EXHIBIT 99.1
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December 28, 1995
Board of Directors
XXXX, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Re: Subscription to Purchase 632,000 Shares of XXXX, Inc. Common
Stock, $.01 par value per share
Gentlemen:
(1) Subscription:
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The Purchaser, XXXX Investors, L.L.C., a limited liability company
organized under the laws of the State of Delaware (the "Purchaser"), hereby
subscribes to purchase 632,000 shares ("Shares") of the $.01 par value common
stock of XXXX, Inc. at $11.00 per Share and hereby tenders payment for the
subscribed number of Shares by certified check, bank draft or Federal Funds wire
transfer made payable to XXXX, Inc. (the "Company") in the amount of $6,952,000.
In connection with this subscription, the Purchaser hereby executes this
Subscription Agreement and hereby acknowledges that the Purchaser and/or the
Purchaser's authorized representatives have received from the Company or its
counsel, read, reviewed, understand and are familiar with:
(i) the Company's Annual Report (Form 10-K), as well as any
amendments thereof, filed with the Securities and Exchange
Commission for the fiscal years ended March 31, 1992 through
and including 1995;
(ii) the Company's annual reports and definitive proxy statements
distributed to shareholders in connection with the annual
meeting of shareholders held in August 1992 through and
including 1995;
(iii) the Company's definitive Proxy Statement distributed to
shareholders in connection with the special meeting of
shareholders held December 28, 1995 and a certificate of the
duly authorized Inspectors of Election for such meeting
certifying the favorable vote of the shareholders for the
subject sale;
(iv) Quarterly Reports (Form 10-Q) filed with the Securities and
Exchange Commission for the quarters ended June 30, 1992
through and including September 30, 1995;
(v) Current Reports (Form 8-K, and any amendments thereto) filed
with the Securities and Exchange Commission for reportable
events taking place on October 13, 1994, January 16, 1995 and
October 5, 1995;
(vi) Copies of the Company's Certificate of Incorporation, all
amendments thereto and the Company's By-Laws and all amendments
thereto;
(vii) The Closing Books maintained by the Company with respect to the
acquisition of The Xxxxxx Brush Company on October 13, 1994 as
well as copies of certain documentation detailing the
environmental problems associated with the Company's
acquisition of the Great Bend facility and arrangements for the
remediation thereof;
(viii)Material contracts executed in connection with the Company's
licensing arrangement with Stanhome, Inc.;
(ix) The responses of Company counsel to the Company's request to
provide the Company's independent auditors with certain
information in connection with the preparation of the Company's
audited financial statements for the fiscal years ended March
31, 1992 through and including 1995; and
(x) Certain information, both oral and written, with respect to
developments pertaining to the Company's ongoing operations.
The Purchaser further acknowledges that, except as set forth in such
reports, proxy statements, documents and other information made available by the
Company as described above as well as those representations made by the Company
herein, no representations or warranties have been made to the Purchaser, or to
the Purchaser's authorized representatives by the Company, or by any person
acting on behalf of the Company, with respect to the offer or sale of the Shares
and/or the economic, tax, or any other aspects or consequences of a purchase of
the Shares and/or the investment made thereby. Further, the Purchaser has not
relied upon any information concerning the Company, written or oral, other than
that contained in the aforementioned reports, proxy statements, documents, or
other information.
The Purchaser hereby acknowledges that the Purchaser and/or the Purchaser's
authorized representatives have had an opportunity to ask questions of, and
receive answers from persons acting on behalf of the Company to verify the
accuracy and completeness of the information set forth in such reports, proxy
statements, documents, and other information prior to sale and the Purchaser
hereby acknowledges that the Purchaser and/or the Purchaser's authorized
representatives have not requested the Company to provide any additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy and completeness of
the information made available.
