Exhibit 10.2
CHURCH & XXXXXX CO., INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of the 14th day
of June 2000, by and among Xxxxxxxxx X. Xxxxx ("XXXXX"); USA Detergents, Inc., a
Delaware corporation ("USAD"); and Church & Xxxxxx Co., Inc., a Delaware
corporation (the "PURCHASER").
WHEREAS, USAD and the Purchaser are concurrently entering into a Limited
Liability Company Operating Agreement (the "Joint Venture Agreement"); and
WHEREAS, the Board of Directors of each of USAD and Purchaser has
determined that the Joint Venture Agreement and the transactions contemplated
thereby are in the best interests of their respective shareholders.
NOW THEREFORE, in consideration of the mutual terms and conditions set
forth herein, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF STOCK.
(a) Xxxxx Sale. Subject to the terms and conditions of this Agreement,
Xxxxx shall sell to the Purchaser, and the Purchaser shall purchase from Xxxxx,
1,071,428 shares (the "XXXXX SHARES") of the common stock (the "COMMON STOCK")
of USAD at a per share purchase price of $7.00 (the "PER SHARE PURCHASE PRICE").
(b) USAD Sale. Subject to the terms and conditions of this Agreement,
USAD shall issue and sell to the Purchaser, and the Purchaser shall purchase
from USAD, 367,174 shares (the "USAD SHARES") of the Common Stock at the Per
Share Purchase Price.
2. CLOSING.
(a) Closing Date. The purchase and sale of the Xxxxx Shares and the
USAD Shares will take place concurrently at a closing (the "CLOSING"), to be
held on June 13, 2000, at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0 Xxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx 00000, or at such other time and place as the parties
hereto may mutually agree.
(b) Transfer of Xxxxx Shares. At the Closing, Xxxxx shall deliver to
the Purchaser endorsed share certificates or executed stock powers and other
good and sufficient instruments of transfer as the Purchaser may reasonably
require to vest effectively in the Purchaser good and valid title to the Xxxxx
Shares, free and clear of any claims, liens, pledges, options, security
interests, trusts, encumbrances or other rights or interests of any person.
Against delivery of such duly endorsed share certificates evidencing the Xxxxx
Shares the Purchaser shall deliver to Xxxxx, by wire transfer to an account
designed by Xxxxx in writing not less than three (3) business days prior to the
Closing, funds representing the aggregate purchase price of $7,499,996 (the
"AGGREGATE XXXXX PURCHASE PRICE").
(c) Issuance of USAD Shares. At the Closing, USAD shall issue and
deliver to the Purchaser share certificates evidencing the USAD Shares, which
shares when issued and delivered to the Purchaser in accordance with this
Agreement will be duly authorized and validly issued, fully paid and
nonassessable. Against delivery of such share certificates evidencing the USAD
Shares the Purchaser shall deliver to USAD, by wire transfer to an account
designed by USAD in writing not less than three (3) business days prior to the
Closing, funds representing the aggregate purchase price of $2,570,218 (the
"AGGREGATE USAD PURCHASE PRICE").
3. REPRESENTATIONS AND WARRANTIES OF XXXXX. Xxxxx hereby represents and
warrants to the Purchaser that:
(a) Ownership of Shares. All of the Xxxxx Shares are owned of record
and beneficially by Xxxxx, free and clear of any lien, encumbrance, charge or
claim whatsoever. The Xxxxx Shares and the 704,255 shares of Common Stock owned
by Xxxxx that are subject to the Put & Call Agreement (as defined in Section
6(a)(iv) below) constitute all of the shares of Common Stock owned by Xxxxx (it
being understood that Xxxxx or persons related to or associated with Xxxxx have
the right to acquire an additional 563,500 shares of Common Stock upon the
exercise of outstanding stock options and warrants). When the Xxxxx Shares are
sold and delivered to the Purchaser in compliance with the provisions of this
Agreement, the Purchaser will be vested with good and valid title to the Xxxxx
Shares, free and clear of any claims, liens, pledges, options, security
interests, trusts, encumbrances (other than those imposed by United States
federal securities laws) or other rights or interests of any person.
