STOCK PURCHASE AGREEMENT
Dated as of November 23, 1999
by and between
XxxxxxXxxx.Xxx Inc.
and
Xxxxxxxx Broadcast Group, Inc.
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS...................................................-1-
SECTION 1.1. Definitions.................................-1-
SECTION 1.2. Accounting Terms............................-5-
ARTICLE II
PURCHASE, SALE AND TRANSFER OF COMMON STOCK;OPTION;
CERTAIN RIGHTS................................................-5-
SECTION 2.1. Authorization of Common Stock...............-5-
SECTION 2.2. Purchase and Sale of Class B Common Stock...-5-
SECTION 2.4. The Closing.................................-8-
SECTION 2.5. Registration Rights.........................-9-
SECTION 2.6. Board Presence..............................-9-
SECTION 2.7. Protective Provisions.......................-9-
SECTION 2.8. Transfer of Shares in the Company...........-11-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................-11-
SECTION 3.1. Organization, Standing, etc.................-11-
SECTION 3.2. Authorization and Execution.................-11-
SECTION 3.3. Governmental Authorizations.................-12-
SECTION 3.4. Non-Contravention...........................-12-
SECTION 3.5. Capitalization..............................-12-
SECTION 3.6. Subsidiaries................................-13-
SECTION 3.7. Litigation..................................-13-
SECTION 3.8. Investment Company..........................-13-
SECTION 3.10. Financial Statements........................-13-
SECTION 3.11. Employment Agreements.......................-14-
SECTION 3.12. Real Property...............................-14-
SECTION 3.13. Tax Matters.................................-14-
SECTION 3.14. Employee Benefit Plans......................-14-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER............................-15-
SECTION 4.1. Organization, Standing, etc.................-15-
SECTION 4.2. Authorization and Execution.................-15-
SECTION 4.3. Governmental Authorizations.................-16-
SECTION 4.4. Non-Contravention...........................-16-
SECTION 4.5. Private Placement...........................-16-
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING BY THE PURCHASER.......................-17-
SECTION 5.1...................................................-17-
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING BY THE COMPANY.........................-18-
SECTION 6.1...................................................-18-
ARTICLE VII
MISCELLANEOUS..........................................................-19-
SECTION 7.1. Legends; Opinions Requirement...............-19-
SECTION 7.2. Register of Securities......................-19-
SECTION 7.3. Removal of Legend...........................-20-
SECTION 7.4. Rule 144....................................-20-
SECTION 7.5. Notices.....................................-20-
SECTION 7.6. Confidentiality.............................-22-
SECTION 7.7. Brokers; Finders............................-23-
SECTION 7.8. Tax Reporting...............................-23-
SECTION 7.9. Transaction Expenses........................-23-
SECTION 7.10. Amendment; Waiver...........................-23-
SECTION 7.11. Survival of Representations and Warranties..-23-
SECTION 7.12. Severability................................-23-
SECTION 7.13. Headings; Exhibits..........................-24-
SECTION 7.14. Entire Agreement............................-24-
SECTION 7.15. Successors and Assigns......................-24-
SECTION 7.16. Choice of Law...............................-24-
SECTION 7.17. Counterparts................................-24-
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TABLE OF EXHIBITS
Exhibit
A Description of Registration Rights
B Form of Class A Common Stock Option Agreement
C Form of Stock Option Plan
D Co-Sale Rights
E Form of 8% Convertible Subordinated Note in Favor of the New Era
F Form of Non-Competition and Proprietary Information Agreements
G Form of Non-Competition Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of November 23, 1999,
by and between XXXXXXXXXX.XXX INC., a New Jersey 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 issue and sell, and the Purchaser desires
to purchase, 900,000 shares of the issued and outstanding shares of the
Company's Class B Common Stock for the purchase price hereinafter set forth; and
WHEREAS, each share of Class B Common Stock entitles the holder to ten (10)
votes on all matters to be voted upon by the stockholders of the Company, and
Purchaser, following such purchase, accordingly will own shares of Class B
Common Stock entitling it to an aggregate of 9,000,000 votes; and
WHEREAS, Synergy is the owner of 9,000,000 shares of the Company's Class A
Common Stock, each share of which entitles the holder to one (1) vote, and
accordingly Synergy owns shares of Class A Common Stock entitling it to an
aggregate of 9,000,000 votes.
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:
"ADVISOR" shall have the meaning set forth in Section 7.7.
"ADVISOR OPTIONS" shall have the meaning set forth in Section 2.7(c).
"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.
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"AGREEMENT" means this Agreement, as the same may be amended in accordance
with its terms.
"ADVERTISING TIME" shall have the meaning set forth in Section 2.3(a).
"BB SHARES" shall mean the shares of Class B Common Stock purchased by
Purchaser pursuant to Section 2.2 and/or the shares of Class A Common Stock
acquired upon the exercise of the Option and/or the mandatory conversion of
Class B Common Stock, as set forth in Section 2.3(a)(iii), owned by Purchaser on
the date of determination.
"BB TERM" shall have the meaning set forth in Section 2.3(b).
"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.
"CLASS A COMMON STOCK" means the Class A Common Stock, $.001 par value, of
the Company.
"CLASS B COMMON STOCK" means the Class B Common Stock, $.001 par value, of
the Company.
"CLOSING" and "Closing Date" have the meanings set forth in Section 2.4
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 Class A Common Stock and the Class B Common Stock
of the Company.
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"EARNED ADVERTISING TIME" means $10,000,000 for each calendar year of the
BB Term, except for any calendar year which begins after (a) the effective date
of a written notice of termination delivered by Purchaser pursuant to Section
2.3(a)(ii) hereof, or (b) receipt by the Company of a written notice of the
application of a credit delivered by Purchaser pursuant to Section 2.3(a)(vi)
hereof; provided that in no event shall the amount of such earned Advertising
Time on the date of determination be less than $20,000,000.
"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.
"IN-KIND SERVICES" and "IN-KIND VALUE" shall have the respective meanings
set forth in Section 2.3(b).
"IPO" means an initial public offering of the Common Stock by filing a Form
S-1 or SB-2 registration statement with the Commission.
"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
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 2.3(b)(ii).
"MATERIAL ADVERSE EFFECT" shall have the meaning provided in Section 3.1
hereof.
"NEW ERA" means New Era Foods, Inc., a Nevada corporation, all of the
outstanding Capital Stock of which is owned by Synergy.
"NOTE" shall have the meaning set forth in Section 5.1.
"OPTION" and "OPTION AGREEMENT" shall have the respective meanings set
forth in Section 2.3.
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"OPTION SHARES" shall mean the shares of Class A Common Stock to be
purchased by the Purchaser pursuant to the Option Agreement (upon closing on the
exercise of the Option as to any shares of Class A Common Stock, such shares
shall cease to be Option Shares).
"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.
"PROMOS" shall have the meaning set forth in Section 2.3(a).
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2.
"PURCHASER OPTIONS" shall have the meaning set forth in Section 2.7(c).
"QUALIFIED SALE" means a sale or transfer of at least eighty (80%) of the
outstanding voting Capital Stock of the Company to a non-affiliated third party,
or a merger or consolidation of the Company with or into a non-affiliated third
party who will thereby own at least eighty (80%) percent of the outstanding
voting capital stock of the Company, provided that the non-affiliated third
party, after such sale, merger or consolidation, will not be controlled,
directly or indirectly, by any Person or Persons who, immediately prior to the
merger or consideration, were Affiliates of the Company or the controlling
stockholders of the Company or such Affiliates, or a sale or transfer of all or
substantially all of the assets of the Company to a non-affiliated third party.
"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 BB Shares which may not be publicly sold
or transferred without registration under the Securities Act.
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"SEC REPORTS" means all forms, reports and documents filed by Synergy 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.
"SOP" means the stock option plan created by the Company as more fully
described in Section 2.7. "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 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 Synergy.
"SYBR OPTIONS" shall have the meaning set forth in Section 2.7(c).
"SYNERGY" means Synergy Brands Inc., a Delaware corporation.
"SYNERGY AGREEMENT" means that certain Stock Purchase Agreement entered
into between the Purchaser and Synergy providing for the issuance and sale by
Synergy, and the purchase by Purchaser, of shares of common stock of Synergy,
upon the terms and conditions set forth therein.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the Option
Agreement and any other instrument, certificate, agreement or other document
executed or delivered in connection therewith.
"UNEARNED ADVERTISING TIME" means all Advertising Time which is not Earned
Advertising Time.
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.
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ARTICLE II
PURCHASE, SALE AND TRANSFER OF COMMON STOCK; OPTION; CERTAIN RIGHTS
SECTION 2.1. Authorization of Common Stock. The Company has authorized the
issuance and sale of up to 50,000,000 shares of Common Stock, consisting of
49,100,000 shares of Class A Common Stock and 900,000 shares of Class B Common
Stock, of which 9,000,000 shares of Class A Common Stock are issued and
outstanding.
SECTION 2.2. Purchase and Sale of Class B 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 900,000 Shares of Class B
Common Stock, constituting fifty (50%) of the voting power of the Common Stock
issued and outstanding after giving effect to such purchase, for an aggregate
subscription price of $765,000, payable in cash at the Closing (the "Purchase
Price").
SECTION 2.3. Option to Purchase Class A Stock. Simultaneously with the
purchase by the Purchaser of Class B Common Stock, the Company and the Purchaser
shall enter into a Class A Common Stock Option Agreement (the "Option
Agreement"), providing for the grant by the Company to the Purchaser of an
option (the "Option")to purchase 8,100,000 shares of Class A Common Stock, to be
issued and sold by the Company upon the terms and conditions set forth in the
form of Option Agreement attached as Exhibit B hereto. In consideration of the
grant of the Option, the Purchaser and the Company agree as follows:
(a) the Purchaser agrees to provide the Company $50,000,000, of radio
and/or television advertising (the "Advertising") and promotional support (the
"Promos") from Purchaser's unutilized inventory of Advertising and Promos,
valued as if each spot was being sold at the then-current street rates (which is
net of commissions) at the time of the airing. The 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 Promos, on those radio and/or television stations
from time to time owned, operated, or programmed by the Purchaser, or any of its
Subsidiaries. (The 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 from the
date hereof until December 31, 0000 (xxx "XX Xxxx"); subject to the following:
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(i) the Company may not utilize more than $10,000,000 worth of
Advertising Time in any one calendar year (except that the first year shall be a
fiscal year commencing on the Closing Date and terminating on December 31,
2000), except that the Company may carry-over unused Advertising Time from all
previous calendar years and use the same until December 31, 2005; provided, that
(x) the total Advertising Time which may be utilized in any calendar year during
the BB Term may not exceed $15,000,000 (the "Annual Limitation"), (y) any amount
in excess of the Annual Limitation may be further carried over to subsequent
years during the BB Term, and (z) the total Advertising Time which may be
utilized in the calendar year ending December 31, 2005 may not exceed
$10,000,000;
(ii) the Purchaser may terminate its obligation to provide Unearned
Advertising Time to the Company in any calendar years after calendar year 2001,
by providing at least ninety (90) days prior written notice to the Company (the
"Notice Period"); provided, any Earned Advertising Time may not be terminated;
(iii) As provided in the Option Agreement, (x) the Option can only be
exercised in integral multiples of nine (9) shares of Class A Common Stock, and
(y) for each increment of nine (9) shares of Class A Common Stock purchased upon
exercise of the Option, one (1) share of Class B Common Stock shall be
automatically converted into one (1) share of Class A Common Stock;
(iv) In the event the Purchaser terminates its obligation to provide
Unearned Advertising Time to the Company under subsection (a)(ii), the following
shall occur on the last day of the Notice Period: (A) all Option shares that are
not vested as of that time pursuant to Section 2.6 of the Option Agreement shall
no longer be eligible for vesting and (B) the Purchaser shall return to the
Company the number of Class B Common Stock shares equal to the product of (1)
the Applicable Percentage multiplied by (2) 900,000.
As used herein, the "Applicable Percentage" is the percentage determined by
dividing (1) the amount of Purchaser's Unearned Advertising Time obligation
being terminated by Purchaser by (2) $50,000,000.
(v) notwithstanding Purchaser's right to terminate its obligation to
provide Unearned Advertising Time to the Company under subsection (a)(ii) above,
the Purchaser shall only be entitled to terminate such portion of its obligation
to provide Unearned Advertising Time to the Company to the extent of the shares
of Class B Common Stock returned to the Company as computed in subsection (iv)
above.
(vi) in the event the Company either (x) completes an IPO and the
Common Stock sold in the IPO constitutes less than one-third (?) of the issued
and outstanding Capital Stock of the Company, or (y) completes a Qualified Sale
(such Qualified Sale for minimum gross proceeds of at least $100,000,000), then
the Purchaser shall be entitled to apply, upon written notice to the Company
delivered within thirty (30) days after completion of the IPO or Qualified Sale,
as a credit to its obligation to provide Unearned Advertising Time to the
Company, an amount equal to the lesser of:
A. fifty percent (50%) of the gross proceeds raised in the IPO; or
B. $30,000,000; or
C. the amount of Unearned Advertising Time as of the date of such
notice.
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(vii) the Company shall have the right to use any Earned Advertising
Time until December 31, 2005, subject to the $10,000,000 limitation set forth in
Section 2.3(a)(i), notwithstanding any termination pursuant to subsection
2.3(a)(ii) or application of a credit pursuant to subsection 2.3(a)(vi); and
(b) the Purchaser hereby agrees to perform for the Company, at the
request of the Company, certain services during the BB Term (the "In-Kind
Services"), as more fully set forth on Schedule 2.3, up to an aggregate amount
of $18,623,535 (the "In-Kind Value") . Notwithstanding the amount of In-Kind
Services stated in the preceding sentence and the value set forth on Schedule
2.3, the Company may utilize the In-Kind Services in an amount:
(i) less than the In-Kind Value, without any recourse to, or additional
consideration from, the Purchaser or any of its Subsidiaries;
(ii) greater than the In-Kind Value, but only to the extent permitted
by a further written agreement between the parties hereto, without any cost to
or additional consideration from the Company or any of its Subsidiaries.
Purchaser shall have the responsibility to notify the Company in writing when
the In-Kind Value 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 the In- Kind Value 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.
Upon any termination or exercise of an option pursuant to subsection 2.3(a)(ii)
or (vi) above, as the case may be, Purchaser shall have the further right, upon
written notice to the Company, to terminate the remaining portion of the In-Kind
Services not theretofore used by the Company.
(c) any appropriate numbers or calculations in this Section 2.3,
including without limitation the multiple of shares set forth in
Section 2.3(a)(iii), shall be adjusted as appropriate to effectuate the intent
of the parties evidenced by Section 4 of the Option Agreement, notwithstanding
that adjustments to such numbers or calculations may not be expressly provided
for in this Section 2.3 or in Section 4 of the Option Agreement.
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SECTION 2.4. The Closing. (a) The purchase and sale of the BB 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 Purchase
Price, and (ii) a credit for Advertising Time and In-Kind Services in payment
for the Option, as set forth in Section 2.3(a) and 2.3(b), 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 shares of Class B Common Stock 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 2.5. Registration Rights. The Purchaser and SYBR each shall have
the right to have the shares of Class A Common Stock owned by them included in
any registration statements of the Company filed after the Closing Date relating
to public offerings of securities, except for the IPO (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 registration rights is set forth in Exhibit A hereto.
SECTION 2.6. Board Presence. For so long as the Purchaser holds issued and
outstanding Common Stock having at least thirty (30%) percent of the votes of
all shares of Common Stock issued and outstanding, SYBR will vote its shares of
Common Stock for the election of one-half (?) of the members of the Board of
Directors of the Company who are designated by the Purchaser. For so long as
SYBR or its Affiliates holds issued and outstanding Common Stock having at least
thirty (30%) percent of the votes of all shares of Common Stock issued and
outstanding, the Purchaser will vote its shares of Common Stock for the election
of the remaining one-half (?) of said members who are designated by SYBR or such
Affiliates.
SECTION 2.7. Protective Provisions. Without the affirmative votes of at
least 66 2/3% of the outstanding shares of Common Stock, the Company will not:
(a) issue, sell or transfer any additional Capital Stock, except
pursuant to clause (c) below;
(b) sell, assign, transfer or convey all or substantially all of its
assets to, or merge or consolidate with or into, any Person (other than an
Affiliate of the Company), except for a reincorporation merger or a merger that
does not result in a change in the ownership of the Company; or
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(c) grant any options, warrants or rights to purchase, or issue
securities convertible into, Common Stock, other than the Note; provided,
however, the Purchaser agrees and consents to the creation by the Company of a
stock option plan (the "SOP"), for the benefit of its employees, consultants,
officers, directors and independent contractors (e.g., the Purchaser), under the
following terms and conditions:
(i) The SOP will be substantially in the form of Exhibit C attached
hereto, and will be adopted by the Board as promptly as possible on or after the
Closing Date (subject to stockholder approval within one (1) year of the date of
adoption);
(ii) options to purchase 3,000,000 shares of Class A Common Stock may
be granted on or as promptly as possible after the date of adoption of the SOP,
at an exercise price of $3.00 per share, to employees, consultants, officers,
directors as determined solely by, and at the discretion of, SYBR (the "SYBR
Options"), which shall include the option granted to the Advisor as provided in
Section 7.7 (the "Advisor Options");
(iii) non-qualified options to purchase the same number of shares of
Class A Common Stock, and at the same exercise price per share, as constitute
the SYBR Options (the "Purchaser Options") shall be granted to the Purchaser or
its designees simultaneously with the grant of SYBR Options, the recipients of
such Purchaser Options to be determined solely by, and at the discretion of, the
Purchaser; provided, such Purchaser Options shall only vest in accordance with
subsection (c)(iv)A. below;
(iv) options granted pursuant to subsections (c)(ii) and (iii) (the
exercise of which are subject the limitations imposed in Section 2.7(c)(v)
below) above, shall fully vest, commencing on the date of the granting of such
options, over a period of:
A eight years for the key employees listed in Schedule 2.7
attached hereto, officers, directors, the holders of the Purchaser
Options and the holders of the Advisor Options, at the rate of:
0% - after year one,
0% - after year two,
10% - after year three,
10% - after year four,
15% - after year five,
20% - after year six,
20% - after year seven, and
25% - after year eight;
B five years for all other employees; at the rate of:
0% - after year one,
10% - after year two,
20% - after year three,
30% - after year four, and
40% - after year five.
