EXHIBIT 10.22
SUBSCRIPTION AND STOCK PURCHASE AGREEMENT
THIS SUBSCRIPTION AND STOCK PURCHASE AGREEMENT, dated as of December
18, 2003 (this "Agreement"), is entered into by and between EMPIRE FINANCIAL
HOLDING COMPANY, a Florida corporation (the "Company"), and SHEPHERD LARGE CAP
GROWTH FUND (the "Purchaser").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Purchaser desires to purchase from the Company, and the
Company desires to sell to the Purchaser, 200,000 shares (the "Shares") of
common stock, $.01 par value, of the Company (the "Common Stock"), all on the
terms set forth in this Agreement and the agreements referred to herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. PURCHASE AND SALE.
1.01. PURCHASE AND SALE OF SHARES. Simultaneously with the execution of
this Agreement and subject to, and on the terms and conditions of, this
Agreement, (a) the Company will sell to the Purchaser, and the Purchaser will
purchase from the Company, all of the Shares, (b) the Company will deliver to
the Company's transfer agent a letter of instruction directing the transfer
agent to issue the Purchaser a certificate representing the Shares, which
certificate shall contain standard restrictive securities legends and (c) the
Company will execute a registration rights agreement granting to the Purchaser
the limited right to register the Shares, on the terms and conditions set forth
therein (the "Registration Rights Agreement").
1.02. PURCHASE PRICE FOR SHARES. Simultaneously with the execution of
this Agreement and subject to, and on the terms and conditions of, this
Agreement, (a) the Purchaser shall purchase the Shares for the aggregate cash
consideration of Two Hundred and Fifty Thousand Dollars ($250,000), which shall
be paid by the Purchaser by wire transfer to an account previously designated by
the Company and (b) the Purchaser will execute the Registration Rights
Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents
and warrants to the Purchaser as follows:
2.01. CORPORATE EXISTENCE AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida; the Company has the corporate power to own, manage,
lease and/or hold its properties and to carry on its business as and where such
properties are presently located and such business is presently conducted.
2.02. AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement and the
Registration Rights Agreement have been duly executed and delivered by the
Company, and the Company
Company:________ Purchaser:________
has all requisite power and legal capacity to execute and deliver this Agreement
and the Registration Rights Agreement and to consummate the transaction
contemplated hereby or thereby, and to perform its obligations hereunder or
thereunder. This Agreement and the Registration Rights Agreement constitute, or
upon execution and delivery will constitute, the legal, valid and binding
obligation of the Company, enforceable in accordance with their respective
terms, except as such enforcement may be limited by general equitable principles
or by applicable bankruptcy, insolvency, moratorium, or similar laws and
judicial decisions from time to time in effect which affect creditors' rights
generally.
2.03. ISSUANCE OF SHARES. The Shares have been duly authorized, validly
issued, fully paid and non-assessable.
2.04. NO DEFAULTS OR CONSENTS. Neither the execution and delivery of
this Agreement nor the Registration Rights Agreement, nor the carrying out of
any transaction contemplated hereby or thereby will violate or conflict with any
of the terms, conditions or provisions of the articles of incorporation or
bylaws of the Company. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Company and the performance by the Company
of its obligations hereunder and thereunder will not violate any provision of
law or any judgment, award or decree or any indenture, agreement or other
instrument to which the Company is a party, or by which the properties or assets
of the Company is bound or affected, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under, any such
indenture, agreement or other instrument, in each case except to the extent that
such violation, default or breach could not reasonably be expected to be
material to the Company.
2.05. SEC PUBLIC FILINGS; FINANCIAL STATEMENTS. The Company is a
reporting company pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and files annual, quarterly and periodic reports with the
Securities and Exchange Commission ("SEC"). The Company's public filings made
with the SEC since January 1, 2003 (the "Public Filings") did not contain at the
time filed any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The financial statements of the Company contained in the Public Filings present
fairly in all material respects the financial condition and results of
operations of the Company for the dates or periods indicated thereon.