(b) Authority. Xxxxx has full power and authority to execute and
deliver this Agreement and the other agreements and documents contemplated
herein to which he is a party (the "TRANSACTION DOCUMENTS") and to perform of
all of his obligations hereunder and thereunder. This Agreement and the other
Transaction Documents, when executed and delivered, will constitute valid and
legally binding obligations of Xxxxx enforceable in accordance with their
respective terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and subject to the availability of
equitable remedies (the "BANKRUPTCY EXCEPTION"), and to the fact that the
indemnification provisions set forth in the Transaction Documents may be limited
by applicable federal or state law (the "INDEMNIFICATION EXCEPTION").
(c) Compliance with Other Instruments. The execution, delivery and
performance of this Agreement and the completion of the transactions
contemplated hereby will not result, to the knowledge of Xxxxx, in any violation
or be in conflict with or constitute, with or without the passage of time and
giving of notice, a default under any instrument, judgment, order, writ, decree
or contract to which Xxxxx is a party or by which he is bound or of any
provision of any federal or state statute, rule or regulation applicable to
Xxxxx.
4. REPRESENTATIONS AND WARRANTIES OF USAD. Except as set forth on Schedule
1 hereto (the "DISCLOSURE SCHEDULE") or as otherwise previously disclosed in an
SEC Report (as defined in Section 4(f) below), USAD hereby represents and
warrants to the Purchaser that:
(a) Organization and Good Standing. USAD is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, and has full
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power and authority to own and operate its properties and assets and to carry on
its business as currently conducted. USAD and its subsidiaries are duly
qualified and authorized to do business, and are in good standing as foreign
corporations, in each jurisdiction where the nature of their activities and of
their properties (both owned and leased) makes such qualification necessary,
except where the failure to so qualify, either individually or in the aggregate,
would not have a Material Adverse Effect. As used in this Agreement, "MATERIAL
ADVERSE EFFECT" means any change or effect that (i) is or is reasonably likely
to be materially adverse to the business, financial condition or results of
operations of USAD and its subsidiaries, or (ii) may impair USAD's ability to
complete the transactions contemplated hereby.
(b) Capitalization. As of the Closing, the authorized capital stock of
USAD will consist of 30,000,000 shares of Common Stock and 1,000,000 shares of
preferred stock (the "PREFERRED STOCK"). All issued and outstanding shares of
USAD's capital stock have been duly authorized and validly issued, fully paid
and nonassessable. Immediately prior to the Closing, there will be issued and
outstanding 13,825,602 shares of Common Stock and no shares of Preferred Stock.
As of June 6, 2000, other than an aggregate of 1,841,395 shares of Common Stock
reserved for issuance under awards made pursuant to USAD's 1995 Stock Option
Plan and its Stock Option Plan for Non-Employee Directors (collectively, the
"OPTION PLANS"), of which 1,493,551 shares are subject to issued and outstanding
stock options, and an aggregate of 578,524 shares of Common Stock issuable upon
the exercise of outstanding warrants and options issued outside of the Option
Plans, there are no outstanding rights of first refusal, preemptive rights or
other rights, options, warrants, conversion rights, or other agreements either
directly or indirectly for the purchase or acquisition from USAD of any shares
of its capital stock. All of the outstanding shares of Common Stock have been
duly and validly issued in compliance with federal and state securities laws.
(c) Authorization. All corporate action on the part of USAD and its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement and the other Transaction Documents, the
performance of all of USAD's obligations hereunder and thereunder, and the
authorization, issuance (or reservation for issuance), sale and delivery of the
USAD Shares has been or will be taken prior to the Closing. This Agreement and
the other Transaction Documents, when executed and delivered, will constitute
valid and legally binding obligations of USAD enforceable in accordance with
their respective terms, subject to the Bankruptcy Exception and the
Indemnification Exception.
(d) Validity of Securities. The sale of the USAD Shares is not subject
to any preemptive rights or rights of first refusal that have not been properly
waived or complied with. When the USAD Shares are issued, sold and delivered in
compliance with the provisions of this Agreement, the USAD Shares will be duly
authorized and validly issued, fully paid and nonassessable, and will be free of
any liens, encumbrances or restrictions on transfer. Notwithstanding the
foregoing, the USAD Shares may be subject to restrictions on transfer (i)
pursuant to the terms of the Transaction Documents and (ii) under state and
federal securities laws as set forth herein or as otherwise required by such
laws at the time a transfer is proposed.
