OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is made as of September 30, 2002,
by and between Xxxxxxxx Broadcast Group, Inc., a Maryland corporation
("Xxxxxxxx" or "Optionee") and Synergy Brands, Inc., a Delaware corporation (the
"Company").
Explanatory Statement
Pursuant to and subject to the terms and conditions of Modification
Agreement No. 2, dated as of September 30, 2002 (the "Second Modification
Agreement"), by and among Xxxxxxxx, Synergy and XxxxxxXxxx.xxx, Inc. a New
Jersey corporation ("BeautyBuys") which modified various agreements among the
parties, including the Modification Agreement dated as of December 1, 2000 (the
"First Modification 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 transactions contemplated by
the Second Modification Agreement and to evidence the grant to Optionee of the
Options described therein. Copies of the Second Modification Agreement and the
First Modification Agreement are attached hereto as Exhibit A.
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 date upon which a Closing occurs.
Capitalized terms used in Section 2.2(a) and (b) below or otherwise not
defined in this Agreement shall have the respective meanings ascribed to them in
the Second Modification Agreement or the First Modification Agreement, as
applicable.
2. Options.
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 One Hundred Twenty Five Thousand
(125,000) shares (such shares, the "Option Shares") of the Company's Common
Stock, $.001 par value per share (the "Common Stock"). The Company shall also
issue to Xxxxxxxx 75,000 shares of the Company's common stock, $.001 par value,
as provided in the Second Modification Agreement.
2.2. Consideration for Options. In consideration of the grant of the
Options and the issuance of the 75,000 Company shares to Xxxxxxxx, among other
consideration, the Optionee has eliminated the Note, as provided in the Second
Modification Agreement.
2.3. Partial Exercises Permitted. 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.
2.4. 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 2.4, 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 2.4 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.
2.5. Vesting and Expiration Date. The Option Shares shall be fully vested
and exercisable as of the grant date which grant date is September 30, 2002; The
Options shall expire ten (10) years from the date of September 30, 2002
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 2.4 prior to the expiration of such ten (10)-year period.
2.6. 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 One Dollar and Twenty Five
Cents ($1.25) per each Option Share so acquired by the Optionee pursuant to its
exercise of an Option.
2.7. Adjustments Relating to Section 4. Any appropriate numbers or
calculations in this Section 2 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 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 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.
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.
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 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 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 (a) the
Synergy Common Stock to be delivered to Xxxxxxxx pursuant to the Second
Modification Agreement, and (b) 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.
7. 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.
7.1. 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:
7.1.1. a receipt for the Option Exercise Price;
7.1.2. a certificate or certificates for the Option Shares so
purchased;
7.1.3. 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;
7.1.4. such other documents that the Optionee shall reasonably request.
7.2. 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:
7.2.1. 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
7.2.2. such other documents as the Company shall reasonably request.
8. Representations and Warranties
8.1. 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:
8.1.1. 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.
8.1.2. 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 (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.
8.1.3. 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.
8.2. 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:
8.2.1. 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.
9. Covenants.
9.1. 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:
9.1.1. 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.
9.1.2. In case:
9.1.2.1. 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
9.1.2.2. 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
9.1.2.3. of any voluntary or involuntary dissolution, liquidation
or winding-up of the Company; 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.
9.1.3. 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 Common Stock on the exercise
of an Option from time to time.
9.1.4. The Company shall at all times reserve and keep available,
solely for issuance and delivery on the Exercise of the Options, all shares
of Common Stock from time to time issuable on the Exercise of the Options.
9.1.5. Not later than ten (10) 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 fillings. The Company
shall pay one-half (1/2) of any filing fee required to be paid under the
HSR Act.
9.1.6. The Company shall inform the Optionee promptly of anything which
comes to the Company's attention that would make the representations,
warranties, or disclosures made herein untrue or misleading or to omit to
state a material fact which would be misleading if omitted, or which
constitutes a breach of any covenant or agreement contained herein.
9.1.7. The Company shall undertake any and all actions which are both
necessary and appropriate to preserve the Optionee's rights to acquire the
Option Shares pursuant to the terms of this Agreement.
