AGREEMENT FOR PURCHASE AND SALE OF STOCK
AND AGREEMENT FOR PURCHASE OF COMMERCIAL REAL ESTATE
THIS AGREEMENT FOR PURCHASE AND SALE OF STOCK AND AGREEMENT FOR
PURCHASE OF COMMERCIAL REAL ESTATE, made and entered into on September
30, 1998, by and between Chronicle Communications, Inc., a Georgia
corporation, (the "Buyer"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (together, the "Sellers").
W I T N E S S E T H :
WHEREAS, the Sellers own and desire to sell to the Buyer all of
the issued and outstanding common stock of Bright Now, Inc., a Florida
corporation (the "BN Stock"), of Southern Paper Converters, Inc., a
Florida corporation (the "SPC Stock") and of Double M Group, Inc., a
Florida corporation ("MM Stock") the BN Stock and the SPC Stock
together the "Stock"), the Stock being all of the issued and
outstanding equity securities of Bright Now, Inc. ("BN"), Southern
Paper Converters, Inc. ("SPC") and of Double M Group, Inc. ("MM"),
respectively; and
WHEREAS, BN is engaged in the business of printing and
publishing; and
WHEREAS, SPC is engaged in the business of recycling waste
paper, primarily damaged rolls of newsprint; and
WHEREAS, MM may own certain equipment and may have an equitable
claim on certain commercial real estate on the Plant, as identified
below; and
WHEREAS, the Sellers own commercial real estate used in the
business of BN and SPC, the street address of which is ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ (the "Plant"); and
WHEREAS, the Buyer is engaged in the publication of specialty
newspaper and shopper products; and
WHEREAS, the Buyer desires to purchase all of the Stock and the
Plant from the Sellers;
NOW, THEREFORE, in consideration of the premises herein before
set forth, the mutual promises and respective representations and
warranties of the parties, one to another made herein, and the
reliance of each party upon the other(s) based hereon and other good
and valuable consideration, the receipt and sufficiency of which the
parties acknowledge, the parties agree, as follows:
ARTICLE I
PRELIMINARY MATTERS
Section 1.01. Recitals. The parties acknowledge the recitals
herein above set forth in the preamble are correct, are, by this
reference, incorporated herein and are made a part of this Agreement.
Section 1.02. Exhibits and Schedules. Exhibits (which are
documents to be executed and delivered at the Closing by the party
identified therein or in the provision requiring its delivery) and
Schedules (which are documents setting forth information about the
party identified as delivering the schedules) referred to herein and
annexed hereto are, by this reference, incorporated herein and made a
part of this Agreement, as if set forth fully herein.
Section 1.03. Use of words and phrases. Natural persons may be
identified by last name, with such additional descriptors as may be
desirable. The words "herein," "hereby," "hereunder," "hereof,"
"herein before," "hereinafter" and any other equivalent words refer to
this Agreement as a whole and not to any particular Article, Section
or other subdivision hereof. The words, terms and phrases defined
herein and any pronoun used herein shall include the singular, plural
and all genders. The word "and" shall be construed as a coordinating
conjunction unless the context clearly indicates that it should be
construed as a copulative conjunction.
Section 1.04. Accounting terms. All accounting terms not
otherwise defined herein shall have the meanings assigned to them
under generally accepted accounting principles ("GAAP") unless
specifically referenced to regulatory accounting principles.
Section 1.05. Calculation of time lapse or passage; Action
required on holidays. When a provision of this Agreement requires or
provides for the calculation of the lapse or passage of a time period,
such period shall be calculated by treating the event which starts the
lapse or passage as zero; provided, that this provision shall not
apply to any provision which specifies a certain day for action or
payment, e.g. the first day of each calendar month. Unless otherwise
provided, the term "month" shall mean a period of thirty days and the
term "year" shall mean a period of 360 days, except that the term
"calendar year" shall mean the actual calendar year period. If any
calendar day on which action is required to be taken or payment is
required to be made under this Agreement is not a business day (a day
on which national banks are open for business), then such action or
payment shall be taken or made on the next succeeding business day.
Section 1.06. Use of titles, headings and captions. The
titles, headings and captions of articles, sections, paragraphs and
other subdivisions contained herein are for the purpose of convenience
only and are not intended to define or limit the contents of said
articles, sections, paragraphs and other subdivisions.
ARTICLE II
TERMS OF THE TRANSACTION
Section 2.01. Agreement to sell. The Sellers agree to sell
the Stock and the Plant to the Buyer for an aggregate purchase price
of Four Hundred Thousand Dollars ($400,000) apportioned among the
Stock and the Plant, as follows:
(a) Bright Now Stock-$100.00;
(b) SPC Stock-$100.00; and
(c) MM Stock-$100.00; and
(d) Plant-$399,700.
The purchase price will be paid as provided in Section 2.03.
Section 2.02. Agreement to purchase. The Buyer agrees to
purchase the Stock and the Plant from the Sellers for an aggregate
price of Four Hundred Thousand Dollars ($400,000), apportioned as
stated in Section 2.01 and paid as provided in Section 2.03.