(e) Compliance with Other Instruments. Neither USAD nor any of its
subsidiaries is in violation of any term of its current Certificate of
Incorporation or Bylaws, any material agreement, instrument, judgment, order,
or, to USAD's knowledge, any statute, rule or
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regulation applicable to it or its subsidiaries, in any such case the violation
of which would have a Material Adverse Effect. The execution, delivery, and
performance of and compliance with this Agreement and the issuance and sale of
the USAD Shares pursuant hereto will not result in any violation of any term of
the Certificate of Incorporation or Bylaws of USAD or its subsidiaries, or any
material agreement, instrument, or any judgment, or order, or be in conflict
with or constitute a default under any such term, or result in the creation of
any mortgage, pledge, lien, encumbrance, or charge upon any of the properties or
assets of USAD or its subsidiaries.
(f) SEC Reports and Financial Statements. Since November 14, 1997, USAD
has filed all required forms, reports and documents (collectively, the "SEC
REPORTS") with the SEC, each of which has complied in all material respects with
all applicable requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the Securities Act of 1934, as amended (the "EXCHANGE
ACT"), and the regulations promulgated thereunder, each as in effect on the
dates such forms, reports and documents were filed. At the time each was filed,
none of the SEC Reports, including without limitation any financial statements
or schedules included or incorporated by reference therein, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements of USAD included
in the SEC Reports fairly present in all respects, in conformity with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of USAD and
its consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial condition for the periods then
ended.
(g) Title to Properties and Assets; Liens, etc. Except as set forth in
Section 4(g) of the Disclosure Schedule, USAD and its subsidiaries have good and
marketable title to their properties and assets, in each case subject to no
mortgage, pledge, lien, encumbrance, or charge, other than (i) liens resulting
from taxes which have not yet become delinquent, or (ii) minor liens,
encumbrances, or defects of title which do not, individually or in the
aggregate, have a Material Adverse Effect. With respect to the properties and
assets they lease, USAD and its subsidiaries are in compliance with all material
terms of such leases which are material to USAD and, except as set forth in
Section 4(g) of the Disclosure Schedule, they hold a valid leasehold free of any
liens, claims or encumbrances that impair its present use of such leased
properties and assets. USAD and its subsidiaries have sufficient rights to use
the property and assets used in connection with the operation of their
businesses.
(h) Related Party Transactions. Set forth in Section 4(h) of the
Disclosure Schedule is a correct and complete list of (i) all of the
indebtedness of USAD to all officers, directors and stockholders of USAD,
including any member of their immediate families (other than normal expense
vouchers) exceeding $50,000 and (ii) all of the indebtedness of USAD's officers,
directors and stockholders, including any member of their immediate families
(other than expense advances made in the ordinary course of USAD's business) to
USAD exceeding $50,000. Except as set forth on the Disclosure Schedule, none of
USAD's officers or directors nor their respective affiliates has any ownership
interest in any firm or corporation with which USAD is affiliated or with which
USAD has a business relationship in which the obligations of either party exceed
$100,000.
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(i) Registration Rights. Except as set forth in Section 4(i) of the
Disclosure Schedule or as required by the Registration Rights Agreement (as
defined in Section 6(a)(iii) below), USAD is not under any obligation to
register (as defined in the Registration Rights Agreement) any of its currently
outstanding securities or any of its securities which may hereafter be issued.
(j) Material Licenses. USAD and its subsidiaries have all operating
authority, licenses, franchises, permits, certificates, consents, rights and
privileges necessary to conduct its business as presently conducted
(collectively "MATERIAL LICENSES") the lack of which would have a Material
Adverse Effect. To the extent that USAD or its subsidiaries lack any of the
foregoing Material Licenses, as described in the Disclosure Schedule, USAD
warrants that it or its subsidiaries can obtain, without undue burden or
expense, such Material License or any similar authority for the conduct of its
business. All of the Material Licenses are in full force and effect and no
violations have been or are expected to be recorded in respect of any such
Material Licenses, except where the failure to be in full force and effect or
where such violation would not, individually or in the aggregate, have a
Material Adverse Effect. No proceeding is pending or threatened that could
result in the revocation or material limitation of any of such Material
Licenses. USAD and its subsidiaries have conducted their businesses so as to
comply in all material respects with all such Material Licenses.
(k) Employees. To the knowledge of USAD, no employee of USAD or any of
its subsidiaries is in violation of any term of any employment contract,
proprietary information and inventions agreement, non-competition agreement, or
any other contract or agreement relating to the relationship of any such
employee with USAD, its subsidiaries or any previous employer. Neither USAD nor
any of its subsidiaries has any collective bargaining agreements with any of its
employees and there is no labor union organizing activity pending or threatened
with respect to USAD or its subsidiaries.
