EXHIBIT 4.3
SUBSCRIPTION AGREEMENT
Xxxxxx Industries, Inc.
c/o Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Gentlemen:
You have informed me that Xxxxxx Industries, Inc. is a Tennessee
corporation (the "Company" or "you") and is conducting a private offering of its
common stock to select "accredited investors". You have informed me that the
offering relates up to a maximum of 480,000 shares of the Company's common
stock, $.01 par value per share (the "Shares"), at a price of $9.00 per Share
(the "Offering"), and that you expect to require a minimum investment by each
person to whom Shares are sold in the Offering of 50,000 Shares, although you
have reserved the right to make one or more exceptions.
In connection with the Offering, you have agreed to enter into a common
Registration Rights Agreement, which will be dated the date of the closing of
the Offering as described below (the date of closing being referred to as the
"Closing Date"), with each purchaser of Shares, in the form that accompanied
this Subscription Agreement, which shall cover all of the Shares that are sold
on the same terms and conditions for all such purchasers. Apart from the rights
set forth in that Registration Rights Agreement, and the rights or other terms
described in this Subscription Agreement, you have not established any other
rights or terms for the Offering, and I am not relying on any such other
matters. Collectively, the Subscription Agreement and the Registration Rights
Agreement are referred to herein as the "Agreements". I understand that the
other persons to whom you will sell Shares to in this Offering (the "Other
Investors") will purchase the Shares from you on the same terms and conditions
as contained in this Subscription Agreement and the Registration Rights
Agreement.
You have delivered to me a copy of each of the Company's (i) Annual
Report on Form 10-K for its fiscal year ended December 31, 2003 (the "Form
10-K"), (ii) Quarterly Report on Form 10-Q for the quarter ended March 31, 2004
(the "Form 10-Q"), and (iii) Proxy Statement relating to the meeting of the
Company's shareholders on February 12, 2004 (the "Proxy Statement")
(collectively the Form 10-K, Form 10-Q and Proxy Statement are referred to as
the "Disclosure Documents"). You have also informed me that each of the select
prospective investors to whom you are making offers has a significant
pre-existing relationship with the Company and thus has ready access to any
information about the Company and the Offering that he or she may desire in
order to consider an investment.
I desire to make an investment in the Company by purchasing some of the
Shares, and I am delivering this Subscription Agreement in order to confirm to
the Company my agreement with the terms for purchasing Shares and certain other
matters.
1. SUBSCRIPTION.
(a) Subject to the terms and conditions hereof, I hereby tender
this Subscription Agreement (the "Subscription" or "Agreement") in order to
subscribe for the number of Shares set forth on the signature page below.
Simultaneously with the execution and tender of this Agreement, I am delivering
to the Company the purchase price for the Shares for which I have subscribed.
(For purposes of this Agreement, payments made by me are referred to as the
"Funds.")
(b) This Agreement will be held by the Company for my benefit
pending acceptance of my Subscription. I understand that unless my Subscription
is accepted, the Funds will be refunded with any interest actually earned
thereon after clearance of the instrument by which they were paid. I
acknowledge, however, that if the Funds are returned without being held for more
than 15 days after clearance of the check or other instrument by which they were
paid, no interest shall be paid to me on the Funds. I acknowledge that the
Company reserves the right to cancel, withdraw or modify the Offering at any
time prior to the acceptance by it of subscriptions for Shares. I understand
that the Shares must be approved for listing on the New York Stock Exchange
before they may be issued to me. I understand that the Company's obligation to
issue the Shares to me is conditioned upon the completion of the purchases under
the Agreements with the Other Investors.
2. UNDERSTANDINGS, COVENANTS, AND AGREEMENTS. I understand and agree
that:
(a) The Company shall have the right, in its absolute discretion,
to accept or reject this Subscription, in whole or in part.
(b) This Subscription is and shall be irrevocable, except that I
shall have no obligations hereunder in the event this Subscription is for any
reason rejected, other than the obligation set forth in subsection (g) below, to
treat this Confidential Subscription Booklet confidentially.
(c) The issuance of the Shares will not be registered under the
Securities Act of 1933, as amended (the "1933 Act"), or the securities laws of
any state that, absent an exemption, would require registration, in reliance
upon exemptions from registration contained in the 1933 Act and such laws. The
Company's reliance upon such exemptions is based in part upon my
representations, warranties, covenants, and agreements contained in this
Agreement.
