EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is made this 31st
day of May, 2002, by and between Xxxxxxxx'x, Inc., a Tennessee corporation (the
"Company") and Xxxx Xxxxxxxx ("Shareholder").
RECITALS
WHEREAS, Shareholder owns 258,425 shares of Class C Preferred
Stock of the Company (the "Class C Preferred Stock"), and each share of the
Class C Preferred Stock has a stated value equal to $30.83556 (the "Stated
Value");
WHEREAS, the Company intends to conduct an initial public
offering of the common stock of the Company (the "IPO") on the terms set forth
on a registration statement on Form S-1 filed with the U.S. Securities and
Exchange Commission (the "SEC") on April 23, 2002 (as the same may be hereafter
amended, including any related registration statement filed pursuant to Rule 462
under the Securities Act of 1933, the "Registration Statement").
WHEREAS, the parties have agreed that, immediately prior to
the closing of the IPO (the "IPO Closing"), Shareholder will exchange all of the
shares of Class C Preferred Stock held by him (the "Exchange Shares") for such
number of shares of the Company's common stock, no par value per share (the
"Common Stock"), as provided for in this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties to this Agreement, intending
to be legally bound, hereby agree as follows:
1. Exchange. Upon the terms and subject to the
conditions set forth herein, effective immediately prior to the IPO Closing,
Shareholder hereby assigns, transfers, conveys and delivers the Exchange Shares
to the Company, and the Company, in exchange therefor, hereby agrees to issue
and deliver to Shareholder, immediately prior to the IPO Closing, such number of
shares of Common Stock equal to (x) the Stated Value for all of the Exchange
Shares divided by (y) 93% of the initial public offering price per share at
which the Common Stock is sold in the IPO.
2. Deliveries. Contemporaneously with the execution of
this Agreement, Shareholder agrees to deposit with the Custodian, pursuant to
the Irrevocable Power of Attorney and Custodian Agreement executed by the
Shareholder as of May 31, 2002 (the "POA"), (i) the stock certificates
representing the Exchange Shares exchanged by Shareholder pursuant to Section 1
hereof and (ii) stock powers for the shares of Common Stock that Shareholder is
to receive under this Agreement pursuant to Section 1 hereof (the "New Common
Shares"), duly endorsed or accompanied by appropriate stock, in order to
facilitate the transfer of the Exchange Shares under this Agreement and the
shares of Common Stock in connection with the IPO.
3. Sale of Common Stock. Shareholder hereby agrees to
sell the New Common Shares, as a selling shareholder in the IPO pursuant to a
Purchase Agreement with the
underwriters, and Shareholder has authorized the attorney-in-fact under the POA
to enter into a Purchase Agreement with the underwriters for that purpose.
4. Termination. This Agreement shall terminate and be
wholly without force or effect in the event that the IPO Closing does not occur
by December 31, 2002.
5. Representations and Warranties of Shareholder.
Shareholder hereby represents, warrants, covenants, agrees and acknowledges to
the Company the following to be true and correct in all respects as to himself:
a. Title; Third-Party Options. There are no
contracts, options, commitments or rights of any kind, by or through
Shareholder, with, to or in any third party to acquire all or any portion of the
Exchange Shares held by Shareholder and Shareholder has good title to such
shares and owns such shares free and clear of any claim, mortgage, assignment,
conditional sale, lease, easement, consignment, bailment, contingent interest,
pledge, lien, option, charge, security interest, preemptive right, encumbrance
or other restrictions of any kind or nature whatsoever, other than restrictions
imposed by the Securities Act (as defined below) or any other securities laws,
and other than any restrictions which have been waived or will terminate prior
to the IPO Closing.
b. No View to Distribution or Resale.