C Anything to the contrary in subsection (c)(iv)A or B above
notwithstanding, the Purchaser Options and the Advisor Options
shall not be subject to termination for any reason, except the
expiration of the term of the applicable Option in accordance with
its terms;
(v) Optionees may not exercise their options unless there is an IPO or
a Qualified Sale; and
(vi) At no time shall the number of Purchaser Options exercised be
permitted to exceed the number of SYBR Options exercised.
SECTION 2.8. Transfer of Shares in the Company. Until the occurrence of an
IPO or a Qualified Sale (such Qualified Sale for minimum gross proceeds of at
least $100,000,000), neither SYBR nor the Purchaser shall have the right to
sell, assign, convey or otherwise transfer any of the BB Shares or Option Shares
owned by it without compliance with the Co-Sale Provisions set forth in Exhibit
D attached hereto, except that, without such compliance, either party may
transfer its shares in the Company to a wholly-owned subsidiary, or to an
Affiliate which is wholly-owned, directly or indirectly, by the direct or
indirect parent, of such party.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser that:
SECTION 3.1. Organization, Standing, etc.. The Company (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. The Company has all requisite
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Transaction Documents, and to issue the BB
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.
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 BB 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.
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SECTION 3.4. Non-Contravention. The Company is not in violation or default
of any provisions of its Articles of Incorporation or By-Laws. The Company is
not 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, which violation or default could result in a Material Adverse Effect on
the Company. 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 BB 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.
SECTION 3.5. Capitalization. (a) The authorized Capital Stock of the
Company consists of 50,000,000 shares of Common Stock, consisting of 49,100,000
shares of Class A Common Stock, of which 9,000,000 shares are issued,
outstanding and owned by SYBR, and 900,000 shares of Class B Common Stock, none
of which are outstanding. Other than the SOP, the Note, the Option and 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) All of 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
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. The Company does not own or hold, directly or
indirectly, any Capital Stock or equity security of, or any equity interest in,
any corporation, partnership or other business entity (except PHS Group after
the transfer referred to in Section 5.1(d)).
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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, 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. The Company is not 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 BB 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. Intellectual Property. The Company 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 3.9 attached hereto. The
Company has not 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 3.10. Financial Statements. The financial statements of the Company
included in the SEC Reports filed by Synergy since January 1, 1997 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 as at and for the periods set forth therein. Except as set forth on
Schedule 3.10 hereto, in any filings by Synergy 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.
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 Synergy 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.
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SECTION 3.13. Tax Matters. Except as set forth on Schedule 3.13 hereto, in
any filing by Synergy with 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 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
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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 BB 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 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 BB 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.
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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 BB 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 BB 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 BB Shares and there can be no assurance that the Purchaser will
be able to sell or dispose of the BB Shares.
(b) The Purchaser represents and warrants to the Company that:
(i) the BB 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 BB 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 BB 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;
(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.
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(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 BB 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 BB Shares; and
(ii) In evaluating the suitability of an investment in the BB 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 BB 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 and the Option Agreement as the Purchaser shall reasonably request;
(ii) stock certificates representing the shares of Class B Common Stock
being purchased on the Closing Date as set forth in Section 2.2; 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, taken as a whole, since the date of this Agreement;
(c) the closing shall have occurred under the Synergy Agreement;
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(d) New Era shall have contributed all of the issued and outstanding
shares of PHS Group to the Company in exchange for an 8% Convertible
Subordinated Note made by the Company in favor of New Era (the "Note") in a
principal amount equal to the net tangible book value of PHS Group, determined
after giving effect to the exchange of the PHS Group Indebtedness, as provided
in clause (e) below; provided, that (i) such net tangible book value shall be
equal to the lesser of (x) $750,000, or (y) the amount of net tangible book
value set forth in the audited balance sheet of PHS Group for the fiscal year
ended December 31, 1999, and (ii) promptly upon completion of the foregoing
audit, if the amount of net tangible book value shall be less than $750,000, the
principal amount of the Note shall be appropriately adjusted. The form of the
Note is attached hereto as Exhibit E;
(e) the aggregate principal amount of the PHS Group Indebtedness shall
have been exchanged for newly-issued shares of common stock of Synergy, at an
exchange ratio of $1.00 per share, and all security interests on the assets of
PHS Group shall have been duly terminated;
(f) the Company shall have entered into Non-Competition and Proprietary
Information Agreements with Xxxxxx X. Xxxxxxxx, Xx Xxxxxx and Xxxx Xxxxx,
respectively, substantially in the form set forth in Exhibit F hereto.
(g) Synergy and the Purchaser shall have entered into a Non-Competition
Agreement with the Company, substantially in the form set forth in Exhibit G
hereto.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING BY THE COMPANY
SECTION 6.1. The obligation of the Company to issue and sell BB 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 Purchase Price, as provided in Section 2.4(b);
(ii) evidence of the credits for Advertising Time and In-Kind Services,
as provided in Section 2.3 hereof, satisfactory in form and substance to the
Company;
(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 Synergy Agreement.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Legends; Opinions Requirement. (a) 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 BB 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.
(b) The certificates evidencing the Class B Common Stock and each
certificate issued in transfer thereof, will bear the following legend:
"THE CLASS B COMMON STOCK EVIDENCED HEREBY IS SUBJECT TO MANDATORY
CONVERSION INTO CLASS A COMMON STOCK, PAR VALUE $.001 PER SHARE,
OF XXXXXXXXXX.XXX INC. (THE "COMPANY") UPON THE TERMS AND SUBJECT
TO THE CONDITIONS SET FORTH IN THAT CERTAIN OPTION AGREEMENT DATED
AS OF NOVEMBER 23, 1999 BETWEEN THE COMPANY AND XXXXXXXX BROADCAST
GROUP, INC., A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
OFFICES OF THE COMPANY."
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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 BB Shares. All transfers of BB 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 BB Shares
as the actual holder of the BB Shares so registered until the Company or its
agent is required to record a transfer of the BB 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(a) 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.
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.
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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 answerback, 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: XxxxxxXxxx.xxx 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
Xxxxxxx X. Xxxxx, Esq.
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail:xxxxxxx@xxxxxxx.xxx
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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 answerback, (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
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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:
(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 BB 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 Synergy 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 Synergy Agreement, which amount shall be paid by delivery to the
Advisor or its designees of an option to purchase 800,000 shares of Class A
Common Stock pursuant to the SOP, such option to be granted from the
SYBR Options.
SECTION 7.8. Tax Reporting. For federal income tax reporting purposes, the
parties shall consistently treat the Option as an option without a "readily
ascertainable fair market value", that is issued in exchange for services under
the rule set forth in section 1.83-7 of the U.S. Treasury Regulations.
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SECTION 7.9. Transaction Expenses. Neither Synergy nor the Purchaser, nor
any of their respective Affiliates, will charge or xxxx the Company for, or
collect or seek to collect from the Company, for any services or goods rendered
or sold to the Company, except (a) as expressly provided for in this Agreement,
(b) either party may xxxx, collect or seek to collect for out-of-pocket expenses
actually paid by such party on behalf of the Company, such as equipment rental
fees, modeling fees, etc., and (c) with the prior written consent of the other
party. The provisions of this Section 7.9 shall terminate upon the occurrence of
an IPO or a Qualified Sale.
SECTION 7.10. 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 7.11. 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.
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SECTION 7.12. 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.
SECTION 7.13. 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 7.14. 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 7.15. 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 7.16. 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 7.17. 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.
COMPANY:
XXXXXXXXXX.XXX INC.
By:
----------------------------
Name:
Title:
PURCHASER:
XXXXXXXX BROADCAST GROUP, INC.
By:
----------------------------
Name:
Title:
XXXX.XXX INC. (for purposes of
Sections 2.6 and 2.8 only)
By:
-----------------------------
Name:
Title:
-E 66-
Schedule 2.3
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 -
$1,764,707.
2. Commercial Production - commercial production (average of 8 separate
commercials each year) at the facilities or studios of the Purchaser or
any of its direct or indirect subsidiaries, valued at $200,000.
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 $10,000.
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 Assistance - assistance with
financial planning and reporting, capital structure, credit facilities,
systems development and integration, and investment banking activities
- $1,000,000.
6. Periodic Technology and Marketing Consulting - $250,000.
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 (the total over the BB
Term is $18,623,535), and (c) shall increase over the BB Term consistent with
the market value of such services on the actual date such services are supplied.
-E 67-
Schedule 2.7
Key Employees
Xxxx Xxxxxxx
Xx Xxxxxx
Xxxx Xxxxx
Xxxxx Xxxxxx
Xxxxxxxx Xxxxxxxx
-E 68-
Schedule 3.5
Capitalization
Outstanding Options, Warrants, etc.
None.
PHS Group Indebtedness
----------------------
Name Amount
---- -------
Xxxxxx X'Xxxxxx $100,000
Xxxxx Xxxxxx 25,000
Xxxxxxx Xxxxxx 25,000
Xxxxxxxx Xxxxxx 200,000
Xxxxxxxx X. Xxxxxxxxxx 250,000
---------
$600,000
All of the foregoing Indebtedness has been exchanged for common stock of
Synergy Brands Inc. prior to the Closing.
-E 69-
Schedule 3.7
Litigation
None.
-E 70-
Schedule 3.9
Intellectual Property
The tradename "BeautyBuys", for which a U.S. trademark application has been
filed by SYBR.
The Company owns the following domain names:
Registered to Synergy Brands, Inc.:
-----------------------------------
XXXXXXXXXX.XXX XXXXXXXX.XXX
XXXXXXXXX.XXX XXXXXXXXXX.XXX
XXXXXXXXXXX.XXX XXXXXXXXX.XXX
XXXXXXXXXXXX.XXX XXXXXXXXXXX.XXX
XXXXXXXXXXXXX.XXX XXXXXXXXXXXXX.XXX
XXXXXXXXXXX.XXX XXXXXXXXXXX.XXX
XXXXXXXXXXXXXX.XXX XXXXXXXXXXXX.XXX
XXXXXXXXXXXXXX.XXX XXXXXXXXXXXX.XXX
Registered to XxxxxxXxxx.xxx, Inc.:
-----------------------------------
XXXXXXXXXXX0X.XXX XXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXX.XXX XXXXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXX.XXX XXXXXXXXXXXXXXXXXXX.XXX
-E 71-
Schedule 3.10
Financial Statements
None.
-E 72-
Schedule 3.13
Tax Matters
None.
-E 73-
EXHIBIT A
(BEAUTYBUYS)
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 or SYBR 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 shares of Class A Common Stock owned
by Purchaser or SYBR; and (ii) any shares of Class A Common Stock issuable with
respect to shares of Class A Common Stock 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 at any at any time after 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), it shall each such time give prompt prior
written notice to the Holder. 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 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.
-E 74-
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.
-E 75-
Exhibit B
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is made as of the ____ day of
November, 1999, by and between XxxxxxXxxx.Xxx Inc., a New Jersey corporation
(the "Company"), and Xxxxxxxx Broadcast Group, Inc., a Maryland corporation (the
"Optionee").
Explanatory Statement
Pursuant to and subject to the terms and conditions of a Stock Purchase
Agreement dated as of November ___, 1999, by and between the parties hereto (as
amended and supplemented, the "Stock Purchase Agreement"), the parties hereto
agreed, among other things, to execute, seal, and deliver (and are hereby
executing, sealing, and delivering) this Agreement in connection with the
closing of the transactions contemplated by the Stock Purchase Agreement.
NOW, THEREFORE, IN CONSIDERATION OF the premises and the mutual covenants,
promises, agreements, representations and warranties set forth herein, the
parties hereto covenant, promise, agree, represent and warrant as follows:
1. Definitions. As used in this Agreement:
1.1. "Common Stock" includes (a) all classes of the Company's common
stock, $.001 par value per share, as authorized on the date hereof, (b) any
other capital stock of any class or classes (however designated) of the Company,
authorized on or after such date, the holders of which shall have the right,
without limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and (c) any other securities
into which or for which any of the securities described in (a) or (b) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
1.2. "Option Closing Date" shall mean the day upon which the Closing
occurs.
1.3. "Unearned Advertising Time" means all Advertising Time which is
not Earned Advertising Time.
Capitalized terms not defined in this Agreement shall have the respective
meanings ascribed to them in the Stock Purchase Agreement.
2. Options.
-E 76-
2.1. Grant. The Company hereby grants to Optionee, subject to the terms
and conditions hereinafter set forth, the option (individually, the "Option" and
collectively, the "Options") to purchase Eight Million One Hundred Thousand
(8,100,000) shares (such shares, the "Option Shares") of the Company's Class A
Common Stock, $.001 par value per share (the "Class A Common Stock").
2.2. Consideration for Options. In consideration of the grant of the
Options, the Optionee and the Company agree as follows:
2.2.1. Optionee agrees to provide the Company Fifty Million
Dollars ($50,000,000) of radio and/or television advertising (the "Advertising")
and promotional support ("Promos") from the Optionee's unutilized inventory of
Advertising and Promos, valued as if each spot were being sold at the
then-current street rates (which is net of commissions) at the time of the
airing. The Advertising and Promos shall be supplied as available over the
Optionee's various markets in a commercially reasonable manner. The airing of
all Advertising and Promos shall be in accordance with the Optionee's standard
terms and conditions applicable to the airing of such Advertising and Promos on
those radio and/or television stations from time to time owned, operated, or
programmed by the Optionee, or any of its Subsidiaries. The Advertising and
Promos are sometimes referred to herein collectively as "Advertising Time". Both
the Company and the Optionee shall work together in a commercially reasonable
manner to effect the airing of the Advertising Time for the economic benefit of
each other. Such Advertising Time may be used by the Company, from the date
hereof until December 31, 0000 (xxx "XX Xxxx"); subject to the following:
2.2.1.1.The Company may not utilize more than Ten Million Dollars
($10,000,000.00) worth of Advertising Time in any one calendar year (except that
the first year shall be a fiscal year commencing on the Closing Date and
terminating on December 31, 2000), except that the Company may carry-over unused
Advertising Time from all previous calendar years and use the same until
December 31, 2005; provided, that (x) the total Advertising Time which may be
utilized in any calendar year during the BB Term may not exceed Fifteen Million
Dollars ($15,000,000.00) (the "Annual Limitation"), (y) any amount in excess of
the Annual Limitation may be further carried over to subsequent years during the
BB Term, and (z) the total Advertising Time which may be utilized in the
calendar year ending December 31, 2005 may not exceed Ten Million dollars
($10,000,000.00).
2.2.1.2.The Optionee may terminate its obligation to provide
Unearned Advertising Time to the Company in any calendar years after calendar
year 2001, by providing at least ninety (90) days prior written notice to the
Company (the "Notice Period"); provided, any Earned Advertising Time may not be
terminated.
-E 77-
2.2.1.3.An Option can only be exercised (an "Exercise") in
integral multiples of nine (9) shares of Class A Common Stock, and for each
multiple of nine (9) shares of Class A Common Stock purchased upon the Closing
of an Exercise of the Option), one (1) share of Class B Common Stock shall be
automatically converted into one (1) share of Class A Common Stock.
0.0.0.0.Xx the event the Optionee terminates its obligation to
provide Unearned Advertising Time to the Company under Section 2.2.1.2, the
following shall occur on the last day of the Notice Period: (1) all Option
Shares that are not vested as of that time pursuant to Section 2.6 below shall
no longer be eligible for vesting and (2) the Optionee shall return the number
of Class B Common Stock shares equal to a number of shares of Class B Common
Stock equal to the product of (1) the Applicable Percentage multiplied by (2)
900,000. As used herein, the "Applicable Percentage" is the percentage
determined by dividing (1) the amount of the Optionee's Unearned Advertising
Time obligation being terminated by the Optionee by (2) $50,000,000.
2.2.1.5.[Intentionally Left Blank]
2.2.1.6.Notwithstanding the Optionee's right to terminate its
obligation to provide Unearned Advertising Time to the Company under Section
2.2.1.2 above, the Optionee shall only be entitled to terminate such portion of
its obligation to provide Unearned Advertising Time to the Company to the extent
of the Class B Common Stock shares returned to the Company as computed in
Section 2.2.1.4 above.
0.0.0.0.Xx the event the Company either (x) completes an IPO and
the Common Stock sold in the IPO constitutes less than one-third (1/3rd) of the
issued and outstanding Capital Stock of the Company, or (y) completes a
Qualified Sale (such Qualified Sale for minimum gross proceeds of at least
$100,000,000), then the Optionee shall be entitled to apply, upon written notice
to the Company delivered within thirty (30) days after completion of the IPO or
the date of a Qualified Sale, as a credit to its obligation to provide Unearned
Advertising Time to the Company, an amount equal to the lesser of:
A. Fifty percent (50%) of the gross proceeds raised in the IPO; or
B. Thirty Million Dollars ($30,000,000.00); or
C. The amount of Unearned Advertising Time as of the date of such
notice.
-E 78-
2.2.1.8.The Company shall have the right to use any Earned
Advertising Time until December 31, 2005, subject to the $10,000,000 limitation
set forth in Section 2.2.1.1 above notwithstanding any termination pursuant to
Section 2.2.1.2 above or application of a credit pursuant to Section 2.2.1.7
above.
2.2.2. The Optionee hereby agrees to perform for the Company, at the
Company's request, certain services during the BB Term (the "In-Kind Services"),
as more fully set forth on Schedule 2.2.2 hereto, up to an aggregate amount of
$18,623,535 (the "In-Kind Value"). Notwithstanding the amount of In-Kind
Services stated in the preceding sentence and the value set forth on Schedule
2.2.2, the Company may utilize the In-Kind Services in an amount:
2.2.2.1.less than the In-Kind Value, without any recourse to, or
additional consideration from, the Optionee or any of its Subsidiaries;
2.2.2.2.greater than the In-Kind Value without any cost to or
additional consideration from the Company or any of its Subsidiaries but only to
the extent permitted by an additional written agreement by and between the
parties.