(d) Because the Shares have not been registered under the 1933 Act
or applicable state securities laws, the economic risks of investment in the
Shares must be borne by me, for the Shares may not be sold, transferred, pledged
or otherwise disposed of in the absence of an effective registration statement
covering the Shares under the 1933 Act and applicable state securities laws, or
unless an exemption from such registration is available. Any certificate
representing the Shares will contain a legend stating that they have not been
registered under the 1933 Act or any state securities laws, and referring to the
above restrictions on transferability and sale. A notation to such effect may
also be made on the stock ledger of the Company maintained by its transfer agent
or registrar, so that transfers of the Shares will not be effected on the
records of the Company without compliance with these restrictions.
(e) While the Company will agree, as reflected in the Registration
Rights Agreement included in the Confidential Subscription Booklet, to register
the Shares under the 1933 Act and certain state securities laws for public sale
by me, I understand that there is no certainty that such registration will be
effected, notwithstanding the Company's best efforts to do so.
(f) No federal or state agency has made any finding or
determination as to the fairness of this investment, or provided any
recommendation or endorsement of the Shares.
(g) I acknowledge that the Offering is confidential, and I agree
that the Confidential Subscription Booklet and any other information provided to
me by the Company in connection with the Offering shall be kept in confidence by
me; PROVIDED, HOWEVER, that this obligation shall not apply to any such
information that (i) is part of the public knowledge or literature and readily
accessible at the date
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hereof; (ii) becomes part of the public knowledge or literature and readily
accessible by publication (except as a result of a breach of this provision); or
(iii) is received from a third party (except for a third party who discloses
such information in violation of any confidentiality agreement he or she may
have with the Company). Further, this obligation does not prohibit my discussion
of such information with my counsel, accountant, or other financial advisor
solely for the purpose of assisting my analysis and assessment of such
information and the Offering.
3. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED. I hereby represent
and warrant as follows:
(a) I have adequate means of providing for my current needs and
possible personal contingencies; I have no need for liquidity of my investment
in the Company; I have taxable income and a net worth sufficient to make a
purchase of Shares a suitable investment for me; and I have such knowledge and
experience in financial matters that I am capable of evaluating the relative
risks and merits of this investment.
(b) I am at least 21 years of age. The address set forth below my
signature is my true and correct residence, and I have no present intention of
becoming a resident of any other state or jurisdiction.
(c) I acknowledge that (i) _____________________ [IF NONE, SO
INDICATE] has acted as my "Purchaser Representative" (as defined in Rule 501
promulgated by the Securities and Exchange Commission pursuant to the 1933 Act);
(ii) in evaluating my investment as contemplated hereby, I have been advised by
my Purchaser Representative as to the merits and risks of the investment in
general and the suitability of the investment for me in particular; and (iii) my
Purchaser Representative has confirmed to me in writing [A COPY OF SUCH DOCUMENT
SHOULD BE ATTACHED TO THIS AGREEMENT BY THE SUBSCRIBER] any past, present, or
future material relationship, actual or contemplated, between the Purchaser
Representative and the Company, or any affiliate of the Company.
(d) I have received and read, or reviewed with my Purchaser
Representative, if any, and I am familiar with the Disclosure Documents, the
Registration Rights Agreement and this Agreement, and I confirm that all
documents, records, and books pertaining to the investment in the Company and
requested from the Company by me or my Purchaser Representative have been made
available or delivered to me or my Purchaser Representative.
(e) I or my Purchaser Representative, or both, have had an
opportunity to ask questions of and receive answers from the Company, or a
person or persons acting on their behalf, concerning the terms and conditions of
this investment.
(f) The Shares for which I am subscribing are being acquired
solely for my own account for investment and are not being purchased with a view
to or for the resale, distribution, subdivision, or fractionalization thereof in
violation of the registration requirements of the 1933 Act, and I agree not to
sell, hypothecate or otherwise dispose of the Shares unless the Shares have been
registered under the 1933 Act and applicable state securities laws, or in the
opinion of counsel acceptable to the Company, an exemption therefrom is
available. In order to induce the Company to accept my Subscription and to issue
and sell to me the Shares subscribed for, I agree that the Company will have no
obligation (in the absence of demonstration of compliance with applicable
federal and state securities laws) to recognize the ownership, beneficial or
otherwise, of such Shares by anyone but me.
(g) I have received (and if requested by the Company, I have
completed and returned to the Company) the Offeree (Investor) Questionnaire
relating to my general ability to bear the risks of an
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investment in the Company and my suitability as an investor in a private
offering, and I hereby affirm the correctness of my answers in such
Questionnaire if it was requested by the Company.
