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EXHIBIT 10.37
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
This Preferred Stock and Warrant Purchase Agreement (this
"AGREEMENT"), dated as of October 12, 1999, is made and entered into by and
between Xxxxxxxx Manufacturing Company, Inc., a Texas corporation (the
"COMPANY"), and the purchasers listed on the attached Schedule A (each a
"PURCHASER").
R E C I T A L S
WHEREAS, the Company proposes to issue and sell to Purchaser
shares of its Series D Redeemable Preferred Stock, $100 stated value per share
(the "PREFERRED STOCK") and its warrants to acquire common stock (the
"WARRANTS") to be sold in accordance with and subject to the terms and
conditions set forth in this Agreement, in the case of the Preferred Stock, the
Statement of Designation of Series D Preferred Stock in substantially the form
of Exhibit A annexed hereto (the "Statement of Designation") and, in the case of
the Warrants, the Preferred Warrant Agreement dated as of the date hereof among
the Company and the Purchasers in substantially the form of Exhibit B annexed
hereto (the "Preferred Warrant Agreement").
NOW, THEREFORE, in consideration of the above premises and the
representations, warranties, covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. PURCHASE AND SALE OF PREFERRED STOCK.
1.1 THE PREFERRED STOCK. Upon the terms and conditions
contained herein, the Company agrees to sell and issue to each Purchaser, and
each Purchaser severally agrees to purchase from the Company, at a purchase
price with respect to each Purchaser designated on Schedule A annexed hereto,
the number of shares of Preferred Stock and Warrants specified opposite such
Purchaser's name on Schedule A annexed hereto.
1.2 PAYMENT AND DELIVERY. The Company shall deliver to each
Purchaser a stock certificate and warrant certificate representing the Preferred
Stock and Warrants acquired by such Purchaser against delivery to the Company by
such Purchaser of the purchase price specified opposite such Purchaser's name on
Schedule A annexed hereto (the "PURCHASE PRICE"), such Purchase Price to be paid
by check or wire transfer to the Company.
1.3 AGREEMENT TO BE BOUND BY FIRST AMENDMENT TO AMENDED AND
RESTATED SECURITYHOLDERS AGREEMENT. Each Purchaser agrees to be bound by that
certain Amended and Restated Securityholders Agreement, as amended by the First
Amendment thereto (the "SECURITYHOLDERS AGREEMENT"), by and among certain
holders of the Company's Common and preferred stock annexed hereto as Exhibit C.
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SECTION 2. CLOSING DATE. The consummation of the purchase and sale transaction
described herein (the "Closing") shall occur concurrently with the execution and
delivery of this Agreement and the payments required hereunder.
SECTION 3. COMPANY REPRESENTATIONS. The Company represents and warrants to each
Purchaser that:
(a) Organization, Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and has all the requisite
power and authority to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted.
(b) Authorization and Enforceability. The Company has
all requisite corporate power and authority to enter into and perform
all its obligations under this Agreement and the Securityholders
Agreement, to issue the Preferred Stock and the Warrants and to carry
out the transactions contemplated hereby and thereby. The Company has
duly and properly taken all actions necessary to authorize it to enter
into and perform its obligations under this Agreement and the
Securityholders Agreement, and to consummate the transactions
contemplated hereby and thereby. This Agreement and the Securityholders
Agreement are legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except for the
effect upon such agreements of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting the rights
of creditors generally and of general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
(c) Capitalization. The authorized capital stock of
the Company consists of 15,000,000 shares of Common Stock and
25,000,000 shares of preferred stock, of which 50,000 shares have been
designated as the Preferred Stock. Of such shares, 3,104,644 shares of
Common Stock and 9,161,567 shares of Series C Preferred Stock will be
issued and outstanding immediately prior to the Closing. The Preferred
Stock and the Warrants are duly authorized and, when issued and paid
for pursuant to the terms of this Agreement, will be validly issued,
fully paid and nonassessable. There are no outstanding subscriptions,
rights, warrants, options, calls, convertible securities, commitments
of sale or liens granted or issued by the Company or any of its
subsidiaries relating to or entitling any person to purchase or
otherwise to acquire any shares of the capital stock of the Company,
except as otherwise disclosed on Schedule B annexed hereto.