2.06. ABSENCE OF CERTAIN CHANGES.
Except as disclosed in the Public Filings, there has not been:
(i) any event, circumstance or change that has had,
or might reasonably be expected to have, a material adverse effect on the
business, operations, properties, financial condition or working capital of the
Company;
(ii) any damage, destruction or loss (whether or not
covered by insurance) that has had, or might reasonably be expect to have, a
material adverse effect on the business, operations, properties or financial
condition of the Company; or
(iii) any material adverse change in the Company's
revenues, pricing policies, accounts receivable or accounts payable.
Company:________ Purchaser:________
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2.07. COMPLIANCE WITH LAWS. Except as may have been disclosed in the
Public Filings, the Company is and has been in compliance in all respects with
any and all law, statutes and regulations applicable to the Company, other than
failures to so comply that would not have a material adverse effect on the
business, operations, properties or financial condition of the Company, taken as
whole.
2.08. LITIGATION. Except as disclosed in the Public Filings or as
previously disclosed to the Purchaser, there are no claims, actions, suits,
investigations or proceedings against the Company pending or, to the knowledge
of the Company, threatened in any court or before or by any governmental
authority, or before any arbitrator, that might have an adverse effect (whether
covered by insurance or not) on the business, operations, properties or
financial condition of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to the Company as follows:
3.01. EXISTENCE AND QUALIFICATION. The Purchaser is a corporation duly
organized, validly existing and in good standing.
3.02. UNITED STATES PERSON. The Purchaser is a "United States Person",
as defined in Section 7701(a)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"), because the Purchaser is either (i) a citizen or resident
of the United States of America, (ii) a domestic partnership, or (iii) a
domestic corporation.
3.03. ACCREDITED INVESTOR. The Purchaser acknowledges that it is an
"Accredited Investor", as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
PLEASE READ AND REVIEW THE FOLLOWING QUESTIONS AS THEY PERTAIN TO THE PURCHASER
AND CHECK TRUE OR FALSE FOR EACH QUESTION:
|_| |_| (1) The Purchaser is a bank as defined in
True False Section 3(a)(2) of the Securities Act, or
any savings and loan association or other
institution as defined in Section 3(a)(5)(A)
of the Securities Act, whether acting in its
individual or fiduciary capacity.
|_| |_| (2) The Purchaser is a broker or dealer
True False registered under Section 15 of the Exchange
Act.
|_| |_| (3) The Purchaser is an insurance company as
True False defined in Section 2(a)(13) of the
Securities Act.
|_| |_| (4) The Purchaser is an investment company
True False registered under the Investment Company Act
of 1940 or a business development company as
defined in Section 2(a)(48) of such Act.
|_| |_| (5) The Purchaser is a Small Business Investment
True False Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d)
of the Small Business Investment Act of
1958.
Company:________ Purchaser:________
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|_| |_| (6) The Purchaser is a plan established and
True False maintained by a state, its political
subdivisions, or any agency or
instrumentality of a state or its political
subdivisions, for the benefit of its
employees, if such plan has total assets in
excess of $5,000,000.
|_| |_| (7) The Purchaser is an employee benefit plan
True False within the meaning of the Employment
Retirement Income Security Act of 1974, if
the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of
such act, which is either a bank, savings
and loan association, insurance company, or
registered investment adviser, or if the
employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed
plan, with investment decisions made solely
by persons that are Accredited Investors.
|_| |_| (8) The Purchaser is a private business
True False development company as defined in Section
202(a)(22) of the Investment Advisors Act of
1940.
|_| |_| (9) The Purchaser is a company, partnership or
True False organization described in Section 501(c)
(3) of the Internal Revenue Code, or
Massachusetts or similar business trust, not
formed for the specific purpose of acquiring
the Shares, with total assets in excess of
$5,000,000.
|_| |_| (10) The Purchaser is a trust, with total assets
True False in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares,
whose purchase is directed by a
sophisticated person who had such knowledge
and experience in financial and business
matters that such person is capable of
evaluating the merits and risks of investing
in the Company.
|_| |_| (11) The Purchaser is an entity in which ALL of
True False the equity owners are Accredited Investors.