(h) The person, if any, executing the Purchaser Representative
Questionnaire, a copy of which has been received by me, is acting and is hereby
designated to act as my Purchaser Representative in connection with the offer
and sale of the Shares to me. Such designation of a Purchaser Representative, if
any, was made with the knowledge of the representations and disclosures made in
such Purchaser Representative Questionnaire and materials.
(i) I am an "accredited investor" as defined in Regulation D under
the Securities Act and I am also knowledgeable, sophisticated and experienced in
making, and am qualified to make decisions with respect to investments in shares
presenting an investment decision like that involved in the purchase of the
Shares, including investments in securities issued by the Company and
investments in comparable companies, and I have requested, received, reviewed
and considered all information that I have deemed relevant in making an informed
decision to purchase the Shares.
(j) I have full right, power, authority and capacity to enter into
the Agreements and to consummate the transactions contemplated hereby and
thereby and I have taken all necessary action to authorize the execution,
delivery and performance of the Agreements.
The foregoing representations and warranties are true and accurate
as of the date hereof, shall be true and accurate as of the date of acceptance
hereof by the Company, and shall survive thereafter. If such representations and
warranties shall not be true and accurate in any respect prior to such
acceptance, I shall give written notice of such fact to the Company, specifying
which representations and warranties are not true and accurate and the reasons
therefor.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. As
consideration for my investment in the Company, the Company hereby represents
and warrants to, and covenants with, me, as follows:
4.1 ORGANIZATION. The Company is duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization. Each of the Company and its Material Subsidiaries (defined to
include those subsidiaries that have a material impact on the operations,
business or financial condition of the Company) has full power and authority to
own, operate and occupy its properties and to conduct its business as presently
conducted and as described in the documents filed by the Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") since the end
of its most recently completed fiscal year through the date hereof, including,
without limitation, its most recent reports on Forms 10-K and 10-Q
(collectively, the "Exchange Act Documents") and is registered or qualified to
do business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the location of the properties owned or leased by it
requires such qualification and where the failure to be so qualified would have
a material adverse effect upon the condition (financial or otherwise), earnings,
business, properties or operations of the Company and its Subsidiaries,
considered as one enterprise (a "Material Adverse Effect"), and no proceeding
has been instituted in any such jurisdiction, revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
4.2 DUE AUTHORIZATION AND VALID ISSUANCE. The Company has all
requisite power and authority to execute, deliver and perform its obligations
under the Agreements, and the Agreements have been duly authorized and validly
executed and delivered by the Company and constitute legal, valid and binding
agreements of the Company enforceable against the Company in accordance with
their terms, except as rights to indemnity and contribution may be limited by
state or federal securities laws
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or the public policy underlying such laws, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.3 NON-CONTRAVENTION. The execution and delivery of the
Agreements, the issuance and sale of the Shares under the Agreements, the
fulfillment of the terms of the Agreements and the consummation of the
transactions contemplated thereby will not (A) conflict with or constitute a
violation of, or default (with the passage of time or otherwise) under, (i) any
material bond, debenture, note or other evidence of indebtedness, lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or any Material Subsidiary is
a party or by which it or any of its Material Subsidiaries or their respective
properties are bound, (ii) the charter, by-laws or other organizational
documents of the Company or any Material Subsidiary, or (iii) any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or any Material
Subsidiary or their respective properties, except in the case of clauses (i) and
(iii) for any such conflicts, violations or defaults which are not reasonably
likely to have a Material Adverse Effect or (B) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company or any
Material Subsidiary or an acceleration of indebtedness pursuant to any
obligation, agreement or condition contained in any material bond, debenture,
note or any other evidence of indebtedness or any material indenture, mortgage,
deed of trust or any other agreement or instrument to which the Company or any
Material Subsidiary is a party or by which any of them is bound or to which any
of the material property or assets of the Company or any Material Subsidiary is
subject. No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or
other governmental body in the United States or any other person is required for
the execution and delivery of the Agreements and the valid issuance and sale of
the Shares to be sold pursuant to the Agreements, other than such as have been
made or obtained, and except for any post-closing securities filings or
notifications required to be made under federal or state securities laws.
