SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Agreement"), dated as of February 20,
1998, is made and entered into by and between XXXXXXX HOLDINGS INC., a Delaware
corporation (the "Company"), and CO-INVESTMENT PARTNERS, L.P. ("Purchaser").
Purchaser desires to subscribe for and purchase from the Company, and the
Company desires to sell to Purchaser, Preferred Stock and Common Stock of the
Company (as hereinafter defined).
IN CONSIDERATION of the foregoing and of their mutual covenants set forth
in this Agreement, the parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the meanings set forth below:
Affiliate has the meaning set forth in the Stockholders Agreement.
Common Stock means the common stock, par value $0.0001 per share, of the
Company.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the
rules and regulations in effect from time to time thereunder.
Fasteners means Xxxxxxx Fasteners Inc., a Delaware corporation.
Investor has the meaning set forth in the Stockholders Agreement.
Permitted Transferee has the meaning set forth in the Stockholders
Agreement.
Person means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Preferred Stock means the Series B Preferred Stock, par value $0.0001 per
share, of the Company.
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Purchased Shares has the meaning set forth in Section 2(a).
Purchase Price means $10,320,833.
Registrable Securities has the meaning set forth in the Stockholders
Agreement.
Securities Act means the Securities Act of 1933, as amended, and the rules
and regulations in effect from time to time thereunder.
SEC means the Securities and Exchange Commission.
Stockholders Agreement means the Stockholders Agreement dated as of
November 26, 1997 among the Company and the Investors (as defined therein) from
time to time.
Shares means the Purchased Shares and any and all shares of capital stock
of the Company or any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of,
in exchange for, or in substitution of the Purchased Shares, by reason of any
stock dividend, split, reverse split, combination, recapitalization,
reclassification, merger, consolidation or otherwise.
2. Subscription for and Acquisition of Purchased Shares. Purchaser and the
Company agree as follows:
(a) Subscription for Purchased Shares: Purchase Price. Upon the terms and
subject to the conditions hereinafter set forth, Purchaser hereby subscribes for
and shall purchase, and the Company shall issue and sell to Purchaser, the
number of shares of Preferred Stock and Common Stock set forth below Purchaser's
signature on the signature pages hereof (collectively, the "Purchased Shares")
at the Purchase Price in cash.
(b) Closing. The closing (the "Closing") of the purchase and sale of the
Purchased Shares shall take place on February 20, 1998 at the offices of Xxxxxx
Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or at such other place as
the parties hereto shall mutually agree. At the Closing, (i) the Company shall
deliver to Purchaser a certificate or certificates representing its Purchased
Shares, as subscribed for by Purchaser, (ii) Purchaser shall deliver or cause to
be delivered to the Company the Purchase Price in immediately available
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funds and (iii) Purchaser shall execute and deliver a joinder to the
Stockholders Agreement.
(c) Legend. Each certificate representing the Shares shall bear
substantially the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE STOCKHOLDERS AGREEMENT DATED AS OF
NOVEMBER 26, 1997, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF XXXXXXX
HOLDINGS INC. (TOGETHER, WITH ITS SUCCESSORS, THE "COMPANY") AND MAY BE
OBTAINED FROM THE COMPANY WITHOUT CHARGE UPON REQUEST.
(d) Blue Sky Compliance. The Company shall comply with all state or foreign
securities or "blue sky" laws which might be applicable to the sale to Purchaser
of its Purchased Shares hereunder, and Purchaser agrees to provide the Company
with such information, and cooperate with such filings, as may be required in
connection with such compliance. In no event may Purchaser's Purchased Shares be
issued to Purchaser unless such laws have been complied with to the satisfaction
of counsel to the Company.
3. Representations and Warranties and Other Agreements of Purchaser.
(a) Representations and Warranties. Purchaser represents and warrants that:
(i) Purchaser is acquiring its Purchased Shares for investment for
Purchaser's own account and will not sell or otherwise dispose of any
Shares except in compliance with the Stockholders Agreement, the Securities
Act and any other applicable law.
