SUBSCRIPTION AGREEMENT LYRIS, INC.
EXHIBIT
10.1
THE SECURITIES
REFERRED TO HEREIN MUST BE ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE STATE SECURITIES LAWS OF ANY STATE.
WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON
DELIVERY TO LYRIS, INC. (THE “CORPORATION”) OF AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED FOR SUCH TRANSFER AND/OR THE SUBMISSION TO THE CORPORATION OF SUCH
OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT ANY
SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933 AND/OR
APPLICABLE STATE SECURITIES LAWS, AND/OR ANY RULE OR REGULATION PROMULGATED
THEREUNDER.
This Subscription Agreement (this “Agreement”) is entered into as of April 12, 2010, by and
between Lyris, Inc., a Delaware corporation (the “Corporation”), and the subscriber (“Subscriber”) specified on the signature
page hereof.
PRELIMINARY
STATEMENT
The Subscriber desires to acquire the number of
shares of common stock of the Corporation, par value $.01 per share, set forth
opposite the Subscriber’s name on the signature page hereof (the “Shares”), and the Corporation desires to issue the Shares
to the Subscriber in accordance with the terms of this
Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing and
of the mutual covenants and agreements set forth herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE
I
Subscription for Stock
Subscription for Stock
1.1 Subscription. Subject to and in accordance with the respective
terms and conditions of this Agreement, the Subscriber hereby subscribes for and
purchases the Shares at a purchase price of $0.33 per share. The Subscriber’s
total subscription amount for the Shares is Four Million Dollars ($4,000,000)
(the “Total Subscription Price”).
1.2 Payment of Total Subscription
Price. The Total Subscription
Price is being satisfied by the Subscriber, concurrently with the execution
hereof, by the payment to the Corporation of an amount equal to the Total
Subscription Price, by wire transfer of immediately available funds to such
account as the Corporation has designated.
1.3 Acceptance of Subscription. The Corporation (i) hereby accepts, pursuant to the
terms and conditions set forth in this Agreement, the Subscriber’s Total
Subscription Price, and (ii) concurrently herewith is delivering to the
Subscriber a certificate representing the Shares.
ARTICLE
II
Representations of the Subscriber
Representations of the Subscriber
2.1 Representations of the Subscriber. The Subscriber hereby represents and warrants to,
and agrees with, the Corporation as follows:
(a) Power and Authority. The Subscriber is authorized to execute and enter
into this Agreement and such other agreements, certificates, or other
instruments as are executed by or on behalf of the Subscriber in connection with
its obligations hereunder (collectively, the “Subscriber Agreements”), to perform its obligations under each Subscriber
Agreement, and to consummate the transactions that are the respective subjects
of any Subscriber Agreement. The signature of the individual signing any
Subscriber Agreement as, or on behalf of, the Subscriber is binding upon the
Subscriber. Unless otherwise indicated on the signature page of this Agreement,
the Subscriber has not been organized for the purpose of acquiring the
Shares.
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(b) Organization and Principal Place of
Business. The Subscriber is a
partnership duly formed, organized and existing under the laws of the state or
other jurisdiction of its formation. The address set forth on the Subscriber’s
signature page to this Agreement is the Subscriber’s correct principal place of
business, and the Subscriber has no present intention of moving its principal
place of business to any other domestic or foreign
jurisdiction.
(c) Compliance with Laws and Other
Instruments. The execution and
delivery of the Subscriber Agreements by or on behalf of the Subscriber and the
consummation of the transactions contemplated in the Subscriber Agreements do
not conflict with or result in any violation of or default under any provision
of any charter, bylaws, trust agreement, partnership agreement or other
organizational document, as the case may be, of the Subscriber or any agreement,
certificate or other instrument to which the Subscriber is a party or by which
the Subscriber or any of its properties is bound, or any permit, franchise,
judgment, decree, statute, rule, regulation or other law applicable to the
Subscriber or the business or properties of the Subscriber.
(d) Accredited Investor. The Subscriber is an “Accredited Investor” as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act of
1933, as amended (“Securities Act”).
(e) Investment Intent. The Subscriber is acquiring the Shares for its own
account for investment, and not with a view to any distribution, resale,
subdivision or fractionalization thereof in violation of the Securities Act or
any other applicable domestic or foreign securities law, and the Subscriber has
no present plans to enter into any contract, undertaking, agreement or
arrangement for any such distribution, resale, subdivision or
fractionalization.