4.4 CAPITALIZATION. The capitalization of the Company as of March
31, 2004 is as set forth in the most recent applicable Exchange Document,
increased as set forth in the next sentence. The Company has not issued any
capital stock since that date other than pursuant to (i) employee benefit plans
disclosed in the Exchange Documents, or (ii) outstanding warrants, options or
other securities disclosed in the Exchange Documents. The Shares to be sold
pursuant to the Agreements have been duly authorized, and when issued and paid
for in accordance with the terms of the Agreements will be duly and validly
issued, fully paid and nonassessable. The outstanding shares of capital stock of
the Company have been duly and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. Except as set forth in
or contemplated by the Exchange Documents, there are no outstanding rights
(including, without limitation, preemptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any unissued
shares of capital stock or other equity interest in the Company or any Material
Subsidiary, or any material contract, commitment, agreement, understanding or
arrangement of any kind to which the Company is a party or of which the Company
has knowledge and relating to the issuance or sale of any capital stock of the
Company or any Material Subsidiary, any such convertible or exchangeable
securities or any such rights, warrants or options. Without limiting the
foregoing, no preemptive right, co-sale right, right of first refusal,
registration right, or other similar right exists with respect to the Shares or
the issuance and sale thereof. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for the
issuance and sale of the Shares, other than such as have been made or obtained.
The Company owns the entire equity interest in each of its Subsidiaries, free
and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest, other than as described in the
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Exchange Documents. Except as disclosed in the Exchange Documents, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the common stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company's stockholders.
4.5 NO VIOLATIONS. Neither the Company nor any Material Subsidiary
is in violation of its charter, bylaws, or other organizational document, or, to
the knowledge of the Company, in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company or any Material Subsidiary, which
violation, individually or in the aggregate, would be reasonably likely to have
a Material Adverse Effect, or is in default (and there exists no condition
which, with the passage of time or otherwise, would constitute a default) in any
material respect in the performance of any bond, debenture, note or any other
evidence of indebtedness in any indenture, mortgage, deed of trust or any other
material agreement or instrument to which the Company or any Material Subsidiary
is a party or by which the Company or any Material Subsidiary is bound or by
which the properties of the Company or any Material Subsidiary are bound, which
would be reasonably likely to have a Material Adverse Effect.
4.6 FINANCIAL STATEMENTS. The financial statements of the Company
and the related notes contained in the Exchange Documents present fairly, in
accordance with generally accepted accounting principles, the financial position
of the Company and its Subsidiaries as of the dates indicated, and the results
of its operations and cash flows for the periods therein specified consistent
with the books and records of the Company and its Subsidiaries except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which are not expected to be material in amount.
Such financial statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods therein specified, except as may be disclosed in
the notes to such financial statements, or in the case of unaudited statements,
as may be permitted by the Securities and Exchange Commission (the "SEC") on
Form 10-Q under the Exchange Act and except as disclosed in the Exchange
Documents. The other financial information contained in the Exchange Act
Documents has been prepared on a basis consistent with the financial statements
of the Company.
4.7 NO MATERIAL ADVERSE CHANGE. Except as disclosed in the
Exchange Documents, since March 31, 2004, there has not been (i) any material
adverse change in the financial condition or earnings of the Company and its
Material Subsidiaries considered as one enterprise, (ii) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company or any of its Material Subsidiaries, or (iii) any loss or damage
(whether or not insured) to the physical property of the Company or any of its
Material Subsidiaries which has been sustained which has a Material Adverse
Effect.
4.8 DISCLOSURE. The representations and warranties of the Company
contained in this Section 4 do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Except with respect to the material terms and
conditions of the transaction contemplated by the Agreements, which shall be
publicly disclosed by the Company, the Company confirms that neither it nor any
person acting on its behalf has provided me with any information that the
Company believes constitutes material, non-public information. The Company
understands and confirms that I will rely on the foregoing representations in
effecting transactions in the securities of the Company.
4.9 NYSE COMPLIANCE. The Company's common stock is registered
pursuant to Section 12(b) of the Exchange Act and is listed on the New York
Stock Exchange (the "NYSE"), and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of
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the common stock under the Exchange Act or de-listing the Common Stock from the
NYSE, nor has the Company received any notification that the SEC or the NYSE is
contemplating terminating such registration or listing, other than as disclosed
in the Exchange Documents.
4.10 REPORTING STATUS. The Company has filed in a timely manner
all documents that the Company was required to file under the Exchange Act
during the period following June 1, 2003. Each of such documents complied in all
material respects with the SEC's requirements as of their respective filing
dates, and the information contained therein as of the date thereof did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances under which they were made not misleading.
4.11 LISTING. The Company shall comply with all requirements of
the NYSE with respect to the issuance of the Shares and the listing thereof.
4.12 NO MANIPULATION OF STOCK. The Company has not taken and will
not, in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the common stock to facilitate the sale or resale of the Shares.
