STOCK PURCHASE AGREEMENT
Between
VERMONT PURE SPRINGS, INC.
and
XXXXXXX XXXXXX
Relating to the
Capital Stock of
A.M. FRIDAYS, INC.
TABLE OF CONTENTS
ARTICLE I - REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE STOCKHOLDER..............................................................................................-1-
1.1 Organization.........................................................................-2-
1.2 Subsidiaries; Partnerships...........................................................-2-
1.3 Authority............................................................................-2-
1.4 Capital Structure....................................................................-2-
1.5 Financial Statements.................................................................-3-
1.6 Material Changes since March 31, 1997................................................-3-
1.7 Availability of Assets and Legality of Use...........................................-3-
1.8 Accounts Receivable..................................................................-4-
1.9 Real Property and Leases.............................................................-4-
1.10 Organizational Documents.............................................................-4-
1.11 Material Contracts and Leases........................................................-4-
1.12 Insurance............................................................................-4-
1.13 No Undisclosed Liabilities...........................................................-5-
1.14 Litigation and Claims................................................................-5-
1.15 Tax Liabilities......................................................................-5-
1.16 Employee Agreements..................................................................-5-
1.17 Employee Relations...................................................................-5-
1.18 Benefit Plans........................................................................-6-
1.19 Conflicts............................................................................-7-
1.20 Corporate Name.......................................................................-7-
1.21 Trademarks and Proprietary Rights....................................................-7-
1.22 Brokers..............................................................................-7-
1.23 No Omissions.........................................................................-7-
ARTICLE II REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
BUYER...........................................................................................................-8-
2.1 Organization.........................................................................-8-
2.2 Authority............................................................................-8-
2.3 Brokers..............................................................................-8-
2.4 No Omissions.........................................................................-8-
2.5 Financial Ability....................................................................-8-
2.6 Conduct After Execution..............................................................-9-
2.7 Acceleration.........................................................................-9-
ARTICLE III - ADDITIONAL COVENANTS OF THE STOCKHOLDER AND THE
BUYER...........................................................................................................-9-
3.1 Non-Competition......................................................................-9-
3.2 Use of Trademarks...................................................................-10-
3.3 Use of Names........................................................................-10-
------------
3.4 Additional Tax Information..........................................................-10-
--------------------------
3.5 Certain Tax Matters.................................................................-10-
-------------------
ARTICLE IV - ACTION PRIOR TO THE CLOSING DATE.........................................................-11-
4.1 Confidential Nature of Information..................................................-11-
4.2 Accuracy of Representations and Warranties..........................................-11-
4.3 No Material Change in the Company...................................................-11-
4.4 No Public Announcement..............................................................-12-
ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
BUYER..........................................................................................................-12-
5.1 No Misrepresentation or Breach of Covenants and Warranties..........................-12-
5.2 No Changes in or Destruction of Property............................................-12-
ARTICLE VI - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
STOCKHOLDER....................................................................................................-12-
ARTICLE VII - PURCHASE PRICE AND CLOSING..............................................................-13-
7.1 Closing.............................................................................-13-
7.2 Purchase and Sale...................................................................-13-
7.3 Deliveries by the Stockholder.......................................................-13-
7.4 Deliveries of the Buyer.............................................................-15-
ARTICLE VIII - SURVIVAL OF OBLIGATIONS; INDEMNIFICATION...............................................-15-
8.1 Survival of Obligations.............................................................-15-
8.2 Indemnification.....................................................................-15-
ARTICLE IX - MISCELLANEOUS............................................................................-17-
9.1 Notices.............................................................................-17-
9.2 Governing Law.......................................................................-17-
9.3 Successors and Assigns..............................................................-18-
9.4 Severability........................................................................-18-
9.5 Expenses............................................................................-18-
9.6 Titles and Headings.................................................................-18-
9.7 Schedules...........................................................................-18-
9.8 Entire Agreement; Amendments and Waivers............................................-18-
9.9 No Assignment.......................................................................-18-
SCHEDULES
1.1 Jurisdictions of Qualification..................................................................1
1.3 Consents........................................................................................2
1.5 Bank Accounts of the Company....................................................................3
1.7 Assets..........................................................................................5
1.8 Accounts Receivable.............................................................................5
1.9 Real Property...................................................................................5
1.11 Leases..........................................................................................6
1.12 Insurance.......................................................................................6
1.14 Claims..........................................................................................6
1.15 Tax Procedures..................................................................................6
1.16 Employment Agreements...........................................................................7
1.17 Employee Compensation...........................................................................7
1.19 Conflicts.......................................................................................9
1.21 Trademarks and Proprietary Rights..............................................................10
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, made and entered into this _16_ day of
July, 1997 (the "Agreement") by and among VERMONT PURE SPRINGS, INC., a Delaware
corporation (the "Buyer"), and XXXXXXX XXXXXX, an individual (the "Stockholder")
and A.M. FRIDAYS, INC., a New Hampshire corporation (the "Company"), all of the
issued and outstanding capital stock (the "Stock") of which is owned by the
Stockholder.
WITNESSETH:
WHEREAS, the Company is engaged in the business of home and office
delivery of water products, vending machines, and coffee/tea products;
WHEREAS, the Stockholder desires to sell the Stock to the Buyer
pursuant to the terms and conditions set forth in this Agreement; and
WHEREAS, the Buyer desires to purchase the Stock from the Stockholder
on the terms and conditions set forth in this Agreement,
NOW, THEREFORE, the Buyer and the Stockholder, in consideration of the
agreements, covenants and conditions contained herein, hereby make the following
representations and warranties, give the following covenants and agree to be
legally bound hereby as follows:
ARTICLE I
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE STOCKHOLDER
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, the Stockholder represents and
warrants to the Buyer and agrees as set forth in this Article I. The
representations and warranties of the Stockholder are qualified by the
information set forth in the Schedules referred to in this Article I. Buyer
acknowledges and agrees that apart from the representations and warranties of
the Stockholder contained in this Agreement, the Stockholder and representatives
of the Stockholder have made no further or additional representations or
warranties.Buyer acknowledges and agrees that apart from the representations and
warranties of the Stockholder contained in this Agreement, the Stockholder and
representatives of the Stockholder have made no further or additional
representations or warranties.