(l) Proprietary Information. USAD has taken commercially reasonable
measures to protect the secrecy, confidentiality, and value of all trade
secrets, know-how, inventions, designs, processes, and technical data required
to conduct its business.
(m) Taxes. USAD and its subsidiaries have filed all tax returns
(federal, state or local) they have been required to file prior to the date
hereof and USAD and its subsidiaries have paid all taxes that have been due and
payable. Neither USAD nor its subsidiaries have any material liability for any
federal, state or local taxes. USAD has not elected to be treated as a
collapsible corporation pursuant to Section 341(f) or Section 1362(a) of the
Internal Revenue Code of 1986, as amended (the "CODE"), nor has it made any
other elections pursuant to the Code (other than elections that relate solely to
methods of accounting, depreciation or amortization) that would have a Material
Adverse Effect. Neither USAD nor any of its subsidiaries has ever had any tax
deficiency proposed or assessed against it and has not executed any waiver of
any statute of limitations on the assessment or collection of any tax or
governmental charge. USAD is not a real property holding company within the
meaning of Section 897 of the Code.
(n) Environmental Laws. Except as disclosed on Schedule 4(n), each of
USAD and its subsidiaries is in material compliance with all applicable federal,
state and local
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laws and regulations relating to pollution or the protection of human health or
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) (collectively, "ENVIRONMENTAL
LAWS"), which compliance includes, but is not limited to, the possession by USAD
and its subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws and compliance with
the terms and conditions thereof. Except as disclosed in Schedule 4(n), None of
USAD or any of its subsidiaries has received written notice of or, to the
knowledge of USAD, is the subject of any action, cause of action, claim,
investigation, demand or notice by any person or entity alleging liability under
or non-compliance with any Environmental Law. There are no circumstances that
are reasonably likely to prevent or interfere with the compliance by USAD or any
of its subsidiaries with any Environmental Law in the future.
(o) Patents, Trademarks, etc. Except as disclosed in Schedule 4(o),
USAD and its subsidiaries have sufficient title or ownership of, or license for,
all patents, patent applications, licenses, trademarks, service marks, trade
names, inventions, processes, formulae, trade secrets, franchises, copyrights
and other proprietary rights (the "INTELLECTUAL PROPERTY") used in connection
with the operation of their businesses with no known infringement of or conflict
with the rights of others. Except for commercial software and applications
generally available to the public and trademarks, service marks and trade names
licensed in the ordinary course of business, there are no material and
outstanding options, licenses, or agreements of any kind relating to the
Intellectual Property, nor is USAD or any of its subsidiaries bound by or a
party to any material options, licenses or agreements of any kind with respect
to the Intellectual Property of any other person or entity. USAD is not aware of
any third party that is infringing or violating any of its or its subsidiaries'
Intellectual Property. USAD has not received any communications alleging that
USAD or any of its subsidiaries has violated or, by conducting their businesses
as proposed, would violate any of the Intellectual Property of any other person
or entity.
(p) Litigation. Except as disclosed in Schedule 4(p), there are no
actions, suits, proceedings or investigations before any court or administrative
agency pending or, to the knowledge of USAD, threatened against or with respect
to USAD or its subsidiaries, which question the validity of this Agreement or
any action taken or to be taken in connection herewith, or which, either
individually or in the aggregate, might result in a Material Adverse Effect.
Neither USAD nor any of its subsidiaries is a party or subject to, and none of
their assets are bound by, the provisions of any order, writ, injunction,
judgment, or decree of any court or governmental agency or instrumentality which
has had, is having or will have a Material Adverse Effect. There is no action,
suit, proceeding or investigation by USAD or any of its subsidiaries pending or
that USAD or any of its subsidiaries intend to initiate.
(q) Governmental Consents. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of USAD in
connection with the valid execution and delivery of this Agreement, the other
Transaction Documents, the offer, sale or issuance of the USAD Shares, and the
completion of any other transaction contemplated hereby have been obtained,
except for notices required or permitted to be filed with certain state and
federal securities commissions after the date hereof, which notices will be
filed on a timely basis.
