XXXXXXX INDUSTRIES, INC.
SUBSCRIPTION AGREEMENT
The undersigned (the "Subscriber"), hereby subscribes to purchase shares of
Common Stock, $.001 par value ("Shares"), issued by Xxxxxxx Industries, Inc., a
Maryland corporation (the "Company"), in the amount set forth on the signature
page below ("Commitment"), on the terms and conditions set forth herein.
(Capitalized terms used and not defined in this Agreement have the meanings
assigned to them in the Offering Circular dated November 5, 1997 referred to
below.)
1. SALE AND PURCHASE OF SHARES. Subject to the terms and conditions set
forth in this Agreement, and in reliance upon the representations and warranties
of the respective parties set forth in this Agreement, the Company hereby agrees
to sell to the Subscriber, and the Subscriber irrevocably subscribes for and
agrees to purchase from the Company, Shares in the amount of its Commitment.
2. MANNER OF PAYMENT. Payments made to purchase Shares shall be made on or
before the payment date (the "Payment Date"). which shall occur no later than
fourteen business days from the date of this Agreement. Payments shall be made
by wire transfer or by personal check.
3. PAYMENT DEFAULT. If payment for the purchase of Shares is received by
the Company from the Subscriber later than 14 days after the Payment Date,
interest will be charged on the overdue amount, calculated at a daily rate equal
on an annualized basis to four percentage points over the highest rate of
interest reported from time to time as a "prime rate" by The Wall Street Journal
(provided that, if such rate is in excess of the maximum rate of interest
permitted by law, interest will be charged at such maximum rate). If a default
in a payment under this Subscription Agreement (including interest charges)
remains uncured for 30 days following a payment date, the Company may, at its
option, pursue any or all of the following remedies: (i) cancel the balance of
the Subscriber's subscription (including the installment as to which the
Subscriber had defaulted), (ii) assign the remaining balance of the Subscriber's
subscription (including the installment as to which the Subscriber has
defaulted) to another investor selected by the Company and/or (iii) repurchase
the Shares previously purchased by the Subscriber at a purchase price per Share
equal to the lesser of 60% of the Shares' then-current Net Asset Value or the
prices at which the Subscriber purchased the Shares. The election by the Company
to pursue one or more of these remedies will not preclude the Company from
pursuing any rights it may have to seek judicial enforcement of the Subscriber's
subscription obligation.
4. RESTRICTION ON ASSIGNMENT OF SUBSCRIPTION AGREEMENT. Neither this
Agreement nor any rights or interests herein may be assigned by the Subscriber
nor may the obligations of the Subscriber be assumed or performed by another,
other than a successor to the entire business and affairs of the Subscriber,
without the express prior written consent of the Company. The Company may
withhold consent to the assignment of this Agreement in its sole discretion.
Except as provided in Section 3 hereof, neither this Agreement nor any rights or
interests herein may be assigned by the Company.
5. RESTRICTION ON TRANSFER OR ASSIGNMENT OF SHARES. Neither the Shares to
be issued hereunder nor any right or interest therein may be sold, assigned,
pledged or otherwise transferred by the Subscriber without the consent of the
Company. Without limiting the foregoing, the Company may withhold consent to a
proposed transfer if the Company reasonably determines that any of the following
requirements are not met:
(i) The transfer is made to an institutional or individual accredited
investor who the Company determines would have been eligible to participate in
the initial offering of the Shares, in a transaction that, in the opinion of
counsel for the Subscriber and counsel for the Company, complies with the
requirements of the Securities Act of 1933 (the "1933 Act") and any applicable
state securities laws;
(ii) The transfer is made in a transaction that the Company determines,
after consideration of an opinion of counsel for the proposed transferee and
such additional counsel as the Company may wish to consult on the matter, will
not make it more difficult for the Company to comply with the requirements of
the 1933 Act applicable to the Company and its operations, applicable state
securities laws, the 1940 Act, the Internal Revenue Code of 1986, as amended
(the "Code") or the Employee Retirement Income Security Act of 1974 ("ERISA");
and
(iii) The transfer is made to a transferee who agrees to be bound by all
the provisions of this Agreement that pertain to an owner of Shares, including
provisions relating to the repurchase of the Shares being transferred in the
event of a payment default by the party liable to meet additional capital calls
hereunder.