Section 2.03. Form of payment of the purchase price. The
purchase price for the Stock and for the Plant to be paid by the Buyer
and accepted by the Sellers will be paid in shares of the Buyer's
common stock (the "Chronicle Stock"), the number thereof to be
determined by dividing the aggregate purchase price of the Stock and
Plant by the average of the closing asked quotation(s) for Chronicle's
shares on the OTC Bulletin Board over the five day period ending the
day prior to the Closing.
Section 2.04. Special provisions for sale and purchase of the
Plant. Attached hereto as Exhibit "A" are special provisions for the
sale and purchase of commercial real estate, which shall apply to the
purchase and sale of the Plant.
Section 2.05. Press releases. Not later than the date the
Buyer is required to file and does file a report pursuant to the
requirements of the Securities Exchange Act of 1934, as amended,
reporting the proposed transaction contemplated by this Agreement, the
Buyer will issue a press release announcing the transaction,
summarizing its pertinent terms and providing such other information
as the parties may mutually agree. Following the Closing, the Buyer
will issue a press release announcing the consummation of the
transaction contemplated by this Agreement.
Section 2.06. Transaction costs. Each party will pay all costs
and expenses which it or he incurs in connection with this Agreement
and the transactions contemplated hereby.
ARTICLE III
CLOSING OF THE TRANSACTION
Section 3.01. Location, date and time of the Closing. The
Closing of the transaction herein contemplated shall take place at
10:00 o'clock a.m., local time, on September 30, 1998 at the offices
of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., subject to the satisfaction of the
conditions to Closing set forth in Section 3.02.
Section 3.02. Sellers' obligations at Closing. At the
Closing, the Sellers will deliver to Buyer:
(a) The Stock and separate stock powers for each certificate thereof
duly executed in blank for transfer;
(b) Employment agreements;
(c) Joint certificates by the Sellers and Officers' Certificates of
BN, of SPC and of MM, in the form of Exhibit "B".
(d) Resignations of BN's, of SPC's and of MM's directors and
officers.
(e) A Florida statutory general warranty deed for the Plant,
transferring title thereto to a corporation designated by the Buyer as
the Buyer's assignee of this Agreement with respect to the sale and
purchase of the Plant.
(f) Buyer's title insurance for the plant insuring title to the Plant
in the amount of $399,700 plus the outstanding balance of principal
and interest on the mortgage note incumbering the Plant.
Section 3.03. Buyer's obligations at Closing. At the Closing, Buyer
shall execute and/or deliver or cause to be delivered:
(a) Certificates aggregating the number of shares of Chronicle Stock
computed as provided in Section 2.03, issued and registered in the
names of the Sellers or their nominees, the number of shares issuable
to each of the Sellers as specified in writing to the Buyer not less
than forty-eight hours before the Closing.
Section 3.04. Closing memorandum and receipts. As evidence
that all parties deem the Closing to be completed and the transactions
contemplated by this Agreement to have been consummated, the parties
jointly will execute and deliver a memorandum acknowledging such
completion and consummation. The party receiving any consideration or
stock under this Agreement will execute and deliver a receipt(s)
therefore to the party giving the consideration or stock.
Section 3.05. Waiver of conditions. Notwithstanding Section
11.03, any condition to the Closing to the benefit of any party which
is not satisfied prior to or at the Closing will be deemed to be
waived by that party or satisfied by virtue of that party executing
the Closing memorandum, excepting such conditions or other matters
identified in the Closing memorandum which are required to be
satisfied after the Closing.
Section 3.06. Further assurances. At any time and from time to
time after the Closing, at the reasonable request of any party and
without further consideration, any other party(ies) shall execute and
deliver such other instruments and documents as the requesting party
may deem reasonably desirable or necessary to complete the
transactions contemplated by this Agreement.
Section 3.07. Conditions precedent to Buyer's obligations. All
obligations of the Buyer hereunder are subject, at the option of the
Buyer, to the fulfillment of each of the following conditions
at or prior to the Closing, and the Sellers shall exert their best
efforts to cause each such condition to be fulfilled by them or by the
respective issuers of the Stock, as the case may be:
(a) All representations and warranties of the Sellers contained
herein or in any document delivered pursuant hereto shall be true and
correct in all material respects when made and as of the date of the
Closing, and shall then be true and correct in all material respects
except for changes in the ordinary course of business after the date
hereof in conformity with the covenants and agreements contained
herein.
(b) All covenants, agreements and obligations required by the terms
of this Agreement to be performed by the Sellers at or before the
Closing shall have been duly and properly performed in all material
respects.
(c) There shall be delivered to the Buyer a certificate executed by
the Sellers and certificate(s) executed by the President and Secretary
of each of the respective issuers of the Stock, dated the date of the
Closing, certifying that the conditions set forth in paragraphs (a)
and (b) of this Section 3.07 have been fulfilled.
(d) All documents required to be delivered to the Buyer at or prior
to the Closing shall have been so delivered.
(e) The Sellers shall have obtained written consents to the transfer
or assignment to the Buyer of Stock where the consent of any other
party may, in the opinion of the Buyer's counsel, be required for such
assignment or transfer.
(f) None of the assets or business of either BN or SPC shall have
suffered or incurred a material damage, destruction or loss not fully
covered by insurance and which has a materially adverse affect on
their respective businesses and operations.