1.1 Organization. The Stockholder is an individual. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New Hampshire and is duly qualified to transact business as a
foreign corporation and is in good standing as such in the jurisdictions listed
on Schedule 1.1 hereto, which are the only jurisdictions in which the failure to
so qualify would have a material adverse effect on the business or financial
condition of
the Company. The Company has the corporate power and authority and other
authorizations necessary or required in order for it to own or lease and operate
its properties and to carry on its businesses as now conducted.
1.2 Subsidiaries; Partnerships. The Company does not own any
interest in any other corporation, partnership, joint venture or other entity.
1.3 Authority. The Stockholder has the authority to execute,
deliver and perform its obligations under this Agreement. This Agreement, when
executed and delivered by the Stockholder and assuming the due execution hereof
by the Buyer, will constitute the valid, legal and binding agreement of the
Stockholder enforceable in accordance with its terms. Except as described on
Schedule 1.3 hereof, no consent, authorization, approval, order, license,
certificate or permit of or from or declaration or filing with, any Federal,
state, local or other governmental authority or any court or other tribunal
(collectively, the "Governmental Consents") is required in connection with the
execution, delivery or performance of this Agreement by the Stockholder. Except
as described on Schedule 1.3, no consent of any affiliate of the Company or the
Stockholder or of any party to any, contract, agreement, instrument, lease,
license, arrangement or understanding to which the Company is a party, or to
which any of its properties or assets is subject (the "Stockholder's Contractual
Consents"), is required for the execution, delivery or performance of this
Agreement by the Stockholder. The execution, delivery and performance by the
Stockholder does not (if the Governmental Consents and the Stockholder's
Contractual Consents referred to in Schedule 1.3 hereof have been obtained prior
to the Closing) (I) violate, result in a breach of, conflict with or (with or
without the giving of notice or the passage of time or both) entitle any party
to terminate, modify or otherwise change, in any material respect, the rights or
obligations of the parties thereunder or call a default under any such contract,
agreement, instrument, lease, license, arrangement, or understanding, (ii)
violate or result in a material breach of any term of the certificate of
incorporation or other organizational documents or by-laws of the Company, or
the Stockholder, or (iii) violate, result in a breach of or conflict, in any
material respect, with any law, rule, regulation, order, judgment or decree
binding the Company or the Stockholder, or to which any of their respective
operations, businesses, properties, or assets are subject.
1.4 Capital Structure. The authorized capital stock of the
Company consists of 1000 authorized shares of common stock at no par value per
share, of which 100 shares are issued and outstanding (and none of which is held
by the Company as treasury stock). Except for this Agreement, there are no
agreements, arrangements, options, warrants or rights or commitments of any
character relating to the issuance, sale, purchase or redemption of any shares
of capital stock of the Company. There is outstanding no security or other
investment convertible into or exchangeable for capital stock of the Company.
Each of such outstanding shares of Stock is validly authorized, validly issued,
fully paid and nonassessable, has not been issued and is not owned or held in
violation of any preemptive right; and is owned of record and beneficially by
the Stockholder, free and clear of any liens, security interests, pledges,
charges, encumbrances, stockholders' agreements, voting trusts or restrictions
of any kind and the transfer and delivery
2
of the Stock to the Buyer by the Stockholder as contemplated by this Agreement
will be sufficient to transfer good and marketable record and beneficial title
and ownership to such Stock to the Buyer free and clear of liens, claims,
encumbrances and restrictions of any kind.
1.5 Financial Statements. The Stockholder has furnished to the
Buyer the audited consolidated balance sheets of the Company for the years ended
December 31, 1995 and 1996 and the related statements of operations, statements
of shareholder's equity and statements of cash flows for the periods then ended,
including the notes thereto (the 1995-1996 statements are collectively defined
as the "Financial Statements") and the unaudited financial statements (balance
sheet and profit and loss statement) at and for the period ended March 31, 1997
(the "March 31 Balance Sheet"). The Financial Statements and the March 31, 1997
Balance Sheet fairly present the respective financial positions of the Company
as of the respective dates thereof and the results of operations for the
respective periods covered thereby, and the Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout all periods and in accordance with the books and
records of the Company.
There is set forth on Schedule 1.5 hereto a correct and complete
list of all (I) accounts, borrowing resolutions and deposit boxes maintained by
the Company at any bank or other financial institution (ii) the names of the
persons authorized to sign or otherwise act with respect thereto, and (iii)
powers of attorney for the Company.
1.6 Material Changes since March 31, 1997. To the best of the
Stockholder's knowledge, since March 31, 1997, the business of the Company has
been operated only in the ordinary course and, whether or not in the ordinary
course of business other than as disclosed in this Agreement or the Schedules
referred to herein there has not been, occurred or arisen (i) any Material
adverse change in the financial condition of the Company from that shown on the
March 31 Balance Sheet; (ii) any damage or destruction in the nature of a
casualty loss, whether covered by insurance or not, to any property or business
of the Company; (iii) any amendment or termination of any agreement other than
in the ordinary course of business, or cancellation or Material reduction of any
debt owing to the Company or waiver or relinquishment of any right of Material
value to the Company; or (iv) any other event or condition which Materially and
adversely affects the results of operations or business, financial condition or
property of the Company ("Material" to be defined as any transaction or event
with a balance sheet effect in excess of $12,000).