9.2. 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:
9.2.1. Not later than ten (10) 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.
10. 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.
11. 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:
If to the Company:
Synergy Brands 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: Xxxxx X. Xxxxxxxx, 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.
12. Entire Agreement. This Agreement and the Second Modification 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. Notwithstanding
the foregoing, the Option Agreement between the parties dated December 1, 2000
shall not be effected by, of have any effect on, this Agreement.
13. 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.
14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
19. Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall together constitute one
document.
20. 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.
21. 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.
22. Time. Time is of the essence with respect to all aspects of this
Agreement.
23. 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.
24. Legends and Other Securities Matters.
24.1. 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 (THE "SECURITIES ACT"), 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 SECURITIES 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.
24.2. 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 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.
24.3. Removal of Legend. Any legend endorsed on a certificate pursuant to
Section 24.1 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, as such Rule
may be amended from time to time ("Rule 144"), 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.
24.4. Rule 144. The Company agrees to timely file the reports required to
be filed by it under the Securities Act and the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and the rules and regulations adopted by the
Securities and Exchange Commission (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 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.
24.5. Private Placement.
24.5.1. 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
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.
24.5.2. The Optionee represents and warrants to the Company that:
24.5.2.1. 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;
24.5.2.2. 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
24.5.2.3. 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.
24.5.3. The Optionee further represents that:
24.5.3.1. 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
24.5.3.2. 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 Second Modification Agreement, this
Agreement, the Synergy SPA, the SEC Reports and the other Transaction
Documents (as such terms are defined in the Synergy SPA).
[REMAINDER OF PAGE LEFT BLANK-SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first above written.
WITNESS/ATTEST: Company:
Synergy Brands Inc.
-----------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Optionee:
XXXXXXXX BROADCAST GROUP, INC.
--------------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Exhibit 2.4
[ADDRESS OF OPTIONEE]
[Date]
VIA FACSIMILE (000) 000-0000
AND FEDERAL EXPRESS
Synergy Brands Inc.
00 Xxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Attention: Chief Executive Officer
Re: Exercise of Option for Common Stock of Synergy Brands Inc., a Delaware
Corporation (the "Corporation"), under Option Agreement dated
September 30, 2002 (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 Common Stock of the Corporation. Closing on this transaction shall
take place in accordance 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:
------------------------
CERTIFICATE OF DESIGNATION. PREFERENCES. RIGHTS AND
LIMITATIONS OF
CLASS B PREFERRED STOCK, SERIES A
OF
SYNERGY BRANDS INC.
Pursuant to Section 151 of the
General Corporation law of the State of Delaware
SYNERGY BRANDS INC., a corporation incorporated, organized and existing
under the laws of the State of Delaware (the "Corporation"). does hereby certify
that pursuant to the authority conferred on the Board of Directors of the
Corporation by the Certificate of Incorporation, as amended, of the Corporation
and in accordance with Sections 141 and 151 of the General Corporation Law of
the State of Delaware, the Board of Directors of the Corporation adopted the
following resolution establishing the designations, rights and limitations of
100,000 shares of Class B Preferred Stock of the Corporation to be designated as
Series A of Class B Preferred Stock:
RESOLVED. that pursuant to the authority conferred on the Board of
Directors of this Corporation by the Certificate of Incorporation, the number of
voting and other powers, preferences and relative, participating, optional or
other rights and the qualifications, limitations and restrictions of 100,000
shares of the previously designated Class B Preferred stock. par value $.001 per
share. of the Corporation now to be designated Series A of Class B Preferred
Stock are as follows:
SERIES A OF CLASS B PREFERRED STOCK
-----------------------------------
1. DESIGNATION AND AMOUNT. There shall be a series of Class B Preferred
Stock designated as "Series A of Class B Preferred Stock" and the number of
shares constituting such series of Class B Preferred Stock shall be 100,000.
2. PAR VALUE. The par value of each such share of Series A of Class B
Preferred Stock shall be $.001.