Shareholder will acquire the New Common Shares solely for his own account
without a view to the distribution or resale thereof other than pursuant to a
Registration (as defined below) or an exemption therefrom, and Shareholder does
not have any contract, undertaking, agreement or arrangement to sell or
otherwise transfer or dispose of any of such shares in any manner to any person
except as contemplated by this Agreement.
c. No Transfer Without Registration or
Exemption. Shareholder will not, except as contemplated by this Agreement, sell,
transfer or otherwise dispose of any of the New Common Shares in any manner,
unless at the time of any such transfer: (i) a Registration is in effect with
respect to the New Common Shares to be sold, transferred or disposed of, and
Shareholder complies with all of the requirements of the Securities Act and the
Applicable Laws (as defined below) with respect to the proposed transaction; or
(ii) Shareholder has obtained and has provided to the Company an opinion from
counsel satisfactory to the Company (as to both the counsel rendering such
opinion and the substance of the opinion) that the proposed sale, transfer or
disposition does not require Registration.
d. Securities Legend. A legend will be placed
on the certificates evidencing all New Common Shares and stop-transfer
instructions will be issued to any transfer agent with respect to such shares to
ensure compliance with the provisions of this Agreement the Securities Act and
the Applicable Laws.
e. Investment Risk. Shareholder can bear the
economic risk of his acquisition and ownership of the New Common Shares,
including the total loss of his investment, has no need for liquidity in this
investment and, either individually or with his advisers, has such knowledge and
experience in financial and business matters that he is capable
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of evaluating the merits and risks of the Company and the investment in the New
Common Shares.
f. Review of Company's Registration Statement.
Shareholder has received the Registration Statement and all other documents
requested by Shareholder have been carefully reviewed by him and Shareholder
understands the information contained therein.
g. Knowledge and Experience. Shareholder,
together with his advisers, have such knowledge and experience in financial,
tax, and business matters, and, in particular, investments in securities, so as
to enable them to utilize the information made available to them in connection
with the New Common Shares to evaluate the merits and risks of an investment in
the New Common Shares and to make an informed investment decision with respect
thereto.
h. Accredited Investor Status. Shareholder is
an "accredited investor," as such term is defined under Regulation D under the
Securities Act.
i. No Reliance. Shareholder is not relying on
the Company or any of its employees or agents with respect to the legal, tax,
economic and related considerations of an investment in the New Common Shares,
and Shareholder has relied on the advice of, or have consulted with, only his
own advisers with respect to such matters.
j. Definitions. As used herein: the term
"Registration" means registration under the Securities Act and, with respect to
the Applicable Laws, such registration thereunder (or, with respect to any of
the Applicable Laws which do not provide for registration, such compliance
therewith which is similar to registration) which has then resulted in statutory
or administration authorization for the proposed transaction; the term
"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder; and the term "Applicable Laws" means any applicable
state securities laws and, to the extent applicable to offers or sales of
securities, the Securities Exchange Act of 1934, as amended, and the rules and
regulations under the foregoing.
6. Governing Law. This Agreement shall be governed by
and interpreted and enforced in accordance with the substantive laws of the
State of Tennessee.
7. No Benefit to Others. The representations,
warranties, covenants and agreements contained in this Agreement are for the
sole benefit of the parties hereto and their executors, legal representatives,
successors and assigns, and they shall not be construed as conferring and are
not intended to confer any rights on any other persons.
8. Contents of Agreement. This Agreement together with
any documents referred to herein set forth the entire agreement of the parties
hereto and supersede any prior agreement or understanding of the parties with
respect to the transactions contemplated hereby. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto, and no
claimed amendment, modification, termination or waiver shall be binding unless
in writing and signed by the party against whom or which such claimed amendment,
modification, termination or waiver is sought to be enforced.
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9. Further Assurances. Each of the Shareholder and the
Company shall do or cause to be done such further acts and things and deliver or
cause to be delivered such additional assignments, agreements, documents,
powers, and instruments as may reasonably be required to carry into effect the
purposes of this Agreement
10. Severability. Any provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall be ineffective to the
extent of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. Counterparts. This Agreement may be executed in any
number of counterparts, which when taken together, shall constitute but one and
the same instrument. Any and all counterparts may be executed by facsimile.
[Execution page to follow]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Exchange Agreement on the date first above written.
XXXXXXXX'X, INC.
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: Chief Executive Officer and
President
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
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