1.7 Availability of Assets and Legality of Use. Except as
specified in Schedule 1.7, the assets owned or leased by the Company constitute
all of the assets which are being used in their businesses, and, to the best of
the Stockholder's knowledge, after due inquiry of the Company's Senior Officers,
such assets are in good and serviceable condition (normal wear and tear
excepted) and suitable for the uses for which intended and such assets and their
uses conform in all Material respects to all applicable laws; and except as
specified in Schedule 1.7, the Company has title to, or valid leasehold
interests in, all of their respective properties and assets, including those
reflected on the March 31 Balance Sheet (other than those disposed of for fair
3
value in the ordinary course of business) which at Closing will be free and
clear of all liens, mortgages, security interests, pledges, charges and
encumbrances.
1.8 Accounts Receivable. All accounts receivable reflected on
the March 31 Balance Sheet for the Company and not collected at the date hereof,
have arisen from bona fide transactions in the ordinary course of the Company's
business. Except as set forth in Schedule 1.8, none of such receivables is
subject to counterclaims, set-offs or is in dispute and all of such accounts are
good and collectible in the ordinary course of business at the aggregate
recorded amounts thereof, subject to the allowance for possible losses shown on
such March 31 Balance Sheet.
1.9 Real Property and Leases. The Company does not own any
real property. Attached hereto as Schedule 1.9 are true, correct and complete
copies of every lease or agreement under which the Company is lessee or
sublessee of, or holds or operates, any real property or personal property owned
by any third party. Each of such leases and agreements is in full force and
effect and constitutes a legal, valid and binding obligation of the Company and,
to the best of the Stockholder's knowledge, after due inquiry of the Company's
Senior Officers, the other parties thereto. The Company is not in default in any
Material respect under any such lease or agreement nor, to the best of the
Stockholder's knowledge has any event occurred which with the passage of time or
giving of notice or both would constitute such a default. Except as set forth on
Schedule 1.9, none of such leases or agreements requires the consent of any
party thereto to the transactions contemplated by this Agreement.
1.10 Organizational Documents. The Company has delivered to
the Buyer the Certificate of Incorporation and Bylaws of the Company, as
presently in effect, certified by the Secretary of the Company. The stock
ledgers and stock transfer books and the minute book records of the Company
relating to all issuances and transfers of stock by the Company and all formal
proceedings of the Stockholder and the Board of Directors of the Company since
their respective incorporations made available to the Buyer are the original
stock ledgers and stock transfer books and minute book records of the Company or
exact copies thereof.
1.11 Material Contracts and Leases. True, correct and complete
copies of every Material contract, agreement, lease or other obligation or
commitment under which the Company, is the obligor, lessor or sublessor have
been made available to the Buyer and attached hereto as Schedule 1.11. Each of
such agreements and leases is in full force and effect and constitutes a legal,
valid and binding obligation of the parties thereto and is enforceable in
accordance with its terms except as enforcement of such agreement may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally. Neither the Company nor the other parties to such agreements
and leases are in default under any such lease or agreement in any Material
respect as it relates to the Company nor to the best of the knowledge of the
Stockholder after due inquiry of the Company's Senior Officers, has any event
occurred which with the passage of time or the giving of notice or both would
constitute such a Material default.
4
1.12 Insurance. Attached hereto as Schedule 1.12 is a list and
an accurate description of all policies of insurance that are held or maintained
by or for the benefit of the Company as of the date hereof (including policy
numbers, nature of coverage, limits, deductibles, carriers, premiums and
effective and termination dates) The Company has complied with each of such
policies and has not failed to give any notice or present any known claim
thereunder. The Company has not received, and no event or omission within the
control of the Company has occurred which may cause it to receive notice that
any such policies will be canceled or will be reduced in amount or scope. True
and complete copies of all such policies have been delivered to the Buyer.
1.13 No Undisclosed Liabilities. The Company is not subject to
any Material liability (including unasserted claims), absolute or contingent,
which is not shown or which is in excess of amounts shown or reserved for in the
March 31 Balance Sheet other than liabilities of the same nature as those set
forth on the March 31 Balance Sheet and reasonably incurred in the ordinary
course of business after March 31, 1997.
1.14 Litigation and Claims. Except as set forth on Schedule
hereto, there are no lawsuits, proceedings, claims, governmental or other
proceedings (formal or informal) or investigations pending or threatened with
respect to the Company or its businesses, properties or assets which may
reasonably be expected to have a Material adverse effect on the Company.
1.15 Tax Liabilities. Schedule 1.15 sets forth a correct
description of the procedures followed with respect to all payments by the
Company to the Stockholder in connection with taxes, including any amounts paid
in 1997, the dates of such payments and any amounts remaining to be paid in
respect of any period prior to the Closing Date. The amounts reflected as
liabilities for taxes on the March 31 Balance Sheet are sufficient for the
payment of all unpaid Federal, state, county, local and foreign taxes of the
Company accrued and applicable to the period ended on such balance sheet date
and all years and periods prior thereto.
1.16 Employee Agreements. Attached hereto as Schedule 1.16 is
a true, correct and complete list of all employee benefit plans, contracts, and
arrangements, oral or written, including, but not limited to, union contracts,
employee benefit plans and severance plans, whereunder the Company has any
obligation (other than the obligation to make current wage or salary payments
terminable on notice of 30 days or less or normal policies concerning holidays,
vacations and salary continuation during short absence for illness or other
reasons) to or on behalf of its officers, employees or their beneficiaries or
whereunder any of such persons owes money to the Company.
1.17 Employee Relations. The Company has not engaged in any
unfair labor practice, unlawful employment practice or unlawful discriminatory
practice in the conduct of its respective businesses. The Company has complied
in all Material respects with all applicable laws, rules and regulations
relating to wages, hours and collective bargaining and have withheld all amounts
required to be withheld from the wages or salaries of employees. The Company is
not a party to or threatened with or in danger of being a party to any labor
dispute which would Materially
5
interfere with the conduct of their businesses. Set forth on Schedule 1.17
hereto is the name and total annual compensation (including bonuses) paid by the
Company or the Subsidiary to current active employees during the year ended
December 31, 1996 and the annual compensation payable for 1997.