3.RANK. All shares of Series A of Class B Preferred Stock shall rank prior,
both as to payment of dividends and as to distributions of assets upon
liquidation. dissolution or winding up of the Corporation, whether voluntary or
involuntary, to all of the Corporation's now or hereafter issued Class A
Preferred Stock $.001 par value ("Class A Preferred Stock") and its common
stock. par value $.001 per share (the "Common Stock").
4.DIVIDENDS. The holders of Series A of Class B Preferred Stock shall be
entitled to receive, out of the net profits of the Corporation, dividends at the
annual rate of $.90 per share per annum payable monthly by the 15th day of the
month and accruing until paid starting and assessed beginning the first full
month following issuance. The amount of dividends payable shall be computed on
the basis of a 360 day year of twelve 30 day months. The Common Stock is
entitled to all remaining profits which the Board of Directors may determine to
distribute to the holders of Common Stock as dividends, Class A Preferred Stock
not being entitled to any dividends but only liquidation preferences where
applicable, subject to any future designations regarding the remainder of the
unissued Class B Preferred Stock.
No dividends or other distributions, other than dividends payable solely in
shares of, Common Stock of the Corporation ranking junior as to dividends and as
to liquidation rights to the Series A of Class B Preferred Stock shall be
declared, paid or set apart for payment on any shares of Common Stock and/or
Class A Preferred Stock of the Corporation ranking junior as to dividends to
Series A of Class B Preferred Stock unless and until all accrued and unpaid
dividends of Series A of Class B Preferred Stock shall have been paid and/or set
apart for payment.
Any reference to "distribution" contained in this Section 4 shall not be
deemed to include any distribution made in connection with any liquidation,
dissolution or winding up of the Corporation whether voluntary or involuntary.
5. LIQUIDATION PREFERENCE. In the event of a liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
Series A of Class B Preferred Stock shall be entitled to receive out of the
assets of the Corporation, whether such assets are stated capital or surplus of
any nature, an amount equal to the dividends accumulated thereon to the date of
final distribution to such holders which have not prior thereto been paid
without interest, and a sum equal to $10.00 per share, before any payment shall
be made or any assets distributed to the holders of Class A Preferred Stock
and/or Common Stock, or any other class or series of the Corporation's capital
stock. All of the remaining net assets shall belong to and be distributed among
the holders of the Class A Preferred Stock and/or Common Stock in proportion to
rights designated for each, subject to any future designations regarding the
remainder of the unissued Class B Preferred Stock. Neither a consolidation or
merger of the Corporation with another corporation nor a sale or transfer of all
or part of the Corporation's assets for cash, securities or other property will
be considered a liquidation, dissolution or winding up of. the Corporation.
6. REDEMPTION AT OPTION OF THE CORPORATION. The Corporation may, at its
option, at any time redeem in whole, or from time to time in part, out of the
earned funds of the Corporation, the Series A of Class B Preferred Stock on any
date set by the Board of Directors, at $10.00 per share plus, in each case, an
amount in cash equal to all dividends on the Series A of Class B Preferred Stock
accrued and unpaid thereon, pro rata to the date fixed for redemption (such sum
being hereinafter referred to as the "Redemption Price").
In case of the redemption of less than all of the then outstanding Series A
of Class B Preferred Stock, the Corporation shall designate by lot, or in such
other manner as the Board of Directors may determine, the shares to be redeemed
or shall effect such redemption pro rata. Notwithstanding the foregoing, the
Corporation shall not redeem less than all of the Series A of Class B Preferred
Stock at any time outstanding until all dividends accrued and in arrears upon
all Series A of Class B Preferred Stock then outstanding shall have been paid
for a1 past dividend periods.
Not less than thirty (30) days prior to the redemption date notice by first
class mail, postage prepaid, shall be given to the holders of record of the
Series A of Class B Preferred Stock to be redeemed, addressed to such
stockholders at their last addresses as shown on the books of the Corporation.