(g) The Buyer shall have obtained funding for payment of its own and
of BN's and SPC's liabilities and for operating capital, which is
reasonably acceptable to the Buyer in its sole judgment.
(h) Defense of the suit by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ against BN shall be in a
posture acceptable to the Buyer in its sole discretion.
(i) The Plant's mortgagee shall have granted any extension or
forbearance to initiation of an action in foreclosure.
Section 3.08. Conditions precedent to the Sellers' obligations. All
obligations of the Sellers at the Closing are subject, at the option
of the Sellers, to the fulfillment of each of the following conditions
at or prior to the Closing, and the Buyer shall exert its best efforts
to cause each such condition to be so fulfilled.
(a) All representations and warranties of the Buyer contained herein
or in any document delivered pursuant hereto shall be true and correct
in all material respects when made and as of the Closing.
(b) All obligations required by the terms of this Agreement to be
performed by the Buyer at or before the Closing shall have been duly
and properly performed in all material respects.
(c) There shall be delivered to the Sellers a certificate executed by
the President and Secretary of the Buyer, dated the date of the
Closing, certifying that the conditions set forth in paragraphs (a)
and (b) of this Section 3.08 have been fulfilled.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Section 4.01. The Sellers' representations and warranties. The
Sellers, jointly and severally represent and warrant to the Buyer that
(the "Company" in this Section 4.01 referring to BN, to SPC and to MM,
respectively):
(a) The Company is a duly incorporated and existing corporation
under the laws of its state of incorporation, it is subject to
administrative dissolution by such state for failure to pay its
corporate franchise fee due June 30, 1998, except that MM has been
administratively dissolved for such reason in 1997, it has not
formally organized by action of its incorporator and initial board of
directors, nor have any records of approvals by its stockholders and
directors been prepared, maintained or preserved; provided, however,
that by virtue of both stockholders and directors being employed in
the day-to-day business of the Company, all actions taken and
transactions entered into by the Company have been in fact approved by
the assent thereto of the stockholders or the directors, or both, as
may have been required.
(b) The Company has the power, subject to dissolution as noted
above, to conduct its business as it is now being conducted and to own
and lease its assets and properties shown on its most recent balance
sheet and used in the conduct of its business, all of such assets and
properties being used in and necessary for the conduct of the
Company's business.
(c) This Agreement has been duly and validly executed and
delivered by the Sellers and constitutes the legal, valid and binding
obligation of each of the Sellers enforceable against each of them
severally in accordance with its terms subject, as to enforceability,
to bankruptcy, insolvency and other laws of, relating to or affecting
creditors rights generally and to general equitable principles.
(d) The execution of this Agreement and consummation of the
transaction contemplated hereby does not conflict with and will not
result in any adverse consequences to or breach of any agreement,
mortgage, instrument, judgment, decree, law or governmental
regulation, permit or authorization by the Company or by either of the
Sellers or in the loss, forfeiture or waiver of any rights or
franchise owned by the Company, from which the Company benefits or
which is desirable in the conduct of the Company's business, except
possibly a due on sale clause in the mortgage encumbering the Plant,
which is in default at the date hereof and for which the Buyer will
have obtained a n extension or forbearance of foreclosure prior to the
Closing.
(e) The Company's authorized capital is as set forth in its
Articles of Incorporation, none thereof having been issued, but when
issued and delivered to the Sellers will be validly issued, fully paid
and nonassessable, all of which will be legally and beneficially owned
by one or both of the Sellers and none of which are subject to any
liens, claims, encumbrances or restrictions of any kind.
(f) Except for such actions as may have been taken, no further
action by or before any governmental body or authority of the United
States of America or any state or subdivision thereof or any self-
regulatory body to which the Company is or the Sellers, or either of
them, are subject is required in connection with the execution and
delivery of this Agreement by the Sellers and the consummation of the
transactions contemplated hereby, with the possible exception of
approval by BN's first mortgage lender.
(g) The information the Sellers have delivered to the Buyer
relating to the Company, its business, its operations and its
prospects (financial and otherwise) was on the date reflected in each
such item of information accurate in all material respects and such
information at the date hereof taken as a whole provides full and fair
disclosure of all material information relating to the Company, its
business, its operations, its financial condition and its prospects
(financial and otherwise) and does not contain any untrue statement of
material fact (which is not corrected by subsequent information) or
omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(h) The Company has conducted its business in the ordinary
course for the last three years.
(i) Neither the Company nor any employee, to the Sellers'
knowledge, has within the past five years given or agreed to give any
gift or similar benefit valued at more than $20 annually to any
customer, supplier, governmental officer, employee, elected official
or other person who is or may be or have been in a position to help or
hinder the Company's business which is likely subject the Company to
damage or penalty in civil, criminal or governmental litigation or
proceedings.
(j) The Stock, when issued and delivered, will be the only
equity securities of the Company issued and outstanding, there being
no other equity securities of the Company issued and outstanding, no
authorizations in effect or, upon a specified event, with the lapse of
time or otherwise, to take effect for the issue of additional shares
of the Company's equity securities, no obligations outstanding
convertible into equity securities of the Company, no options,
warrants, rights similar instruments outstanding pursuant to which the
holder has a right to demand and receive the issuance of the Company's
equity securities and no stock appreciation rights or phantom stock of
the Company held by any person or to which any person has a claim.