1.18 Benefit Plans. Schedule 1.18 contains a list of any
"employee pension benefit plan" or "employee welfare benefit plan" within the
meaning of Sections 3(1) and 3(2) of the Employee Retirement Income Security Act
of 1974, as amended, ("ERISA") established or maintained by the Company to which
the Company has made any contributions in 1996 or 1997 (collectively the
"Employee Benefit Plans"). The Company is not required, or was not required
within the immediately preceding five years, to make any contribution to any
"multiemployer plan" within the meaning of Section 3(7) of ERISA. The Company
does not have any liability in respect of any employee pension benefit plans
established or maintained and to which contributions are or were made by it to
the Pension Benefit Guaranty Corporation ("PBGC").
Schedule 1.18 also lists each deferred compensation plan, bonus
plan, stock option plan, employee stock purchase plan and any other employee
benefit plan, agreement, arrangement or commitment not required under the
preceding paragraph to be listed on Schedule 1.18 (other than normal policies
concerning holidays, vacations and salary continuation during short absences for
illness or other reasons) maintained by the Company.
Except as set forth on Schedule 1.18, (a) no employee pension
benefit plan, as defined in Section 3(2) of ERISA, maintained or contributed to
by the Company or in respect of which the Company is considered an "employer"
under Section 414 of the Internal Revenue Code of 1986, as amended (the "Code"),
(i) has incurred any "accumulated funding deficiency," as defined in Section 412
of the Code (whether or not waived), or (ii) has incurred any liability to PBGC,
and (b) the Company has not breached any of the responsibilities, obligations or
duties imposed on it by ERISA or the Code with respect to any employee pension
benefit plan or employee welfare benefit plan maintained by it, which breach has
given rise to, or may in the future give rise to, an obligation to pay money,
including the obligation to make any required contribution to any employee
pension benefit plan for any plan year ending prior to the Closing Date. There
is no contribution due for any pension plan for the year in which the Closing
occurs. Except as set forth on Schedule 1.18, neither the Company nor any of its
affiliates or any "party in interest," as defined in Section 3(14) of ERISA, in
respect of any such plan has engaged in any non-exempted prohibited transaction
described in Sections 406 and 408 of ERISA or Section 4975 of the Code which
would result in a Material adverse effect on the Company. Except as set forth on
Schedule 1.18, no reportable event, as defined in Section 4043 of ERISA, has
occurred with respect to any employee pension benefit plan maintained or
contributed to by the Company or in respect of which the Company is an employer
under Section 414 of the Code; and none of such plans has been terminated by the
plan administrator thereof or by the PBGC. The Company has not incurred any
unpaid liability for any pension plan covered under ERISA.
With respect to any employee pension benefit plan or employee
welfare benefit plan
6
maintained by the Company, no action, suit, grievance, arbitration or other
manner of litigation, or claim with respect to the assets of the plan (other
than the routine claims for benefits made in the ordinary course of plan
administration for which plan administrative review procedures have not been
exhausted) are pending, threatened or imminent against or with respect to the
plan, the Company, or fiduciary (as defined in ERISA ss.3(21)) of the plan
(including any action, suit, grievance, arbitration or other manner of
litigation, or claim regarding conduct which allegedly interferes with the
attainment of rights under the plan), and the Stockholder has no knowledge of
any facts which would give rise to or could give rise to any action, suit,
grievance, arbitration or other manner of litigation, or claim.
1.19 Conflicts. There are (a) no Material situations involving
the interests of the Stockholder (except as listed on Schedule 1.16 or Schedule
1.19) or to the best of Stockholder's knowledge any officer or director of the
Company which may be generally characterized as a "conflict of interest,"
including but not limited to, the leasing of property to or from the Company or
significant direct or indirect interests in the business of competitors,
suppliers or customers of the Company.
1.20 Corporate Name. The Company owns and possesses, to the
exclusion of the Stockholder and its affiliates, all rights to the use of the
names"A.M.Fridays" and "Four Seasons Spring Water" including, but not limited
to, the right to use such names in advertising and neither the Company nor the
Stockholder has licensed either name to any party.
1.21 Trademarks and Proprietary Rights. All trademarks, trade
names, copyrights and applications therefor which are owned or exclusively used
or registered in the name of or licensed to the Company are listed and briefly
described on Schedule 1.21. Other than as specified on Schedule 1.21, no
proceedings have been instituted or are pending or threatened which challenge
the validity of the ownership by the Company of any such trademarks, trade
names, copyrights or applications. The Company has not licensed anyone to use
any of the foregoing or any other technical know-how or other proprietary rights
of the Company and the Stockholder has no knowledge of the infringing use of any
of such trademarks and trade names or the infringement of any such copyrights by
any person except as set forth on Schedule 1.21. The Company owns all
trademarks, trade names, copyrights, processes and other technical know-how and
other proprietary rights now used in the conduct of its business and has not
received any notice of conflict with the asserted rights of others except as
specified in Schedule 1.21.
1.22 Brokers. Neither the Company nor the Stockholder has paid
or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions provided for in this
Agreement. Neither the Company nor the Stockholder has any agreement or
obligation whatsoever with entities other than the Buyer regarding any proposed
acquisition of the Company by any such entity and neither of them is engaged in
any negotiations with any such entity for any such acquisition.