If the Purchaser belongs to this investor
category only, list the equity owners of the
Purchaser, and the investor category which
each such equity owner satisfies:
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
(Continue on a separate piece of paper, if necessary.)
Company:________ Purchaser:________
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3.04. COPIES OF THE COMPANY'S PUBLIC FILINGS. These Public Filings
contain detailed information regarding the business, competition, properties,
risk factors, board of directors, management, financial information and other
information relating to the Company and its business. The Purchaser will rely
solely on the information contained in the Public Filings and the independent
investigations made by the Purchaser and/or the Purchaser's advisors (the
"Advisor(s)") and is not relying upon any oral representations in making the
decision to purchase the Shares subscribed for herein. The Purchaser
acknowledges that all documents, records and books pertaining to this investment
have been made available for inspection by the Purchaser and/or such Advisor(s).
The Purchaser and/or such Advisor(s) have had a reasonable opportunity to ask
questions of, and receive answers from, proper representatives of the Company
concerning the terms and conditions of this offering of Shares and all such
questions have been answered to the full satisfaction of the Purchaser. No oral
representations have been made or oral information furnished to the Purchaser or
such Advisor(s) in connection with the offering of the Shares which were in any
way inconsistent with the Public Filings.
3.05. INVESTMENT INTENT. The Shares are being purchased solely for the
Purchaser's own account for investment and not for the account of any other
person and not for, or with a view towards, distribution, assignment or resale
to others in the United States or elsewhere and, upon the Purchaser's purchase,
no other person shall have a direct or indirect beneficiary interest in the
Shares.
3.06. NO REGISTRATION. The Shares purchased pursuant to this Agreement
have not been registered under the Securities Act, or the securities laws of any
state and are being offered and sold in reliance on exemptions from the
registration requirements of said act and such laws. The Shares are subject to
restrictions on transferability and resale and may not be transferred or resold
except pursuant to registration under said Securities Act and such applicable
state laws or exemption therefrom. The Shares have not been approved or
disapproved by the SEC, any state securities commission or any other regulatory
authority, nor have any of the foregoing authorities passed upon or endorsed the
merits of this transaction or the accuracy or adequacy of this Agreement. Any
representation to the contrary is unlawful.
3.07. ECONOMIC LOSS AND SOPHISTICATION. The Purchaser (i) has adequate
means of providing for the Purchaser's current needs and possible contingencies,
(ii) has no need for liquidity in the investment, (iii) is able to bear the
substantial economic risk of an investment in the Shares, including a complete
loss of such investment and (iv) does not have an overall commitment to
investments which are not readily marketable that is disproportionate to the
Purchaser's net worth and the Purchaser's investment in the Shares will not
cause such overall commitment to become disproportionate to such net worth.
3.08. CORRECT INFORMATION. All information that the Purchaser has
provided to the Company, including all information contained herein, is correct
and compete as of the date set forth on the signature page hereof.
3.09. TAX CONSEQUENCE. The Purchaser has obtained, from the Purchaser's
Advisor(s) or otherwise, any tax advice deemed appropriate by the Purchaser.
3.10. NO FEE. No broker or other person is entitled to any commission
or finder's fee in connection with the transaction contemplated by this
Agreement, except for a fee payable by the Company to Xxxxxxx Xxxx. The
Purchaser has no claims with respect to any other issuance of securities by the
Company:________ Purchaser:________
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Company or sale of any securities by the Company. The Purchaser did not become
aware of the offering of the Shares through any form of general solicitation or
advertising.
3.11. PRINCIPAL PLACE OF BUSINESS OR RESIDENCE. The address set forth
in Section 4 is the Purchaser's true and correct principal place of business.
3.12. AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been
duly executed and delivered by the Purchaser, and the Purchaser has all
requisite power and legal capacity to execute and deliver this Agreement and to
consummate the transaction contemplated hereby, and to perform its obligations
hereunder. This Agreement constitutes, or upon execution and delivery will
constitute, the legal, valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except as such enforcement may be
limited by general equitable principles or by applicable bankruptcy, insolvency,
moratorium, or similar laws and judicial decisions from time to time in effect
which affect creditors' rights generally.