(k) The Company's financial statements at and for the years
ended August 31, 1996 and 1997, and the financial information
subsequent to the date of the later financial statements delivered to
the Buyer fairly present the financial condition of the Company at the
dates and the results of operations for the periods indicated and,
except as disclosed in the notes thereto or identified in writing to
the Buyer, the Company does not have any contingent, undisclosed or
hidden liabilities.
(l) The Company has, and the Sellers with respect to the Plant
have, good, marketable and insurable title to all of the properties
and assets which it owns or they own and which are used in the
Company's business or purports to own, including, without limitation,
those reflected in its books and records and in the most recent
balance sheet delivered to the Buyer, both tangible and intangible,
trademarks, trade names, copyrights and other intellectual properties
(excluding inventory sold after the most recent balance sheet date in
the ordinary course of business), excepting only those properties and
assets subject to operating leases disclosed in Schedule "A" and a
forty inch ▇▇▇▇▇▇ sheet fed press located at the Plant. None of the
properties and assets are subject to any mortgage, pledge, lien,
charge, security interest, encumbrance, restriction, lease, license,
easement, liability or adverse claim of any nature whatsoever, direct
or indirect, whether accrued, absolute, contingent or otherwise,
except (i) a mortgage to ▇▇▇▇▇▇▇ Bank covering the Plant and equipment
situated therein and a mortgage to Second 26 Corporation covering the
Plant, (ii) as expressly set forth in the notes to the Company's
financial statements as securing specific liabilities or subject to
specific capital leases or (iii) those imperfections of title and
encumbrances, if any, which (A) are not substantial in character,
amount or extent and do not materially detract from the value of the
properties or assets subject thereto, (B) do not interfere with either
the present or continued use of such property or assets or the conduct
of the Company's normal business operations and (C) have arisen only
in the ordinary course of business. All of the properties and assets
owned, leased or used by the Company are sold "as is, where is".
(m) All of the contracts, agreements, leases, licenses and
commitments of the Company (other than those which have been fully
performed), copies of all of which have been delivered to the Buyer,
are valid and binding, enforceable in accordance with their respective
terms, in full force and effect and, except as set forth in Schedule
"B", there is not thereunder any existing breach or default or event,
which after the giving of notice or lapse of time or both, would
constitute a default or result in a right to accelerate or loss of
rights and none of such contracts, agreements, leases, licenses and
commitments is, either when considered singly or in the aggregate with
others, unduly burdensome, onerous or materially adverse to the
Company's business, properties, assets, earnings or prospects
(financial and otherwise) or either before or after the Closing,
likely to result in any material loss or liability.
(n) Except as set forth in Schedule "C" (copies of items listed
therein have been delivered to the Buyer), there is no claim, legal
action, suit, arbitration, governmental investigation, or other legal
or administrative proceeding, nor any order, decree or judgment in
progress, pending or in effect or to the Company's or the Seller's
knowledge threatened, against or relating to the Company, its
directors, officers or employees, it properties, assets or business or
the transaction contemplated by this Agreement and neither the Company
knows nor the Sellers know or has any reason to be aware of any basis
for the same, including any basis for a claim of sexual harassment or
racial or age discrimination.
(o) Except as set forth in Schedule "D", all taxes, including
without limitation, income, property, special assessments, sales, use,
franchise, intangibles, employees' income withholding and social
security taxes, imposed by the United States or any state,
municipality, subdivision or authority, which are due and payable, and
all interest and penalties thereon, unless disputed in good faith in
proper proceedings and reserved for or set aside, have been paid in
full and all related tax returns and reports required to be filed in
connection therewith have been accurately prepared and timely filed
and all deposits required by law to be made by the Company with
respect to employees' withholding and social security taxes have been
made. The Company is not and, other than filing delinquency, has no
reason to believe that it will be the subject of an audit by any
taxing authority. There is not now in force any extension of time
with respect to the date when a tax return was or is due to be filed,
except for federal income tax return for 1997, or any waiver or
agreement by the Company for the extension of time for the assessment
of any tax and the Company is not a "consenting corporation" within
the meaning of Section 341(f)(1) of the Internal Revenue Code of 1986,
as amended; ("Code") and BN has not and SPC and MM have elected to be
treated as an "S corporation" under the Code. All workers'
compensation, disability and similar items due and payable under any
governmental program have been paid.
(p) The Company does not have any employee benefit, pension or
profit sharing plan subject to ERISA and no such plan to which the
Company is obligated or required to make contributions.
(q) None of the Company's employees are represented by a
collective bargaining agent or subject to a collective bargaining
agreement and the Company considers its relations with its employees
as a whole to be good. The Company has disclosed to the Buyer all
employee salary, compensation and benefit agreements and no employee
has a written employment agreement.
(r) Except for the Sellers' guarantee of the mortgage note to
▇▇▇▇▇▇▇ Bank, no person has guaranteed any obligation of the Company
and the Company has not guaranteed the obligation of any other person.
(s) The Company has made no offers and sales of securities
during the most recent two years other than the offer thereof to the
Sellers.