(2) Purchaser's Representations and Warranties:
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The Purchaser further represents and warrants to the Company:
(a) The Shares are being issued to the Purchaser by the Company for
investment only, for the Purchaser's own account, and are not being purchased by
the Purchaser with a view to distribution of such Shares, or for the offer
and/or sale in connection with any distribution thereof. The Purchaser is not
participating, directly or indirectly, in an underwriting of the Shares or in
any similar undertaking. The Purchaser has no present plans to enter into any
contract, undertaking, agreement or arrangement which would entail an
underwriting of such Shares or any similar distribution thereof;
(b) The Shares are being purchased by the Purchaser for investment
only and not with a view to changing control of the Company within the meaning
of Rule 12b-2 promulgated by the Securities and Exchange Commission;
(c) The Purchaser is an "accredited investor" as that term is defined
in Rule 501 of Regulation D, promulgated by the Securities and Exchange
Commission;
(d) The Purchaser understands that there is no guarantee of profits
or against loss as a result of purchasing the Shares and the Purchaser hereby
states that the Purchaser can afford a complete loss of the investment in such
Shares. The Purchaser further warrants that the Purchaser's present financial
condition is such that the Purchaser has no present or perceived future need to
dispose of any portion of the Shares to satisfy any existing or contemplated
undertaking, obligation, need or indebtedness. Consequently, the Purchaser
represents that the Purchaser has sufficient liquid assets to pay the full
purchase price of the Shares, has adequate means for providing for the
Purchaser's current needs and possible contingencies and has no current need to
liquidate any of the Purchaser's investment in the Company;
(e) The Purchaser has been represented by such legal counsel and
other advisors, each of whom has been personally selected by the Purchaser, as
the Purchaser has found necessary to consult, concerning the purchase of the
Shares, and such representation has included an examination of applicable
documents and an analysis of all relevant tax, financial and securities law
aspects of an investment in the Shares. The Purchaser, the Purchaser's counsel,
advisors, and such other persons with whom the Purchaser has found it necessary
or advisable to consult, have represented to the Purchaser that they have
knowledge or experience in business and financial matters to evaluate the
information set forth in the aforementioned reports, press releases and/or other
public information statements issued by the Company, the risks associated with
this investment, and to make an informed investment decision with respect
hereto. To the extent that the Purchaser has found it necessary to consult with
any such counsel and/or advisors concerning the purchase of the Shares, the
Purchaser has relied upon their advice and counsel in making such investment
decision.
(f) The Purchaser is a limited liability company organized under the
laws of the State of Delaware.
(3) Company's Representations and Warranties
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The Company represents and warrants to the Purchaser:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York;
(b) The Company has authorized capital consisting of 10,000,000
shares of common stock with a par value of $.01 per share, of which 5,212,364
are issued and outstanding and 60,767 shares are held in its treasury;
(c) When fully paid by the Purchaser, the Shares purchased pursuant
to this Agreement will be properly issued and non-assessable;
(d) The Company has the full right, power, legal capacity and
authority to sell and transfer the Shares, free and clear of any statutory,
contractual or other limitations and to enter into and perform its obligations
under the Subscription Agreement. This Subscription Agreement has been duly
executed and delivered by the Company and constitutes the valid and legally
binding obligation of the Company, enforceable against it in accordance with the
terms hereof;
(e) The consummation of the transaction contemplated by this
Subscription Agreement will not result in or constitute the following: (i) a
breach or an event that, with notice or lapse of time or both, would be a
default, breach or violation of the Certificate of Incorporation of the Company,
or any material lease, license, promissory note, commitment, indenture,
mortgage, deed of trust, or other material agreement (including, without
limitation, any contracts or agreements with the NASD), instrument, or
arrangement to which the Company is a party or by which it or its property is
bound; (ii) an event that would permit any party to terminate any material
agreement or to accelerate the maturity of any indebtedness or other obligation
of the Company; or (iii) the creation or imposition or any lien, charge, or
encumbrance of any of the properties of the Company;
(f) the information contained in the reports, proxy statements,
documents and other information made available by the Company as described in
paragraph (1) of this Subscription Agreement contain no untrue statements of
material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading;
(g) as of the date of the execution of this Subscription Agreement
and closing of the Subscription, there have been no material, adverse changes in
the Company's assets, prospects, operations or financial condition since the
applicable dates of the aforementioned reports, proxy statements, documents, and
other information distributed by the Company.