3.13. NO DEFAULTS OR CONSENTS. Neither the execution and delivery of
this Agreement, nor the carrying out of any transaction contemplated hereby will
violate or conflict with any of the terms, conditions or provisions of the
organizational documents of the Purchaser. The execution and delivery of this
Agreement and the performance by the Purchaser of its obligations hereunder will
not violate any provision of law or any judgment, award or decree or any
indenture, agreement or other instrument to which the Purchaser is a party, or
by which the properties or assets of the Purchaser is bound or affected, or
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under, any such indenture, agreement or other
instrument, in each case except to the extent that such violation, default or
breach could not reasonably be expected to be material to the Purchaser.
4. MISCELLANEOUS.
4.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or made in writing by any party in connection
herewith will survive the execution and delivery of this Agreement for a period
of one year from the date hereof.
4.02. RESTRICTIVE SECURITIES LEGEND; TRANSFER OF SHARES. The Company
agrees that at any time that the Shares may be transferred without restriction
under then applicable securities laws, at the Purchaser's request (but at no
charge to the Purchaser), the Company will promptly issue to the Purchaser, in
exchange for any certificate then outstanding representing the Shares, a
replacement certificate that does not contain any restrictive securities legend.
In addition, at any time that the Purchaser elects to transfer the Shares in
compliance with applicable securities laws, the Company agrees to fully
cooperate in promptly transferring the Shares without imposing any charge on the
Purchaser.
4.03. TIME IS OF THE ESSENCE. Time is of the essence.
4.04. WAIVER. The failure of any party to declare any default
immediately upon occurrence thereof, or delay in taking any action in connection
therewith, shall not waive such default, but the parties hereto shall have the
Company:________ Purchaser:________
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right to declare any such default at any time. No waiver by any party of a
default by another party shall be implied, and no express waiver by any party
shall affect any default other than the default specified in such waiver and
then only for the time and extension stated therein. No waiver of any term,
provision, condition or covenant of this Agreement by any party shall be deemed
to imply or constitute a further waiver by any party of any other term,
provision, condition or covenant of this Agreement. Notwithstanding any
applicable law, the terms of this Section and the other provisions of this
Agreement may not be waived by any prior, contemporaneous, concurrent, or
subsequent course of dealing, course of conduct or trade practice.
4.05. ARMS-LENGTH AGREEMENT. The parties hereto mutually acknowledge
and agree that this Agreement and the matters memorialized herein have been
fully negotiated with the assistance of counsel at arms-length. The parties
further stipulate and agree that (i) the choice of law, venue and jurisdiction
clauses contained in this Agreement are reasonable, (ii) neither party had
overwhelming bargaining power and (iii) all parties were represented by counsel
of their choice and were fully advised concerning this Agreement.
4.06. ENTIRE AGREEMENT. The parties are not relying upon any prior,
contemporaneous, or concurrent oral, tacit, or written representation,
statement, letter agreement, understanding, side-deal, inducement, warranty, or
utterance as an inducement to enter into this Agreement. This written Agreement
constitutes the entire understanding of the parties with respect to the
disposition of the matters contained herein and all oral, tacit, or written
representations, side-deals, conversations, inducements, understandings,
warranties, utterances or agreements made prior to, contemporaneously with,
and/or concurrently with the execution and delivery of this Agreement are merged
into this written document and are of no further force and effect.
4.07. MODIFICATIONS. No change, modification or waiver of any provision
of this Agreement or the Registration Rights Agreement shall be valid or binding
unless it is in writing and signed by all parties to this Agreement.
Notwithstanding any applicable law, the terms of this Section and all other
provisions of this Agreement may not be waived by any prior, contemporaneous,
concurrent, or subsequent course of dealing, course of conduct, trade practice,
or attempted modification.
4.08. SUCCESSORS AND ASSIGNS. This Agreement is binding upon all
parties and their respective successors and assigns.
4.09. CONSTRUCTION. This Agreement was negotiated and prepared jointly
by the parties hereto and their respective legal counsel. The provisions of this
Agreement shall be construed according to their fair meaning and neither for nor
against any party hereto irrespective of which party caused such provisions to
be drafted. The headings in this Agreement are only for convenience and cannot
be used in interpretation.