The Optionee shall have the responsibility to notify the Company in writing
when the In-Kind Value 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 the In-Kind Value 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.
Upon any termination pursuant to Section 2.2.1.2 or upon an IPO or a Qualified
Sale, as the case may be, the Optionee shall have the further right, upon
written notice to the Company, to terminate the remaining portion of the In-Kind
Services not theretofore used by the Company.
2.3. [intentionally left blank]
-E 79-
2.4. Partial Exercises Permitted. Subject to Section 2.2.1.3, the
Options may be exercised by the Optionee for all, or less than all (and on any
number of multiple occasions as determined by the Optionee), of the Option
Shares subject to the Options.
2.5. Method of Exercise. In order to exercise an Option, the Optionee
must deliver to the Company written notice ("Exercise Notice") of the Optionee's
intention to so exercise by delivering to the Company a notice substantially in
the form attached hereto as Exhibit 2.5, with all blanks filled in as
appropriate and duly executed by the Optionee. The date upon which any Exercise
Notice shall be delivered shall be referred to as the "Exercise Date". The
Optionee may withdraw any of its Exercise Notices prior to the applicable Option
Closing Date by written notice to that effect to the Company. Upon withdrawal of
any of its Exercise Notices, the Optionee shall reimburse the Company for all
reasonable out-of-pocket expenses incurred in connection therewith, including,
without limitation, reasonable attorney's fees incurred by the Company in
connection therewith. Nothing contained in this Section 2.5 shall or is meant to
prohibit the Optionee, after any such withdrawal, from subsequently exercising
any Options during the period in which Options are permitted to be exercised as
set forth in this Agreement.
2.6. Vesting and Expiration Date. The acquisition of Option Shares
shall be subject to the following vesting schedule: (i) forty percent (40%) of
all of the Option Shares initially subject to the Option shall vest and become
exercisable at the end of two years after the date of this Agreement and (ii) an
additional twenty percent (20%) of all the Option Shares shall vest and become
exercisable at the end of each of the next three (3) years thereafter; provided,
however, that the Optionee's right to acquire the Option Shares shall in any
event fully vest and become exercisable on the date of an IPO or on the date of
a Qualified Sale without regard to the preceding clauses (i) and (ii). The
Options shall expire ten (10) years from the date of this Agreement; provided,
however, that the Closing (as defined in Section 6 hereof) on an Option may take
place after the expiration of such ten (10)-year period as long as the Optionee
has delivered the Exercise Notice to the Company in accordance with Section 2.5
prior to the expiration of such ten (10)-year period. If Optionee exercises its
right to terminate its obligation to provide Unearned Advertising Services under
Section 2.2.1.2. above, the Option Shares scheduled to vest as of the end of the
year during which the Notice Period expires shall vest and become exercisable
pursuant to the vesting schedule set forth in this Section.
2.7. Option Exercise Price. Subject to the other provisions of this
Agreement, the parties acknowledge and agree that the purchase price the
Optionee shall pay the Company for the acquisition of an Option Share (the
"Option Exercise Price") shall be an amount equal to Thirty-Four Cents ($.34)
per each Option Share so acquired by the Optionee pursuant to its exercise of an
Option.
-E 80-
2.8. Adjustments Relating to Section 4. Any appropriate numbers or
calculations in this Section 2, including, without limitation, the multiple set
forth in Section 2.2.1.3, shall be adjusted as appropriate to effectuate the
intent of the parties evidenced by Section 4 below notwithstanding the fact that
adjustments to such numbers or calculations may not be expressly provided for in
this Section 2 or in Section 4 below.
3. Adjustment for Reorganization, Consolidation or Merger. In case at any
time or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other Person, or (c) transfer all or
substantially all of its properties or assets to any other Person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, the Optionee, on the exercise of an Option at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Option Shares issuable (without regard to the second sentence in Section 2.6) on
such exercise prior to such consummation or such effective date, the stock and
other securities and property (including cash) to which the Optionee would have
been entitled upon such consummation or in connection with such dissolution, as
the case may be, if the Optionee had so exercised and closed on the Option,
immediately prior thereto, all subject to further adjustment thereafter as
provided in Section 4.
4. Adjustments for Stock Dividends and Stock Splits. In the event that the
Company after the date of this Agreement (i) issues additional shares of the
Common Stock as a dividend or other distribution on outstanding Common Stock,
(ii) subdivides its outstanding shares of Common Stock, or (iii) combines its
outstanding shares of the Common Stock into a smaller number of shares of the
Common Stock, then, in each such event, the Option Exercise Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
then prevailing Option Exercise Price by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such event and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event, and the product so obtained
shall thereafter be the Option Exercise Price then in effect. The Option
Exercise Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described in this Section 4. The
number of Option Shares shall then be adjusted so that the Optionee shall then
have the Options to acquire that number of shares of Class A Common Stock
determined by multiplying the number of Option Shares which the Optionee would
otherwise (but for the provisions of this Section 4) have the Options, by a
fraction of which (i) the numerator is the Option Exercise Price which would
otherwise (but for the provisions of this Section 4) be in effect, and (ii) the
denominator is the Option Exercise Price in effect on the applicable Option
Closing Date. Upon each adjustment of the Option Exercise Price and the number
of Option Shares pursuant to the provisions of this Section 4, the Company shall
promptly provide the Optionee with a written notice which sets forth a detailed
explanation of such adjustments and the calculations applicable to such
adjustments.
-E 81-
5. Other Adjustments to Option Exercise Price.
5.1. Computation of Adjusted Option Exercise Price. Except as
hereinafter provided, in case the Company after the date of this Agreement
issues or sells any shares of Common Stock (other than the issuances or sales
referred to in Sections 4 and 5.4 hereof), for a consideration per share less
than the Option Exercise Price in effect immediately prior to the issuance or
sale of such shares, or without consideration, then forthwith upon such issuance
or sale, the Option Exercise Price shall (until another such issuance or sale)
be reduced to the price equal to the quotient derived by dividing (a) an amount
equal to the sum of (x) the Option Exercise Price in effect immediately prior to
such issuance or sale multiplied by the total number of shares of Common Stock
outstanding immediately prior to such issuance or sale, plus (y) the aggregate
of the amount of all consideration, if any, received by the Company upon such
issuance or sale, by (b) the total number of shares of Common Stock outstanding
immediately after such issuance or sale. For the purposes of any computation to
be made in accordance with this Section 5.1, the following provisions shall be
applicable:
5.1.1. In case of the issuance or sale of shares of Common Stock
for a consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if either of such
securities shall be sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing similar
services, or any expenses incurred in connection therewith.
5.1.2. In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash shall be deemed to be the
value of such consideration as agreed to by the Company and the Optionee.
Lacking such agreement, such valuation shall be determined pursuant to binding
arbitration pursuant to the Commercial Arbitration Rules of the American
Arbitration Association, and such determination shall be final and binding on
the parties.
5.1.3. The reclassification of securities of the Company other
than shares of Common Stock into securities including shares of Common Stock
shall be deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in Section 5.1.2.
-E 82-
5.1.4. The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
options, rights, warrants and upon the conversion or exchange of convertible or
exchangeable securities.
5.2. Options, Rights, Warrants and Convertible and Exchangeable
Securities. In case the Company at any time after the date of this Agreement,
issues options, rights or warrants to subscribe for shares of Common Stock, or
issues any securities convertible into or exchangeable for shares of Common
Stock, for a consideration per share less than the Option Exercise Price in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, or without consideration, the
Option Exercise Price in effect immediately prior to the issuance of such
options, rights or warrants, or such convertible or exchangeable securities, as
the case may be, shall be reduced to a price determined by making a computation
in accordance with the provisions of Section 5.1 hereof, provided that:
5.2.1. The aggregate maximum number of shares of Common Stock, as
the case may be, issuable under such options, rights or warrants shall be deemed
to be issued and outstanding at the time such options, rights or warrants were
issued, and for a consideration equal to the minimum purchase price per share
provided for in such options, rights or warrants at the time of issuance, plus
the consideration (determined in the same manner as consideration received on
the issue or sale of shares in accordance with the terms of this Agreement), if
any, received by the Company for such options, rights or warrants.
5.2.2. The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on the issue or sale of
shares of Common Stock in accordance with the terms of this Agreement) received
by the Company for such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof.
5.2.3. If any change shall occur in the price per share provided
for in any of the options, rights or warrants referred to in Section 5.2.1, or
in the price per share at which the securities referred to in Section 5.2.2 are
convertible or exchangeable, such options, rights or warrants or conversion or
exchange rights, as the case may be, shall be deemed to have expired or
terminated on the date when such price change became effective in respect of
shares not theretofore issued pursuant to the exercise or conversion or exchange
thereof, and the Company shall be deemed to have issued upon such date new
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options, rights or warrants or convertible or exchangeable securities at the new
price in respect of the number of shares issuable upon the exercise of such
options, rights or warrants or the conversion or exchange of such convertible or
exchangeable securities.
5.3. Adjustment Notice. Upon each adjustment of the Option Exercise
Price pursuant to the provisions of Section 5, the Company shall promptly
provide the Optionee with a written notice which sets forth a detailed
explanation of such adjustment and the calculations applicable to such
adjustment.
5.4. No Adjustment of Option Exercise Price. No adjustment of the
Option Exercise Price shall be made upon the authorization or issuance of shares
subsequent to the date hereof pursuant to stock option and other duly authorized
incentive plans.
5.5. No Increase in Number of Shares. The number of Option Shares shall
not be adjusted upon any adjustment of the Option Exercise Price made pursuant
to this Section 5.
6. Closing. The closing of the acquisition of any of the Option Shares
after delivery of an Exercise Notice (a "Closing") shall be on a business day no
later than the later of ten (10) days after (i) the date an Exercise Notice is
received by the Company or (ii) the date any applicable waiting period under the
HSR Act has expired or terminated.
7. Tax Reporting. For federal income tax reporting purposes, the
parties shall consistently treat the Option as an option without "readily
ascertainable fair market value" that is issued in exchange for services under
the rules set forth in section 1.83-7 of the Treasury Regulations.
8. Closing Deliveries. All actions at a Closing shall be deemed to
occur simultaneously, and no document or payment shall be deemed to be delivered
or made until all documentation or payments are delivered or made to the
reasonable satisfaction of the Optionee, the Company, and their respective
counsel.
8.1. Closing Deliveries by the Company. At a Closing, the Company
shall deliver to the Optionee such customary documentation which shall in form
and substance be reasonably satisfactory to the Optionee and its counsel,
including, without limitation, the following:
8.1.1. a receipt for the Option Exercise Price;
8.1.2. a certificate or certificates for the Option Shares so
purchased;
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8.1.3. a certificate signed on behalf of the Company by an
authorized officer of the Company certifying that all of the representations and
warranties of the Company contained in this Agreement were true on the date of
this Agreement and are true as of the Option Closing Date and that the Company
is in (and since the date of this Agreement has been in) compliance with all of
its covenants and agreements in this Agreement;
8.1.4. a certificate or certificates for the shares of Class A
Common Stock converted from Class B Common Stock pursuant to Section 2.2.1.3;
and
8.1.5. such other documents that the Optionee shall reasonably
request.
8.2. Closing Deliveries by the Optionee. At a Closing, the Optionee
shall deliver to the Company such customary documentation as shall in form and
substance be reasonably satisfactory to the Company and its counsel, including,
without limitation, the following:
8.2.1. the Option Exercise Price which shall be paid via a
certified check, bank cashiers check or by wire transfer to an account
designated by the Company; and 8.2.2. a certificate or certificates for the
shares of Class B Common Stock converted to Class A Common Stock pursuant to
Section 2.2.1.3; and
8.2.3. such other documents as the Company shall reasonably
request.
9. Representations and Warranties
9.1. Representations and Warranties of the Company. As an inducement to
the Optionee to enter into this Agreement, the Company represents and warrants
to the Optionee, as of the date of this Agreement and as of each Option Closing
Date, the following:
9.1.1. Authority. The Company has the full right, power, and
authority to execute, seal and deliver this Agreement and to perform its
obligations contemplated thereby; and this Agreement is a valid and legally
binding obligation of the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws affecting the rights of creditors generally and the exercise of
judicial discretion in accordance with general principles of equity. The
execution, sealing and delivery of this Agreement and the consummation of the
transactions contemplated herein has been duly authorized by all necessary
corporate action of the Company.
9.1.2. No Conflict. Neither the execution or delivery of this
Agreement, nor the consummation of the transactions contemplated herein, will
conflict with or constitute a default under the Charter or By-Laws of the
Company or under any contract, understanding, instrument, or other agreement
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(whether written or oral), or of any judgment, decree, order or resolution to
which the Company is a party or by which it is otherwise bound.
9.1.3. Valid Issuance. Upon their issuance to the Optionee, the
Option Shares will be validly issued, fully paid and non-assessable, free from
and clear of all restrictions, liens, security interests and encumbrances.
9.2. Representations and Warranties of the Optionee. As an inducement
to the Company to enter into this Agreement, the Optionee represents and
warrants to the Company, as of the date of this Agreement and as of each Option
Closing Date, the following:
9.2.1. No Conflict. Neither the execution or delivery of this
Agreement, nor the consummation of the transactions contemplated herein, will
conflict with or constitute a default under the Charter or By-Laws of the
Optionee or under any contract, understanding, instrument, or other agreement
(whether written or oral), or of any judgment, decree, order, law, rule or
resolution to which the Optionee is a party or by which it is otherwise bound.
10. Covenants.
10.1. Covenants of the Company. During the term of this Agreement and
until title to and beneficial ownership in all of the Option Shares transfers to
the Optionee, the Company covenants and agrees with the Optionee as follows:
10.1.1. the Company shall undertake any and all reasonable actions
and comply with all reasonable requests of the Optionee delivered to the Company
in writing which in any way pertain to the delivery of the Option Shares and the
transfer of title to and beneficial ownership therein to the Optionee upon the
exercise of an Option therefor.
10.1.2. In case:
10.1.2.1. the Company shall take a record of the holders of its
Common Stock (or other securities at the time receivable after the exercise of
an Option) for the purpose of entitling them to receive any dividend (other than
a cash dividend payable out of earned surplus) or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities, or to receive any other right; or
10.1.2.2. of any capital reorganization of the Company (other than
a stock split or reverse stock split), any reclassification of the capital stock
of the Company, any consolidation or merger of the Company with or into another
entity (other than a merger for purposes of change of domicile) or any
conveyance of all or substantially all of the assets of the Company to another
Person; or
10.1.2.3. of any voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
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then, and in each such case, the Company shall immediately give the Optionee a
notice specifying, as the case may be, (i) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution or right, or (ii) the date
on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any, is to be fixed, as to which the holders of record of Common Stock
(or such other securities at the time receivable after an Exercise) shall be
entitled to exchange their shares of Common Stock (or such other securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be sent at least twenty (20) days prior to the
date therein specified.
10.1.3. The Company shall not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Agreement, but shall at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Optionee. Without limiting the
generality of the foregoing, the Company (a) shall not increase the par value of
any shares of stock receivable on the exercise of an Option above the amount
payable therefor on such exercise, and (b) shall take an such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Class A Common Stock on the exercise of
an Option from time to time.
10.1.4. The Company shall at all times reserve and keep available,
solely for issuance and delivery on the Exercise of the Options, all shares of
Class A Common Stock from time to time issuable on the Exercise of the Options.
10.1.5. Not later than seven (7) Business Days after the receipt
of an Exercise Notice, the Company shall prepare and file all documents, if any,
with the Federal Trade Commission and the United States Department of Justice as
required (of an acquired person) to comply with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and shall promptly furnish
all materials thereafter requested by any of the regulatory agencies having
jurisdiction over such filings. The Company shall pay one-half (1/2) of any
filing fee required to be paid under the HSR Act.
10.1.6. The Company shall inform the Optionee promptly of anything
which comes to Company's attention that would make the representations,
warranties, or disclosures made herein untrue or misleading or to omit to state
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a material fact which would be misleading if omitted, or which constitutes a
breach of any covenant or agreement contained herein.
10.1.7. The Company shall undertake any and all actions which the
are both necessary and appropriate to preserve the Optionee's rights to acquire
the Option Shares pursuant to the terms of this Agreement.
10.2. Covenants of the Optionee. During the term of this Agreement and
until title to and beneficial ownership in all of the Option Shares transfers to
the Optionee, the Optionee covenants and agrees with the Company as follows:
10.2.1. Not later than seven (7) Business Days after the date the
Company receives an Exercise Notice, the Optionee shall prepare and file all
documents, if any, with the Federal Trade Commission and the United States
Department of Justice as required (of an acquiring person) to comply with the
HSR Act, and shall promptly furnish all materials thereafter requested by any of
the regulatory agencies having jurisdiction over such filings. The Optionee
shall pay one-half of any filing fee required to be paid under the HSR Act.
11. Transferability. The Optionee's rights under this Agreement may be not
assigned, pledged, hypothecated, sold, or otherwise transferred or encumbered
without approval of the Company, except that the Optionee may assign and sell
its rights under this Agreement to Xxxxxxxx Ventures, Inc.; provided that
Xxxxxxxx Ventures, Inc. is then a directly or indirectly wholly-owned subsidiary
of the Optionee, and provided further that Xxxxxxxx Ventures, Inc. delivers to
the Company a written assumption signed by Xxxxxxxx Ventures, Inc. pursuant to
which it assumes the obligations and liabilities of the Optionee under this
Agreement. However, no such assignment or assumption shall relieve the Optionee
of any of its obligations or liabilities under this Agreement.
12. Notices. All notices, demands and other communications which may or are
required to be given hereunder or with respect hereto shall be in writing, shall
be delivered personally or sent by nationally recognized overnight delivery
service, charges prepaid, or by registered or certified mail, return-receipt
requested, or by facsimile transmission, and shall be deemed to have been given
or made when personally delivered, the next business day after delivery to such
overnight delivery service, when dispatched by facsimile transmission (provided
that the sender's facsimile machine produces confirmation of receipt), or five
(5) days after deposited in the mail, first-class postage prepaid, addressed as
follows:
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If to the Company:
XxxxxxXxxx.Xxx Inc.