(f) Information and Access. The Subscriber hereby acknowledges receipt of
copies of the Corporation’s Annual Report on Form 10-K for the fiscal year ended
June 30, 2009, and the Corporation’s Quarterly Reports on Form 10-Q for the
fiscal quarter ended September 30, 2009 and December 31, 2009. The Corporation
has made available to the Subscriber or its attorneys, accountants and other
representatives all agreements, documents, records and books that the Subscriber
or its attorneys, accountants and other representatives have requested relating
to an investment in the Corporation. The Subscriber and its attorneys,
accountants and other representatives have had a full opportunity to ask
questions of and receive answers from the Corporation or a person acting on
behalf of the Corporation, concerning the terms and conditions of this
investment, and all questions asked by the Subscriber and its attorneys,
accountants and other representatives have been adequately answered to the full
satisfaction of the Subscriber and its attorneys, accountants and other
representatives.
(g) Illiquidity; Risk. The Subscriber understands that substantial
restrictions will exist on transferability of the Shares, and that the
Subscriber may not be able to liquidate his or its investment in the
Corporation. The Subscriber understands that investment in the Corporation
entails a very high degree of risk and understands fully the risks associated
with the operation of the Corporation and its subsidiaries. Additionally, the
Subscriber has read and understands the risk factors and other risks associated
with an investment in the Corporation as such are set forth in the Corporation’s
annual and quarterly reports filed with the Securities and Exchange
Commission.
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(h) Economic Loss and Sophistication. The Subscriber is able to bear the economic risk of
losing its entire investment in the Corporation. The Subscriber’s overall
commitment to investments which are not readily marketable is not
disproportionate to its net worth. The Subscriber’s investment in the
Corporation will not cause such overall commitment to become excessive. The
Subscriber has such knowledge and experience in financial and business matters
that it is capable of evaluating the risks and merits of this
investment.
(i) No Registration of Shares. The Subscriber acknowledges and agrees that, based
in part upon the Subscriber’s representations contained herein and in reliance
upon applicable exemptions, the Shares have not been and will not be registered
under the Securities Act or the securities laws of any other domestic or foreign
jurisdiction. Accordingly, no such Shares may be offered for sale, sold,
pledged, hypothecated or otherwise transferred in whole or in part except in
accordance with the terms of the Corporation’s certificate of incorporation and
bylaws and in compliance with all applicable laws, including securities laws.
The Subscriber acknowledges that it has been advised that the Corporation has no
obligation and does not intend to cause any of the Shares to be registered under
the Securities Act or any other securities laws or to comply with an exemption
under the Securities Act which would permit the Subscriber to sell the Shares or
any part thereof.
(j) No Investment Advice. The Subscriber acknowledges that neither the
Corporation nor any Affiliate (as defined below) thereof has rendered or will
render any investment advice or securities valuation advice to the Subscriber,
and that the Subscriber is not acquiring the Shares in reliance upon, or with
the expectation of, any such advice. For purposes of this Agreement,
“Affiliate” shall mean, with respect to any Person (as defined
below), any Person directly or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person. For
purposes of this Agreement, “Person” shall mean any individual, partnership,
corporation, limited liability company, trust, unorganized entity or other
entity.
(k) Tax Year. Unless otherwise specified on the Subscriber’s
signature page to this Agreement, the Subscriber’s tax year ends on December 31
of each year.
(l) Withholding. The information provided by the Subscriber on Form
W-9, and delivered to the Corporation in connection with this Agreement is true
and complete, against penalties of perjury.
(m) Benefit Plan Investor Status. Except as otherwise specified on the Subscriber’s
signature page to this Agreement, the Subscriber is not a “benefit plan
investor” (as such term is defined in 29 C.F.R. 2510.3-101(f)(2)). If the
Subscriber is a benefit plan investor, the plan participants are not permitted
to decide whether or how much to invest in particular investment alternatives,
and if the Subscriber is a collective investment vehicle, the plans
participating therein do not direct the specific investments made by the
Subscriber.
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(n) Source of Funds. No part of the funds to be used to purchase the
Shares or to pay any amounts under any Subscriber Agreement constitutes an asset
of any employee benefit plan with respect to which the Corporation, or any
Person considered an affiliate of the Corporation within the meaning of Section
407(d)(7) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), is a party in interest or a disqualified person.