Section 4.02. The Buyer's representations and warranties. The
Buyer represents and warrants to the Sellers that:
(a) The Buyer is a duly incorporated and existing corporation
in good standing under the laws of its state of incorporation and has
full corporate power to execute and deliver this Agreement and to
authorize the issuance of and deliver the Chronicle Stock which, when
issued, will in form comply with the applicable laws of the Buyer's
state of incorporation.
(b) This Agreement has been duly and validly authorized,
executed and delivered by the Buyer and constitutes the legal, valid
and binding obligation of the Buyer enforceable against the Buyer in
accordance with its terms subject, as to enforceability, to
bankruptcy, insolvency, reorganization and other laws of, relating to
or affecting shareholders and creditors rights generally and to
general equitable principles.
(c) The Chronicle Stock, when issued by the Buyer,
authenticated and delivered by its transfer agent, to the Sellers
against delivery of the Stock and the warranty deed to the Plant will
be duly and validly authorized, validly issued and fully paid and
nonassessable.
(d) Except for such actions as may have been taken, no further
action by or before any governmental body or authority of the United
States of America or any state thereof is required in connection with
the execution and delivery of this Agreement by the Buyer and the
consummation of the transactions contemplated hereby.
(e) The Buyer's Prospectus dated September 23, 1998 (contained
in Amendment No. 1 to Registration Statement No. 333-63143 filed with
the U.S. Securities and Exchange Commission), which the Buyer has
delivered or hereafter delivers to the Sellers was or will be, on the
date reflected in each such item and as of the date hereof, accurate
in all material respects and such information at the date hereof as a
whole does not contain any untrue statement of material fact or omit
to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading, except that the Buyer's executive offices and production
facility are subject to foreclosure sale on October 6, 1998.
Section 4.03. Nature and survival of representation and warranties.
All statements of fact contained in this Agreement, any certificate
delivered pursuant to this Agreement, or any letter, document or other
instrument delivered by or on behalf of the Sellers, of BN, of SPC and
of MM or the Buyer and their respective officers, pursuant to the
terms of this Agreement shall be deemed representations and warranties
made by the Sellers, by BN, by SPC and by MM, respectively, and made
by the Buyer to each other under this Agreement. All representations
and warranties of the parties shall survive the Closing and all
inspections, examinations or audits on behalf of the parties;
provided, however, that all representations and warranties shall
terminate and expire, and be without further force and effect whatever
from and after one year from the Closing date. For purposes of this
Section 4.03 only, any party or other person seeking to enforce, or
claiming the benefit of, any representation and warranty under this
Agreement is called a Claimant, and any party or other person against
whom a right is claimed is called a Defendant. Neither the Buyer nor
the Sellers shall have any liability whatsoever on account of any
inaccurate representation or warranty or for any breach of warranty,
unless a Claimant shall, on or prior to the one year from the Closing,
serve written notice on a Defendant, with a copy to the Defendant's
counsel, setting forth in reasonable detail the breach and any direct,
incidental or consequential damages (including amounts) the Claimant
may have suffered as a result of such breach.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01. Conduct of business prior to Closing.
(a) From September 13, 1998 (letter-of-intent date) to the
Closing, each of BN, SPC and MM has conducted and will conduct its
business and affairs only in the ordinary course and consistent with
its prior practice and shall maintain, keep and preserve its assets
and properties in good condition and repair and maintain insurance
thereon in accordance with present practices, it will use its best
efforts (i) to preserve its business and organization intact, (ii) to
keep available to Buyer the services of the Company's present
employees, agents and independent contractors, (iii) to preserve for
the benefit of the Buyer the goodwill of suppliers, customers,
distributors, creditors and others having business relations with it,
and (iv) to cooperate and use reasonable efforts to assist the Buyer
in obtaining the consent of any creditor where the consent of such
creditor may be required by reason of the transactions contemplated
hereby.
(b) From September 13, 1998 to the Closing, none of BN, SPC or
MM has, and shall not, without the Buyer's prior written approval, (i)
disposed of any material assets, (ii) engaged in any transactions
outside their respective normal business, including but not limited
to, directly or indirectly, soliciting, entertaining, encouraging
inquiries or proposals or entering into negotiation or agreement with
any third party for sale of assets by the respective company, sale of
equity securities or merger, consolidation or combination with any
company or enterprise, (iii) grant any salary or compensation increase
to any employee exceeding three percent of annual salary or
compensation in effect at May 18, 1998, (iv) make any commitment for
capital expenditures, other than as disclosed to the Buyer and
approved by it, or (v) issue, sell, grant or otherwise distribute any
equity securities or any security or instrument which is convertible
into or exercisable for the purchase of the respective company's
equity securities.
Section 5.02. Conduct of the Sellers prior to Closing, The Sellers
will not directly or indirectly, solicit, entertain or encourage
inquiries or proposals or enter into negotiation or agreement with any
third party for sale of the Stock, for sale of equity securities,
business or assets, or any part thereof, by either themselves or by
any or all of BN, SPC and MM or for the merger, consolidation or
combination of any or all of BN, SPC and MM with any company or
enterprise.
Section 5.03. Notice of changes in information. Each party shall
give the other party prompt written notice of any change in any of the
information contained in their respective representations and
warranties made in Article IV, or elsewhere in this Agreement, or the
exhibits and schedules referred to herein or any written statements
made or given in connection herewith which occurs prior to the
Closing.