(ii) Purchaser will not, directly or indirectly, offer, transfer,
sell, assign, pledge, hypothecate or otherwise dispose of any Shares unless
such transfer, sale, assignment, pledge, hypothecation or other disposition
complies with the provisions of this Agreement and the Stockholders
Agreement and (x) the transfer, sale, assignment, pledge, hypothecation or
other disposition is pursuant to an effective registration statement under
the Securities Act and under all applicable state or foreign securities
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or "blue sky" laws, or (y) Purchaser shall have furnished the Company with
an opinion of counsel, which opinion of counsel shall be reasonably
satisfactory to the Company, to the effect that no such registration is
required because of the availability of an exemption from registration
under the Securities Act and under all applicable state or foreign
securities or "blue sky" laws.
(iii) Purchaser has been advised by the Company that: (A) neither the
offer nor sale of any Purchased Shares has been registered under the
Securities Act or any state or foreign securities or "blue sky" laws; (B)
the Purchased Shares are characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that the Purchased Shares
must be held indefinitely and Purchaser must continue to bear the economic
risk of the investment in its Purchased Shares unless the offer and sale of
its Purchased Shares is subsequently registered under the Securities Act
and all applicable state or foreign securities or "blue sky" laws or an
exemption from such registration is available; (C) it is not anticipated
that there will be any public market for the Shares in the foreseeable
future; (D) when and if the Shares may be disposed of without registration
under the Securities Act in reliance on Rule 144, such disposition can be
made only in limited amounts in accordance with the terms and conditions of
such Rule; (E) if the Rule 144 exemption is not available, public offer or
sale of any Shares without registration will require the availability of
another exemption under the Securities Act; (F) a restrictive legend in the
form heretofore set forth shall be placed on the certificates representing
the Shares; and (G) a notation shall be made in the appropriate records of
the Company indicating that the Shares are subject to restrictions on
transfer and, if the Company should at some time in the future engage the
services of a stock transfer agent, appropriate stop transfer restrictions
will be issued to such stock transfer agent.
(iv) Purchaser is not acquiring its Purchased Shares as an agent or
otherwise for any other Person.
(v) Purchaser is an "accredited investor" as defined in the Securities
Act and has such knowledge, skill and experience in business, financial and
investment matters so that Purchaser is capable of evaluating the merits,
risks and consequences of an investment in the Shares and
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is able to bear the economic risk of loss of this investment.
(vi) Purchaser has duly and validly executed and delivered this
Agreement.
(vii) This Agreement constitutes, and the Stockholders Agreement will,
when executed as contemplated herein, constitute, valid, binding and
enforceable agreements of Purchaser except as enforceability may be limited
by (x) applicable bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting creditor's rights generally and (y)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(viii) The execution, delivery and performance by Purchaser of this
Agreement and the Stockholders Agreement do not and will not (a) constitute
or result in a breach of or default (or an event which, with notice or
lapse of time, or both, has the potential of constituting a default) under
any agreement to which Purchaser is a party, (b) violate any law binding
upon Purchaser or (c) require the consent of any third party.
(b) Dispositions. If any Shares are to be disposed of by Purchaser in
accordance with Rule 144 under the Securities Act or otherwise, Purchaser shall
promptly notify the Company of such intended disposition and shall deliver to
the Company, at or prior to the time of such disposition, such documentation as
the Company may reasonably request in connection with such disposition and, in
the case of a disposition pursuant to Rule 144, shall deliver to the Company an
executed copy of any notice on Form 144 required to be filed with the SEC.