00 Xxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
ATTN: Chief Executive Officer
Facsimile No.: (000) 000-0000
With a copy to:
Meltzer, Lippe, Xxxxxxxxx & Xxxxxxxxx, P.C.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
ATTN: Xxxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Optionee:
Xxxxxxxx Broadcast Group, Inc.
00000 Xxxxxx Xxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
ATTN: President
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxxx Broadcast Group, Inc.
00000 Xxxxxx Xxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
ATTN: General Counsel
Facsimile No.: (000) 000-0000
and with an additional copy to:
Xxxxxx & Xxxxxxxx, P.A.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000-0000
ATTN: Xxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address or facsimile number as the parties hereto may from time
to time designate for themselves.
13. Entire Agreement. This Agreement and the Stock Purchase Agreement shall
supersede all prior agreements between the parties relating to the subject
matter hereof and thereof, and there are no other agreements or understandings
between them concerning the subject matter hereof or thereof. For sake of
convenience in drafting the Stock Purchase Agreement, the Stock Purchase
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Agreement contains provisions at Section 2.3 thereof that are similar to the
provisions of Section 2.2 of this Agreement. However, it is the intention and
agreement of the parties that in the event of a conflict between this Agreement
and the Stock Purchase Agreement, this Agreement shall control.
14. Binding Effect. Each of the covenants, promises, agreements,
representations and warranties in this Agreement by or on behalf of any of the
parties hereto shall bind and inure to the benefit of their respective heirs,
guardians, personal and legal representatives, successors and permitted assigns.
15. New York Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
16. Specific Performance. In the event of a breach of this Agreement, the
other party may maintain an action for specific performance against the party
alleged to have breached any of the terms, conditions, representations,
warranties, provisions, covenants or agreements herein contained, and it is
hereby further agreed that no objection to the form of action in any proceeding
for specific performance of this Agreement shall be raised by any party hereto
so that such specific performance of this Agreement may not be obtained by the
aggrieved party. Anything contained herein to the contrary notwithstanding, this
Section shall not be construed to limit in any manner whatsoever any other
rights and remedies that an aggrieved party may have by virtue of any breach of
this Agreement, the parties having agreed that all such rights and remedies are
cumulative and supplementary.
17. Attorneys' Fees. In the event of any litigation between the parties
arising under, out of or in connection with this Agreement, the non-prevailing
party shall pay all of the prevailing party's costs, expenses and fees
(including, without limitation, attorneys' fees) incurred as a result of or in
connection with such litigation.
18. Headings. The descriptive headings of the several sections and
subsections of this Agreement are inserted for convenience only, and do not
constitute a substantive part of this Agreement, and are not intended to
describe, interpret, define, or limit the scope, extent or intent of this
Agreement as a whole, or any provision hereof. All schedules and exhibits
referred to in this Agreement are hereby deemed a substantive part of this
Agreement.
19. Word Usage. Unless the context otherwise requires, whenever used in
this Agreement, the singular shall include the plural, the plural shall include
the singular, and the masculine gender shall include the neuter and feminine
gender, and vice versa. Whenever used in this Agreement, words such as "herein,"
"hereinafter," "hereof," "hereto," and "hereunder" refer to this Agreement as a
whole, unless the context otherwise requires.
20. Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall together constitute one
document.
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21. Construction. Each and every term and provision of this Agreement has
been mutually agreed to and negotiated by the parties hereto, and shall be
construed simply according to its fair meaning and not strictly for or against
any party.
22. Severability. Each and every term and provision of this Agreement is
intended to be severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
legality or validity of the remainder of this Agreement.
23. Time. Time is of the essence with respect to all aspects of this
Agreement.
24. Further Assurances. From time to time prior to, at, and after any
Option Closing Date, each party hereto will execute all such instruments and
take all such actions as the other party being advised by counsel shall
reasonably request in connection with carrying out and effectuating the intent
and purpose hereof, and all transactions and things contemplated by this
Agreement, including, without limitation, the execution and delivery of any and
all confirmatory and other instruments, in addition to those to be delivered on
any Option Closing Date, and any and all actions which may reasonably be
necessary to complete the transactions contemplated hereby.
25. Legends and Other Securities Matters.
25.1. Legends; Opinions Requirement. The certificates evidencing the
Option Shares acquired by the Optionee 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 Optionee desires to sell or otherwise dispose of all or any part
of the Option Shares acquired by it under an exemption from registration under
the Securities Act, and if requested by the Company, the Optionee shall deliver
to the Company an opinion of counsel, which may be counsel for the Company, that
such exemption is available.
25.2. 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 Option Shares. All transfers of Option Shares
acquired by the Optionee shall be recorded on the register maintained by the
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Company or its agent, and the Company shall be entitled to regard the registered
holder of such Option Shares as the actual holder of such Option Shares so
registered until the Company or its agent is required to record a transfer of
such Option Shares on its register. Subject to Section 25.3 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.
25.3. Removal of Legend. Any legend endorsed on a certificate pursuant
to Section 25.1 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.
25.4. 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 Optionee 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 Optionee, the Company will
deliver a written statement as to whether it has complied with such
requirements.
25.5. Private Placement.
25.5.1. The Optionee understands and agrees with the Company that
(i) the Options and the offer and sale of the Option Shares are 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
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market for the Options or the Option Shares and there can be no assurance that
the Optionee will be able to sell or dispose of the Options or the Option
Shares.
25.5.2. The Optionee represents and warrants to the Company that:
25.5.2.1. any Option Shares acquired by it pursuant to this
Agreement will be acquired for its own account and without a view to the
distribution or resale of the Option Shares acquired by it or any interest
therein; provided that the provisions of this Section shall not prejudice the
Optionee's right at all times to sell or otherwise dispose of all or any part of
Option Shares so acquired by the Optionee pursuant to a registration under the
Securities Act or an exemption from such registration available under the
Securities Act;
25.5.2.2. the Optionee is an "Accredited Investor" as such term is
defined in Rule 501 of Regulation D promulgated by the Commission under the
Securities Act; and
25.5.2.3. the Optionee 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.
25.5.3. The Optionee further represents that:
25.5.3.1. the Optionee 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 Options and the Option Shares and the Optionee is
capable of bearing the economic risks of such investment and is able to bear a
complete loss of its investment in the Options and the Option Shares; and
25.5.3.2. in evaluating the suitability of an investment in the
Option and the Option Shares, the Optionee 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, the Stock
Purchase Agreement, this Agreement and the other Transaction Documents.
[REMAINDER OF PAGE LEFT BLANK-SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first above written.
WITNESS/ATTEST: Company:
XxxxxxXxxx.Xxx Inc.
----------------------- By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Optionee:
XXXXXXXX BROADCAST GROUP, INC.
----------------------- By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
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Schedule 2.2.2
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 Optionee acceptable to the Company - $1,764,707.
2. Commercial Production - commercial production (average of 8 separate
commercials each year) at the facilities or studios of the Optionee or
any of its direct or indirect subsidiaries, valued at $200,000.
3. Commercial Distribution - commercial distribution to any and all of
radio and television stations licensed, owned or operated by the
Optionee or any of its direct or indirect subsidiaries, valued at
$10,000.
4. Web Site Advertising - web site advertising on any and all of the
Optionee'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 Optionee, and all technical specifications to be provided by the
Company at its sole cost.
5. Investment and Financial Planning Assistance - assistance with
financial planning and reporting, capital structure, credit facilities,
systems development and integration, and investment banking activities
- $1,000,000.
6. Periodic Technology and Marketing Consulting - $250,000.
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 (the total over the BB
Term is $18,623,535), and (c) shall increase over the Synergy Term consistent
with the market value of such services on the actual date such services are
supplied.
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Exhibit 2.5
[ADDRESS OF OPTIONEE]
[Date]
VIA FACSIMILE (000) 000-0000
AND FEDERAL EXPRESS
XxxxxxXxxx.Xxx Inc.
00 Xxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Attention: Chief Executive Officer
Re: Exercise of Option for Class A Common Stock of
XxxxxxXxxx.Xxx Inc., a New Jersey Corporation (the
"Corporation"), under Option Agreement (the "Option
Agreement") by and between Xxxxxxxx Broadcast Group, Inc., a
Maryland corporation (the "Optionee"), and the Corporation
Dear Sir/Madam:
Pursuant to the terms and conditions of the Option Agreement, the
undersigned hereby exercises its right to acquire _______________ (_______)
shares of Class A Common Stock of the Company. Closing on this transaction shall
take place in accord with the provisions of the Option Agreement. Please prepare
all necessary documentation necessary for closing pursuant to the Option
Agreement.
Sincerely,
XXXXXXXX BROADCAST GROUP, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
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EXHIBIT C
XXXXXXXXXX.XXX INC.
1999 LONG TERM INCENTIVE PLAN
Section 1. Purpose
The purpose of the Plan is to attract and retain the services of key
employees, directors and non-employee consultants and independent contractors of
or to the Company and its Subsidiaries and to motivate such individuals to put
forth maximum efforts for the success of the business by offering them long term
performance-based incentives and an opportunity to acquire ownership of the
Company's Stock.
For purposes of the Plan, the following terms shall have the meanings set
forth below:
Section 2. Definitions
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control", "Potential Change in Control", and "Change in
Control Price" have the meanings set forth in Sections 10(b), (c),
and (d), respectively.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Commission" means the Securities and Exchange Commission or any
successor agency.
(e) "Committee" means the Committee referred to in Section 3.
(f) "Company" means Xxxxxxxxxx.Xxx, Inc., a corporation organized
under the laws of the State of New Jersey, or any successor
corporation.
(g) "Disability" means permanent and total disability as determined
under procedures established by the Committee for purposes of the
Plan.
(h) "Early Retirement" means retirement, with the consent for purposes
of the Plan of the Committee or such officer of the Company as may
be designated from time to time by the Committee, from active
employment with the Company or a Subsidiary prior to Normal
Retirement.
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(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(j) "Fair Market Value" means, except as provided in Section 7(b)(ii),
the mean, as of any given date, between the highest and lowest
reported sales prices of the Stock on any Exchange or in the
over-the-counter market on such date (or, if there is no reported
sale on such date, on the last preceding date on which any
reported sale occurred), or if no such reported sales prices are
available, the fair market value of the Stock as established by a
good faith determination of the Committee.
(k) "Holder" means an Optionee or a Transferee, as defined in Sections
2(p) and (y), respectively.
(l) "Incentive Stock Option" means any Stock option intended to be and
designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(m) "Long Term Performance Award" or "Long Term Award" means an award
under Section 9.
(n) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(o) "Normal Retirement" means retirement from active employment with
the Company or a Subsidiary at or after the retirement age
determined by the Board .
(p) "Optionee" means a person who is granted a Stock Option under
Section 6.
(q) "Plan" means the Xxxxxxxxxx.Xxx, Inc. 1999 Long Term Incentive
Plan, as set forth herein and as hereinafter amended from time to
time.
(r) "Restricted Stock" means an award under Section 8.
(s) "Retirement" means Normal or Early Retirement.
(t) "Rule 16b-3" means Rule 16b-3 as promulgated by the Commission
under Section 16(b) of the Exchange Act as amended from time to
time.
(u) "Stock" means the Class A Common Stock, $.001 par value, of the
Company.
(v) "Stock Appreciation Right" means a right granted under Section 7.
(w) "Stock Option" or "Option" means an option granted under Section
6.
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(x) "Subsidiary" means any business entity in which the Company,
directly or indirectly, owns 50 percent or more of the total
combined voting power of all classes of stock or other equity
interest.
(y) "Transferee" means a member of an Optionee's Immediate Family, a
partnership or a trust to whom or which any Option is transferred
as provided in Section 6.
Section 3. Administration
The Plan shall be administered by the Committee on Executive Compensation
of the Board, or such other Committee of the Board, composed of two or more
members, of which one will be the Chairman of the Board, who may be an employee
of the company, the other members will be non-employees. If at any time no
Committee designated to administer the Plan shall be in office, the functions of
the Committee specified in the Plan shall be exercised by the Board.
Except as limited by the express provisions of the Plan, the Committee
shall have the sole and complete authority:
(a) to select the officers and other key employees or consultants or
independent contractors to whom Stock Options, Stock, Appreciation
Rights, Restricted Stock and Long Term Performance Awards may from
time to time be granted;
(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Long Term Performance Awards, or any combination thereof
are to be granted, hereunder, provided that Incentive Stock
Options may only be granted to employees.
(c) to determine the number of shares to be covered by each award
granted hereunder;
(d) to determine the terms and conditions of any award granted
hereunder (including, but not limited to, the share price, any
restriction or limitation, any vesting acceleration or any
forfeiture waiver regarding any Stock Option or other award and
the shares of Stock relating thereto), based on such factors as
the Committee shall determine;
(e) to adjust the performance goal and measurements applicable to
performance-based awards pursuant to the terms of the Plan; and
(f) to determine to what extent and under what circumstances Stock and
other amounts payable with respect to an award shall be deferred;
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The Committee shall have the authority to adopt, alter, and repeal such
administrative rules, guidelines and The Committee shall have the authority to
adopt, alter, and repeal such administrative rules, guidelines and practices
governing the Plan as it shall from time to time deem advisable, to interpret
the terms and provisions of the Plan and any award issued under the Plan (and
any agreement relating thereto), and otherwise to supervise the administration
of the Plan. The Committee may act only by a majority of its members then in
office, except that the members thereof may authorize any one or more of their
number or any officer of the Company to execute and deliver documents on behalf
of the Committee. Any determination made by the Committee pursuant to the
provisions of the Plan with respect to any award shall be made in its sole
discretion at the time of the grant of the award or, unless in contravention of
any express term of the Plan, at any time thereafter. Whenever the Committee has
the power, or right under this Plan to adjust, alter, amend, award, consent,
deem advisable, deem appropriate, deem desirable, deem necessary, determined,
determine conditions, determine criteria, determine factors, determine terms,
elect, exercise authority, exercise discretion, grant, interpret, make a
decision, provide, set, specify, supervise, use criteria, use factors or any
similar power or right, the Committee shall have the sole, absolute and
uncontrolled discretion in doing so.
Section 4. Subject to Plan
The total number of shares of Stock reserved for distribution pursuant to
Stock Options or other awards under the Plan shall be equal to 9,000,000 shares.
Such shares may consist, in whole or in part, of authorized and unissued shares
or issued shares heretofore or hereafter required and held as treasury shares.
If an outstanding Stock Option or Stock Appreciation right shall expire or
terminate without having been exercised in full, or if any Restricted Stock
award or long Term Performance Award is not earned or is forfeited in whole or
in part, the shares subject to the unexercised or forfeited portion of such
award shall again be available for distribution in connection with awards under
the Plan. In the event that a Stock Option is exercised by tendering shares to
the Company as full or partial payment of the option exercise price, only the
number of shares issued net of the shares tendered shall be deemed delivered
under the Plan. Further, shares tendered or withheld for the payment of taxes in
connection with any award shall again be available for distribution in
connection with awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, or other change in corporate
structure affecting the Stock such substitution or adjustments shall be made in
the aggregate number of shares reserved for issuance under the Plan, in the
number and option price of shares subject to outstanding Stock Options, in the
determination of the amount payable upon exercise of outstanding Stock
Appreciation Rights and in the number of shares subject to other outstanding
awards granted under the Plan as may be determined by the Committee, in its sole
discretion, to be equitable to prevent substantial dilution or enlargement of
the rights granted to participants hereunder, provided, however, that the number
of shares subject to any award will always be a whole number. The Committee
shall give notice to each participant of any adjustment made pursuant to this
paragraph, and upon such notice, such adjustment shall be effective and binding
for all purposes of the Plan.
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Shares issued under the Plan as the result of the settlement or assumption
of, or substitution of awards under the Plan for, any awards or obligations to
grant future awards of any entity acquired by or merging with the Company shall
not reduce the number of shares available for delivery under the Plan.
The maximum number of shares available for delivery under the Plan through
Incentive Stock Options shall be 6,000,000 shares. The maximum number of shares
available for awards under Section 8 and 9 hereof shall be equal to twenty
percent of the total shares available for distribution under the Plan.
Section 5. Eligibility
All employees and non-employee consultants and independent contractors to
the Company and its Subsidiaries (but excluding, except as otherwise provided in
Section 6, members of the Committee and any person who serves only as a
director) who in the opinion of the Committee are responsible for, or contribute
to, the management, growth, and profitability of the business of the Company or
its Subsidiaries are eligible to be granted awards under the Plan.
Section 6. Stock Options
Stock Options may be granted alone or in addition to other awards granted
under the Plan and may be of two types: Incentive Stock Options and
Non-Qualified Stock Options. Any Stock Option granted under the Plan shall be in
such form as the Committee may from time to time approve. The Committee shall
have the authority to grant any Optionee Incentive Stock Options, Non-Qualified
Stock Options, or both types of Stock Options (in each case with or without
Stock Appreciation Rights); provided, however, that the Committee shall not have
the authority to grant Incentive Stock Options to any independent contractor or
any non-employee consultant or director. To the extent that any Stock Option
does not qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option. The Committee shall not grant Stock Options to any
one individual with respect to more than twenty-five percent (25%) of the shares
of Stock reserved for distribution pursuant to Stock Options or other awards
under the Plan.
Stock Options shall be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement shall indicate on its face
whether it is an agreement for Incentive Stock Options or Non-Qualified Stock
Options. The grant of a Stock Option shall occur on the date the Committee by
resolution selects an employee as a participant in any grant of Stock Options,
determines the number of Stock Options to be granted to such employee, and
specifies the terms and provisions of the option agreement; provided, however,
that the Committee may designate in such resolution a later date as the date of
grant of any or all of the Stock Options covered thereby. The Company shall
notify a participant of any grant of Stock Options, and a written option
agreement or agreement shall be duly executed between the Company and the
participant.