As used herein, the terms “employee benefit plan” and “party in interest” shall
have the meanings assigned to such terms in Section 3 of ERISA, and the term
“disqualified person” shall have the meaning assigned to such term in Section
4975 of the Code.
(o) Investment Company Act. The Subscriber was not specifically formed to
acquire the Shares. The Subscriber is not registered or required to register as
an investment company under the Investment Company Act of 1940 (the
“Investment Company Act”), and the Subscriber does not maintain a separate
investment account with respect to his or its investment in the Corporation
whereby each of its partners, shareholders, trustees, or other owners has the
right to elect not to participate in such investment, except where such election
requires the consent of all Persons or the consent of the Subscriber’s general
partner (or other controlling Person).
(p) Legends. Subscriber understands and acknowledges that each
certificate evidencing the Shares shall bear a legend substantially as
follows:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR
PURSUANT TO THE SECURITIES OR “BLUE SKY” LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED, OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO (i) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT,
(ii) RULE 144 UNDER SUCH ACT, OR (iii) ANY OTHER VALID EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
The Subscriber understands and acknowledges that each
certificate evidencing the Shares shall also bear legends substantially as
follows:
RESTRICTIONS ON TRANSFER OF STOCK AND
REQUIREMENTS TO
TRANSFER STOCK
TRANSFER STOCK
Article Fifth of the Certificate of
Incorporation of the Corporation (“Article Fifth”) restricts the direct or
indirect sale, transfer, disposition, purchase or acquisition (“Transfer”) of
shares of common stock of the Corporation (“Stock”), and requires the Transfer
of Stock, under certain circumstances. In general, Article Fifth prohibits any
Transfer of Stock on or prior to January 1, 2022 or such earlier date or later
date as may be determined by the board of directors of the Corporation (the
“Board of Directors”) without prior approval of the Board of Directors by or to
any holder (a) who beneficially owns directly or through attribution 5% or more
of the Stock (as determined under Section 382 of the Internal Revenue Code of
1986 and the applicable Treasury Regulations thereunder, each as amended from
time to time (collectively, “Section 382”) with certain modifications), or (b)
who, upon such Transfer of Stock, would beneficially own directly or through
attribution 5% or more of the Stock (as determined under Section 382, with
certain modifications). If any person or entity attempts to Transfer Stock in
violation of Article Fifth, such purported Transfer shall be null and void and
the purported acquiror shall have no rights with respect thereto. Among other
things, Article Fifth permits the Corporation to require sale of any Stock
Transferred in violation of Article Fifth, and the purported acquiror shall not
be entitled to receive any proceeds of such sale in excess of the amount paid by
such purported acquiror for such Stock and shall be required to return any
dividends or distributions on such Stock. In addition, certain holders of Stock
will be required to Transfer Stock as a result of certain transfers of interests
in entities that own Stock and the proceeds of such sale to be received by the
holder shall be limited to the fair market value of such Stock at the time of
the transfer of such interests. Under Article Fifth, the Corporation may require
as a condition to the registration of the Transfer of any Stock that the
proposed transferee furnish to the Corporation information regarding the
ownership of Stock by the proposed transferee as well as the ownership of Stock
by any persons or entities controlling, controlled by or under common control
with such proposed transferee. Under certain circumstances, Article Fifth
authorizes the Board of Directors to extend or accelerate the expiration date of
the Article Fifth transfer restrictions and to modify certain provisions of
Article Fifth. The foregoing is a summary description only of certain of the
provisions of Article Fifth, to which reference is made for a complete
description of the restrictions on the Transfer of Stock and the provisions
requiring the Transfer of Stock and the consequences of the violation thereof.
The Corporation will furnish a copy of Article Fifth to the holder of record of
this certificate without charge upon written request to the Corporation at its
principal place of business. By acceptance of this certificate, the holder
hereof and any beneficial owner of the shares represented hereby shall be bound
in all respects by such Article Fifth, as modified from time to time by the
Board of Directors or the stockholders of the Corporation.
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THE CORPORATION WILL FURNISH WITHOUT
CHARGE, TO EACH STOCKHOLDER WHO SO REQUESTS, A COPY OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF
EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE MADE TO THE
SECRETARY OF THE CORPORATION OR TO THE TRANSFER AGENT NAMED ON THIS
CERTIFICATE.