1.23 No Omissions. None of the representations or warranties
of the Stockholder
7
contained herein and, none of the information contained in the Schedules
referred to in this Article I is false or misleading in any Material respect or
omits to state a fact herein or therein, necessary to make the statements herein
or therein in the circumstances in which they were made not misleading in any
Material respect.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BUYER
As an inducement to the Stockholder to enter into this Agreement
and to consummate the transactions contemplated herein, the Buyer represents and
warrants to the Stockholder and agrees as follows:
2.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
2.2 Authority. This Agreement and the transactions
contemplated herein have been duly approved by all necessary corporate action
on the part of the Buyer. This Agreement, when executed and delivered by the
Buyer, and assuming due execution hereof by the Stockholder will constitute the
valid and binding agreement of the Buyer enforceable in accordance with its
terms. Neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions contemplated herein, nor compliance
with nor fulfillment of the terms and provisions hereof, will (i) conflict
with or result in a breach of the terms, conditions or provisions of or
constitute a default under the governing instruments of the Buyer, any
instrument, mortgage, agreement, judgment, order, award, decree or other
restriction to which the Buyer is a party or by which the Buyer is bound or any
statute or regulatory provisions affecting it or (ii) require the approval,
consent, or authorization of or any filing with or notification to any
Federal, state or local court, governmental authority or regulatory body.
The Buyer has full power and authority to purchase the Stock pursuant to this
Agreement and to do and perform all acts and things required to be done by the
Buyer under this Agreement.
2.3 Brokers. Neither the Buyer nor its representatives has
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions provided for in this
Agreement.
2.4 No Omissions. None of the representations or warranties
of the Buyer contained herein and none of the other information or documents
furnished to the Stockholders or the Company by the Buyer or its representatives
in connection with this Agreement is false or misleading in any Material respect
or omits to state a fact herein or therein necessary to make the statements
herein or therein not misleading in any Material respect; to the best knowledge
of the Buyer, there is no fact which adversely affects, or in the future is
likely to adversely affect, the business or assets of the Buyer in any Material
respect which has not been disclosed in writing to the Stockholder or the
Company.
8
Financial Ability. The Buyer has the financial resources and
ability to meet each of its obligations under this Agreement, whether due at
Closing or after Closing, in a timely manner and without default.
2.6 Conduct After Execution. From the date hereof, subject
otherwise to the terms and conditions of this Agreement, Buyer shall do nothing
to jeopardize the transactions contemplated by this Agreement, or fail to take
any action necessary in order to consummate the transactions contemplated by
this Agreement.
2.7 Acceleration. Upon the sale of any of the stock of the Company,
or all or substantially all of the assets of the Company, all obligations of
Buyer to the Stockholder, including but not limited to the Note, Non-Competition
Agreement, Employment Agreement or Consulting Agreement, shall be accelerated
and become immediately due and payable.
ARTICLE III
ADDITIONAL COVENANTS OF THE STOCKHOLDER AND THE BUYER
3.1 Non-Competition.
(a) In furtherance of the sale of the Stock to the Buyer,
upon the consummation of the transactions contemplated herein and more
effectively to transfer and protect the business of the Company, the Stockholder
agrees that for a period ending on the fifth anniversary of the date hereof, she
will not (I) directly or indirectly own, manage or operate a home and office
water delivery business anywhere in New York, Vermont, New Hampshire, Maine,
Massachusetts, Rhode Island, and Connecticut, and any other state in which
the Company presently conducts its business, that sells to any of the Company's
existing customers; provided that ownership of not more than five percent
(5%) of the issued and outstanding shares of a class of securities of a
corporation, the securities of which are traded on a national securities
exchange or in the over-the-counter market, shall not be deemed ownership of
the issuer of such shares for the purposes of this paragraph; or (ii) induce
or attempt to persuade any employee or agent of the Company to terminate such
employment or agency relationship in order to enter into any such relationship
with the Stockholder or any of its subsidiaries or affiliates or to enter into
any such relationship on behalf of any other business organization in
competition with the Company or the Buyer.
(b) Without limiting the right of the Buyer and any of
its successors or assigns to pursue all other legal and equitable rights
available to them for violation of the covenant set forth in Section 3.1(a)
above by the Stockholder, it is agreed that other remedies cannot fully
compensate the Buyer and its successors and assigns for such a violation
and that the Buyer and its successors and assigns shall be entitled to
injunctive relief to prevent violation or continuing violation hereof. It is
the intent and understanding of each party hereto that if, in any action
before any court or agency legally empowered to enforce this covenant, any term,
restriction, covenant or promise is found to be unreasonable and for that reason
unenforceable, then such
9
term, restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency.
3.2 Use of Trademarks. From the date hereof, neither the
Stockholder nor any stockholder, director, employee or officer of the
Stockholder shall have the right to use any of the trademarks, trade names,
or applications therefor heretofore exclusively used or owned by the Company
or to use any trademarks or trade names similar thereto or designs imitative
thereof except as officers or agents of the Company in connection with its
business prior to the Closing. From the date hereof, neither the Stockholder nor
any stockholder, director, employee or officer of the Stockholder shall have any
right to use or to disclose, except in the ordinary course of business of the
Company, to any person, firm or corporation other than the Buyer, its employees,
agents and representatives, any
trade or business secrets or client lists or other proprietary information of
the Company.
3.3 Use of Names. From the Closing Date, the Stockholder and
its successors, assigns and affiliates, shall not use the names "A.M.Fridays"
and "Four Seasons Spring Water".
3.4 Additional Tax Information. The Stockholder agrees to
deliver promptly to the Buyer any copies of information in the Stockholder's
possession reasonably requested by the Buyer in connection with any tax
returns relating to the Company (whether filed prior to the Closing or to
be filed hereafter). The Stockholder shall have access to such records of the
Company as shall reasonably be required to enable the Stockholder to prepare
any tax returns for periods ending on or before the Closing.