(4) Securities Law Restrictions on Transfers
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The Purchaser understands that the offer and/or sale of the Shares to the
Purchaser is not required to be registered under the Securities Act of 1933 (the
"1933 Act") by reason of a specific exemption for the offer and sale of the
Shares under the provisions of Regulation D promulgated by the Securities and
Exchange Commission. The Purchaser further understands that, except as provided
in paragraph (5) below, the Company has not agreed to register the Shares for
distribution and/or resale in accordance with the provisions of the 1933 Act or
the Securities Exchange Act of 1934 (the "1934 Act"), or to register the Shares
for distribution and/or resale under any applicable state securities laws.
Hence, it is the Purchaser's understanding that by virtue of the provisions of
certain rules respecting "restricted securities" promulgated under such federal
and/or state laws, unless such secondary distribution and/or resale is
registered as provided in paragraph (5) below, the Shares which the Purchaser is
purchasing by virtue of this Subscription Agreement must be held indefinitely
and may not be sold, transferred, pledged, hypothecated or otherwise encumbered
for value, unless and until such secondary distribution and/or resale is
subsequently registered under such federal and/or state securities laws or
unless an exemption from registration is available, in which case the Purchaser
still may be limited as to the amount of the Shares that may be sold,
transferred, pledged and/or encumbered for value.
The Purchaser, therefore, agrees that any certificates evidencing the
Shares received by the Purchaser by virtue of this Subscription Agreement shall
be stamped or otherwise imprinted with a conspicuous legend to give notice of
the securities law transfer restrictions set forth herein and the Purchaser
acknowledges that the Company may cause stop transfer orders to be placed on the
Purchaser's account. The legend shall be in substantially the following form:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE COMMON SHARES REPRESENTED
BY THIS CERTIFICATE SHALL BE MADE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IN
COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND IS IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS.
(5) Registration Rights
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(a) Registration Rights; Requests for Registration.
(1) The Purchaser shall be entitled at any time after the
expiration of the six month period immediately following September 30, 1995 to
make a written request that the Company register for resale under the 1933 Act,
all or any number of the total of the Shares plus the 368,000 shares of the
Company's common stock acquired by Purchaser from the Company pursuant to the
Subscription Agreement between the parties hereto dated September 22, 1995 (the
368,000 shares together with the Shares are hereinafter referred to as the
"Aggregate Shares"), provided that with respect to any such request, the Company
shall not be required by the registration rights granted under this Section (5)
to file a Registration Statement or cause a filed Registration Statement to
become effective if such filing, in compliance with and pursuant to the
regulations and rules contained in Regulation S-X dealing with the age of
financial statements at the effective date of a registration statement, would
require the Company to include in such Registration Statement audited financial
statements of the Company which, but for such request, would not otherwise have
been required, in compliance with such applicable rules and regulations, to have
been furnished by the Company in the normal course of its business and
operations. Any registration requested pursuant to this paragraph (5)(a)(1) is
referred to herein as the "Demand Registration".
The Purchaser understands that the Company sold Five Hundred
Thousand (500,000) of its $.01 par value common stock to other "accredited
investors" in a private placement on October 4, 1995. The Purchaser further
understands that such other investors have been granted rights which, if a
majority of the aggregate number of those shares sold so request, would enable
the holders thereof to request registration of their shares (the "Registerable
Shares"). Within thirty days after receipt of the Purchaser's registration
request, the Company will give written notice of such request to all the holders
of Registerable Shares and will include in such registration all Registerable
Shares with respect to which the Company has received written requests for
inclusion therein within 15 days after the Company's notice is mailed.