2.2 Effect of Representations. The Subscriber’s representations, warranties and
agreements set forth in this Agreement are true and correct. The Subscriber
acknowledges that the Corporation has relied upon the representations,
warranties and agreements of, and information furnished by, the Subscriber set
forth in this Agreement and that all such representations, warranties,
agreements and furnished information shall survive the date
hereof.
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ARTICLE
III
Representations of the Corporation
Representations of the Corporation
3.1 Representations. The Corporation hereby represents and warrants to,
and agrees with, the Subscriber as follows:
(a) Incorporation; Jurisdiction. The Corporation (i) is duly organized and validly
existing; (ii) is in good standing under the laws of the State of Delaware; and
(iii) has all requisite corporate power and authority to carry on its business
as now conducted and as proposed to be conducted.
(b) Power and Authority. The Corporation is authorized to execute and
deliver each Subscriber Agreement to which it is a party, to perform its
obligations under each such Subscriber Agreement, and to consummate the
transactions that are the respective subjects of each such Subscriber Agreement.
The signature of the respective individual signing any Subscriber Agreement on
behalf of the Corporation is binding upon the Corporation.
(c) Compliance with Laws and Other
Instruments. The execution and
delivery of the Subscriber Agreements by or on behalf of the Corporation and the
consummation by the Corporation of the transactions contemplated by the
Subscriber Agreements (including without limitation the offer and sale of the
Shares) do not (i) conflict with or result in any violation of or default under
any provision of the certificate of incorporation, bylaws, or other
organizational document of the Corporation or any agreement, certificate, or
other instrument (including without limitation any indenture, mortgage, deed of
trust, credit agreement, note or other evidence of indebtedness, lease, or
license) to which the Corporation is a party or by which the Corporation or any
of its properties is bound, or any permit, franchise, order, writ, judgment,
decree, statute, rule, regulation, or other law applicable to the Corporation or
its respective business or properties or (ii) require the filing or registration
with, or the approval, authorization, license, or consent of, any court or
governmental department, agency, or authority other than those which have
already been duly and validly given or obtained or which are referred to the
next sentence. As soon as practicable following the Closing Date, but in all
events within the periods prescribed by applicable law, the Corporation will
file a Form D with the Securities and Exchange Commission and any applicable
state securities regulatory authorities and will file such other notices and
reports as are required to be filed under applicable state securities laws in
order to qualify for exemptions applicable to the offer or sale of Securities in
the Corporation.
(d) Shares. Immediately following the consummation of the
transaction contemplated hereby, (i) the authorized capital stock of the
Corporation shall consist of 200,000,000 shares of Common Stock, of which
121,403,700 shares shall be issued and outstanding, (ii) all of the
Corporation’s outstanding equity securities shall be validly issued, fully paid
and nonassessable, and (iii) neither the Corporation nor any Person acting on
its behalf has taken any action that would subject the issuance or sale of any
of the Shares to the registration and prospectus delivery provisions of the
Securities Act.
(e) Proceedings. No action, proceeding or investigation is pending
or, to the knowledge of the Corporation, threatened against the Corporation or
any Affiliate thereof that (i) questions or challenges the validity or purpose
of the Corporation, (ii) could reasonably be expected to have a material adverse
effect on the operations, business, or affairs of the Corporation, or (iii)
claims or alleges any fraud or misrepresentation under, or any violation of, any
federal or state securities law, rule, or regulation. There are no other
actions, proceedings, or investigations pending or, to the knowledge of the
Corporation, threatened against or affecting the
Corporation.
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(f) Validity of Securities. The Shares purchased and sold pursuant to this
Agreement, when issued, sold and delivered in accordance with its terms for the
consideration expressed herein, shall be duly and validly
issued.
3.2 Effect and Time of Representations. The representations, warranties and agreements of
the Corporation set forth in this Agreement are true and correct in all material
respects. The Corporation acknowledges that the Subscriber has relied upon the
representations and agreements of the Corporation set forth in this Agreement,
and that all such representations and agreements shall survive the date
hereof.
ARTICLE
IV
Miscellaneous
Miscellaneous
4.1 Amendments. This Agreement may be modified or amended only with
the written consent of the Corporation and the Subscriber, except that
modifications, amendments, waivers, consents or other matters relating to the
Certificate of Incorporation of the Corporation or the Bylaws of the Corporation
shall not be deemed modifications or amendments of this
Agreement.