3.5 Certain Tax Matters. The Stockholder shall pay all
Federal, state and local taxes, including without limitation, income,
profits, occupation, excise, property, sales, use and franchise taxes and
including interest and penalties on, based on, measured by or with respect to
the income, net worth or capital of the Company (the "Taxes") for all taxable
periods up to and including the Closing Date.
Within thirty (30) days after the filing of any tax return relating
to the Company with respect to a tax period commencing before the Closing Date,
and ending after the Closing Date, the Stockholder shall pay to the Buyer its
appropriate share of such Taxes in an amount equal to the Taxes, if any, that
would have been due if such tax period had ended on the Closing Date, less any
estimated taxes previously paid by the Stockholder or its affiliates for such
period.
The Stockholder shall file, or cause the Company to file, all tax
returns required to be filed on or before the Closing Date with respect to the
Company (and amendments thereof) and all tax returns (and amendments thereof)
with respect to Taxes on income for tax periods ending on or before the Closing
Date. The Buyer shall file or cause the Company to file, all tax returns
required to be filed after the Closing Date with respect to the Company, other
than tax returns with respect to Taxes for tax periods ending on or before the
Closing Date.
10
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE
The parties hereto agree to take the following actions between the
date hereof and the Closing Date:
4.1 Confidential Nature of Information. The Buyer and the
Stockholder agree that, in the event that the transactions contemplated herein
shall not be consummated, each will treat in confidence all documents,
Materials and other information which it shall have obtained during the course
of the negotiations leading to the execution of this Agreement, the
investigation of the other party hereto and the preparation of this Agreement
and any other documents relating hereto, and shall return to the other party
all copies of non-public documents and Materials which have been furnished in
connection therewith.
4.2 Accuracy of Representations and Warranties. The
Stockholder shall refrain from intentionally taking any action and shall cause
the Company to refrain from intentionally taking any action which would render
any representation and/or warranty contained in Article I of this Agreement
inaccurate at any time between the date hereof and the Closing Date. The
Stockholder will promptly notify the Buyer of any lawsuits, claims, proceedings
or investigations that, to the knowledge of the Stockholder, may be brought,
asserted or commenced against the Company, its officers or directors, or the
Stockholder.
4.3 No Material Change in the Company. Prior to the Closing
Date, the Stockholder shall not, without the prior written approval of the
Buyer, cause the Company to (i) make any Material change in the business or
operations of the Company; (ii) make any Material change in the accounting
policies applied in the preparation of the financial statements referred to
herein; (iii) declare any dividends on its issued and outstanding shares
of capital stock, or make any other distribution of any kind in respect
thereof; (iv) issue, sell or otherwise distribute any authorized but unissued
shares of its capital stock or effect any stock split or reclassification of
any such shares or grant or commit to grant any option, warrant or other rights
to subscribe for or purchase or otherwise acquire any shares of capital stock
of the Company or any security convertible or exchangeable for any such shares;
(v) purchase or redeem any of the capital stock of the Company; (vi) incur
or be liable for indebtedness to the Stockholder or any of its subsidiaries,
or affiliates other than in the ordinary course of business; (vii) make any
Material change in the base compensation of officers or key employees of the
Company; (viii) enter into any contract, license, franchise or commitment
other than in the ordinary course of business, or waive any rights of
substantial value; or (ix) enter into any other transaction affecting in
any Material respect the
11
business of the Company other than in the ordinary course of business and in
conformity with past practices, or as contemplated by this Agreement.
4.4 No Public Announcement. Neither the Stockholder nor the
Buyer shall, without the approval of the other, make any press release or other
public announcements or filing concerning the transactions contemplated by this
Agreement, except as and to the extent that any such party shall be so obligated
by law, in which case the other party shall be advised thereof and given an
opportunity to comment thereon.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement to purchase and
pay for the Stock shall, at the option of the Buyer, be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
5.1 No Misrepresentation or Breach of Covenants and Warranties.
There shall have been no Material breach by the Stockholder in the performance
of any of its covenants and agreements herein, each of the representations and
warranties of the Stockholder contained in this Agreement shall be true and
correct in all Material respects on the Closing Date as though made on the
Closing Date and there shall have been delivered to the Buyer a certificate or
certificates to that effect, dated the Closing Date and signed by the
Stockholder.
5.2 No Change in or Destruction of Property. There shall have
been, between the date hereof and the Closing Date, no Material adverse change
in the condition, financial or otherwise, of the Company or any of its assets.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDER
The obligations of the Stockholder under this Agreement to deliver
the Stock shall, at the option of the Stockholder, be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
There shall have been no Material breach by the Buyer in the
performance of any of its covenants and agreements herein, each of the
representations and warranties of the Buyer contained or referred to in this
Agreement shall be true and correct in all Material respects on the Closing Date
as though made on the Closing Date and there shall have been delivered to the
12
Stockholder a certificate or certificates to that effect, dated the Closing Date
and signed on behalf of the Buyer by its President.
ARTICLE VII
PURCHASE PRICE AND CLOSING
7.1 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place on or before July 1, 1997 (the "
Closing Date").
7.2 Purchase and Sale.
(a) On the Closing Date, the Stockholder shall sell to
the Buyer the Stock for the following consideration:
(i) cash payable by Buyer in the amount
of $350,000.00 by wire transfer;
(ii) a Note, in the form attached hereto
as Exhibit "A", made by the Buyer in the amount of $300,000.00 for a term of
five (5) years at the rate of interest of eight and one-half percent (8 1/2%)
with equal monthly payments of principal and interest based on an 8 year
amortization and a balloon payment due at the expiration of the term of the
note;
(iii) contingent consideration in the form
of a bonus in the event that gross sales of the Company, for the time period
January 1, 1997 through January 2, 1998, exceeds $1,135,000.00. In the
event the bonus is earned, Vermont Pure Holdings, Ltd. ("VPUR- NASDAQ")
will, on or before February 1, 1998, subject to all applicable SEC regulations,
issue a number of shares of its unregistered common stock whose market price
(based on the closing price of its registered shares on December 31, 1997) is
equal to the dollar total of gross revenues in excess of $1,135,000.00.