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(r) Offering. Assuming the accuracy of the representations and
warranties of the Purchaser contained in Section 5, the offer, issue, and sale
of the USAD Shares: (i) are and will be exempt from the registration and
prospectus delivery requirements of the Securities Act and (ii) have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit, or qualification requirements of all applicable
state securities laws.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to each of Xxxxx and USAD that:
(a) Authorization. All corporate action on the part of the Purchaser
and its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the other Transaction Documents and
the performance of all of the Purchaser's obligations hereunder and thereunder
have been or will be taken prior to the Closing. This Agreement and the other
Transaction Documents, when executed and delivered, will constitute valid and
legally binding obligations of the Purchaser enforceable in accordance with
their respective terms, subject to the Bankruptcy Exception and the
Indemnification Exception.
(b) Purchase Entirely for Own Account. The Xxxxx Shares and the USAD
Shares to be received by the Purchaser will be acquired for investment for the
Purchaser's own account, not with a view to the distribution of any part
thereof, and the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same. The Purchaser does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Xxxxx Shares or the USAD Shares.
(c) Investment Experience. The Purchaser is an experienced investor and
acknowledges and represents that it is able to fend for itself, can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Xxxxx Shares and the USAD Shares.
(d) Restricted Securities. The Purchaser understands that the Xxxxx
Shares and the USAD Shares it is purchasing are characterized as "restricted
securities" under the federal securities laws inasmuch as such securities are
being acquired in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may not be resold in the
absence of an effective registration statement covering the Xxxxx Shares and the
USAD Shares or an exemption from registration under the Securities Act. The
Purchaser is familiar with SEC Rule 144 under the Securities Act, as presently
in effect, and understands the resale limitations imposed thereby and by the
Securities Act.
(e) Legend. The Purchaser understands that the certificates evidencing
the Xxxxx Shares and the USAD Shares may bear a legend in substantially the form
as follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THEY MAY NOT BE RESOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER THE SECURITIES ACT OF 1933
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OR AN OPINION OF COUNSEL SATISFACTORY TO USA DETERGENTS, INC. THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144
OF THE SECURITIES ACT OF 1933.
6. CONDITIONS TO CLOSING.
(a) Conditions to Obligations of the Purchaser. The Purchaser's
obligation to purchase the Xxxxx Shares and the USAD Shares is subject to the
fulfillment, at or prior to the Closing, of all of the following conditions, any
of which may be waived by the Purchaser:
(i) Representations and Warranties; Performance of Obligations. The
representations and warranties made by USAD in Section 4 hereof must be true and
correct on the date of the Closing, with the same force and effect as if they
had been made on and as of said date. The representations and warranties made by
Xxxxx in Section 3 hereof must be true and correct on the date of the Closing,
with the same force and effect as if they had been made on and as of said date.
The business and assets of USAD must not have been adversely affected in any
material way prior to the Closing. USAD must have performed and complied with
all obligations and conditions herein required to be performed or complied with
by it on or prior to the Closing. Xxxxx must have performed and complied with
all obligations and conditions herein required to be performed or complied with
by him on or prior to the Closing.
(ii) Joint Venture Agreement. USAD must have entered into the Joint
Venture Agreement.
(iii) Registration Rights Agreement. USAD must have entered into a
registration rights agreement with the Purchaser of even date herewith.
(iv) Put & Call Agreement. Xxxxx must have entered into a put and
call agreement with the Purchaser of even date herewith (the "PUT & CALL
AGREEMENT").
(v) Qualifications; Legal Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with and
prior to the lawful sale and issuance of the Xxxxx Shares and the USAD Shares
pursuant to this Agreement must have been duly obtained and must be effective on
and as of the Closing. As of the Closing, no order enjoining the sale of the
Xxxxx Shares or the USAD Shares may have been issued and no proceedings for such
purpose may be pending or threatened by any governmental authority having
jurisdiction over this transaction. At the time of the Closing, the sale and
issuance of the Xxxxx Shares and the USAD Shares must be legally permitted by
all laws and regulations to which the Purchaser, Xxxxx and USAD are subject.
(b) Conditions to Obligations of Xxxxx. Xxxxx'x obligation to sell the
Xxxxx Shares under this Agreement is subject to the fulfillment, at or prior to
the Closing, of the following conditions, any of which may be waived by Xxxxx:
(i) Representations and Warranties, Performance of Obligations. The
representations and warranties made by the Purchaser in Section 5 hereof must be
true and correct at the date of the Closing, with the same force and effect as
if they had been made on and
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as of said date. The Purchaser must have performed and complied with all
agreements and conditions herein required to be performed or complied with by it
on or before the Closing.