4.13 COMPANY NOT AN "INVESTMENT COMPANY". The Company has been
advised of the rules and requirements under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Company is not, and immediately
after receipt of payment for the Shares will not be, an "investment company" or
an entity "controlled" by an "investment company" within the meaning of the
Investment Company Act and shall conduct its business in a manner so that it
will not become subject to the Investment Company Act.
4.14 PRIVATE OFFERING. Assuming the correctness of the
representations and warranties of me and the Other Purchasers set forth in
Section 3 hereof and in the other Subscription Agreements, respectively, the
offer and sale of Shares hereunder is exempt from registration under the
Securities Act. The Company has not distributed and will not distribute any
offering material in connection with this Offering and sale of the Shares other
than the documents of which this Agreement is a part or the Exchange Act
Documents. The Company has not in the past nor will it hereafter take any action
independent of the placement agent to sell, offer for sale or solicit offers to
buy any securities of the Company which would bring the offer, issuance or sale
of the Shares as contemplated by this Subscription Agreement, within the
provisions of Section 5 of the Securities Act, unless such offer, issuance or
sale was or shall be within the exemptions of Section 4 of the Securities Act.
5. NO WAIVER. Notwithstanding any of the representations, warranties,
acknowledgments or agreements made herein by me, I do not hereby or in any other
manner waive any rights granted to me under federal or state securities laws for
which no waiver is permitted under such laws.
6. TRANSFERABILITY. I agree not to transfer or assign this Agreement, or
any of my interest herein, and further agree that the assignment and
transferability of the Shares acquired pursuant hereto shall be made only in
accordance with this Agreement and the terms set forth in the Registration
Rights Agreement.
7. REVOCATION. I understand that I may not cancel, terminate or revoke
this Agreement or any agreement made hereunder and that this Agreement shall
survive my death or disability.
8. ACCEPTANCE OF REGISTRATION RIGHTS AGREEMENT. By my execution of this
Subscription Agreement, (a) I hereby acknowledge my acceptance of and agreement
to the terms and conditions of the
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Registration Rights Agreement as set forth in the form included in the
Confidential Subscription Booklet of which this Agreement is a part, and I agree
to be bound thereby when and if my Subscription is accepted by the Company, and
(b) if I shall neglect to execute the Registration Rights Agreement in
accordance with the instructions therefor, I hereby appoint and constitute any
executive officer of the Company as my true and lawful attorney-in-fact, with
power to act for me and on my behalf, to execute and deliver the Registration
Rights Agreement in my name and as my act and deed with respect to all the
Shares purchased by me pursuant to this Subscription Agreement. The power of
attorney granted hereby is coupled with an interest and shall be irrevocable
during the term of this Agreement, as the same is specified in Section 7 hereof.
9. GENERAL MATTERS.
(a) The Closing Date for purposes of this Agreement shall be the
date on which the Company accepts this Subscription, if it does so, as indicated
in Section 1 hereof, which date shall also be the Closing Date used in the
executed Registration Rights Agreement.
(b) Notwithstanding the place where this Agreement may be executed
by any of the parties hereto, we expressly agree that all the terms and
provisions hereof shall be construed in accordance with and governed by the laws
of the State of Georgia.
(c) This Agreement, along with the Registration Rights Agreement
when executed as contemplated hereby, constitutes the entire agreement between
us with respect to the subject matter hereof and may be amended or modified only
by a writing executed by the party to be bound thereby.
(d) All pronouns and any variations thereof used herein shall be
deemed to refer to the masculine, feminine, neuter, singular, or plural as the
identity of the person or persons may require.
10. REPRESENTATION OF ASHFORD CAPITAL. By executing this Agreement below,
Ashford Capital Management, Inc. represents and warrants that it has the full
right, power and authority to execute the Agreements on behalf of the
undersigned purchaser.
[signatures on following page]
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IN WITNESS WHEREOF, I have executed this Subscription Agreement as an
instrument under seal, this _____ day of May, 2004.
______________________________________
Name(s) (please print or type)
______________________________________
Signature(s) (if not
an individual,
indicate title of
authorized person)
Number of Shares subscribed for:
______________________________________
Address (residence,if an individual
business, if an entity):
______________________________________
______________________________________
______________________________________
______________________________________
* * * * * * * * * * * * *
[FOR COMPANY USE ONLY]
Accepted as to _______________ Shares
XXXXXX INDUSTRIES, INC.
By:
-------------------------------------- -----------------------------
Date
Title:_________________________________
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