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Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended, or altered
nor shall any discretion or authority granted under the Plan be exercised so as
to disqualify the Plan under Section 422 of the Code or, without the consent of
the Optionee affected, to disqualify any Incentive Stock Option under such
Section 422.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions as the
Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be equal to the Fair Market Value of
the Stock on the date of grant or such higher price as shall be
determined by the Committee at grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more
than 10 years after the date of grant of the Option, and no
Non-Qualified Stock Option shall be exercisable more than 10 years
and one month after the date of grant of the Option.
(c) Transferability of Options.
(i) No Stock Option shall be transferable by the Optionee other
than by will, by the laws of descent and distribution or in
accordance with the provisions of Section 6(c)(ii).
(ii) Subject to applicable securities laws, the Committee may
determine that a Non-Qualified Stock Option may be
transferred by the Optionee to one or more members of the
Optionee's Immediate Family, as defined in Section 6(c)(iii),
to a partnership of which the only partners are members of
the Optionee's Immediate Family, or to a trust established by
the Optionee for the benefit of one or more members of the
Optionee's Immediate Family. No Transferee to whom or which a
Non-Qualified Stock Option is transferred may further
transfer such Stock Option. A Non-Qualified Stock Option
transferred pursuant to this Section shall remain subject to
the provisions of the Plan, including, but not limited to,
the provisions of this Section 5 relating to the exercise of
the Stock Option upon the death, Disability, Retirement or
other termination of employment of the Optionee, and shall be
subject to such other rules as the Committee shall determine.
(iii)For purposes of this Section 6, "Immediate Family" of the
Optionee means the Optionee's spouse, parents, children and
grandchildren.
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(d) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be
determined by the Committee. If the Committee provides that any
Stock Option is exercisable only in installments, the Committee
may at any time waive such installment exercise provisions, in
whole or in part based on such factors as the Committee may
determine.
(e) Termination by Death. Subject to Section 6(j), if an Optionee's
employment or service on the Board terminates by reason of death,
any Stock Option held by such Optionee or any Transferee of such
Optionee may thereafter be exercised, to the extent then
exercisable or on such accelerated basis as the Committee may
determine, for a period of one year from the date of such death or
until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the
expiration of the stated term of any such Stock Option is less
than one year following the death of the Optionee, the Stock
Option shall be exercisable for a period of one year from the date
of such death.
(f) Termination by Reason of Disability. Subject to 6(j), if an
Optionee's employment or service on the Board terminates by reason
of Disability, any Stock Option held by such Optionee or any
Transferee of such Optionee may thereafter be exercised by the
Holder, to the extent it was exercisable at the time of
termination or on such accelerated basis as the Committee may
determine, for a period of one year from the date of such
termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is the shorter;
provided, however, that, if the Holder dies while any such Stock
Option remains exercisable, any unexercised Stock Option held by
such Holder at death shall continue to be exercisable to the
extent to which it was exercisable at the time of the Holder's
death for a period of 12 months from the date of such death. In
the event of termination of employment by reason of Disability, if
an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.
(g) Termination by Reason of Retirement. Subject to Section 5(j), if
an Optionee's employment or service on the Board terminates by
reason of Retirement, any Stock Option held by such Optionee or
any Transferee of such Optionee may thereafter be exercised by the
Holder, to the extent it was exercisable at the time of Retirement
or on such accelerated basis as the Committee may determine, for a
period of two years from the date of such termination of
employment or until the expiration of the stated term of such
Stock Option, whichever period is the shorter; provided, however
that, if the Holder dies within such two-year period, any
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unexercised Stock Option held by such Holder shall,
notwithstanding the expiration of such two-year period, continue
to be exercisable to the extent to which it was exercisable at the
time of death for a period of 12 months from the date of such
death. In the event of termination of employment by reason of
Retirement, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of
Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(h) Other Termination. Subject to Section 6(j), if an Optionee's
employment terminates for any reason other than death, Disability
or Retirement, or cause, any Stock Option held by such Optionee or
any Transferee of such Optionee may thereafter be exercised by the
Holder, to the extent it was exercisable at the time of
termination, for a period of three months from the date of such
termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is the shorter;
provided, however, that if the Holder dies within such three-month
period, any unexercised Stock Options held by such Holder shall,
notwithstanding the expiration of such three-month period,
continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months from
the date of such death. If an Optionee's employment is terminated
for cause, all rights under any Stock Option held by such Optionee
or any Transferee of such Optionee shall expire immediately upon
the giving to the Optionee of notice of such termination, if and
to the extent determined by the Committee and, to the extent not
so determined, shall expire as provided in the preceding sentences
of this Section 6(h).
(i) Method of Exercise. Stock Options shall be exercisable (i) during
the Holder's lifetime, only by the Holder or by the guardian or
legal representative of the Holder, and (ii) following the death
of the Holder, only by the person to whom they are transferred by
will or the laws of descent and distribution. For purposes of this
Section 6(i) only, the term "Holder" shall include any person to
whom a Stock Option is transferred by will or the laws of descent
and distribution. Subject to the provisions of this Section 6,
Stock Options may be exercised, in whole or in part, at any time
during the option term by giving written notice of exercise to the
Company specifying the number of shares to be purchased. Such
notice shall be accompanied by payment in full of the purchase
price in cash (including check, bank draft, money order, or such
other instrument as the Company may accept). Unless otherwise
determined by the Committee at any time or from time to time,
payment in full or in part may also be made (i) by delivering a
duly executed notice of exercise together with irrevocable
instructions from the Holder to a broker to deliver promptly to
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the Company sufficient proceeds from a sale or loan of the shares
subject to the Stock Option to pay the purchase price, or (ii) in
the form of unrestricted Stock already owned by the Holder or, in
the case of the exercise of a Non-Qualified Stock Option,
Restricted Stock subject to an award hereunder (based, in each
case, on the Fair Market Value of the Stock on the date the Stock
Option is exercised). If payment of the option exercise price of a
Non-Qualified Stock Option is made in whole or in part in the form
of Restricted Stock, such Restricted Stock (and any replacement
shares relating thereto) shall remain restricted in accordance
with the original terms of the Restricted Stock award in question,
and any additional Stock received upon the exercise shall be
subject to the same forfeiture restrictions, unless otherwise
determined by the Committee.
No shares of Stock shall be issued until full payment therefor has
been made. Subject to any forfeiture restrictions that may apply
if a Stock Option is exercised using Restricted Stock, a Holder
shall have all of the rights of a stockholder of the Company,
including the right to vote the shares and the right to receive
dividends, with respect to shares subject to the Stock Option when
the Holder has given written notice of exercise, has paid in full
for such shares, and, if requested, has given the representation
described in Section 13(a).
Shares issued upon exercise of a Stock Option shall be issued in
the name of the Holder or, at the request of the Holder, in the
names of such Holder and the Holder's spouse with right of
survivorship as community property, community property with right
of survivorship or joint tenants.
(j) Cashing Out of Options. In any case when a Stock Option is
exercised after the death of a Holder, the Committee may elect to
cash out all or any part of the Stock Option by paying the person
to whom the Stock Option has been transferred by reason of the
death of the Holder an amount, in cash or shares of Stock, equal
in value to the excess of the Fair Market Value of the Stock over
the option price on the effective date of such cash out.
(k) Substitute Options. Stock Options or Stock Appreciation Rights may
be granted under the Plan from time to time in substitution for
stock options or stock appreciation rights held by employees of
any corporation who, as the result of a merger, consolidation, or
combination of such other corporation with, or the acquisition of
all or substantially all of the assets or stock of such other
corporation by, the Company or a Subsidiary, become employees of
the Company or a Subsidiary. The terms and conditions of any
substitute Stock Options or Stock Appreciation Rights so granted
may vary from the terms and conditions set forth in the Plan to
such extent as the Committee at the time of grant may deem
appropriate to conform, in whole or in part, to the provisions of
the stock options or stock appreciation rights in substitution for
which they are granted; provided, however, that in the event a
stock option for which a substitute Stock Option is being granted
is an incentive stock option, no such variation shall be permitted
the effect of which would be to adversely affect the status of any
such substitute Stock Options as an Incentive Stock Option.
(l) Deferral of Option Gains. An Optionee may elect to defer to a
future date receipt of the shares of Stock to be acquired upon
exercise of a Stock Option. Such election shall be made by
delivering to the Company not later than six months prior to the
exercise of the Stock Option a written notice of the election
specifying the future date (the "Deferral Date") for receipt of
the shares. At any time, and from time to time, prior to the
delivery to the Optionee of shares the receipt of which has been
deferred as provided in this section, the Optionee may designate
by written notice to the Company a new date, which date shall be
later than the Deferral Date, and such new date shall thereafter
be the Deferral Date with respect to such shares.
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Section 7. Stock Appreciation Rights
A Stock Appreciation Right may be granted in conjunction with all or part
of any Stock Option granted under the Plan. In the case of a Non-Qualified Stock
Option, such Right may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right independent of a Stock Option grant may also
be awarded by the Committee, in which event the provisions of this Section 7
shall be applied for purposes of determining the operation of such Stock
Appreciation Right as if a Non-Qualified Stock Option had been granted on the
date of the grant of and in conjunction with such independent Stock Appreciation
Right.
A Stock Appreciation right granted with respect to a given Stock Option
shall terminate and no longer be exercisable to the extent of the shares with
respect to which the related Stock Option is exercised or terminates. A Stock
Appreciation Right may be exercised by a Holder in accordance with the
provisions of this Section 7 by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the Committee.
Upon such exercise and surrender, the Holder shall be entitled to receive an
amount determined in the manner prescribed in Section 7(b). The Stock Option
which has been so surrendered shall no longer be exercisable to the extent the
related Stock Appreciation Right has been exercised.
Stock Appreciation Rights shall be subject to such terms and conditions as
shall be determined by the Committee, including, but not limited to, the
following:
(a) Exercisability. A Stock Appreciation Right shall be exercisable
only at such time or times and to the extent that the Stock Option
to which it relates is exercisable in accordance with the
provisions of Section 6 and this Section 7; provided, however,
that a Stock Appreciation Right shall not be exercisable during
the first six months of its term by an Optionee who is actually or
potentially subject to Section 16(b) of the Exchange Act, unless
otherwise determined by the Committee in the event of death or
Disability of the Optionee prior to the expiration of the
six-month period.
(b) Payment Upon Exercise. Upon the exercise of a Stock Appreciation
Right, a Holder shall be entitled to receive an amount in cash,
shares of Stock, or both equal in value to the excess of the Fair
Market Value on the date of exercise of one share of Stock over
the option exercise prior per share specified in the related Stock
Option multiplied by the number of shares in respect of which the
Stock Appreciation Right shall have been exercised. The Committee
shall have the right to determine the form of payment in each
case.
In the case of a Stock Appreciation Right held by an Optionee who
is actually or potentially subject to Section 16(b) of the
Exchange Act, the Committee;
(i) may require that such Stock Appreciation Right be exercised
only in accordance with any applicable "window period"
provisions of Rule 16b-3; and
(ii) in the case of a Stock Appreciation Right relating to a
Non-Qualified Stock Option, may provide that the amount to
be paid upon exercise of such stock Appreciation Right
during a Rule 16b-3 "window period" shall be based on the
highest mean sales price of the Stock on any day during such
"window period".
(c) Non-transferability. A Stock Appreciation Right shall be
transferable only when and to the extent that the related Stock
Option would be transferable under Section 6(c).
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(d) Effect of Change in Control. The Committee may provide, at the
time of grant, that a Stock Appreciation Right can be exercised
only in the event of a change in Control or a Potential Change in
Control, subject to such terms and conditions as the Committee may
specify at grant. The Committee may also provide that, in the
event of a change in Control or a Potential Change in Control, the
amount to be paid upon the exercise of a Stock Appreciation Right
shall be based on the Change in Control price, subject to such
terms and conditions as the Committee may specify at grant.
Section 8. Restricted Stock
(a) Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The
Committee shall determine the offices, key employees and
non-employee consultants to whom and the time or times at which
grants of Restricted Stock will be made, the number of shares to
be awarded the time or times within which such awards may be
subject to forfeiture, and any other terms and conditions of the
awards, in addition to those contained in Section 8(c). The
Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors or
criteria as the Committee shall determine. The provisions of
Restricted Stock awards need not be the same with respect to each
recipient.
(b) Awards and Certificates. Each participant receiving a Restricted
Stock award shall be issued a certificate in respect of such
shares of Restricted Stock. Such certificate shall be registered
in the name of such participant and shall be an appropriate legend
referring to the terms, conditions, and restrictions applicable to
such award, substantially in the following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the XXXXXXXXXX.XXX. INC.
1999 Long Term Incentive Plan and a Restricted Stock
Agreement. Copies of such Plan and Agreement are on file at
the offices of XxxxxxXxxx.Xxx. Inc., 00 Xxxxxxxxx Xxxxxxxxx,
Xxxxxxx, Xxx Xxxx 00000.
The Committee may require that the certificates evidencing such
shares be held in custody by the Company until the restrictions
thereon shall have lapsed and that, as a condition of any
Restricted Stock award, the participant shall have delivered a
stock power, endorsed in blank, relating to the Stock covered by
such award.
(c) Terms and Conditions. Shares of Restricted Stock shall be subject
to the following terms and conditions:
(i) Subject to the provisions of the Plan and the Restricted
Stock Agreement referred to in Section 8(c)(vi), during such
period commencing with the date of such award as shall be
set by the Committee (the "Restriction Period"), the
participant shall not be permitted to sell, assign,
transfer, pledge, or otherwise encumber shares of Restricted
Stock. Within these limits, the Committee may provide for
the lapse of such restrictions in installments and may
accelerate or waive such restrictions, in whole or in part,
based on service, performance, and such other facts or
criteria as the Committee may determine.
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(ii) Except as provided in 8(c)(i), the participant shall have,
with respect to the shares of Restricted Stock, all of the
right of a stockholder of the Company, including the right
to vote the shares and the right to receive any cash
dividends thereon; provided, however, that the Committee may
provide at the time of an award that cash dividends shall be
automatically deferred and reinvested in additional
Restricted Stock. Dividends on Restricted Stock which are
payable in Stock shall be paid in the form of additional
shares of Restricted Stock.
(iii) Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and Sections 8(c)(i) and (iv),
upon termination of a participant's employment for any
reason during the Restriction Period, all shares still
subject to restriction shall be forfeited by the
participant.
(iv) In the event of the death of a participant during the
Restriction Period without a prior forfeiture of the
Restricted Stock subject to such Restriction Period,
unlegended certificates for such share shall be delivered to
the participant.
(v) If and when the Restriction period expires without a prior
forfeiture of the Restricted Stock subject to such
Restriction Period, unlegended certificates for such shares
shall be delivered to the participant.
(vi) Each award shall be confirmed by, and be subject to the
terms of, a Restricted Stock Agreement which shall be
executed by the Company and the recipient of the Restricted
Stock.
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Section 9. Long Term Performance Awards
(a) Awards and Administration. Long Term Performance awards may be
awarded either alone or in addition to other awards granted under
the Plan. The Committee shall determine the nature, length, and
starting date of the performance period (the "Performance Period")
for each Long Term Performance Award, which shall be at least two
years (subject to Section 10), and shall determine the performance
objectives to be used in valuing Long Term Performance awards and
determining the extent to which such Long Term Performance Awards
have been earned. The maximum award for any individual with
respect to any one year of any Performance Period shall be 20,000
shares of Stock. Performance objectives may vary from participant
to participant and between groups of participants and shall be
based upon one or more of the following Company, Subsidiary,
business unit, or individual performance factors or criteria (on a
pre- or post- tax basis and on an aggregate or per share basis) as
the Committee may deem appropriate; earnings, sales, Stock price,
return on equity, assets or capital, economic value added, cash
flow, total shareholder return, costs, margins, market share, any
combination of the foregoing. Performance Periods may overlap and
participants may participate simultaneously with respect to Long
Term performance Awards that are subject to different Performance
Periods and different performance factors and criteria. Long Term
Performance Awards shall be confirmed by, and be subject to the
terms of, a Long Term Performance Award Agreement. The terms of
such awards need not be the same with respect to each participant.
(b) Adjustment of Awards. The Committee may adjust the performance
goals and measurements applicable to Long Term Performance Awards
to take into account changes in law and accounting and tax rules
and to make such adjustments as the Committee deems necessary or
appropriate to reflect the inclusion or exclusion of the impact of
extraordinary or unusual items, events, or circumstances in order
to avoid windfalls or hardships.
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(c) Termination of Employment. Subject to Section 9 and unless
otherwise provided in the applicable Long Term Performance Award
Agreement, if a participant terminates employment during a
Performance Period because of death, Disability, or Retirement,
such participant shall be entitled to a payment with respect to
each outstanding Long Term Performance Award at the end of the
applicable Performance Period;
(i) based, to the extent relevant under the terms of the award,
upon the participant's performance of the portion of such
Performance Period ending on the date of termination and the
performance of the Company or any applicable business unit
for the entire Performance Period, and
(ii) prorated for the portion of the Performance Period during
which the participant was employed by the Company or a
Subsidiary, all as determined by the Committee. The
Committee may provide for an earlier payment in settlement
of such award in such amount and under such terms and
conditions as the Committee deems appropriate. Subject to
Section 10 and except as otherwise provided in the
applicable Long Term Performance Award Agreement, if a
participant terminates employment during a Performance
Period for any other reason, then such participant shall not
be entitled to any payment with respect to the Long Term
Performance Awards subject to such Performance Period,
unless the Committee shall otherwise determine.
(d) Form of Payment. The earned portion of a Long Term Performance
Award may be paid currently or on a deferred basis and may provide
for such interest or earnings equivalent as the Committee may
determine. Payment shall be made in the form of cash or whole
shares of Stock, including Restricted Stock, or a combination
thereof, either in a lump sum payment or in annual installments,
all as the Committee shall determine.