For purposes of the Purchaser's right to demand registration, a
registration will not count as a Demand Registration until (i) it has become
effective and (ii) the Purchaser is able to sell the Aggregate Shares requested
to be included in such registration. Any Demand Registration shall be made on a
short registration form (on Form S-3 or any similar short registration form)
whenever the Company is permitted under applicable rules promulgated by the
Securities and Exchange Commission to use such short form.
(2) Whenever the Company proposes to register (either on its own
behalf or on behalf of holders of its equity securities other than the Aggregate
Shares) any of its equity securities under the 1933 Act including the
Registerable Shares (other than pursuant to the registrations of equity
securities to be sold under one or more of the Company's employee benefit plans
on Form S-8), and the registration form to be used may be used for a
registration of the Aggregate Shares, the Company will give prompt written
notice to Purchaser and to the holders of the Registerable Shares of its
intention to effect such a registration and will include in such registration,
the Purchaser's Aggregate Shares and all Registerable Shares with respect to
which the Company has received written request by the Purchaser and by the
holders of the Registerable Shares for inclusion therein within 30 days after
the mailing of the Company's notice. Any registrations requested pursuant to
this paragraph (5)(a)(2) are referred to herein as "Piggyback Registrations".
(b) The Demand Registration
(1) Priority of Demand Registration
The Company will not include in the Demand Registration any
other of its equity securities without the written consent of the Purchaser. If
a Demand Registration is an underwritten offering, and the managing underwriters
of such offering advise the Company in writing that, in their opinion, the
number of the Aggregate Shares, the Registerable Shares and other equity
securities to be included exceeds the number of the Aggregate Shares,
Registerable Shares and other equity securities which can be sold in such
offering, the Company will include in such registration prior to the inclusion
of the Registerable Shares and any other of the Company's equity securities, the
Aggregate Shares without regard to the inclusion of any Registerable Shares
and/or other equity securities. If in the opinion of the managing underwriters
a number of Registerable Shares requested to be included in such registration
can be sold (in addition to all of the Aggregate Shares requested to be sold),
such Registerable Shares shall be included pro rata among the respective holders
thereof based on a fraction, with respect to each holder, the numerator of which
is the number of Registerable Shares requested to be sold by such holder, and
the denominator of which is the number of Registerable Shares requested to be
included in such Demand Registration by all holders of the Registerable Shares.
(2) Restrictions on Demand Registration.
The Company will not be obligated to effect more than two
Demand Registrations. Further, the Company will not be obligated to effect any
Demand Registration within three months after the effective date of a
registration in which the Purchaser exercised its "piggyback registration"
rights pursuant to paragraph (5)(a)(2) hereof and all of the Aggregate Shares
requested by the Purchaser to be included in the registration were so included.
(3) Selection of Underwriters
The Company shall have the exclusive right to select the
underwriter(s), including the exclusive right to designate the managing
underwriter(s), with respect to any Demand Registration offering, provided that
such selection is acceptable to the Purchaser, which acceptance shall not be
unreasonably withheld.
(4) Expenses of the Demand Registration
The Company shall pay all expenses incident to any Demand
Registration, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons retained by the Company
in connection with any Demand Registration. The Purchaser will be required to
pay its pro rata share of any underwriter and/or brokerage commissions
attributable to the inclusion of the Aggregate Shares in the Demand
Registration.
(c) Piggyback Registration.
(1) Priority on Primary Registrations.
If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriters advise the
Company in writing that, in their opinion, the number of equity securities
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company will include in such registration (i) the
equity securities the Company proposes to sell, (ii) the Aggregate Shares and
the Registerable Shares requested to be included in such Piggyback Registration,
pro rata among the holders thereof, based upon a fraction, with respect to each
holder, the numerator of which is the number of shares requested to be sold by
such holder, and the denominator of which is the total number of the Purchaser's
Aggregate Shares and the Registerable Shares requested to be included in such
Piggyback Registration by the Purchaser and by all holders of the Registerable
Shares and (iii) any other equity securities requested to be included in such
registration.