(d) Non-Contravention by Company. Neither the
execution and delivery of this Agreement or the Securityholders
Agreement nor the issuance, sale or delivery of the Preferred Stock and
the Warrants by the Company, nor the performance of the obligations of
the Company and its securityholders hereunder or thereunder, nor any
action by the Company contemplated hereunder or thereunder, violates
any provisions of the Articles of Incorporation or Bylaws of the
Company, or violates or constitutes a breach of or a default under, or
would result in the acceleration of or entitle any party to
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accelerate (whether after the giving of notice or lapse of time or
both) any material obligation under, or result in the creation or
imposition of any lien, charge, pledge, security interest or other
encumbrance of any kind upon the property or assets (real, personal or
mixed, tangible or intangible) of the Company pursuant to any
provision of any material promissory note, security interest, bond,
mortgage, indenture, lien, claim, charge, right, option, lease,
agreement, license, pledge, encumbrance, instrument, commitment, law,
ordinance, regulation, order, arbitration award, judgment or decree to
which the Company is a party or by which it or any of its properties
or assets (real, personal or mixed, tangible or intangible) are bound
which would have a material adverse effect on the Company.
(e) Private Offering. The Company agrees that neither
it, nor anyone acting on its behalf, will offer the Preferred Stock and
the Warrants so as to bring the issuance and sale of such securities
within the provisions of Section 5 of the Securities Act of 1933, as
amended (the "Securities Act"), nor offer any similar securities for
issuance or sale to, or solicit any offer to acquire any of the same
from, or otherwise approach or negotiate with respect thereto with,
anyone if the sale of the Preferred Stock and the Warrants and any such
securities would be integrated as a single offering for the purposes of
the Securities Act, including, without limitation, Regulation D
thereunder.
(f) Brokers. The Company has not retained, directly
or indirectly, any broker or finder or incurred any liability or
obligation for any brokerage fees or finder's fees with respect to this
Agreement or the transactions contemplated hereby.
(g) Survival of Representations and Warranties. All
the Company's representations and warranties herein shall survive the
execution and delivery of this Agreement, any investigation by the
Purchasers and the issuance of the Preferred Stock and the Warrants.
SECTION 4. INVESTMENT REPRESENTATIONS. Each Purchaser acknowledges that the
Preferred Stock and the Warrants are not being registered under the Act, based,
in part, on reliance that the issuance of the Preferred Stock and the Warrants
are exempt from registration under Section 4(2) of the Act as not involving any
public offering. Each Purchaser further acknowledges that the Company's reliance
on such exemption is predicated, in part, on the several representations set
forth below made by each Purchaser to the Company.
(a) Such Purchaser is acquiring the Shares solely for
such Purchaser's own account, for investment purposes only, and not
with an intent to sell, or for resale in connection with any
distribution of all or any portion of the Preferred Stock and the
Warrants within the meaning of the Act;
(b) In evaluating the merits and risks of an
investment in the Preferred Stock and the Warrants, such Purchaser has
relied upon the advice of such Purchaser's legal counsel, tax advisors,
and/or investment advisors;
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(c) Such Purchaser is experienced in evaluating and
investing in companies such as the Company. In addition, such Purchaser
has a preexisting business relationship with the Company. As a result
of such relationship, such Purchaser has access on a regular basis to
the Company's financial statements and other records and information
material to the Company's financial condition, operations and
prospects. Such Purchaser has been given access to all books, records
and other information of the Company which such Purchaser has desired
to review and analyze in connection with such Purchaser's purchase of
the Preferred Stock and the Warrants hereunder.