Section 5.04. Notice of extraordinary changes. The Sellers shall
advise the Buyer with respect to any of the following outside of
ordinary course of business of BN, of SPC or of MM, or which are
materially adverse: (i) the entering into and cancellation or breach
of contracts, agreements, commitments or other understandings or
arrangements to which the Company is a party, including, without
limitation, purchase orders for any item of inventory and commitments
for capital expenditures or improvements, orderly and gradual
discontinuance or particular items or (ii) any changes in purchasing,
pricing or selling policy (including, without limitation, selling
merchandise at discounts); provided, however, that not withstanding
anything contained in this subsection (c) the Sellers, BN and SPC will
not take or fail to take any action that, in the Company's reasonable
judgment, is likely to give rise to a substantial penalty or a claim
for damages by any third party against either or both BN or SPC, or is
likely to result in losses to either company, or is otherwise likely
to prejudice in any material respect or unduly interfere with the
conduct of its business and operations in the ordinary course
consistent with prior practice, or is likely to result in a breach by
the Company of any of its representations, warranties or covenants
contained in this Agreement (unless any such breach is first waived in
writing by the Buyer).
Section 5.05. Access to Information and Documents. Upon reasonable
notice and during regular business hours, the BN, SPC and MM will give
the Buyer, its attorneys, accountants and other representatives full
access to its personnel (subject to reasonable approval as to the time
thereof) and all properties, documents, contracts, books and records,
will furnish copies of such documents (certified by officers, if so
requested), and will provide the Buyer, its attorneys, accountants and
other representatives with such information with respect to its
business, operations, affairs and prospects (financial and otherwise)
as it may from time to time request, and will not omit any material
information; provided, that all things delivered or provided under
this Section shall remain the property of the Sellers and the Buyer
will not improperly disclose or use the same prior to the Closing.
Any such furnishing of such information or any investigation shall not
affect the Buyer's right to rely on the Sellers' representations and
warranties made in this Agreement or in connection herewith or
pursuant hereto.
Section 5.06. Cooperation by the parties. Each party hereto
shall cooperate and shall take such further action as may be
reasonably requested by any other party in order to carry out the
provisions and purposes of this Agreement.
Section 5.07. The Sellers as employees after Closing. The
Sellers, individually, will enter into employment agreements with
either the Buyer or with BN.
Section 5.08. Special covenant with respect to loans and
factored accounts. Following completion of an independent audit of
BN's financial statements, the Buyer will issue to ▇▇. ▇▇▇▇▇▇
registered shares of the Buyer's common stock, the number thereof
determined dividing the amount BN owes ▇▇. ▇▇▇▇▇▇ for loans and
factored accounts at the Closing Date, as verified by the independent
auditors, by the average of the closing asked quotation(s) for
Chronicle's shares on the OTC Bulletin Board over the five day period
ending the day of the final report by the independent auditors. This
special provision shall not in any way be deemed to be part of the
consideration for the sale and purchase of BN as provided in Sections
2.01 and 2.02, but it shall be a covenant separate and apart and
unrelated to the such sale and purchase, providing that this covenant
shall be of no force and effect in the event the purchase and sale is
not Closed.
ARTICLE VI
SECURITIES LAW MATTERS AND STATUS OF CHRONICLE STOCK
Section 6.01. Unregistered Chronicle Stock. The Sellers
acknowledges that the Chronicle Stock to be delivered at the Closing
has not and will not be registered under the federal Securities Act of
1933, as amended, ("Securities Act") and the securities laws of the
Sellers' state of residence, and that it is not transferable, except
as permitted under various exemptions contained in the Securities Act
and applicable state securities law. The provisions contained in the
following sections are intended to ensure compliance with the
Securities Act and applicable state securities law.
Section 6.02. No transfers in violation of Securities Act. The
Sellers will not offer, sell, assign, pledge, hypothecate, transfer or
otherwise dispose of the Buyer's common stock, except after full
compliance with all of the applicable provisions of the Securities Act
and applicable state securities law.
Section 6.03. Investment intent. Each of the Sellers represents and
warrants to and covenants with the Buyer that he is acquiring
Chronicle Stock for his own account for investment, and not with a
view to resale or other distribution; that he currently has no
intention of selling, assigning, transferring, pledging, hypothecating
or otherwise disposing of all or any part thereof at any particular
time, for any particular price, or on the happening of any particular
event or circumstance; and he acknowledges that the Buyer is relying
on the truth and accuracy of the covenants, warranties and
representations of the Sellers in issuing Buyer's common stock without
first registering it under the Securities Act.