(b) In addition to the Purchase Price, the Stockholder
shall enter into with the Company an Agreement in the form attached hereto as
Exhibit "B" embodying (i) a non-compete agreement that will pay Stockholder
compensation of $20,000.00 per year (plus health and welfare benefits covering
Stockholder and her spouse at current levels of coverage) for five (5) years
with the first payment due on the signing of this agreement; (ii) an employment
agreement for six (6) months at an annual compensation rate of $25,000.00
paid bi-weekly; and, (iii) a consulting agreement commencing at the expiration
of the employment period for thirty (30) months at an annual compensation of
$25,000.00 paid bi-weekly.
7.3 Deliveries by the Stockholder. At the Closing, the
Stockholder shall sell, assign, transfer and convey to the Buyer all of the
outstanding capital stock of the Company and shall
13
deliver, at the Closing the following:
(a) A certificate or certificates representing all of
the Stock, together with fully executed and witnessed stock powers (in blank)
attached thereto with signatures guaranteed by an institution that is a
participant in the Securities Transfer Agents Medallion Program.
(b) An opinion dated the Closing Date hereof from
counsel for the Stockholder, in form and substance satisfactory to the Buyer and
its counsel, to the effect that:
(i) The Company is a corporation validly
existing and in good standing under the laws of the State of New Hampshire; and
the Company has full corporate power and authority to own or lease and operate
its properties and to carry on its business as now conducted. To the best of
such counsel's knowledge, the Company has no subsidiaries.
(ii) The authorized capital stock of the
Company consists of 1000 authorized shares of common stock, at no par value
per share, of which 100 shares have been issued and are outstanding and
are owned of record by the Stockholder; except for this Agreement, and all of
the issued and outstanding shares of common stock of the Company as of the
Closing are validly issued, fully paid and nonassessable.
(iii) This Agreement has been duly and
validly executed and delivered by the Stockholder and such Agreement, assuming
due execution by the Buyer, is the valid and binding agreement of the
Stockholder enforceable against the Stockholder in accordance with its terms
except as enforcement of such agreement may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally.
(iv) The Stockholder has full power and
authority to execute and deliver the Agreement and to perform its obligations
hereunder. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated herein, (a) violates or conflicts
with or results in the breach of the terms, conditions or provisions of, or
constitutes a default under, the Certificate of Incorporation or the Bylaws
of the Company or any agreement or instrument known to such counsel to which
the Company or the Stockholder is a party or by which either of them is bound
or (b) requires the consent, approval or authorization of or any filing with or
notification to any Federal, state or local court, governmental authority or
regulatory body not already obtained or made, as the case may be.
(v) To the best of such counsel's
knowledge there is no action, suit, proceeding or investigation pending or
threatened against the Stockholder or the Company, other than actions, suits,
proceedings or investigations described in Schedule 1.14, Schedule 1.17 or
Schedule 1.21 hereto, which might result in a Material adverse change in the
properties, business or assets which questions the legality, validity or
propriety of this Agreement or of any action taken or to be taken by the
Stockholder pursuant to or in connection with this Agreement.
14
(vi) The Stockholder is the lawful owner
of the Stock, to the best of such counsel's knowledge, free and clear of
all adverse claims, with unrestricted right and power to transfer and deliver
the Stock to the Buyer. The Stockholder has executed and delivered to the
Buyer such instruments as are sufficient in form to vest good and marketable
title to the Stock in the Buyer free and clear of all adverse claims.
In giving such opinion, counsel for the Stockholder may rely, as to
matters of fact, upon certificates of officers of the Company.
(vii) The resignations immediately prior to
the Closing of (i) each director of the Company and (ii) each officer of the
Company as requested by the Buyer, however, any liability incurred under the
Company's existing severance policy as a result of such resignations shall be
borne by the Buyer.
7.4 Deliveries of the Buyer. At the Closing, the Buyer shall
deliver to the Stockholder an opinion of Ledgewood Law Firm, P.C., counsel for
the Buyer, in form and substance satisfactory to the Stockholder and its
counsel, to the effect that (i) The Buyer is a corporation duly organized,
validly existing and in good standing under the laws State of Delaware; and
(ii) this Agreement and the transactions contemplated herein have been duly
approved by all necessary corporate action of the Buyer and such Agreement,
assuming due execution by the Stockholder, is the valid and binding agreement of
the Buyer enforceable against the Buyer in accordance with its terms except as
enforcement of such agreement may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally and, (iii)
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein, (a) violates or conflicts with or results
in the breach of the terms, conditions or provisions of, or constitutes a
default under, the Certificate of Incorporation or the Bylaws of the
Company or any agreement or instrument known to such counsel to which the
Company or the Stockholder is a party or by which either of them is bound or
(b) requires the consent, approval or authorization of or any filing with or
notification to any Federal, state or local court, governmental authority
or regulatory body not already obtained or made, as the case may be.
In giving such opinion, counsel for the Buyer may rely, as to
matters of fact, upon certificates of officers of the Buyer.
ARTICLE VIII
SURVIVAL OF OBLIGATIONS; INDEMNIFICATION
8.1 Survival of Obligations. All representations and warranties
made herein by the Stockholder and its obligations to be performed pursuant to
the terms hereof, shall survive the Closing hereunder and shall terminate three
years after the Closing; provided, that, (i) the representations and warranties
contained in Section 1.15 shall expire three (3) years after the
15
Closing, or with respect to any dispute with the Internal Revenue Service, upon
the later to occur of the following (x) such dispute's final resolution and the
payment of all taxes, interest and penalties arising therefrom and (y) the
expiration of the applicable statute of limitations; and (ii) the
representations in Section 1.4 shall not terminate.