Section 10. Change in Control Provisions
(a) Impact of Event. In the event of:
(i) a "Change in Control" as defined in Section 10(c), but only
if and to the extent so determined by the Committee or the
Board, the following acceleration and valuation provisions
shall apply:
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(ii) a "Potential Change in Control" as defined in Section 10(c),
but only if and to the extent so determined by the Committee
or the Board, the following acceleration and valuation
provisions shall apply:
a. Stock Options and Stock Appreciation Rights
outstanding as of the date such Change in Control or
such Potential Change in Control is determined to
have occurred and not then exercisable and vested
shall become fully exercisable and vested; provided,
however, that, in the case of Stock Appreciation
rights held by an Optionee who is actually subject to
Section 16(b) of the Exchange Act, such Stock
Appreciation Rights shall not become exercisable and
vested unless they shall have been outstanding for at
least six months at the date such Change in Control
is determined to have occurred.
b. The restrictions and forfeiture provisions applicable
to any restricted Stock shall lapse, and such
Restricted Stock shall become fully vested.
c. The value of all outstanding Stock Options, Stock
Appreciation Rights, and Restricted Stock shall,
unless otherwise determined by the Committee at or
after grant, be cashed out on the basis of the
"Change in Control Price", as defined in Section
10(d), as of the date such change in Control or such
Potential Change in Control is determined to have
occurred or such other date as the Committee may
determine prior to the Change in Control.
d. Any outstanding Long Term Performance Awards shall,
unless the Committee otherwise determines, be vested
and paid out based on the prorated target results for
the Performance Periods in question, unless the
Committee provides prior to the Change in Control
event for a different payment.
(b) Definition of "Change in Control". For purposes of Section 10(a),
a "Change in Control" means a change in control of the Company of
a nature that would be required to be reported in response to Item
1(a) of the Current Report on Form 8-K, as in effect on the
effective date of the Plan, pursuant to Section 13 or 15(d) of the
Exchange Act; without regard to whether the Company would be
required to file such Reports under the Exchange Act; provided
that, without limitation, such a "Change in Control" shall be
deemed to have occurred if:
(i) A third person, including a "group" as such term is used in
Section 13(d)(3) of the Exchange Act, other than the trustee
of a Company employee benefit plan, becomes the beneficial
owner, directly or indirectly of 20 percent or more of the
combined voting power of the company's outstanding voting
securities ordinarily having the right to vote for the
election of independent contractors of the Company; or
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(ii) During any period of 24 consecutive months individuals who,
at the beginning of such consecutive 24-month period,
constitute the Board of Directors of the Company (the
"Board" generally and as of the effective date of the Plan
the "Incumbent Board") cease for any reason (other than
Retirement upon reaching Normal Retirement age, Disability,
or death) to constitute at least a majority of the Board;
provided that any person becoming a director subsequent to
the effective date of the Plan whose election, or nomination
for election by the Company's shareholders, was approved by
a vote of at least three-quarters of the Directors
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of
office is in connection with an actual or threatened
election contest relating to the election of the Directors
of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be,
for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board.
(c) Definition of "Potential Change in Control". For purposes of
Section 10(a), a "Potential Change in Control" means the happening
of any one of the following:
(i) The entering into an agreement by the Company, the
consummation of which would result in a Change of Control of
the Company as defined in Section 9(b); or
(ii) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person, or group (other than the
trustee of a Company employee benefit plan) of securities of
the Company representing five percent or more of the
combined voting power of the Company's outstanding voting
securities and the adoption by the Board of a resolution to
the effect that a Potential Change in Control of the Company
has occurred for purposes of the Plan.
(d) Change in Control Price. For purposes of this Section 10, "Change
in Control Price" means the highest price per share paid or
offered in any bona fide transaction related to an actual or
potential Change in Control of the Company at any time during the
preceding 60-day period as determined by the Committee, except
that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such
price shall be based only on transactions reported for the date on
which the Committee decides to cash out such Stock Options.
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Section 11. Amendments and Termination
The Board may amend, suspend, or discontinue the Plan or any portion
thereof at any time, but no amendment, suspension, or discontinuation shall be
made which would impair the rights of a Holder under a Stock Option or a
recipient of a Stock Appreciation Right, Restricted Stock Award, or Long Term
Performance Award theretofore granted without the Holder's or recipient's
consent or which without the approval of the Company's stockholders, would:
(a) except as expressly Provided in the Plan, increase the total
number of shares reserved for the purpose of the Plan;
(b) decrease the option price of any Stock Option to less than the
Fair Market Value on the date of grant;
(c) change the class of employees eligible to participate in the Plan;
or
(d) extend the maximum option periods under Section 6(b).
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the right of any holder without the holder's consent. Subject to the
above provisions, the Board shall have authority to amend the Plan to take into
account changes in law and tax and accounting rules, as well as other
developments.
Section 12. Unfunded Status of Plan
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Stock or make payments; provided, however, that, unless the Committee
otherwise determines, the existence of such trusts or other arrangements is
consistent with the "unfunded" status of the Plan.
Section 13. General Provisions
(a) All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such transfer orders and other
restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Commission, any stock
exchange upon which the Stock is then listed, and any applicable
Federal or state securities law, and the Committee may cause a
legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. The Committee may
require any Optionee purchasing shares pursuant to a Stock Option
to represent to and agree with the Company in writing that the
Optionee is acquiring the shares without a view to the
distribution thereof.
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(b) Nothing contained in this Plan shall prevent the Company or a
Subsidiary from adoption of other or additional compensation
arrangements for its employees.
(c) Neither the adoption of the Plan nor the granting of any Stock
Option, Stock Appreciation Right, Restricted Stock or Long Term
Award shall confer upon any employee any right to continued
employment or constitute an agreement or understanding that the
Company will retain a director for any period of time or at any
particular rate of compensation, nor shall the same interfere in
any way with the right of the Company or a Subsidiary to terminate
the employment of any employee or the service of any director at
any time.
(d) No later than the date on which the Company is required to
withhold taxes in respect of an award, the participant shall pay
to the Company, or make arrangements satisfactory to the Company
regarding the payment of, any Federal, state, local, or other
taxes of any kind required by law to be withheld with respect to
such award or any payment or distribution made in connection
therewith. Unless otherwise determined by the Committee,
withholding obligations may be settled with Stock, including Stock
that is part of the award that gives rise to the withholding
requirement; provided, however, that in the case of any Optionee
who is actually subject to Section 16(b) of the Exchange Act, any
such settlement shall comply with the applicable requirements of
Rule 16(b)-3. The obligations of the Company under the Plan shall
be conditional on such payment or arrangements, and the Company
and its Subsidiaries shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment otherwise due
to the participant.
(e) The reinvestment of dividends in additional Restricted Stock at
the time of any dividend payment shall be permissible only if
sufficient shares of Stock are available under Section 3 for such
reinvestment (taking into account then outstanding Stock Options
and other Plan awards).
(f) The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom
any amounts payable with respect to outstanding awards under the
Plan in the event of the participant's death are to be paid.
(g) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State
of New York.
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Section 14. Effective Date of Plan; Shareholder Approval
The Plan shall be effective as of November __, 1999, subject however to the
approval of the Plan by the holders of at least a majority of the outstanding
shares of Stock of the Company present or represented and entitled to vote at a
meeting of shareholders of the Company. Awards may be made under the Plan on and
after its effective date; provided, however, that any such awards shall be null
and void if shareholder approval of the Plan is not obtained within 12 months of
the adoption of the Plan by the Board.
Section 15. Term of Plan
No Stock Option, Stock Appreciation Right, Restricted Stock award, or Long
Term Performance award shall be granted on or after the tenth anniversary of the
effective date of the Plan, but awards granted prior to such tenth anniversary
(including, without limitation, Long Term Performance Awards for Performance
Periods commencing prior to such tenth anniversary) may extend beyond that date.
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EXHIBIT D
CO-SALE RIGHTS
(a) In the event, prior to the occurrence of an IPO or a Qualified Sale
(such Qualified Sale for minimum gross proceeds of at least $100,000,000),
either the Purchaser or SYBR (a "Selling Shareholder") receives a bona fide
offer, other than an offer which, if accepted, would result in such a Qualified
Sale (the "Offer"), from a third party which is not an Affiliate of the Selling
Shareholder (the "Offeror"), to purchase from the Selling Shareholder any or all
of the BB Shares and/or Option Shares owned by the Purchaser or any or all of
the shares of Class A Common Stock ("Class A Shares") owned by SYBR (said BB
Shares, Option Shares and Class A Shares are collectively referred to herein as
the "Shares") for a specified price payable in cash or otherwise and on
specified terms and conditions, the Selling Shareholder shall promptly forward a
copy of the Offer to the other shareholder (the "Other Shareholder"), together
with a notice from the Selling Shareholder that the Selling Shareholder desires
to sell such Shares pursuant to this Exhibit B. Such notice shall specify the
number of Shares which the Selling Shareholder desires to sell (the "Sale
Shares"), the percentage that the Sale Shares represents of the total number of
Shares owned by the Selling Shareholder ("Ownership Percentage"), the identity
of the proposed purchaser of the Sale Shares, and all of the material terms of
the Offer.
(b) Concurrently with the delivery of the notice by the Selling
Shareholder referred to in subparagraph (a) hereof, the Selling Shareholder
shall offer to the Other Shareholder the opportunity to sell to the Offeror the
Ownership Percentage of Shares owned by such Shareholder. The Other Shareholder
shall notify the Selling Shareholder in writing, within (10) ten Business Days
of the receipt of the notice of Offer, whether it desires to sell the Ownership
Percentage of the Shares owned by such Shareholder. Failure to provide such
written notice within such 10-day period shall be deemed to constitute a refusal
by such Shareholder to exercise its rights under this Section in which event the
Selling Shareholder may proceed with the sale of the Sale Shares at any time
within 90 days after such refusal. In the event that the Selling Shareholder
cannot obtain commitments from the Offeror to purchase the aggregate number of
Shares representing the Ownership Percentage of Shares owned by the Selling
Shareholder and the Other Shareholder who has provided notification of its
desire to sell Ownership Percentages of the Shares owned by it, then the Selling
Shareholder and the other Shareholder wishing to sell its Shares under this
Section shall reduce the number of the Shares which they propose to sell, so
that (i) the Selling Shareholder and the Other Shareholder wishing to sell
Shares under this Section shall each be entitled to sell an identical percentage
of the Shares which each respectively owns to the Offeror; and (ii) the total
number of Shares to be sold by the Selling Shareholder and the Other Shareholder
exercising rights under this Section shall equal the number of Shares which the
Offeror shall have committed to purchase.
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(c) Notwithstanding any contrary provision of section (a) or (b) above,
the Purchaser shall not have the right to include Option Shares as part of the
Shares to be sold unless it shall first execute and deliver an agreement,
reasonably satisfactory in form and substance to the Company, to the effect that
the Purchaser cancels or surrenders its right to terminate its obligation to
provide Unearned Advertising Time to the Company under Section 2.3(a)(ii) of the
Stock Purchase Agreement to which this is Exhibit D, to the extent necessary to
insure that the Option Shares to be included as part of the Shares to be sold
will never become ineligible for vesting as otherwise provided therein.
(d) The Purchaser and SYBR each hereby agrees not to Transfer directly
or indirectly any Shares or other Capital Stock of the Company to any Person
whose activities, products or services are competitive with the activities,
products or services of Synergy or its Subsidiaries, including the Company, as
reasonably determined by the Board of Directors of Synergy, as of the date of
the proposed Transfer (provided that the foregoing shall not restrict public
sales registered under the Securities Act or pursuant to Rule 144 thereunder
unless the relevant transferor has knowledge that the buyer or buyers are such
competitors). The Company may impose stop transfer instructions with its
transfer agent in order to enforce the foregoing covenants.
(e) The Selling Shareholder shall not have the right to Transfer any
Shares owned by it without complying with the provisions of this Section and, if
the co-sale right provided for herein has been exercised by the Other
Shareholder, unless the Offeror has agreed to purchase the Shares being offered
by the Selling Shareholder and the Other Shareholder as provided herein. Any
Transfer made or attempted contrary to the foregoing provisions shall be void ab
initio; SYBR, the Purchaser and the Company each shall have the right to enforce
such provisions by actions for specific performance, in addition to any other
legal or equitable remedies; and each may refuse to recognize any purported
Transferee as a stockholder of the Company for any purpose.
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EXHIBIT E
NEITHER THIS NOTE NOR THE COMMON STOCK ISSUABLE UPON THE CONVERSION OF
THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS.
NEITHER THIS NOTE NOR ANY SUCH COMMON STOCK MAY BE OFFERED,
TRANSFERRED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS
(I) A REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT IS IN
EFFECT OR (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, WHICH
OPINION IS REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR ANY STATE SECURITIES
LAWS IN CONNECTION WITH THE PROPOSED TRANSFER, SALE, ASSIGNMENT, PLEDGE
OR OTHER DISPOSITION.
$ [DATE]
XXXXXXXXXX.XXX INC.
8% Convertible Subordinated Note
FOR VALUE RECEIVED, XXXXXXXXXX.XXX INC., a New Jersey corporation (the
Company"), HEREBY PROMISES TO PAY to the order of NEW ERA FOODS, INC., a Nevada
corporation (the "Holder"), the principal sum of ($____________) DOLLARS on
___________________, 200_ [5 years from the date of issuance] (the "Maturity
Date") and to pay interest on the principal amount outstanding from time to time
under this note (the "Outstanding Principal Amount"), at the rate of 8% per
annum, payable on the Maturity Date.
1. Definitions. For purposes hereof the following definitions shall
apply:
"Additional Shares of Common Stock" shall mean all shares (including
treasury shares) of Common Stock issued or sold or deemed to be issued by the
Company after the date hereof, whether or not subsequently reacquired or retired
by the Company other than shares of Common Stock issued upon conversion of the
Notes.
"Business Day" shall have the meaning set forth in Section 2(c).
"Common Stock" shall mean, the common stock of the Company, $.001 par value
per share.
"Company" shall have the meaning set forth in the Preamble.
"Conversion Date" shall have the meaning set forth in Section 3(c)(x)(i).
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"Conversion Notice" shall have the meaning set forth in Section 3(c)(x)(i).
"Conversion Price" shall mean $3.175 subject to certain adjustments as
described in Section 3(c).
"Conversion Shares" means the shares of Common Stock to be issued upon
conversion of this Note.
"Convertible Securities" shall have the meaning set forth in Section
3(c)(iv).
"Default" shall have the meaning set forth in Section 14.
"Default Rate" shall have the meaning set forth in Section 2(a).
"Holder" shall have the meaning set forth in the Preamble.
"Issuance Date" shall be the date set forth at the outset of this Note.
"Maturity Date" shall have the meaning set forth in the Preamble.
"Notes" shall mean this Note and any like Notes hereinbefore or hereafter
issued to Holder.
"Organic Change" shall mean, any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets to another Person or other transaction which is effected in
such a way that holders of Common Stock are entitled to receive (either directly
or upon subsequent liquidation) stock, securities or assets with respect to or
in exchange for Common Stock.
"Outstanding Principal Amount" shall mean the principal amount of this Note
which is outstanding on the date of determination.
"Person" shall mean, an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
"Prepayment Amount" shall mean the sum equal to the face amount of this
Note, plus all accrued but unpaid interest thereon.
"Proceeding" shall mean, with respect to any Person, (i) any insolvency,
bankruptcy, receivership, liquidation, reorganization, readjustment, composition
or other similar proceeding relating to such Person or its properties as such,
(ii) any proceeding for any liquidation, dissolution or other winding up of such
Person, voluntary or involuntary, or (iii) any assignment for the benefit of
creditors or marshaling of the assets of such Person.
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"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations thereunder, or any successor statute.
"Solvent" shall mean, with respect to any Person on a particular date, that
on such date (i) the fair value of the property of such Person is not less than
the total amount of the liabilities of such Person, (ii) the present fair
salable value of the assets of such Person is not less than the amount required
to pay the probable liability on such Person's existing debts as they become
absolute and matured, (iii) such Person is able to realize upon its assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature and (v) such Person's property does not constitute unreasonably small
capital for such Person to carry out its business as currently conducted and as
proposed to be conducted including the capital needs of such Person taking into
account the capital requirements of the business conducted by such Person and
projected capital requirements and capital availability thereof.
2. General Provisions.
(a) Any amount of principal hereof that is not paid when due
(whether at maturity, by acceleration or otherwise) shall bear interest from the
day when due until such principal amount is paid in full, payable on demand, at
an interest rate per annum equal at all times to the prime rate (as set from
time to time by The Chase Manhattan Bank) plus two percent (2%) per annum (the
"Default Rate"). All interest shall be computed on the basis of a year of 360
days for the actual number of days (including the first day but excluding the
last day) elapsed. Notwithstanding any other provision of this Note, interest
paid or becoming due hereunder shall in no event exceed the maximum rate
permitted by applicable law. All payments made hereunder shall be made in cash.
(b) If any amount payable hereunder shall be due on a Saturday or
a Sunday or a day on which commercial banking institutions in the City of New
York are authorized by law to be closed (any other day being a "Business Day"),
such payment may be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of interest payable
hereon.
(c) Both principal and interest are payable in lawful money of the
United States and in immediately available funds at the offices of Holder at
00 Xxxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000, or at such other place as the
Holder shall designate in writing to the Company.
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3. Holder's Conversion of Note.
(a) Conversion Right. The Holder shall have the right, at its
option, to convert this Note, in whole or in part, into fully paid, validly
issued and nonassessable shares of the Company's Common Stock at any time and
from time to time on or after April 1, 2001 (including, without limitation,
during a Default after such date) that this Note is outstanding. If this Note is
converted in part, the remaining portion of this Note not so converted shall
remain entitled to the conversion and other rights provided herein.
(b) Conversion Rate. The number of shares of Common Stock issuable
upon conversion of this Note pursuant to Section 3(a) shall be determined by
dividing (i) the Outstanding Principal Amount submitted for conversion plus
accrued but unpaid interest thereon, by (ii) the Conversion Price then in
effect.