Section 6.04. Conditions to sale and investment legend on
certificates. Each of the Sellers agrees not to sell, assign,
transfer, pledge, hypothecate or otherwise dispose of any of the
Chronicle Stock or two years following the Closing, unless and until
(i) he has delivered to the Buyer a written legal opinion in form and
substance satisfactory to counsel for the Buyer to the effect that the
disposition is permissible under the terms of the Securities Act; (ii)
the Buyer has complied with the registration and prospectus delivery
requirements of the Securities Act for the resale of the Chronicle
Stock; or (iii) beginning one year after the Closing and ending two
years after the Closing, he has presented to the Buyer satisfactory
evidence, in the opinion of the Buyer's counsel, that the transfer
will comply with Rule 144 under the Securities Act. The Sellers
further agree that the certificates evidencing the Chronicle Stock
shall contain the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF Securities AND IS A "RESTRICTED SECURITY" AS
DEFINED UNDER SAID ACT. ACCORDINGLY, NEITHER THIS
SECURITY NOR ANY INTEREST THEREIN MAY BE SOLD, OFFERED FOR
SALE, ASSIGNED, TRANSFERRED, PLEDGED OR HYPOTHECATED,
EXCEPT BY BONA FIDE GIFT OR INHERITANCE, IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS SECURITY
UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED
and any additional legend required by the laws of the Sellers' state
of residence. The Sellers acknowledges the Buyer will also place a
"stop transfer" order against any transfer of the Chroncicle Stock
until one of the conditions set forth in this section has been met.
Section 6.05. Indemnification by the Sellers. If at any time in the
future, a Seller should offer, sell, assign, pledge, hypothecate,
transfer or otherwise dispose of any of the Chronicle Stock without
registration under the Securities Act, unless an exemption from
registration is available, that Seller agrees to indemnify and hold
harmless the Buyer against and from any and all claims, liabilities,
penalties, costs and expenses which may be asserted against or
suffered by the Buyer as a result of the disposition.
Section 6.06. Future registrations. If the Buyer registers
securities under the Securities Act, the Buyer will include the
Chronicle Stock then held by the Sellers in the registration
statement, provided that including the Buyer's common stock for sale
by the Sellers pursuant to the registration statement shall be subject
to the approval of the Buyer's investment banker or underwriter and
the agreement by the Sellers to reasonable volume and other
limitations required or desirable to maintain an orderly market.
Section 6.07. State securities law. The Closing is subject to any
and all requirements of the laws of the Buyer's and the Sellers'
respective states of residence applying to the offer and sale of
securities therein. In no event shall any party be liable to anyone
for failure to sell or issue its securities pursuant to this
Agreement, unless and until all applicable requirements of the law of
the applicable state of the recipient's residence relating to the
offer and sale have been satisfied.
ARTICLE VII
FEDERAL INCOME TAX MATTERS AND ACCOUNTING TREATMENT
Section 7.01. Parties responsible. Each party will be
responsible for obtaining advice on the federal income tax
consequences of this Agreement to such party and paying any tax
incurred as a result thereof.
Section 7.02. Accounting treatment. The parties intend the
sale and purchase of the Stock to be treated as a "pooling
transaction" for purposes of GAAP.
ARTICLE VIII
TERMINATION PRIOR TO CLOSING
Section 8.01. Termination For Default.
(a) The Buyer may, by notice to the Sellers given in the manner
provided below on or at any time prior to the Closing date, terminate
this Agreement if default shall be made by the Sellers in the
observance or in the due and timely performance of any of the
covenants and agreements contained, made by or imposed upon it, or
material breach of or default in any representation or warranty made
by the Sellers, in this Agreement, if the breach or default has not
been fully cured within fifteen days after receipt of the notice
specifying the breach or default.
(b) The Sellers may, by notice to the Buyer given in the manner
provided below on or at any time prior to the Closing date, terminate
this Agreement if default shall be made by the Buyer in the observance
or in the due and timely performance of any of its covenants and
agreements contained in, made by or imposed upon it, or material
breach of or default in any representation or warranty made by the
Sellers or the Company, in this Agreement, if the breach or default
has not been fully cured within fifteen days after receipt of the
notice specifying the breach or default.
(c) Notwithstanding Section 2.07, the party giving notice of the
other party's default, if the default is not cured as provided in
subsection (a) or (b), above, will be entitled to recover its costs
incurred in connection with this Agreement.
Section 8.02. Termination for failure to Close. If the Closing does
not occur by September 30, 1998, either Buyer or Sellers, if the party
is not then in default in the observance or in the due or timely
performance of any covenants and conditions under this Agreement, may
at any time terminate this Agreement by giving written notice to the
other.
Section 9.03. Termination for material adverse change. The Buyer
may, at its option, terminate this Agreement prior to the Closing if
the business or assets of BN, of SPC or of MM has suffered any
material damage, destruction or loss (whether or not covered by
insurance) or if there shall occur a material adverse change in either
company's business or prospects (financial and otherwise) from and
after the date of the Company's most recent financial statements
delivered to the Buyer.
ARTICLE IX
NOTICES
Section 9.01. Procedure for giving notices. Any and all
notices or other communications required or permitted to be given
under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered
(excluding telephone facsimile and including receipted express courier
and overnight delivery service) or mailed by first class certified
U.S. mail, return receipt requested showing name of recipient,
addressed to the proper party.
Section 9.02. Addresses for notices. For purposes of sending
notices under this Agreement, the addresses of the parties are as
follows:
As to Sellers: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Copy To: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
As to the Buyer: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
President
Chroncile Communications, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Section 9.03. Change of address. A party may change its
address for notices by sending a notice of such change to all other
parties by the means provided in Section 9.01.