(2) Priority on Secondary Registrations.
If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's equity securities (other than
the Purchaser or the holders of the Registerable Shares in their capacity as the
Purchaser or as holders of the Registerable Shares), and the managing
underwriters advise the Company in writing that, in their opinion, the number of
equity securities requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration (i) the equity securities to be sold in the secondary offering by
the holders of the Company's equity securities requesting such registration,
(ii) the Purchaser's Aggregate Shares and the Registerable Shares requested to
be included in such Piggyback Registration, pro rata among the holders thereof
based upon a fraction, with respect to each holder, the numerator of which is
the number of shares requested to be sold by such holder and the denominator of
which is the total number of the Purchaser's Aggregate Shares and the
Registerable Shares requested to be included in such Piggyback Registration by
the Purchaser and by all holders of Registerable Shares, and (iii) any other
equity securities requested to be included in such registration.
(3) Expenses of Piggyback Registrations
The Company shall pay all expenses incident to the Piggyback
Registration, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent, certified public accountants, underwriters
(excluding discounts and commissions) and any other persons retained by the
Company in connectiion with such Piggback Registrations. The Purchaser will be
required to pay its pro rata share of any underwriter and/or brokerage
commissions attributable to the inclusion of the Aggregate Shares in the
Piggyback Registration.
(d) Other Registrations
If the Company has previously filed a registration statement with
respect to the Aggregate Shares pursuant to a Demand Registration and if such
previous registration has not been withdrawn or abandoned, the Company will not
file or cause to be effective any other registration statement with respect to
any of its equity securities or securities convertible or exchangeable into or
exercisable for its equity securities under the 1933 Act (except with respect to
securities to be sold under any of the Company's employee benefit plans
registered on Form S-8), whether on its own behalf or at the request of any
holder or holders of such securities, until a period of at least six months has
elapsed from the effective date of such previous Demand Registration.
(e) Holdback Agreement.
(1) Provided the Company, its Directors and its Officers agree
as provided in Section 5(e)(2) below, the Purchaser agrees not to effect any
public sale or distribution of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and the ninety day period beginning on the
effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten Registration),
unless the underwriters managing the registered Demand or Piggyback public
offering otherwise agree. This restriction shall not apply in the case of the
Shares which have been registered previously in either the Demand or a Piggyback
Registration.
(2) The Company agrees, and shall cause its Directors and
Officers to agree, not to effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and the ninety day period
beginning on the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such underwritten
registration or with respect to sales of its securities under any employee
benefit plan pursuant to registration on Form S-8), unless the underwriters
managing the registered Demand or Piggyback public offering otherwise agree.
(f) Scope of Registration Rights; Registration Procedures.
The Company's registration obligations under this Subscription
Agreement are "best efforts" obligations only. Whenever the Purchaser has
requested that any Aggregate Shares be registered (either Demand or Piggyback),
the Company will use its best efforts to effect the registration and the sale of
such shares with the intended method of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
(1) Prepare and file with the Securities and Exchange Commission
a registration statement (which shall be, to the extent the Company is permitted
to do so under applicable rules promulgated by the Securities and Exchange
Commission, a short-form registation statement) with respect to such shares and
use its best efforts to cause such registration statement to become effective;
(2) Prepare and file with the Securities and Exchange Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective as permitted by Rule 415 promulgated by the
Securities and Exchange Commission and comply with the provisions of the 1933
Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended method
of distribution by the sellers thereof set forth in such registration statement;
(3) Furnish to each Purchaser such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus,
if any) and such other documents as such Purchaser may reasonably request in
order to facilitate the disposition of such shares, including copies of any
legal opinions and other "comfort" letters that counsel may prepare in
connection with the registration of such shares;
(4) Use its best efforts to register or qualify such shares in
such jurisdictions as any Purchaser reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
Purchaser to consummate the disposition in such jurisdictions of the shares
provided that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this subparagraph;
(ii) subject itself to taxation in any jurisdiction where it
would not otherwise be subject to taxation but for this subparagraph;
(iii) consent to general service of process in any jurisdiction
where it would not otherwise be subject to process but for this
subparagraph;
(5) notify the Purchaser at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening of any
event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading, and, at the request of the
Purchaser, the Company will prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such shares, such
prospectus will not contain an untrue statement of material fact or omit to
state any fact necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading;
(6) enter into any such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Purchaser or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such registered shares;
(7) make available for inspection by any Purchaser, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement and cause the Company's attorneys
and accountants to deliver legal opinions and comfort letters to the Purchaser
which have been delivered in connection therewith.