(c) No Sale During Offering. If any shares of capital stock (or securities
exchangeable or convertible into or exercisable for capital stock) of the
Company are offered to the public pursuant to an effective registration
statement under the Securities Act, Purchaser may not, without the consent of
the Company, offer, sell, transfer or otherwise dispose of, including pursuant
to Rule 144 under the Securities Act, any of the Shares, and Purchaser shall use
his best efforts not to effect any such offer, sale, transfer or other
disposition of any other capital stock of the Company or of any security
exchangeable or convertible into or exercisable for any other capital stock of
the Company (in each case, other than securities covered by such registration
statement) within 30 days prior to,
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or within 180 days after, the effective date of such registration statement.
4. Representations and Warranties and Other Agreements of the Company.
(a) Representations and Warranties. The Company represents and warrants to
Purchaser that:
(i) Each of the Company and Fasteners is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(ii) At the date hereof prior to the issuance of the Purchased Shares,
the authorized capital stock of the Company consists of (x) 6,000,000
shares of Common Stock, of which 3,655,500 shares are outstanding and
344,500 shares are reserved for issuance upon exercise of outstanding stock
options, and (y) 16,200,000 shares of preferred stock, par value $.0001 per
share, of which 3,655,500 shares are outstanding as Preferred Stock,
1,000,000 shares are outstanding as 13 3/4% Series A Cumulative Redeemable
Exchangeable Preferred Stock and 344,500 shares are reserved for issuance
as Preferred Stock upon exercise of outstanding stock options.
(iii) The Company has full corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. This
Agreement has been duly and validly executed and delivered by the Company.
(iv) This Agreement constitutes, and the Stockholders Agreement will,
when executed as contemplated herein, constitute, valid, binding and
enforceable agreements of the Company, except as such enforceability may be
limited by (x) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights
generally and (y) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(v) The execution, delivery and performance by the Company of this
Agreement and the Stockholders Agreement do not and will not (a) constitute
or result in a breach of or a default (or an event which, with notice or
lapse of time, or both, has the potential of constituting a default) under
any charter document or By-laws of the Company or Fasteners, as the case
may be, (b) violate any law
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binding upon the Company or Fasteners, as the case may be, or (c) require
the consent of any third party or governmental agency.
(vi) The Purchased Shares, upon issuance by the Company following
receipt of the consideration provided for herein, will be duly authorized,
validly issued, fully paid and non-assessable.
(vii) Assuming the accuracy of the representations set forth in
Section 3 hereof, the offer and sale of the Purchased Shares is exempt from
the registration requirements of the Securities Act.
(b) Exchange Act Reports. If the Company shall, at any time, file a
registration statement with respect to Common Stock or Preferred Stock or both
pursuant to the requirements of Section 12 of the Exchange Act or of the
requirements of the Securities Act, the Company will file the reports required
to be filed by it under the Securities Act and the Exchange Act, to the extent
required from time to time to enable Purchaser to sell Shares of Common Stock or
Preferred Stock or both, subject to the terms of the Stockholders Agreement,
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 and Rule 144A under the Act, as such Rules may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC. Notwithstanding anything to the contrary contained in this
subsection 4(b), the Company may deregister Common Stock or Preferred Stock or
both under Section 12 of the Exchange Act if it then is permitted to do so
pursuant to the Exchange Act. The Company will, at the request of any holder of
Registrable Securities, upon receipt from such holder of a certificate
certifying (i) that such holder has held such Registrable Securities for a
period of not less than two (2) consecutive years, (ii) that such holder has not
been an affiliate (as defined in Rule 144) of the Company for more than the
ninety (90) preceding days, and (iii) as to such other matters as may be
appropriate in accordance with such Rule, remove from the stock certificates
representing such Registrable Securities that portion of any restrictive legend
which relates to the registration provisions of the Securities Act.
(c) Notification of Changes. Purchaser shall notify the Company upon the
occurrence of any event prior to Closing which would cause any representation or
warranty of Purchaser contained in this Agreement to be false or incorrect.
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5. Conditions to Performance.
(a) Conditions to the Company's Obligations. The Company's obligations to
issue to any Purchaser its Purchased Shares hereunder are subject to the
performance by Purchaser at or prior to the Closing of all of the agreements of
Purchaser contemplated to be performed hereunder at or prior to the Closing and
to the satisfaction at or prior to the Closing of the following further
condition that the representations and warranties of Purchaser contained in
Section 3 hereof shall be true and correct as of the Closing.