4.2 Notices. Any notice, request, demand or other communication
required by or permitted to be given in connection with this Agreement shall be
in writing, except as expressly otherwise permitted herein, and shall be
delivered in person, sent by first class mail (postage prepaid and certified or
registered, with return receipt requested), sent by telefacsimile or similar
means of communication, or delivered by a courier service (charges prepaid), to
the respective party at his or its address as set forth on the signature page
hereof. Each party may change his or its address by notifying each other party
of such change in accordance with the provisions of this Section 4.2. Any such notice, request, demand or other
communication shall be deemed to be given or made (a) if personally delivered,
when received; (b) if mailed, on the fifth day after it is deposited in the
United States mail, properly addressed, with proper postage affixed; (c) if sent
by telefacsimile or similar device, when electronically confirmed; and (d) if
sent by courier, as of the date so delivered.
4.3 Gender, Number, etc. All pronouns used herein shall be deemed to refer to
the masculine, feminine or neuter gender as the identity of the applicable
person may require, and words using the singular or plural number shall be
deemed to include respectively the plural or singular number as applicable.
Unless otherwise specified, all references in this Agreement to Articles,
Sections, or paragraphs shall refer to provisions of this Agreement. As used in
this Agreement, the words “herein,” “hereof,” “hereto,” or derivatives shall
refer to this entire Agreement, and the word “or” shall mean
“and/or.”
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4.4 Governing Law, Binding Effect, and
Severability. This Agreement
shall be enforced, governed, and construed in all respects in accordance with
the laws of the State of Delaware applicable to contracts executed and
performable solely in such state. The Subscriber may not assign any of his or
its rights or obligations under this Agreement without the prior written consent
of the Corporation. This Agreement and the rights and obligations set forth
herein shall be binding upon, and shall inure to the benefit of, the Subscriber,
the Corporation and their respective successors and permitted assigns. If any
provision of this Agreement, or the application of such provision to any
circumstance, shall be invalid under the applicable law of any jurisdiction, the
remainder of this Agreement or the application of such provision to other
Persons or circumstances or in other jurisdictions shall not be affected
thereby.
4.5 Entire Agreement. This Agreement, the appendices hereto constitute
the entire agreement, and supersedes all prior agreements or understandings,
among the parties hereto with respect to the subject matter
hereof.
4.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original Agreement, and all of
which shall constitute one Subscription Agreement between each of the parties
hereto, notwithstanding that, all of the parties are not signatories to the
original or the same counterpart. Each party hereto hereby acknowledges the
effectiveness of, and agrees to accept, facsimile signatures of any other party
hereto for purposes of executing this Agreement; provided, however, that any
party executing this Agreement by facsimile signature shall provide any other
party with the number of original signature pages as such other party may
specify as soon as is practicable following a request for same by the other
party.
[signature page
follows]
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Subscriber Signature Page
IN WITNESS WHEREOF, the Subscriber has executed this
Subscription Agreement as of April 12, 2010.
| Total Subscription Price | |
| $4,000,000 | |
| /s/Xxxxxxx Xx Comfort, III | |
| Xxxxxxx Xx Comfort, III |
| Number of Shares of Common Stock | State and country in which Subscriber is | |
| Subscribed for: | organized (if not a natural person): | |
| 12,121,212 | ||
| Address of Subscriber’s principal place of | ||
| business (or residence if a natural person): | ||
| 127-131 Sloane St., 0xx Xxxxx | ||
| Xxxxxxxxx Xxxxx | ||
| XXXX 0XX, Xxxxxx, XX | ||
| FAX: | ||
| Attn: Xxxxxxx X. Comfort, III | ||
| Tax year end if not December 31: |
Check box if
Subscriber was formed to acquire securities of the Corporation: o1
Each parent of
Subscriber must complete and execute a signature page to this Agreement in the
form provided.
Subscriber Signature Page
to Subscription Agreement
to Subscription Agreement
Subscription of Xxxxxxx Xx
Comfort, III, accepted as of April 12, 2010.
| The Corporation: | |
| LYRIS, INC. | |
| By: /s/ Xxxx Xxxxxx | |
| Name: Xxxx X. Xxxxxx | |
| Title: Chief Executive Officer | |
Address of the
Corporation:
0000 Xxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
With copy
to:
Fenwick & West
LLP
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Fax: 000-000-0000
Attn: Xxxxxx Xxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Fax: 000-000-0000
Attn: Xxxxxx Xxxx
Signature Page for Subscription
Agreement