(ii) Put & Call Agreement. The Purchaser must have entered into the
Put & Call Agreement.
(iii) Payment of Purchase Price. The Purchaser must have delivered
to Xxxxx the Aggregate Xxxxx Purchase Price at the Closing for the Xxxxx Shares
purchased by it.
(iv) Qualifications; Legal Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Xxxxx Shares pursuant to this Agreement must
have been duly obtained and must be effective on and as of the Closing. As of
the Closing, no order enjoining the sale of the Xxxxx Shares may have been
issued and no proceedings for such purpose may be pending or threatened by any
governmental authority having jurisdiction over this transaction. At the time of
the Closing, the sale and issuance of the Xxxxx Shares must be legally permitted
by all laws and regulations to which the Purchaser and Xxxxx are subject.
(c) Conditions to Obligations of USAD. USAD's obligation to issue and
sell the USAD Shares under this Agreement is subject to the fulfillment, at or
prior to the Closing, of the following conditions, any of which may be waived by
USAD:
(i) Representations and Warranties, Performance of Obligations. The
representations and warranties made by the Purchaser in Section 5 hereof must be
true and correct at the date of the Closing, with the same force and effect as
if they had been made on and as of said date. The Purchaser must have performed
and complied with all agreements and conditions herein required to be performed
or complied with by it on or before the Closing.
(ii) Joint Venture Agreement. The Purchaser must have entered into
the Joint Venture Agreement.
(iii) Payment of Purchase Price. The Purchaser must have delivered
to USAD the Aggregate USAD Purchase Price at the Closing for the USAD Shares
purchased by it.
(iv) Qualifications; Legal Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the USAD Shares pursuant to this Agreement must have
been duly obtained and must be effective on and as of the Closing. As of the
Closing, no order enjoining the sale of the USAD Shares may have been issued and
no proceedings for such purpose may be pending or threatened by any governmental
authority having jurisdiction over this transaction. At the time of the Closing,
the sale and issuance of the USAD Shares must be legally permitted by all laws
and regulations to which the Purchaser and USAD are subject.
7. STANDSTILL AGREEMENT.
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(a) Standstill Agreement. Neither the Purchaser nor any subsidiary or
other controlled affiliate of the Purchaser (the "Purchaser Group") will, on or
before the third anniversary of the Closing, without the prior written consent
of a majority of the members of USAD's Board of Directors (the "Board") who are
not affiliated with the Purchaser Group, do any of the following:
(i) acquire, offer or agree to acquire any shares of Common Stock
(or options or warrants to acquire, or securities convertible into or
exchangeable for, shares of Common Stock) if, as a result of such
acquisition, the Purchaser Group would beneficially own (within the
meaning of Rule 13d-3 under the Exchange Act) more than 25% of the then
outstanding shares of Common Stock; provided, however, that at least
one-half of any shares of Common Stock that the Purchaser Group
acquires in excess of the 2,142,857 shares contemplated herein and in
the Put & Call Agreement may not be acquired by the Purchaser Group at
a per share price of less than $7.00 and the balance of any such shares
up to the 25% limit may not be acquired by the Purchaser Group at a per
share price of less than $6.00;
(ii) directly or indirectly commence or become a participant in a
solicitation (as defined in Regulation 14A under the Exchange Act) of
proxies either to oppose the election of any person to the Board or to
seek the removal of any person from the Board, which person has been
nominated by the Board or any nominating committee of the Board;
(iii) directly or indirectly make or solicit or assist any third
party to make a tender or exchange offer to purchase any shares of
Common Stock or make any public announcement concerning, or submit any
written proposal to the Board for a tender offer, exchange offer,
merger, share exchange, acquisition of assets or similar transaction
involving USAD; or
(iv) publicly propose or publicly disclose any intention, plan or
arrangement inconsistent with the foregoing or make any public
announcement or disclosure requesting the Board to amend, modify or
waive this Section 7.
(b) The Purchaser acknowledges that money damages would not be a
sufficient remedy for any breach of the provisions of this Section 7 and that in
addition to all other remedies, USAD shall be entitled to specific performance
and injunctive and other equitable relief as a remedy for any such breach, and
the Purchaser further agrees to waive any requirement for the securing or
posting of bond in connection with any such remedy.