(b) Conditions to Purchaser's Obligations. The obligations of Purchaser to
deliver the purchase price for its Purchased Shares, as contemplated in
subsection 2(a) and subsection 2(b), and to execute and deliver the Stockholders
Agreement are subject to the performance by the Company at or prior to the
Closing of all of the agreements of the Company contemplated to be performed
hereunder at or prior to the Closing and to the satisfaction at or prior to the
Closing of the following further conditions that the representations and
warranties of the Company contained in Section 4 hereof shall be true and
correct as of the Closing.
6. Demand Registration. The Company agrees that Purchaser shall be entitled
to one Demand Registration at any time after the expiration of the Holdback
Period, and the expenses of such registration shall be borne by the Company.
Such Demand Registration shall be deemed to be (i) a "Demand Registration" under
Article V of the Stockholders Agreement, subject to the limitations, benefits,
procedures and priority therein; provided, however, that in the event of an
underwriters' cutback, Capital Stock of Purchaser shall have priority in the
Demand Registration requested by Purchaser, and (ii) a "Registration" under
Article VI of the Stockholders Agreement. Capitalized terms in this Section 6
shall have the meanings given to them in the Stockholders Agreement.
7. Observor Status. So long as Purchaser owns at least 50% of its original
investment in the Company, (i) the Company shall give notice of each meeting of
the Board of Directors to Purchaser and (ii) Purchaser shall be entitled to have
a representative of Purchaser attend each such meeting.
8. Survival. The representations and warranties of the parties set forth in
this Agreement shall survive the Closing.
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9. Binding Effect. The provisions of this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and the heirs, successors
and assigns of the parties hereto.
10. Assignment. Purchaser shall not assign any rights under this Agreement
without the prior written consent of the Company. Any purported assignment of
rights hereunder by Purchaser which has not been consented to by the Company
shall be void.
11. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
12. Invalidi1y of Provisions. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction.
13. Headings; Execution in Counterparts. The headings and captions
contained herein are for convenience of reference only and shall not control or
affect the meaning or construction of any provision hereof. This Agreement may
be executed in counterparts, each of which shall be deemed to be an original and
all of which together shall constitute but one and the same instrument.
14. Notices. All notices and other communications provided for herein shall
be dated and in writing and shall be deemed to have been duly given when
delivered, if delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid and when received if delivered
otherwise, to the party to whom it is directed:
(a) If to the Company, to it at the following address:
XXXXXXX HOLDINGS INC.
c/o Saratoga Partners III, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxxx
with a copy to:
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Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx Xxxxx, Esq.
(b) If to Purchaser, to Purchaser at the address listed on the
signature page below Purchaser's name or at such other address as such
party shall have specified by notice in writing to the other party in
accordance with this Section 13.
15. Amendment. This Agreement may not be amended, modified or supplemented
and no waivers of or consents to departures from the provisions hereof may be
given unless consented to in writing by Purchaser affected, on the one hand, and
the Company on the other hand. Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.
16. Integration. The parties agree that this Agreement and the Stockholders
Agreement contain the entire understanding among the parties hereto relating to
the matter hereof.
17. Third Party Beneficiaries. Nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give to any
third party any rights or remedies against any party hereto.
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IN WITNESS WHEREOF, Purchaser and the Company have executed this Agreement
as of the date first above written.
XXXXXXX HOLDINGS INC.
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
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CO-INVESTMENT PARTNERS, L.P.
By: CIP Partners, LLC,
its general partner
By: /s/ Xxxxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Member
Number of shares to be purchased by above
Purchaser:
Preferred Stock: 1,000,000
Common Stock: 1,000,000
Name in which shares should be
registered (if different from the
name of Purchaser)
Registered address:
000 Xxxxxxx Xxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