ARTICLE X
LEGAL AND OTHER COSTS
Section 10.01. Party entitled to recover. In the event that
any party (the "Defaulting Party") defaults in his or its obligation
under this Agreement and, as a result thereof, the other party (the
"Non-Defaulting Party") seeks to legally enforce his or its rights
hereunder against the Defaulting Party (whether in an action at law,
in equity or in arbitration), then, in addition to all damages and
other remedies to which the Non-Defaulting Party is entitled by reason
of such default, the Defaulting Party shall promptly pay to the Non-
Defaulting Party an amount equal to all costs and expenses (including
reasonable attorneys' fees and expert witness fees) paid or incurred
by the Non-Defaulting Party in connection with such enforcement.
Section 10.02. Interest. In the event the Non-Defaulting Party
is entitled to receive an amount of money by reason of the Defaulting
Party's default hereunder, then, in addition to such amount of money,
the Defaulting Party shall promptly pay to the Non-Defaulting Party a
sum equal to interest on such amount of money accruing at the rate of
1.5% per month during the period between the date such payment should
have been made hereunder and the date of the actual payments thereof.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Effective date. The effective date of this
Agreement shall be the date set forth in the first paragraph of this
Agreement, subject to any conditions set forth herein.
Section 11.02. Entire agreement. This writing constitutes the
entire agreement of the parties with respect to the subject matter
hereof, superseding all prior agreements, understandings,
representations and warranties.
Section 11.03. Waivers. No waiver of any provision,
requirement, obligation, condition, breach or default hereunder, or
consent to any departure from the provisions hereof, shall be
considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or similar nature.
Section 11.04. Amendments. This Agreement may not be modified,
amended or terminated except by a written agreement specifically
referring to this Agreement signed by all of the parties hereto and
amendment, modification or alteration of, addition to or termination
of this Agreement or any provision of this Agreement shall not be
effective unless it is made in writing and signed by the parties.
Section 11.05. Construction. This Agreement has been
negotiated by the parties, section by section, and no provision hereof
shall be construed more strictly against one party than against the
another party by reason of such party having drafted such provision.
The order in which the provisions of this Agreement appear are solely
for convenience of organization; and later appearing provisions shall
not be construed to control earlier appearing provisions.
Section 11.06. Invalidity. It is the intent of the parties
that each provision of this Agreement shall be interpreted in such a
manner as to be effective and valid under applicable law. If any
provision hereof shall be prohibited, invalid, illegal or
unenforceable, in any respect, under applicable law, such provision
shall be ineffective to the extent of such prohibition, invalidity or
non enforceability only, without invalidating the remainder of such
provision or the remaining provisions of this Agreement; and, there
shall be substituted in place of such prohibited, invalid, illegal or
unenforceable provision a provision which nearly as practicable
carries out the intent of the parties with respect thereto and which
is not prohibited and is valid, legal and enforceable.
Section 11.07. Multiple counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be an
original and, taken together, shall be deemed one and the same
instrument.
Section 11.08. Assignment, parties and binding effect. This
Agreement, and the duties and obligations of any party shall not be
assigned without the prior written consent of the other party(ies).
This Agreement shall benefit solely the named parties and no other
person shall claim, directly or indirectly, benefit hereunder, express
or implied, as a third-party beneficiary, or otherwise. Wherever in
this Agreement a party is named or referred to, the successors
(including heirs and personal representative of individual parties)
and permitted assigns of such party shall be deemed to be included,
and all agreements, promises, covenants and stipulations in this
Agreement shall be binding upon and inure to the benefit of their
respective successors and permitted assigns.
Section 11.09. Arbitration. Unless a court of competent
jurisdiction shall find that a particular dispute or controversy
cannot, as a matter of law, be the subject of arbitration, any dispute
or controversy arising hereunder, other than suit for injunctive
relief which can be granted only by a court of competent jurisdiction,
shall be settled by binding arbitration in Tallahassee, Florida by a
panel of three arbitrators in accordance with the rules of the
American Arbitration Association; provided, that the rules of
discovery of the U.S. District Court with jurisdiction of the situs of
the arbitration shall apply. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
The parties may pursue all other remedies with respect to any claim
that is not subject to arbitration.
Section 11.10. Jurisdiction and venue. Any action or
proceeding for enforcement of this Agreement and the instruments and
documents executed and delivered in connection herewith which is
determined by a court of competent jurisdiction not, as a matter of
law, to be subject to arbitration as provided in Section 11.12 or
which seeks injunctive relief shall be brought and enforced in the
courts of the State of Florida in and for Hillsborough County and in
the United States District Court for the Middle District of Florida,
Tampa Division, and the parties irrevocably submit to the jurisdiction
of each such court in respect of any such action or proceeding.
Section 11.11. Applicable law. This Agreement and all
amendments thereof shall be governed by and construed in accordance
with the law of the State of Florida applicable to contracts made and
to be performed therein (not including the choice of law rules
thereof).
IN WITNESS WHEREOF, the corporate party hereto has caused this
Agreement to be signed by its officers thereunto duly authorized and
its corporate seal to be hereunto affixed, and the individual parties
have signed this Agreement, all parties delivering this Agreement to
the other parties, the day and year first above written.
[Corporate Seal] Chronicle Communcations, Inc.
Attest: By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., President
/s/ ▇▇▇▇▇▇▇ L. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ [L.S.]
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [L.S.]
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Page 12 of 16 pages, plus Exhibits and Schedules