To facilitate compliance with Section 4 and this Section 5 and with the
pertinent provisions of the Articles of Incorporation of the Company, the
Subscriber will not effect a transaction restricted by either such Section
without advance notice to the Company and prior written approval by the Company.
A transfer of all or some of the Shares owned by a shareholder will not
relieve the shareholder of any unfulfilled subscription obligation, unless the
Company expressly consents in writing to the assumption of the transferor's
Subscription Agreement by another party.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants that:
(i) The Company is duly organized, validly existing and in good standing
under the laws of the State of Maryland and has the power and authority to carry
on its business as now conducted and as proposed to be conducted in the
Company's Offering Circular ("Offering Circular") and to issue the Shares
subscribed for hereby. This Agreement and any other documents executed and
delivered by the Company in connection herewith have been duly authorized,
executed and delivered by the Company, and are the legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms.
(ii) The execution and delivery of this Agreement and any other documents
executed and delivered by the Company in connection herewith do not, and the
performance and consummation of the transactions set forth or contemplated
herein will not, contravene or result in a default under any provision of
existing law or regulations to which the Company is subject, the provisions of
the charter, by-laws or other governing documents of the Company or any
indenture, mortgage or other instrument or agreement to which the Company is a
party or by which it is bound and does not require on the part of the Company
any approval, authorization, license or filing from or with any federal, state,
municipal or foreign board or agency (except such approvals, authorizations,
licenses or filings as have been obtained or made).
(iii) The Company has filed a notice of intent with the Securities and
Exchange Commission, pursuant to Section 54(a) of the 1940 Act, to in good faith
elect to be subject to the provisions of Sections 55 through 65 of the 1940 Act.
7. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER. The Subscriber represents
and warrants that:
(i) This Agreement and any other documents executed and delivered by the
Subscriber in connection herewith have been duly executed and delivered by the
Subscriber, and are the legal, valid and binding obligations of the Subscriber
enforceable in accordance with their respective terms.
(ii) If the Subscriber is an Individual Retirement Account ("XXX"), (a) the
Subscriber has the power and authority to purchase the Shares subscribed for
hereby, (b) the execution and delivery of this Agreement and any other documents
executed and delivered by the Subscriber in connection herewith do not, and the
performance and consummation of the transactions set forth or contemplated
herein will not, contravene or result in a default under any provision of
existing law or regulations to which the Subscriber is subject or the provisions
of any custodial agreement, trust instrument or other governing documents of the
Subscriber, and (c) the Subscriber has caused this Agreement to be executed by
one or more of its custodians or trustees thereunto duly authorized.
(iii) If the Subscriber is an employee benefit plan as defined in ERISA (an
"ERISA Plan"), (a) the execution and delivery of this Agreement and any other
documents executed and delivered by the Subscriber in connection herewith do
not, and the performance and consummation of the transactions set forth or
contemplated herein will not, contravene or result in a default under any
provision of existing law or regulations to which the Subscriber is subject or
the provisions of any trust instrument or other governing documents of the
Subscriber; (b) the Subscriber has caused this Agreement to be executed by one
or more of its fiduciaries thereunto duly authorized; and (c) such fiduciaries,
by executing and delivering this Agreement on behalf of such ERISA Plan,
represent and warrant that (w) they and their co-fiduciaries, if any, have been
informed of the Company's investment objectives, policies and strategies, (x)
the decision to invest plan assets in the Company was made with appropriate
consideration of relevant investment factors with regard to such ERISA Plan; (y)
such decision was made by such fiduciaries without reliance on any investment
advice or recommendation provided by the Company, and is consistent with the
duties and responsibilities imposed upon fiduciaries with regard to their
investment decisions under ERISA; and (z) if the Company's underlying assets are
deemed to be "plan assets" of ERISA Plan investors, such fiduciaries shall be
deemed to have appointed the Company as investment managers of the ERISA Plan
Subscribers with respect to the assets managed in the Company.