(c) USAD acknowledges and agrees that the Purchaser, by acquiring
shares hereunder and under the Put & Call Agreement, will become an "interested
stockholder" as contemplated by Section 203 of the Delaware General Corporation
Law. As a result of the approval by USAD's Board of Directors of the transaction
in which the Purchaser becomes an interested stockholder, in the absence of the
foregoing provisions of this Section 7, the Purchaser would be free to acquire
shares of USAD's Common Stock. The Purchaser is willing to forego such right to
acquire shares for the three-year period set forth above provided that USAD
complies with its obligations under Section 9.4(b) of the Joint Venture
Agreement. However,
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the provisions of Section 7(a) and 7(b) shall terminate and be of no further
force and effect upon the breach by USAD of its obligations pursuant to Section
9.4(b) of the Joint Venture Agreement. Any good faith dispute as to whether USAD
has breached its obligations under said Section 9.4(b) shall be judicially
determined before the termination of Sections 7(a) and 7(b) shall be effective.
8. MISCELLANEOUS.
(a) Survival of Warranties. The warranties, representations and
covenants of Xxxxx, USAD and the Purchaser contained in or made pursuant to this
Agreement will survive for a period of one (1) year after the Closing, except
that the representations and warranties of Xxxxx made in Section 3(a) shall
survive for a period of five (5) years, the covenant of CHD contained in Section
7 shall survive for a period of three (3) years and the representations and
warranties made by USAD in Section 4(n) shall survive indefinitely.
(b) Successors and Assigns. This Agreement will inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any Xxxxx Shares or USAD Shares). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(c) Governing Law. This Agreement will be governed by and construed
under the internal laws of the State of New York, without reference to any
principles of conflicts of laws.
(d) Headings and Captions. The headings and captions used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Notices. All notices and other communications required or permitted
hereunder will be in writing and will be delivered by facsimile, courier or
nationally recognized overnight delivery service addressed as follows:
If to Xxxxx:
------------
Venad Administration Services, Inc.
000 Xxxxxxx Xxx., Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx, Chief Financial Officer
Telecopy No.: 000-000-0000
with a copy to:
---------------
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: 000-000-0000
11
If to USAD:
-----------
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
---------------
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
If to CHD:
----------
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
with a copy to:
---------------
Xxxxxx, Xxxx & Xxxxxxxx LLP
0 Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
(f) Finder's Fee. Each party represents that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction. The Purchaser shall indemnify and hold harmless Xxxxx and USAD from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Purchaser or any of its officers, partners, employees,
or representatives is responsible. Xxxxx shall indemnify and hold harmless the
Purchaser from any liability for any commission or compensation in the nature of
a finders' fee (and the costs and expenses of defending against such liability
or asserted liability) for which Xxxxx or any of his agents or representatives
is responsible. USAD shall indemnify and hold harmless the Purchaser from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which USAD or any of USAD's officers, employees, agents or
representatives is responsible.
(g) Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party will be
entitled to actual attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
(h) Amendments and Waivers. Any term of this Agreement may be amended,
and the observance of any term of this Agreement may be waived (either generally
or in a
12
particular instance and either retroactively or prospectively), only with the
written consent of each affected party.
(i) Severability. If any provision of this Agreement, or the
application of such provision to any person or circumstance, is judicially
declared to be invalid, unenforceable or void, such decision will not have the
effect of invalidating or voiding the remainder of this Agreement or affect the
application of such provision to other persons or circumstances, and the part or
parts of this Agreement so held to be invalid, unenforceable or void will be
deemed to have been stricken herefrom and the remainder of this Agreement will
have the same force and effect as if such part or parts had never been included
herein. Any such finding of invalidity or unenforceability will not prevent the
enforcement of such provision in any other jurisdiction to the maximum extent
permitted by applicable law.
(j) Entire Agreement. This Agreement and the other Transaction
Documents constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof.
(k) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
XXXXX:
/s/ Xxxxxxxxx X. Xxxxx
-----------------------------------------------
Xxxxxxxxx X. Xxxxx
USAD:
USA DETERGENTS, INC.,
A DELAWARE CORPORATION
By: /s/ Uri Evan
----------------------------------------
Name: Uri Evan
----------------------------------------
Title: Chief Executive Officer
----------------------------------------
THE PURCHASER:
CHURCH & XXXXXX CO., INC.,
A DELAWARE CORPORATION
By: /s/ X. X. Xxxxxx III
----------------------------------------
Name: Xxxxxx X. Xxxxxx III
----------------------------------------
Title: President and Chief Executive Officer
----------------------------------------
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