legal counsel in
investigating, preparing for, prosecuting, defending against, or providing
evidence, producing documents or taking any other action in respect of, such
action shall be the joint and several obligation of and shall be paid or
reimbursed by the unsuccessful party(ies).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Purchaser
PARK STREET ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Its: President
----------------------------
14
The Company
FOUNTAIN PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Its: President
-----------------------------------
/s/ Xxxxxx Xxxxxxxxx
-----------------------------------
XXXXXX X. XXXXXXXXX, XX.
15