(iv) The Shares being subscribed for by the Subscriber will be purchased
for the account of the Subscriber for investment only and not with a view to, or
with any intention of, a distribution or resale thereof, in whole or in part, or
the grant of any participation therein. The Subscriber acknowledges that the
Shares have not been registered under the 1933 Act or any state securities laws,
cannot be disposed of unless they are subsequently registered under the 1933 Act
and any applicable state securities laws, or an exemption from registration is
available. The Subscriber further understands that the Company is not obligated
to file a registration statement or a notification of registration under the
1933 Act or any state securities law, nor does the Company have any other
obligation to take or refrain from taking any action that would make available
any exemption for the sale of Shares without registration.
(v) The Subscriber acknowledges that the Company will accept this
subscription, and issue the Shares as contemplated hereunder, in a transaction
intended to be exempt from registration under the 1933 Act under Regulation E
thereunder.
(vi) The Subscriber has received and carefully reviewed the Offering
Circular and understands that any information provided other than in the
Offering Circular has been furnished on the understanding that the Subscriber
will refer to the Offering Circular for an authoritative statement on all
matters covered therein with respect to the Company and other information
concerning the Offering. The Subscriber has had reasonable time and opportunity
to ask questions and receive answers concerning the terms and conditions of the
offering and the proposed operations of the Company, and has received responses
to such questions that it has chosen to ask. Subscriber acknowledges that any
information is not intended to predict actual performance of the Company and
that Subscriber has not relied on such information or that purpose. Subscriber
understands that past performance does not guarantee future results
(vii) The Subscriber recognizes that an investment in the Company involves
certain risks and it has taken full cognizance of and understands the risk
factors relating to a purchase of Shares, including those set forth under the
headings "Risk Factors" in the Offering Circular. The Subscriber is capable of
bearing a high degree of risk, including the possibility of a loss of its
investment and the lack of a public market such that it will not be possible to
readily liquidate the investment. The Subscriber has such knowledge and
experience in business and financial matters as to be capable of evaluating the
merits and risks of an investment in the Shares and protecting its own interest
in connection with the investment in the Shares.
(viii) The Subscriber acknowledges that it has not relied upon the Company
or any of its employees, directors, officers or agents for any investment, tax,
legal or ERISA advice in connection with its purchase of Shares and that the
Subscriber has consulted, to the extent necessary, its own advisers with respect
to the investment, tax, legal or ERISA considerations of a purchase of Shares.
(ix) The Subscriber acknowledges that there have been no guarantees or
warranties made to it by the Company or any of its employees, directors,
officers or agents, expressly or by implication, other than as contained in the
Offering Circular, with respect to (i) the approximate length of time that it
will be required to remain an owner of its Shares; or (ii) the percentage of
profit and/or the amount or type of consideration, profit or loss to be realized
as a result of its investment.
(x) The Subscriber acknowledges that he/she meets the minimum suitability
requirements set forth by the Company with respect to this offering.
Specifically, Subscriber warrants that:
1) his or her net worth is in excess of SIXTY THOUSAND DOLLARS
($60,000.00) which is exclusive of home, furnishings and
automobiles and any liabilities secured by those assets and his
or her expected income (for the upcoming fiscal year) is at least
TWENTY FIVE THOUSAND DOLLARS ($25,000.00); or
2) his or her net worth is in excess of ONE HUNDRED FIFTY THOUSAND
DOLLARS ($150,000.00), which is exclusive of home, furnishings
and automobiles and any liabilities secured by those assets; and
3) Subscriber is not investing more than TEN PERCENT (10%) of his or
her net worth with the Company pursuant to this offering.