8.2 Indemnification. (a) The Stockholder agrees to indemnify and
hold harmless the Buyer, the Company and their subsidiaries, affiliates,
successors and assigns from and against any and all (x) liabilities, losses,
costs, deficiencies or damages and any and all amounts paid in settlement
("Loss") and (y) reasonable attorneys' and accountants' fees and expenses, court
costs and all other reasonable out-of-pocket expenses ("Expense") net of any
insurance received, incurred by the Buyer or the Company, in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim asserted in good faith in connection with or arising from (i) any claim
that the Stockholder did not convey to the Buyer good and marketable title to
all of the issued and outstanding capital stock of the Company pursuant to this
Agreement, (ii) any breach by the Stockholder of any of its covenants in, or
failure of the Stockholder to perform any of its obligations hereunder, or (iii)
any breach of any warranty or the inaccuracy of any representation of the
Stockholder contained or referred to in this Agreement or in any certificate
delivered by or on behalf of the Stockholder pursuant hereto.
(b) The Buyer and the Company agree to indemnify and
hold harmless the Stockholder and its successors and assigns from and against
any and all Loss and Expense incurred by the Stockholder in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim asserted in good faith in each case net of any insurance received and
retained by the Stockholder in connection with or arising from (i) any breach by
the Buyer or the Company of any of its covenants in, or any failure of the
Buyer or the Company to perform any of its obligations under, this Agreement or
(ii) any breach of any warranty or the inaccuracy of any representation of the
Buyer contained or referred to in this Agreement or in any certificate delivered
by or on behalf of the Buyer pursuant hereto.
(c) If a party incurring a Loss or Expense (an
"Indemnified Person") has suffered or incurred any Loss or Expense, the
Indemnified Person shall so notify the party responsible therefor (an
"Indemnifying Person") promptly in writing describing such Loss or Expense, the
amount thereof, if known, and the method of computation of such Loss or Expense,
all with reasonable particularity and containing a reference to the provisions
of this Agreement or any certificate delivered pursuant hereto in respect of
which such Loss or Expense shall have occurred. If any action at law or suit
in equity is instituted by or against a third party with respect to which an
Indemnified Person intends to claim any liability or expense as Loss or Expense
under this Section 8.2, such Indemnified Person shall promptly notify the
Indemnifying Person of such action or suit.
(d) An Indemnified Person shall have the right, but
not the obligation, to participate at its own expense in the defense of any
third party claim, action or suit with counsel of its own choosing, but the
Indemnifying Person shall be entitled to control the defense unless
16
the Indemnified Person has relieved the Indemnifying Person from liability with
respect to the particular matter. In the event that the Indemnifying Person
shall fail timely to defend, contest or otherwise protect against such claim,
the Indemnified Person shall have the right, but not the obligation, to defend,
contest or otherwise protect against the same or, on not less than thirty (30)
days' written notice to the Indemnifying Person, make any compromise or
settlement thereof, and such compromise or settlement shall be binding on the
Indemnifying Person for purposes of indemnification under this Article VIII
unless the Indemnifying Person objects thereto within the thirty day period
aforesaid.
(e) The Buyer and/or the Company shall have the right
to set off against any amounts due the Stockholder in accordance with the
Note issued by the Buyer pursuant to Section 7 hereof up to a limit of
$300,000 with respect to any amounts both (i) owed to the Buyer by the
Stockholder as a result of the indemnification provided in this Section
8.2 and (ii) paid out-of-pocket to third parties by the Buyer or the Company.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given (a) three (3)
days after having been sent by certified or registered mail, return receipt
requested, (b) one (1) business day after having been sent by regional
recognized courier guarantying next business day delivery, or (C) upon delivery
if given by hand delivery against written receipt, addressed as follows:
If to the Buyer:
Vermont Pure Springs, Inc.
00 Xxxx Xxx Xxx Xxxx
Xxxxx Xxxxxx, XX 00000
with a copy to:
Xxxxx X. Xxxxx, Esq.
Ledgewood Law Firm
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to the Stockholder:
Xxxxxxx Xxxxxx
000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
17
With a copy to:
Xxxxxxxx X. Xxxx, Esq.
Xxxxxxx Xxxxxxx Bass & Green, P.A.
0000 Xxx Xxxxxx
P. O. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
9.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Hampshire without
regard to the provisions on conflicts of law.
9.3 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
9.4 Severability. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein unless the deletion of such provision
or provisions would result in such a Material change as to cause enforcement of
the terms hereof to be unreasonable.
9.5 Expenses. Each party hereto shall pay its own xpenses
(including, without limitation, legal and accounting fees and expenses) incident
to its negotiation and preparation of this Agreement and to its performance and
compliance with the provisions contained herein.
9.6 Titles and Headings. Titles and headings to Articles and
Sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
9.7 Schedules. The Schedules and Exhibits to this Agreement shall
be construed with and read as an integral part of this Agreement to the same
extent as if the same had been set forth verbatim herein.
9.8 Entire Agreement; Amendments and Waivers. This Agreement,
including the Exhibits and Schedules hereto, contains the entire understanding
of the parties hereto with regard to the subject matter contained herein. The
parties hereto, by mutual agreement in writing, may amend, modify and supplement
this Agreement. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the rights of such party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement
18
shall be held to constitute a waiver of any other or subsequent breach.
9.9 No Assignment. Neither party shall assign its right or
delegate its duties under this Agreement to any other person or entity without
the prior written consent of the other party. A consent required by either
party pursuant to this paragraph shall not, once requested, be unreasonably
withheld.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal the day and year first above written.
VERMONT PURE SPRINGS, INC.
Attest: By:
President
XXXXXXX XXXXXX
Attest:
A.M. FRIDAYS, INC.
Attest: By:
President
19