(g) Indemnification.
(1) The Company agrees to indemnify and hold harmless, to the
extent permitted by law, the Purchaser, each underwriter of such shares, its
members and managers and each person who controls such person or entity (within
the meaning of the 1933 Act) against all losses, claims, damages, liabilities
and expenses which arise out of or are based on any untrue statement or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or any amendment thereto or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading or in violation of
the 1933 Act or Blue Sky laws except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such holder
expressly for use therein or by such holders' failure to deliver a copy of the
registration statement or prospectus or any amendments of supplements thereto
after the Company has furnished such holder with a sufficient number of copies
of the same;
(2) In connection with any registration statement in which the
Purchaser is participating, the Purchaser will furnish to the Company in writing
such information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will indemnify the Company, its directors and officers and
each person who controls the Company (within the meaning of the 1933 Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any statement thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading or in violation of
the 1933 Act or Blue Sky laws, but only to the extent that such alleged untrue
statement or omission is contained in any information or affidavit so furnished
in writing by such holder; provided that the obligation to indemnify as set
forth herein will be several, not joint and several, among such holders of
shares and the liability of each such holder of shares will be in proportion to
and limited to the net amount received by such holder from the sale of the
shares pursuant to such registration statement;
(3) Any person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of
any claim with respect to which such person seeks indemnification,
provided, however, that the failure to give such notice will not relieve
the indemnified party of any liability hereunder, and
(ii) unless in such indemnified party's reasonable judgment,
a conflict of interest between such indemnified and indemnifying parties
may exist with respect to such claim, permit the indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to
the indemnified party. If such defense is assumed, the indemnifying party
will not be subject to any liability for any settlement made by the
indemnified party without its consent, but such consent will not be
unreasonably withheld. An indemnifying party who is not entitled to or
elects not to assume the defense of the claim, will not be obligated to
pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim unless
in the reasonable judgment of any indemnified party, a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(6) Company's Right of First Refusal
--------------------------------
The Purchaser agrees that if the Purchaser desires to sell
Aggregate Shares which represent 7.5 percent or more of the Company's issued and
outstanding common stock to the same purchaser or to any affiliated group of
purchasers within the meaning of Section 13 of the 1934 Act, in one or more
related privately negotiated transactions, the Purchaser shall first offer the
Aggregate Shares constituting such percentage for sale to the Company to be
purchased by the Company. Every such offer to sell any or all of the Aggregate
Shares and the price of the Aggregate Shares to the Company, shall be set forth
in writing. Such price shall reflect a bona fide offer to the Purchaser (which
offer shall be affirmed in writing by the Purchaser and/or its counsel, to the
reasonable satisfaction of the Company).
The Company shall have the right, within twenty-four (24) hours
after the receipt by it of such written offer by the Purchaser, to purchase the
Aggregate Shares offered for sale by the Purchaser. Such purchase shall be made
by the Company by its tendering the full purchase price for the Aggregate Shares
for which the written offer is received by means of a certified check, bank
draft made payable to the Purchaser, or by federal funds wire transfer to the
Purchaser or to its designee. Payment shall be made to the Purchaser or to its
designee within twenty (20) days after the receipt of the written offer by the
Purchaser to sell the Aggregate Shares.