(c) Anti-Dilution. In order to prevent dilution of the rights
granted under this Note, the Conversion Price will be subject to adjustment from
time to time as provided in this Section 3(c):
(i) Dividends and Distributions. If the Company shall declare or
pay to the holders of the Common Stock a dividend or other distribution payable
in shares of Common Stock or any other security convertible into or exchangeable
for shares of Common Stock, the Holder of this Note thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock or
other securities convertible into or exchangeable for shares of Common Stock, as
applicable, which such Holder would have owned or been entitled to receive after
the declaration and payment of such dividend or other distribution as if this
Note had been converted immediately prior to the record date for the
determination of stockholders entitled to receive such dividend or other
distribution.
(ii) Stock Splits and Combinations. If the Company shall subdivide
(by means of any stock split, stock dividend, recapitalization or otherwise) the
outstanding shares of Common Stock into a greater number of shares of Common
Stock, or combine (by means of any combination, reverse stock split or
otherwise) the outstanding shares of Common Stock into a lesser number of
shares, or issue by reclassification of shares of Common Stock any shares of the
Company, the Conversion Price in effect immediately prior thereto shall be
adjusted so that the Holder shall receive the number of shares of Common Stock
which the Holder would have owned or been entitled to receive after the
happening of any and each of the events described above if this Note had been
converted immediately prior to the happening of each such event on the day upon
which such subdivision or combination, as the case may be, becomes effective.
(iii) Organic Changes. In case the Company shall effect an Organic
Change, then the Holder shall be given a written notice from the Company
informing such Holder of the terms of such Organic Change and of the record date
thereof for any distribution pursuant thereto, at least twenty (20) days in
advance of such record date, and, if such record date shall precede the Maturity
Date, the Holder shall have the right thereafter to receive, upon conversion of
this Note, the number of shares of stock or other securities, property or assets
of the Company, or of its successor or transferee or any affiliate thereof, or
cash receivable upon or as a result of such Organic Change that would have been
received by a holder of the number of shares of Common Stock equal to the number
of shares the Holder would have received had such Holder converted this Note
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prior to such event at the Conversion Price immediately prior to such event. In
any such case, the Company will make appropriate provision (in form and
substance reasonably satisfactory to the Holder) with respect to such Holder's
rights and interests to insure that the provisions of this Section 3(c)(iii)
will thereafter be applicable to this Note (including, in the case of any such
Organic Change in which the successor entity or purchasing entity is other than
the Company, an immediate adjustment of the Conversion Price to the value for
the Common Stock reflected by the terms of such Organic Change, if the value so
reflected is less than the Conversion Price in effect immediately prior to such
Organic Change). The Company will not effect any such Organic Change unless
prior to the consummation thereof the successor entity (if other than the
Company) resulting from such Organic Change assumes, by written instrument (in
form and substance satisfactory to the Holder), the obligation to deliver to
Holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such Holder may be entitled to acquire. The provisions of
this subparagraph (iii) shall similarly apply to successive Organic Changes.
(iv) No Dilution or Impairment. The Company shall not, by
amendment of its certificate of incorporation or through any Organic Change or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Note, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the Holder against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (i) shall take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock, free from all taxes, liens, security
interests, encumbrances, preemptive rights and charges on the conversion of this
Note from time to time outstanding, (ii) shall not take any action which results
in any adjustment of the Conversion Price if the total number of shares of
Common Stock issuable after the action upon the conversion of this Note would
exceed the total number of shares of Common Stock then authorized by the
Company's certificate of incorporation and available for the purpose of issue
upon such exercise, and (iii) shall not permit the par value of any shares of
stock receivable upon the conversion of this Note to exceed the amount payable
therefor upon such exercise.
(v) Notices.
(A) Immediately upon any adjustment pursuant hereto of the
Conversion Price, the Company will give written notice thereof to the Holder,
setting forth in reasonable detail and certifying the calculation of such
adjustment.
(B) The Company will give written notice to the Holder at
least twenty (20) days prior to the date on the Company closes its books or
takes a record (I) with respect to any dividend or distribution upon the Common
Stock, or (II) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation; provided that in no event shall such notice
be provided to the Holder prior to such information being made known to the
public.
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(C) The Company will also give written notice to the Holder
at least twenty (20) days prior to the date on which any Organic Change,
dissolution or liquidation will take place.
(vi) Further Adjustments. Successive adjustments in the Conversion
Price shall be made whenever any event specified above shall occur. All
calculations under this Section 3(c) shall be made to the nearest cent. No
adjustment in the Conversion Price shall be made if the amount of such
adjustment would be less than $0.01, but any such amount shall be carried
forward and an adjustment with respect thereto shall be made at the time of and
together with any subsequent adjustment which, together with such amount and any
other amount or amounts so carried forward, shall aggregate $0.01 or more.
(d) Conversion Procedure. The conversion of this Note shall be
carried out pursuant to the following procedures:
(i) Holders Delivery Requirements. To convert this Note into full
shares of Common Stock on any date (the "Conversion Date"), the Holder shall (A)
deliver or transmit for receipt on or prior to 11:59 p.m., Eastern Time on such
date, a copy of a fully executed notice of conversion in the form attached
hereto as Exhibit A (the "Conversion Notice"), to the Company to the effect that
the Holder elects to convert a specified amount of the Outstanding Principal
Amount of this Note plus accrued interest) and (B) surrender to a common carrier
for delivery to the Company as soon as practicable following such date, the
originally executed Conversion Notice.
(ii) Company's Response. Within fifteen (15) Business Days after
receipt by the Company of a copy of a Conversion Notice, the Company shall
notify the Holder in writing (an "Exercise Notice") whether it elects either (A)
to accept the conversion and issue to the Holder the number of shares of Common
Stock as specified in the Conversion Notice, or (B) to prepay this Note as
provided in clause (iii) below. Failure to deliver the Exercise Notice within
such fifteen (15) Business Day period shall be deemed an election under clause
(A) of this subsection (ii). Thereafter, and within twenty (20) Business Days
after receipt by the Company of the Conversion Notice, the Company shall either
(a) issue and surrender to a common carrier for overnight delivery to the
address as specified in the Conversion Notice, a certificate(s), registered in
the name of the Holder or its designee, for the number of shares of Common Stock
to which the Holder shall be entitled, or (b) prepay this Note pursuant to
clause (iii) below, as the case may be.
(iii) Prepayment. Upon the Company's election to prepay this Note
pursuant to Section 3(d)(ii)(B) above, the Company shall prepay, from funds
legally available therefor at the time of such prepayment, all of the Prepayment
Amount, or in the event the Conversion Notice shall have been delivered with
respect to less than all of the Note, a portion of the Prepayment Amount which
shall not be less than the amount of this Note specified in the Conversion
Notice. Any such prepayment by the Company shall be in cash and shall be free of
any claim of subordination. Except as set forth above, the Company shall not
have the right to prepay the Note or any part thereof.
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(iv) Dispute Resolution. In the case of a dispute as to the
determination of the Conversion Price, the decision of the Board of Directors of
Holder will be final and binding on the parties hereto.
(v) Record Holder. The Person or Persons entitled to receive the
shares of Common Stock issuable upon a conversion of the Note shall be treated
for all purposes as the record holder or holders of such shares of Common Stock
on the applicable Conversion Date.
(e) Fractional Shares. The Company shall not issue any fraction of
a share of Common Stock upon any conversion. All shares of Common Stock
(including fractions thereof) issuable upon any conversion shall be rounded up
or down, whichever is closest, to the nearest whole share.
(f) Taxes. The Company shall pay any and all taxes which may be
imposed upon it with respect to the issuance and delivery of Common Stock upon
any conversion.
4. Representations and Warranties. The Company represents and warrants
as follows: (i) the Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey; (ii) the
execution, delivery and performance by the Company of this Note are within the
Company's corporate powers, have been duly authorized by all necessary corporate
action, and do not contravene (A) the Company's charter or by-laws or (B) any
law or any contractual restriction binding on or affecting the Company; (iii) no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority, regulatory body or third Person is required for the
due execution, delivery and performance by the Company of the Note; (iv) this
Note constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms; (v) the Company
has all requisite corporate power and authority to conduct its business as now
conducted and to consummate the transactions contemplated hereby; (vi) there is
no pending or to the Company's knowledge threatened action or proceeding
affecting the Company before any governmental agency or arbitrator which
challenges or relates to this Note or any transactions contemplated in
connection herewith or which may have a material adverse effect on the condition
(financial or otherwise), properties, assets, liabilities, business or results
of operations of the Company; (vii) after giving effect to the transactions
contemplated by this Note, the Company is Solvent and no Default has occurred
and is continuing; and (viii) not less than 350,000 shares of Common Stock have
been reserved for issuance for the purpose of effecting conversion of this Note.
5. Covenant of the Company. So long as this Note shall be outstanding,
without the prior written consent of the Holder, the Company will not pay or
declare any dividend or distribution on any shares of the Company's capital
stock (except dividends payable in stock of the Company) or directly or
indirectly redeem, repurchase, retire or otherwise acquire any shares of equity
securities of the Company except pursuant to any agreement, approved in advance
by the Board of Directors of the Company or a committee thereof, for the
repurchase of shares from an employee, director or consultant upon death,
disability, retirement or termination of employment or director or consulting
relationship or upon exercise of a right of first refusal.
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6. Reservation of Shares. The Company shall, so long as any principal
or interest is due hereunder, reserve and keep available out of its authorized
and unissued Common Stock, solely for the purpose of effecting the conversion of
this Note, such number of shares of Common Stock as shall from time to time be
sufficient to effect the conversion of this Note.
7. No Impairment. The Company shall not intentionally take any action
which would impair the rights and privileges of this Note set forth herein or
the Holder.
8. Obligations Absolute. No provision of this Note shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
convert this Note pursuant to the provisions of Section 3, and to pay the
principal of and interest on, this Note at the time, place and rate, and in the
manner, herein prescribed.
9. Waivers of Demand Etc. The Company hereby expressly waives demand
and presentment for payment, notice of nonpayment, protest, notice of protest,
notice of dishonor, notice of acceleration or intent to accelerate, bringing of
suit and diligence in taking any action to collect amounts called for hereunder
and will be directly and primarily liable for the payment of all sums owing and
to be owing hereon, regardless of and without any notice, diligence, act or
omission as or with respect to the collection of any amount called for
hereunder.
10. Replacement Note. In the event that the Holder notifies the Company
that its Note has been lost, stolen or destroyed, a replacement Note identical
in all respects to the original Note (except for registration number and
Outstanding Principal Amount, if different than that shown on the original Note)
shall be issued by the Company to the Holder, provided that the Holder executes
and delivers to the Company an agreement reasonably satisfactory to the Company
to indemnify the Company from any loss incurred by it in connection with such
Note, but in no event shall the aggregate amount of such indemnification exceed
the Outstanding Principal Amount of this Note.
11. Payment of Expenses. The Company agrees to pay on demand all
reasonable costs and expenses (including, without limitation, reasonable fees
and expenses of counsel to the Holder) incurred by the Holder in connection with
the enforcement of the Holder's rights and/or the collection of all amounts due
under this Note.
12. Assignment and Transfer of Note. Subject to the restrictions on
transfer contained herein, if applicable, this Note and all rights hereunder are
transferable in whole or in part, without charge to the Holder hereof, upon
surrender of this Note with a properly executed Form of Assignment attached
hereto as Exhibit B at the principal office of the Company (or at such office or
agency as the Company may designate in writing to the Holder).
13. Events of Default. If any of the following shall occur (each a
"Default"): (a) the Company shall fail to pay any principal of or interest on
this Note when due (whether by scheduled maturity, acceleration, demand or
otherwise), or (b) the Company shall fail to perform or observe any term,
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covenant or agreement contained herein (including, without limitation, the
failure to honor any Conversion Notice or to make any prepayment as provided in
any Election Notice) to be performed or observed by the Company, or (c) the
Company shall fail to pay any debt for borrowed money or other similar
obligation or liability in excess of $100,000 ("Indebtedness") (excluding
Indebtedness evidenced by this Note), or any interest or premium thereon, when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness, or
any other default under any agreement or instrument relating to any such
Indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of the maturity of such Indebtedness, unless such default or
failure to pay has been waived by the party to which enforcement would be
charged; or any such Indebtedness shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or (d) one or more judgments
or orders for the payment of money exceeding by $100,000 or more any applicable
insurance coverage shall be rendered against the Company, and either (i)
enforcement proceedings shall have been commenced by any creditor upon any such
judgment or order, or (ii) there shall be any period of ten (10) consecutive
days during which a stay of enforcement of any such judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect; or (e) the Company
shall be generally not paying its debts as such debts become due, or shall admit
in writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against the Company seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for the Company or for any
substantial part of its property and such proceeding shall remain undismissed or
unstayed for a period of forty-five (45) days; or the Company shall take any
action to authorize or effect any of the actions set forth above in this clause
(e); or (f) any provision of this Note shall at any time for any reason be
declared to be null and void by a court of competent jurisdiction, or the
validity or enforceability thereof shall be contested by the Company, or a
proceeding shall be commenced by the Company seeking to establish the invalidity
or unenforceability thereof; or the Company shall deny that it has any liability
or obligation hereunder or thereunder; then the Holder may (i) declare the
Outstanding Principal Amount of this Note and all other amounts due hereunder to
be immediately due and payable, whereupon the Outstanding Principal Amount of
this Note and all such other amounts shall become and shall be forthwith due and
payable, without diligence, presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived and all such amounts, if unpaid,
shall bear interest at the Default Rate, (ii) notwithstanding any provision to
the contrary contained herein, convert this Note at the Conversion Price then in
effect, and (iii) exercise any and all of its other rights under applicable law,
and hereunder.
14. Subordination. The Company hereby agrees, and the Holder by its
acceptance hereof agrees, that the payment of the principal of and interest on
this Note is hereby expressly made subordinate and junior in right of payment,
to the extent hereinafter set forth, to the prior payment in full of all
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indebtedness of the Maker on account of "Senior Debt." As used herein "Senior
Debt" shall mean all principal of (and premium, if any) and interest on and
other amounts due on any indebtedness, whether outstanding on the date of
execution of this Note or thereafter created, incurred, assumed or guaranteed by
the Company for money borrowed from others (including, for this purpose, all
obligations incurred under capitalized leases or purchase money mortgages) or in
favor of trade creditors or in connection with the acquisition by it of any
other business or entity, and, in each case, all renewals, extensions and
refundings thereof, other than (a) any such indebtedness as to which, in the
instrument creating or evidencing the same, it is provided that such
indebtedness is not superior in right of payment to this Note and (b)
indebtedness of the Company to any affiliate.
(a) Notwithstanding anything to the contrary contained in this
Note, no payment of the principal of or interest on this Note shall be made at
any time a default in payment of any Senior Debt shall have occurred and be
continuing without the prior written consent of the holders of the Senior Debt.
(b) In the event of insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Company or to any of the property of the
Company, or in the event of any proceedings for voluntary liquidation,
dissolution, or other winding-up of Company, whether or not involving insolvency
or bankruptcy, then the holders of the Senior Debt shall be entitled to receive
payment in full of all principal of, and premium, if any, and interest on all
Senior Debt before the holder of this Note shall be entitled to receive any
payment on account of principal or interest on this Note, and to that end the
holders of the Senior Debt shall be entitled to receive for application in
payment thereof any payment or distribution of any kind or character whether in
cash or property or securities, which may be payable or deliverable in any such
proceedings in respect of this Note, except securities of the Company which are
subordinate and junior in right of payment to the payment of all of the Senior
Debt then outstanding.
The subordination provisions of this Note are for the purpose of
defining the relative rights of the holders of the Senior Debt on the one hand,
and the holder of this Note on the other hand, against the Company and its
property; and nothing herein shall impair, as between the Company and the holder
of this Note, the obligation of the Company, which is unconditional and
absolute, to pay to the holder hereof the principal hereof and interest hereon
in accordance with the terms and provisions hereof; nor shall anything herein
prevent the holder of this Note from exercising all remedies otherwise permitted
by applicable law or hereunder upon any default by the Company to make any
payment of the principal of or interest on this Note, subject to the rights of
the holders of the Senior Debt to receive cash, property, stock or obligations
otherwise payable or deliverable to the holder of this Note.
15. Miscellaneous.
(a) The Company agrees that all notices or other communications
provided for hereunder shall be in writing (including telecommunications) and
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shall be mailed, telecopied or delivered to the Company at the address of the
Company set forth next to its signature, or at such other address as may
hereafter be specified by the Company to the Holder in writing. All notices and
communications shall be effective (i) upon receipt, if delivered personally,
(ii) upon receipt, when sent by facsimile with confirmed telecopier answerback,
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive same.
(b) No failure on the part of the Holder to exercise, and no delay
in exercising, any right, power, privilege or remedy hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof by the Holder
preclude any other or further exercise thereof or the exercise of any other
right, power, privilege or remedy of the Holder. No amendment or waiver of any
provision of this Note, nor consent to any departure by the Company therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Holder, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(c) Any provision hereof which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
(d) The Company hereby (i) irrevocably submits to the jurisdiction
of the courts of the State of New York or the United States for the Eastern
District of New York, in each case, shifting in New York County in any action or
proceeding arising out of or relating to this Note, (ii) waives any defense
based on doctrines of venue or forum non conveniens, or similar rules or
doctrines, and (iii) irrevocably agrees that all claims in respect of such an
action or proceeding may be heard and determined in such courts. The Company (by
its acceptance hereof) waives any right to trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Note.
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(e) This Note shall be governed by, and construed in accordance
with, the laws of the State of New York without regard to conflicts of law
principles.
XXXXXXXXXX.XXX INC.
------------------
Xxxxxx X. Xxxxxxxx
President
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EXHIBIT A
XXXXXXXXXX.XXX INC.
CONVERSION NOTICE
Reference is made to the 8% Convertible Subordinated Note (the "Note"), made by
XXXXXXXXXX.XXX INC., a New Jersey corporation (the "Company"), to the order of
NEW ERA FOODS, INC. In accordance with and pursuant to the Note, the undersigned
hereby elects to convert the amount under this Note indicated below into shares
of Common Stock, $.001 par value per share of the Company (the "Common Stock"),
as of the date specified below.