Each such notice of redemption shall specify the date fixed for redemption, the
Redemption Price, the place or p1aces of payment, that payment will be made upon
presentation and surrender of the shares of the Series A of Class B Preferred
Stock and that on and after the redemption date, dividends will cease to
accumu1ate on such shares.
Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of the Series A of
Class B Preferred Stock receives such notice; and failure to give such notice by
mail, or any defect in such notice, to the holders of any shares designated for
redemption shall not affect the validity of the proceedings for the redemption
of any other shares of the Series A of Class B Preferred stock. On or after the
date fixed for redemption as stated in such notice, each holder of the shares
called for redemption shall surrender the certificate evidencing such shares to
the Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the Redemption Price. If less than all the shares
represented by any such surrendered certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares. If, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor and
shall have been irrevocably deposited or set aside, then, notwithstanding that
the certificates evidencing any shares so called for redemption shall not have
been surrendered, the dividends with respect to the shares so called shall cease
to accrue after the date fixed for redemption, the shares shall no longer be
deemed outstanding, the holders thereof shall cease to be stockholders, and all
rights whatsoever with respect to the shares so called for redemption (except
the right of the holders to receive the Redemption Price without interest upon
surrender of their certificates therefor) shall terminate.
The shares of Series A of Class B Preferred Stock shall not be subject to
the operation of any purchase, retirement or sinking fund.
7. CONVERSION. The shares of Series A of Class B Preferred Stock shall not
be convertible at the option of the holder thereof.
8. VOTING RIGHTS.
a. GENERAL. The shares of Series A of Class B Preferred Stock shall not
have any voting rights regarding any corporation business except that
solely and directly affecting the existence and rights and obligations of
such Series A of Class B Preferred Stock.
b. CLASS VOTING RIGHTS. In addition to voting rights provided above, so
long as the Series A of Class B Preferred Stock is outstanding, the
Corporation shall not, without the affirmative vote or consent of the
holders of at least one half (1/2) of all outstanding Series A of Class B
Preferred Stock voting separately as a class, amend, alter or repeal (by
merger or otherwise) any provision of the Certificate of Incorporation or
the By-Laws of the Corporation, as amended, so as adversely to affect the
relative rights. preferences, qualifications, limitations or restrictions
of the Series A of Class B Preferred Stock.
9. OUTSTANDING SHARES. For purposes of this Certificate of Designation, all
shares of the Series A of Class B Preferred Stock issued shall be deemed
outstanding except (i) from the date fixed for redemption pursuant to Section 6
hereof, all shares of Series A of Class B Preferred Stock that have been so
called for redemption under Section 6 hereof; and (ii) from the date of
registration of transfer, all shares of the Series A of Class B Preferred Stock
held of record by the Corporation.
10. PARTIAL PAYMENTS. Upon an optional redemption by the Corporation, if at
any time the Corporation does not pay amounts sufficient to redeem all Series A
of Class B Preferred Stock, then such funds which are paid shall be applied to
redeem such Series A of Class B Preferred Stock as the Corporation may designate
by lot.
11. PREEMPTIVE RIGHTS. The Series A of Class B Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any securities
of the Corporation.
12. SEVERABILITY OF PROVISIONS. Whenever possible, each provision hereof
shall be interpreted in a manner as to be effective and valid under applicable
law, but if any provision hereof is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating or otherwise adversely affecting
the remaining provisions hereof. If a court of competent jurisdiction should
determine that a provision hereof would be val1d or enforceable if a period of
time were extended or shortened or a particular percentage were increased or
decreased, then such court may make such change as shall be necessary to render
the provision in question effective and valid under applicable jaw.
IN WITNESS WHEREOF, SYNERGY BRANDS INC. has caused this Certificate to be
signed on its behalf by Xxxxx X. Xxxxxx, its President, and its corporate seal
to be hereunto affixed and attested to by Xxxxxxxx Xxxxxxxx, its Secretary this
_ day of January 2003.
SYNERGY BRANDS INC.
By:
--------------------------
Xxxx Xxxxxxx
CEO
Attest:
----------------------
Xxxxxxxx Xxxxxxxx
Secretary