It is expressly agreed that if the Company shall have refused in
writing, or shall have failed to accept the offer by the Purchaser for it to
purchase all of the Aggregate Shares offered for sale within the twenty-four
hour period above specified, then all such non-accepted Aggregate Shares of the
Purchaser shall be free from the provisions of this Section.
It is expressly agreed that immediately after the date which is two
years from September 22, 1995, the percentage referred to in the first sentence
of this Section (6) shall be 10%.
The Purchaser covenants and agrees that prior to registering the
transfer of greater than fifty percent (50%) of its membership interests to any
person or entity that does not own, or is not a beneficiary of any trust that
owns, membership interests on the date hereof (whether in one or more
transactions), it will require such transferee to agree in writing to be bound
by the provisions of Section (6) hereof. In addition, the Purchaser covenants
and agrees that prior to any distribution, by way of dividend or otherwise, of
any of the Shares to any member thereof, the Purchaser shall require such member
to agree in writing to be bound by the provisions of Section (6) hereof.
The Purchaser agrees that a legend reflecting the Company's right of
first refusal as set forth herein shall be affixed to the certificate(s)
represent the Shares.
(7) Notices
-------
Any notices or other communication required or permitted herein shall
be sufficiently given if sent by registered or certified mail, postage prepaid,
return receipt requested, and if to the Company, to the address set forth above,
and if to the Purchaser, to the address set forth below the Purchaser's
signature hereto, or to such other addresses as the Company or the Purchaser
shall designate to the other by notice in writing, with copies of any such
notices or other communication sent to:
If to the Purchaser: Xxxxx Xxxxx, Esq.
Xxxxxx, Xxxxxx-Xxxxxxx, Colt
& Mosle
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Company: Xxxxxx Xxxxxxxxxxx, Esq.
Xxxxxxxxxxx, D'Xxxxxx, Xxxxxxxxxxx
& Greenfield
0000 Xxxxxxxxxx Xxxxxx Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
(8) Successors and Assigns
----------------------
This subscription for Shares and Subscription Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and to the
successors and assigns of the Company and to the personal and legal
representatives of the Purchaser, and to the extent applicable, its successors
and assigns.
(9) Applicable Law
--------------
Except when an interpretation of federal and/or state securities laws
is necessary or such law governs, this Subscription Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
(10) Certification with Respect to Federal Dividend and Interest Payments;
Back-up Withholding
Under penalties of perjury, the Purchaser hereby certified to the
Company as follows:
(a) The number shown below is the Purchaser's Social Security or
other taxpayer identification number and such number is the Purchaser's
correct taxpayer identification number; and
(b) the Purchaser is not subject to back-up withholding either
because the Purchaser has not been notified by the Internal Revenue
Service that the Purchaser is subject to back-up withholding as a result
of failure to report all interest or dividends, or the Internal Revenue
Service has notified the Purchaser that the Purchaser is no longer subject
to back-up withholding.
IN WITNESS WHEREOF, the Purchaser has executed and delivered this
Subscription Agreement as of this 28th day of December, 1995.
Subscription: Six Hundred Thirty-Two Thousand (632,000) Shares of the $.01 par
value common stock of XXXX, Inc. at $11.00 per Share.
By:/s/ Xxxxx Xxxxx 000 Xxxx Xxxxxx, 35th Floor
-------------------------- ----------------------------------
Signature of Subscriber Residence and/or Business Address
Xxxxx Xxxxx New York, New York 10178-0061
----------------------------- ----------------------------------
Typed or Printed Name City State Zip
00-0000000
-----------------------------
Social Security or Tax
Identification No. of Subscriber
ACCEPTED:
XXXX, INC.
Dated: December 28, 1995 By:/s/ Xxxxxx X. Xxxxxxxxxxx
----------------------- -------------------------------
Xxxxxx X. Xxxxxxxxxxx
President and Chief
Executive Officer