Date of Conversion:
--------------------------
Outstanding Principal Amount of Note to be
converted:
--------------------------
Please confirm the following information:
Conversion Price:
--------------------------
Number of shares of Common Stock
to be issued:
--------------------------
Please issue the Common Stock and, if applicable, any check drawn on an account
of the Company into which Note is being convened in the following name and to
the following address:
Issue to:
--------------------------
--------------------------
--------------------------
--------------------------
Facsimile Number:
--------------------------
Authorization:
--------------------------
By:
--------------------------
Title:
--------------------------
Dated:
--------------------------
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EXHIBIT B
FORM OF ASSIGNMENT
[To be executed only upon assignment of the Note]
For value received, the undersigned registered Holder of the within Note hereby
sells, assigns and transfers unto _________ the right represented by such Note.
Dated:
----------------
(Signature must conform in all respects to the name of
holder as specified on the face of the Note)
------------------------------------------
(Street Address)
------------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
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EXHIBIT F
XXXXXXXXXX.XXX INC.
NON-COMPETITION AND PROPRIETARY
INFORMATION AGREEMENT
THIS AGREEMENT is entered into as of the ____ day of November, 1999 by and
between _________________________, residing at ________________________________
(herein called the "Employee"), and XXXXXXXXXX.XXX, INC., a Delaware corporation
having its principal place of business at 00 Xxxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxx
Xxxx 00000-0000 (the "Company", which term includes any subsidiaries or
affiliates thereof).
W I T N E S S E T H:
WHEREAS, the Employee is employed by the Company as of _____________, 19__,
and it is a condition to such continued employment and to the grant of any
increases in compensation, stock options or other incentive compensation that
the Employee enter into an agreement with the Company upon the terms set forth
herein.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows.
(a) Full Time Employment; Non-Competition
(a) The Employee shall devote all of his business time and
energies to the business of the Company and shall not at any time while employed
by the Company and for a period of one year after termination of such employment
from the Company (the "Non-Competition Period"), engage in any business on
behalf of any other company or himself and shall not directly or indirectly own
an interest in, manage, operate, join, control, be employed by or participate
either directly or indirectly in the ownership, management, operation or control
of, or be connected in any manner with, any business whose activities conflict
with, are competitive with, or are similar to, that of the Company.
(b) While employed by the Company, and during the Non-Competition
Period, the Employee shall not, directly or indirectly:
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(a) perform services for or render advice to any person or
business wherever located, which currently has, or is contemplating having, any
products, or which currently performs, or is contemplating the performance of,
any services, which competes with any products, lines of business or services of
the Company; and
(b) on his own behalf or on behalf of or as an employee of
any other person or business, contact or approach any person or business
wherever located, with a view to selling or assisting others to sell products or
services competing with any products or services of the Company.
(b) Non Business Solicitation; Non-Hiring of Employees.
Except for the customers listed on Schedule "A" annexed hereto and
made a part hereof, the Employee shall not during the time employed by the
Company and during the Non-Competition Period, engage in business of the type
conducted by the Company with or solicit business of the type conducted by the
Company from any person, firm or entity which was a customer of the Company at
any time within one year preceding the termination of his employment, induce or
attempt to induce any such customer to reduce its business with the Company,
solicit or attempt to solicit any employees of the Company to leave the employ
of the Company or offer or cause to be offered employment to any person who was
employed by the Company at any time during the six months prior to the
termination of his employment with the Company. While employed by the Company,
and during the Non-Competition Period, the Employee shall also not engage in
business of the type conducted by the Company with any prospective customer of
the Company. For this purpose a "prospective customer' shall mean potential
customers which the Company has solicited or with which the Company has had
active discussions concerning potential business at any time during the one year
preceding the end of the Employee's employment by the Company. The Employee
acknowledges that (a) in the event his employment with the Company terminates
for any reason, he will be able to earn a livelihood without violating the
foregoing restrictions and (b) his ability to earn a livelihood without
violating such restrictions is a material condition of his employment with the
Company.
(c) Proprietary Information.
(a) The Employee has not and unless authorized or instructed in
writing by the Company, the Employee shall not, except as required in the
conduct of the Company's business, during or after his employment by the
Company, disclose to others, or use, any of the Company's inventions or
discoveries or its secret or confidential information, knowledge or data (oral,
written, or in machine-readable form) which the Employee may have obtained or
will obtain during the course of or in connection with the Employee's
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employment, including such inventions, discoveries, information, knowledge,
know-how or data relating to machines, equipment, products, services, systems,
software, research and/or development, designs, compositions, formulae,
processes, manufacturing procedures or business methods, whether or not
developed by the Employee, by others in the Company or obtained by the Company
from third parties, and irrespective of whether or not such inventions,
discoveries, information, knowledge, know-how or data have been identified by
the Company as secret or confidential, unless and until, and then only to the
extent that, such inventions, discoveries, information, knowledge, know-how or
data become available to the public otherwise than by the Employee's act or
omission.
(b) During the course of his employment by the Company and
thereafter, the Employee shall not, except as required in the conduct of the
Company's business, disclose to others, or use, any of the information relating
to present and prospective marketing, sales and advertising programs and
agreements with representatives or prospective representatives of the Company,
present or prospective sources of supply or any other business arrangements of
the Company, including but not limited to customers, customer lists, costs,
prices and earnings, whether or not such information is developed by the
Employee, by others in the Company or obtained by the Company from third
parties, and irrespective of whether or not such information has been identified
by the Company as secret or confidential, unless and until, and then only to the
extent that, such information becomes available to the public otherwise than by
the Employee's act or omission.
(d) Assignment of Inventions.
The Employee agrees to assign to the Company or its affiliates,
successors or assigns, all of his rights to inventions, or discoveries,
trademarks, tradenames and intellectual property which, during the period of his
employment with the Company or its affiliates, successors or assigns, the
Employee has made or conceived, either solely or jointly with others, in the
time or course of his employment with the Company or its affiliates, successors
or assigns, or with the use of the Company's or their time, materials or
facilities, or relating to any subject matter with which his work for the
Company, its affiliates, successor or assigns is or may be concerned. The
Employee further agrees without charge to the Company, its affiliates,
successors or assigns, but at the Company's or their expense, to execute,
acknowledge and deliver all such papers or documents, including applications for
patents, trademarks, registrations and copyrights, and to perform such other
acts as the Employee lawfully may perform, as may be necessary in the opinion of
the Company, its affiliates, successors or assigns, to obtain or maintain
patents, trademarks, registrations and copyrights for said inventions,
trademarks, tradenames and intellectual property in any and all countries and to
vest title thereto to the Company, its affiliates, successors or assigns.
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(e) Prior Employment.
(a) Employee represents that his performance of any and all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary information acquired by
him in confidence or in trust prior to his employment by the Company. The
Employee has not entered into, and he agrees he will not enter into, any
agreement either written or oral in conflict herewith.
(b) Employee understands as part of the consideration for his
continued employment by the Company, that he has not brought and will not bring
with him to the Company or use in the performance of his responsibilities at the
Company any materials or documents of a former employer which are not generally
available to the public, unless he has obtained written authorization from the
former employer for their possession and use.
(c) In the event that prior to entering the employ of the Company,
the Employee had terminated employment with one or more prior employers, the
Employee agrees to indemnify and hold harmless the Company, its directors,
officers and employees, against any liabilities and expenses, including amounts
paid in settlement, incurred by any of them in connection with any claim by any
of his prior employers that the termination of his employment with such
employer, his employment by the Company, or use of any skills and knowledge by
the Company is a violation of contract or law. On or prior to the date hereof,
Employee has delivered to the Company a copy of any contract of employment
between Employee and each such prior employer.
(f) Return of Property.
All computer software, computer programs, source codes, object
codes, magnetic tapes, printouts, samples, notes, records, reports, documents,
customer lists, photographs, catalogs and other writings, whether copyrightable
or not, relating to or dealing with the Company's business and plans, and those
of others entrusted to the Company which are prepared or created by the Employee
or which may come into his possession at any time during or as a result of his
employment, are the property of the Company, and upon termination of his
employment, the Employee agrees to return all such computer software, computer
programs, source codes, object codes, magnetic tapes, printouts, samples, notes,
records, reports, documents, customer lists, photographs, catalogs and writings
and all copies thereof to the Company. The Company may withhold any amounts due
to the Employee against return of these materials and any other materials of the
Company or its customers.
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(g) Survival.
The covenants in this Agreement on the part of the Employee shall
survive termination of this Agreement, and the existence of any claim or cause
of action of the Employee against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of such covenants. The Employee agrees that a remedy at law for any
breach of the foregoing covenants would be inadequate and that the Company shall
be entitled to a temporary and permanent injunction or an order for specific
performance of such covenants without the necessity of proving actual damage to
the Company, and to recover from the Employee its legal fees and expenses in
connection therewith.
(h) Unenforceability.
(a) If any of the rights or restrictions contained or provided for
in this Agreement shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope, or other provisions hereof, or any other
provisions of this Agreement, the parties hereto contemplate that the court
shall reduce such extent, duration, geographical scope or other provisions and
enforce this Agreement in its reduced form for all purposes in the manner
contemplated hereby.
(b) The Company and the Employee intend to and hereby confer
jurisdiction to enforce the covenants contained in this Agreement upon the
courts of any jurisdiction within the geographical scope of such covenants. If
the courts of any one or more of such jurisdictions hold such covenants wholly
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the Company and the Employee that such determination not bar or in
any way affect the Company's right to the relief provided above in the courts of
any other jurisdiction within the geographical scope of such covenants as to
breaches of such covenants as they relate to each jurisdiction, such covenants
as they relate to each jurisdiction being, for this purpose, severable into
diverse and independent covenants.
(i) Miscellaneous.
(a) The rights and obligations of the Company under this Agreement
may be assigned by the Company to the successors in interest of the Company or
of that part of the business of the Company to which this Agreement applies.
This Agreement may not be assigned by the Employee.
(b) All notices provided for hereunder shall be deemed adequate if
delivered personally to the Employee or if given to either party by first-class
registered or certified postpaid mail, return receipt requested, addressed to
the person to whom such notice is directed at his residence or usual place of
business, or to such other address as such party may designate by notice
similarly given, and shall be effective upon receipt.
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(c) This Agreement and the rights and obligations of the parties
hereunder shall be construed, interpreted and enforced in accordance with, and
governed by the laws of, the State of New York, exclusive of the choice-of-laws
rules thereunder.
(d) If any of the articles, sections, paragraphs or provisions of
this Agreement shall be held by a court of last resort to be invalid, the
remainder of this Agreement shall not be affected thereby.
(e) The foregoing contains the entire agreement between the
parties relating to the subject matter of this Agreement, and may not be altered
or amended except by an instrument in writing signed by both parties hereto, and
this Agreement supersedes all prior understandings and agreements relating to
the subject matter hereof.
(f) The waiver by one party of a breach by the other of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by such party. No waiver shall be valid unless written and
signed by the party against whom the waiver is sought to be enforced.
(g) All headings and captions herein are for convenience only and
shall not influence the construction or interpretation of this Agreement.
(h) As used in this Agreement, the singular shall include the
plural and vice versa, and the masculine gender shall include the feminine and
neuter and vice versa, unless the context requires otherwise.
(1) Nothing in this Agreement shall confer upon the Employee any
right to continued employment, nor interfere with the right of the Company to
terminate the employment of the Employee at any time.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Employee has hereunto set his hand to be
effective as of the date first above written.
XXXXXXXXXX.XXX INC.
By:
------------------------------
Name:
Title:
------------------------------
, Employee
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Exhibit G
XXXXXXXXXX.XXX INC.
NON-COMPETITION AGREEMENT
THIS AGREEMENT is entered into as of the 23rd day of November, 1999 by and
among XXXXXXXXXX.XXX INC., a New Jersey corporation having its principal place
of business at 00 Xxxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxx Xxxx (herein called the
"Company"), SYNERGY BRANDS, INC., a Delaware corporation having its principal
place of business at 00 Xxxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000-0000 (the
"Synergy"), and XXXXXXXX BROADCAST GROUP, INC., a Maryland corporation having
its principal place of business at 00000 Xxxxxx Xxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxx
00000 ("Xxxxxxxx").
W I T N E S S E T H:
WHEREAS, Synergy and Xxxxxxxx are parties to a Stock Purchase Agreement of
even date herewith (the "Synergy Purchase Agreement", providing for, inter alia,
the issuance and sale by Synergy and the purchase by Xxxxxxxx of 2,200,000
shares of common stock, $.001 par value per share, of Synergy for an aggregate
purchase price of $4,400,000; and
WHEREAS, the Company and Xxxxxxxx are parties to a Stock Purchase Agreement
of even date herewith (the "BeautyBuys Purchase Agreement", and, together with
the Synergy Purchase Agreement, collectively the "Purchase Agreements" ),
providing for, inter alia, the issuance and sale by the Company and the purchase
by Xxxxxxxx of 900,000 shares of the Class B Common Stock, $.001 par value per
share, of the Company, which shares are entitled to fifty percent (50%) of the
voting rights of the outstanding capital stock of the Company, for an aggregate
purchase price of $765,000; and
WHEREAS, following the purchase pursuant to the BeautyBuys Purchase
Agreement Synergy will be the owner of 9,000,000 shares of the outstanding Class
A Common Stock, $.001 par value per share, of the Company, which shares are
entitled to fifty (50%) percent of the voting rights of the outstanding capital
stock of the Company; and
WHEREAS, it is a condition precedent to the closing under the Purchase
Agreements that the parties enter into this Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows.
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(a) Non-Competition; Non-Solicitation.
(i) During the Non-Competition Period (defined below), Xxxxxxxx
and Synergy each agrees that it will not directly or indirectly own or acquire
an interest in or control, any Person which is or would thereby become a
Restricted Subsidiary (defined below); and
(ii) During the Non-Competition Period, Xxxxxxxx will not, and
will not cause or permit any Subsidiary of Xxxxxxxx, and Synergy will not, and
will not cause or permit any Subsidiary of Synergy, to solicit or attempt to
solicit any employees of the Company to leave the employ of the Company or offer
or cause to be offered employment to any person who was employed by the Company
at any time during the six months prior to such solicitation or attempted
solicitation.
(b) Definitions.
As used herein:
(i) the "Non-Competition Period" shall be the period of time
commencing on the date hereof and continuing until the earliest to occur of (i)
the one (1) year anniversary of the date hereof, (ii) the occurrence of an IPO
with respect to the Company, or (iii) the occurrence of a Qualified Sale with
respect to the Company; and
(ii) "Restricted Subsidiary" means, with respect to Xxxxxxxx or
Synergy, any corporation or other entity (i) of which ten (10%) percent or more
of the capital stock or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned or controlled by
Xxxxxxxx or Synergy, as the case may be, and (ii) which derives twenty (20%)
percent or more of its gross revenues from the sale of fragrances and/or
professional hair care products on the date Xxxxxxxx or Synergy, as the case may
be, acquires or would have acquired such 10% or more ownership interest in such
corporation or other entity.
(c) Survival.
The covenants in this Agreement on the part of Synergy and
Xxxxxxxx shall survive termination of this Agreement. Synergy and Xxxxxxxx each
agrees that a remedy at law for any breach of its respective covenants herein
would be inadequate and that the Company and the other such party shall be
entitled to a temporary and permanent injunction or an order for specific
performance of such covenants without the necessity of proving actual damage to
the Company or such party.
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(d) Unenforceability.
(i) If any of the rights or restrictions contained or provided for
in this Agreement shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope, or other provisions hereof, or any other
provisions of this Agreement, the parties hereto contemplate that the court
shall reduce such extent, duration, geographical scope or other provisions and
enforce this Agreement in its reduced form for all purposes in the manner
contemplated hereby.
(ii) The parties intend to and hereby confer jurisdiction to
enforce the covenants contained in this Agreement upon the courts of any
jurisdiction within the geographical scope of such covenants. If the courts of
any one or more of such jurisdictions hold such covenants wholly unenforceable
by reason of the breadth of such scope or otherwise, it is the intention of the
parties that such determination not bar or in any way affect the right of any
party to the relief provided above in the courts of any other jurisdiction
within the geographical scope of such covenants as to breaches of such covenants
as they relate to each jurisdiction, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.
(e) Miscellaneous.
(i) The rights and obligations of the Company under this Agreement
may be assigned by the Company to the successors in interest of the Company or
of that part of the business of the Company to which this Agreement applies.
(ii) All notices provided for hereunder shall be deemed adequate
if given to any party in the manner and with the effect set forth for notices in
the Purchase Agreements.
(iii) This Agreement and the rights and obligations of the parties
hereunder shall be construed, interpreted and enforced in accordance with, and
governed by the laws of, the State of New York, exclusive of the choice-of-laws
rules thereunder.
(iv) If any of the articles, sections, paragraphs or provisions of
this Agreement shall be held by a court of last resort to be invalid, the
remainder of this Agreement shall not be affected thereby.
(v) The foregoing contains the entire agreement between the
parties relating to the subject matter of this Agreement, and may not be altered
or amended except by an instrument in writing signed by both parties hereto, and
this Agreement supersedes all prior understandings and agreements relating to
the subject matter hereof.
(vi) The waiver by one party of a breach by the other of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by such party. No waiver shall be valid unless written and
signed by the party against whom the waiver is sought to be enforced. (vii) All
headings and captions herein are for convenience only and shall not influence
the construction or interpretation of this Agreement.
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(vii) All headings and captions herein are for convenience only
and shall not influence the construction or interpretation of this Agreement.
(viii) As used in this Agreement, the singular shall include the
plural and vice versa, and the masculine gender shall include the feminine and
neuter and vice versa, unless the context requires otherwise.
(ix) This Agreement may be executed in one or more counterparts,
each of which shall be an original and together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties have each has caused this Agreement to be
executed by its duly authorized officer to be effective as of the date first
above written.
SYNERGY BRANDS INC.
By:
----------------------------
Name:
Title:
XXXXXXXXXX.XXX INC.
By:
----------------------------
Name:
Title:
XXXXXXXX BROADCAST GROUP, INC.
By:
----------------------------
Name:
Title:
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