8. COVENANTS OF THE SUBSCRIBER. The Subscriber agrees with the Company
that:
(i) For so long as the Subscriber owns Shares, the Subscriber shall, upon
request, disclose to the Company such information with respect to direct or
indirect holdings of such Shares as the Company deems necessary to comply with
provisions of the Internal Revenue Code of 1986 applicable to the Company, to
comply with requirements of any other appropriate taxing authority, or to comply
with the provisions of the 1940 Act, as any of said laws may be amended from
time to time.
(ii) The Subscriber, if an XXX or an ERISA Plan, will furnish to the
Company promptly upon its request the information called for by applicable
"prohibited transaction" regulations of the Department of Labor and any other
information with respect to Subscriber's parties in interest as the Company may
reasonably require.
(iii) The Subscriber will indemnify and hold the Company harmless from and
against any and all loss, damage or liability due to or arising out of a breach
of any representation or warranty of the Subscriber in this Agreement or any
other document furnished by it to the Company.
9. NOTICES. The address of the Subscriber for all purposes shall be the
address set forth on the signature page to this Agreement, or such other address
of which the Company has received notice in accordance with the provisions
hereof. The address of the Company for all purposes shall be 0000 Xxxxx Xxxxxx,
00xx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000, or such other address of which the
Subscriber has received notice in accordance with the provisions hereof. Any
notice or communication to be given under this Agreement shall be made in
writing and, unless otherwise herein provided, shall be deemed to have been
given when sent by first class to such party at such address.
10. APPLICABLE LAW. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the laws
of the State of Washington.
11. COUNTERPARTS; OTHER AGREEMENTS. This Agreement may be executed in any
number of counterparts, and each of such counterparts shall, for all purposes,
constitute one agreement binding on all the parties, notwithstanding that all
parties are not signatories to the same counterpart.
12. MISCELLANEOUS. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and assigns. This
Agreement constitutes the entire agreement among the parties pertaining to the
subject matter contained in this Agreement and supersedes all prior
understandings of the parties. The invalidity or unenforceability of any one
provision of this Agreement shall in no way affect the validity of any other
provision, and all other provisions shall remain in full force and effect. No
waiver by any party of any breach of any term hereof shall be construed as a
waiver of any subsequent breach of that term or any other term of the same or of
a different nature.
13. TAX CERTIFICATION. The Subscriber certifies that (1) the taxpayer
identification provided above the Subscriber signature is correct and (2) the
Subscriber is not subject to backup withholding because (i) the Subscriber has
not been notified that the Subscriber is subject to backup withholding as a
result of failure to report interest and dividends or (ii) the Internal Revenue
Service has not notified the Subscriber that the Subscriber is subject to backup
withholding. [Strike out clause (2) if incorrect.]
IN WITNESS WHEREOF, this Agreement has been executed by the Subscriber as
of the date of the Subscriber's signature set forth on the signature page hereto
and, if accepted by the Company, becomes an Agreement binding on the Company as
of the date of the signature signifying acceptance set forth on the attached
signature page.
SUBSCRIBER agrees to purchase _____________ shares of common stock of
Xxxxxxx Industries, Inc. in the amount of ______________ dollars, which is
immediately payable by check submitted with this subscription agreement payable
to "Xxxxxxx Industries, Inc." or payable via wire transfer within two business
days to Key Bank of Washington, Seattle, Washington to the account of "Xxxxxxx
Industries, Inc.", with the routing and 000000000 account number 471661008105.
SUBSCRIBER
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Signed: Date
Please Type or Print the following information:
Name: ________________ ___ __________________________
First Init. Last
Home Address: _____________________________________________________________
Street
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City State Zip
Home Phone: ___________________ Work Phone: ________________
Other (Pager/Cellular)________________
Social Security Number or Taxpayer ID: ______-___-_____________