(d) Such Purchaser is aware that an investment in
securities of a closely held corporation such as the Company is not
liquid and will require such Purchaser's capital to be invested for an
indefinite period of time, possibly without return. Such Purchaser has
no need for liquidity in this investment, has the ability to bear the
economic risk of this investment, and can afford a complete loss of the
Purchase Price;
(e) Such Purchaser understands that the Preferred
Stock and the Warrants being purchased hereunder are characterized as
"restricted securities" under the federal securities laws since the
Preferred Stock and the Warrants are being acquired from the Company in
a transaction not involving a public offering and that under such laws
and applicable regulations such securities may be resold without
registration under the Act only in certain limited circumstances. Such
Purchaser represents that such Purchaser is familiar with Rule 144
promulgated under the Act, as presently in effect, and understands the
resale limitations imposed thereby and by the Act;
(f) At no time was an oral representation made to
such Purchaser relating to the purchase or was such Purchaser presented
with or solicited by any leaflet, public or promotional meeting,
newspaper or magazine article, radio or television advertisement or any
other form of general advertising relating to the purchase hereunder;
and
(g) Such Purchaser has read and understands the
restrictions set forth in the Securityholders Agreement.
SECTION 5. STOCK CERTIFICATE LEGEND. Each Purchaser understands and acknowledges
that the certificate evidencing the Preferred Stock purchased by such Purchaser
hereunder (or evidencing any other securities issued with respect thereto
pursuant to any stock split, stock dividend, merger or other form of
reorganization or recapitalization) shall bear, in addition to any other legends
which may be required by this Agreement or applicable state securities laws, the
following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION OR NO-ACTION LETTER
ISSUED BY THE SECURITIES AND
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EXCHANGE COMMISSION THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT. THIS SECURITY IS ALSO SUBJECT
TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
SECURITYHOLDERS AGREEMENT, COPIES OF WHICH MAY BE OBTAINED UPON
REQUEST FROM THE CORPORATION AND ANY SUCCESSOR THERETO."
SECTION 6. MISCELLANEOUS.
6.1 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.
6.2 NOTICES. Any notice, demand, request or other
communication herein requested or permitted to be given shall be in writing and
may be personally served, telecopied, telexed or sent by courier service or
United States mail and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of a telecopy or telex or four
business days after deposit in the United States mail (registered or certified,
with postage prepaid and properly addressed). For purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is delivered as provided
in this Section 6.2) shall be as follows:
If to the Company: Xxxxxxxx Manufacturing Company, Inc.
0000 Xxxxxxx
Xxxxxxxxx, Xxxxx 00000
Attention: President
If to Purchaser: At the address specified on Schedule A
6.3 GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Texas.
6.4 ASSIGNMENTS. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
either party without the prior written consent of the other.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
"THE COMPANY"
XXXXXXXX MANUFACTURING COMPANY, INC.,
a Texas corporation
By:
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Name:
-----------------------------
Its:
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WESTAR CAPITAL II, LLC
By: Westar Capital Associates II, LLC
By:
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Name: Xxxx X. Xxxxxxx
Its: Member
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HBI FINANCIAL INC.
By:
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Name: Xxxxxx X. Xxxxxxx
Its: Chairman of the Board and President
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TWELVE D LIMITED, A TEXAS LIMITED
PARTNERSHIP
By: Cyclone Tours, Inc.
Its: General Partner
By:
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Name: Xxxxxxxx X. Xxxxxxxx, Xx.
Its: President
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Schedule A
Name Address
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Westar Capital II, LLC 000 Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxx Xxxx, XX 00000
HBI Financial Inc. x/x Xxxxxx & Xxxxxxx XXX
X.X. Xxxx Xxxxxx, Xxxxx 000
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.:
Twelve D Limited 0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
Facsimile No.: 000-000-0000
Schedule A-1
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Schedule A
(Shows number of Series D Preferred Stock in proportion to number of shares of
common stock held adjusted to total 100% assuming no other shareholders
participate)
Name of Purchaser Number of Series D Number of Warrants to Aggregate Purchase
Preferred Stock be Purchased Price
to be Purchased
HBI Financial Inc. 32,415 657,365 $3,241,531
Westar Capital II LLC 12,230 248,022 $1,223,019
Twelve D Limited 5,355 108,587 $535,450
Total: 50,000 1,013,974 5,000,000
Schedule A-2
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Exhibit C
FIRST AMENDMENT TO AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT
Exhibit C-1
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Schedule B
Schedule B-1