4.10. ATTORNEYS' FEES. In any proceeding to enforce or concerning this
Agreement, in addition to any other relief that the prevailing party may be
entitled to, the prevailing party shall be entitled to recover their attorneys'
fees and costs incurred at the trial and appellate levels, including, without
limitation, any attorneys' fees and costs incurred in litigating the entitlement
to and amount of such attorneys' fees and costs.
Company:________ Purchaser:________
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4.11. CHOICE OF LAW; VENUE. This Agreement shall be construed in
accordance with the laws of the State of Florida, and any dispute arising out
of, connected with, related to, or incidental to the relationship between the
parties in connection with this Agreement, whether arising in tort, contract,
equity, or otherwise, shall be resolved in accordance with the internal laws (as
opposed to the conflicts of laws provisions) and decisions of the State of
Florida. Sole and exclusive venue for enforcement of this Agreement and any
subsequent court proceedings thereon or relating thereto shall be in the trial
courts in and for Seminole County, Florida.
4.12. SEVERABILITY. Wherever possible, each portion of this Agreement
shall be interpreted in such a manner as to be valid, effective and enforceable
under the applicable law. If any portion of this Agreement is held to be
invalid, illegal, against public policy, or unethical by a court of competent
jurisdiction or other regulatory or administrative authority, under the terms
hereof, such provision shall be severed therefrom and such invalidity shall not
affect any other portion of this Agreement, the balance of which shall remain
in, and have its intended, full force and effect.
4.13. NOTICES. All notices permitted under this Agreement shall be sent
to:
FOR THE PURCHASER: Shepherd Large Cap Growth Fund
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx, Chairman of
the Board and Managing Director
Facsimile: 703.683.9083
WITH A COPY TO: Xxx Xxxxxxx & Xxxxxxx Capital
Management, Inc.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Facsimile: 703.683.9083
FOR THE COMPANY Empire Financial Holding Company
0000 Xxxx Xxxxx Xxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Chief
Executive Officer
Facsimile: 407.682.1664
WITH COPY TO: Xxxxxxxxx Xxxxxxx, P.A.
600 Three Galleria Tower
00000 Xxxx Xxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: 305.961.5531
or such other addresses which the parties may designate in writing from time to
time.
Company:________ Purchaser:________
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4.14. COUNTERPARTS. If the parties deem it expedient, this Agreement
may be executed in counterparts, with each counterpart being of equal dignity.
4.15. FURTHER DOCUMENTS. In the event that further documents are
required or permitted to be executed in order to effectuate the purposes of this
Agreement, then each of the Company and the Purchaser hereby covenant and agree
that they shall execute such documents within three business days of receipt of
such request, together with a copy of the proposed documents.
4.16. MUTUAL SIGNATURE. The parties expressly acknowledge and agree
that this Agreement is not binding on any party unless and until it has been
signed by the parties in the spaces provided below or in counterparts.
4.17. LEGALITY. The parties represent, warrant and covenant that they
know of no reason why this Agreement is in violation of any federal, state, or
local statute, regulation, rule or ordinance.
4.18. JURY TRIAL. AS A MATERIAL INDUCEMENT TO ENTER INTO THIS
AGREEMENT, THE PARTIES HEREBY WAIVE ANY RIGHT TO A JURY TRIAL OR TO HAVE A JURY
PARTICIPATE IN RESOLVING A DISPUTE, WHETHER SOUNDING IN TORT, CONTRACT, EQUITY,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Subscription
and Stock Purchase Agreement on the date first set forth above.
EMPIRE FINANCIAL HOLDING COMPANY,
a Florida corporation
By: /s/ Xxxxx X. Xxxxx
------------------
Xxxxx X. Xxxxx
Chief Executive Officer
SHEPHERD LARGE CAP GROWTH FUND
By: /s/ Xxxx Xxxxxxxx
-----------------
Xxxx Xxxxxxxx
Chairman of the Board and Managing Director
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