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EXHIBIT 10.1
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XXXXXX INDUSTRIES, INC.
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SECURITIES PURCHASE AND EXCHANGE
AGREEMENT
Dated as of January 12, 1998
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COMMON STOCK
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TABLE OF CONTENTS
Page
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ARTICLE I
PURCHASE AND SALE OR EXCHANGE OF COMMON STOCK
1.1 Authorization of Common Stock..........................................................1
1.2 Sale and Purchase of Securities........................................................2
1.3 Exchange of Senior Notes for Securities................................................2
1.4 Closing................................................................................2
1.5 Application of Proceeds................................................................2
1.6 Purchaser's Conditions of Closing......................................................3
1.7 Company's Conditions of Closing........................................................4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Organization, Authority and Capitalization of the Company;
Stock Ownership........................................................................4
2.2 Subsidiaries...........................................................................5
2.3 Qualification; Enforceability..........................................................5
2.4 Business and Property; Financial Statements............................................6
2.5 Compliance with Laws, Other Instruments;
No Conflicts, etc......................................................................6
2.6 Consents and Approvals.................................................................7
2.7 Litigation.............................................................................7
2.8 Private Offering.......................................................................7
2.9 No Defaults; Debt, etc; Liens..........................................................8
2.10 Full Disclosure........................................................................8
2.11 Environmental Matters..................................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
3.1 Investment Representation..............................................................9
3.2 Organization and Authority of the New Purchasers; No Conflicts; Approvals;
Enforceability........................................................................11
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ARTICLE IV
COVENANTS
4.1 Financial Statements; Information.....................................................12
4.2 Corporate Existence...................................................................14
4.3 Compliance with Laws; Government Filings..............................................14
4.4 Environmental Matters.................................................................14
ARTICLE V
CERTAIN OTHER COVENANTS
5.1 Use of Proceeds.......................................................................15
ARTICLE VI
MISCELLANEOUS
6.1 Expenses..............................................................................15
6.2 Reliance on and Survival of Representations...........................................15
6.3 Amendment and Waiver..................................................................16
6.4 Directly or Indirectly................................................................16
6.5 Successors and Assigns................................................................16
6.6 Notices...............................................................................16
6.7 LAW GOVERNING.........................................................................16
6.8 SUBMISSION TO JURISDICTION;
Service of Process....................................................................17
6.9 Headings, etc.........................................................................18
6.10 Entire Agreement......................................................................18
6.11 WAIVER OF TRIAL BY JURY...............................................................18
6.12 Indemnification.......................................................................18
6.13 Interpretive Provision................................................................19
6.14 Severability..........................................................................19
6.15 Counterparts..........................................................................19
6.16 Finder's Fee..........................................................................19
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Schedules:
Schedule 1.1 Purchasers
Schedule 1.5 Use of Proceeds
Schedule 2.1(b) Capitalization of the Company
Schedule 2.1(c) Capitalization of the Subsidiaries
Schedule 2.2 Subsidiaries
Schedule 2.5 Noncontravention
Schedule 2.6 Consent and Approvals
Schedule 2.7 Litigation
Schedule 2.9 Debts; Liens
Exhibits:
Exhibit A Registration Rights Joinder Agreement
Exhibit B Form of Opinion of Company Counsel
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SECURITIES PURCHASE AND EXCHANGE AGREEMENT
THIS SECURITIES PURCHASE AND EXCHANGE AGREEMENT, dated as of January
12, 1998, among XXXXXX INDUSTRIES, INC., a Delaware corporation (the "Company"),
WHITE OWL INVESTORS, L.L.C., a Delaware limited liability company ("White Owl"),
SOMERSET CAPITAL PARTNERS, a New York general partnership ("SCP" and, with White
Owl, the "New Purchasers"), and each of the undersigned HOLDERS OF THE SENIOR
NOTES (individually, a "Holder" and collectively, the "Holders"; the New
Purchasers and the Holders being sometimes hereinafter collectively referred to
as the "Purchasers" and individually as a "Purchaser").
WHEREAS, the capitalized terms used herein have the meaning given to
such terms in Appendix I; and
WHEREAS, the Company has authorized the issuance of an aggregate of
15,000,000 shares of Common Stock and wishes to sell to the New Purchasers an
aggregate of 11,000,000 shares of Common Stock for the consideration provided
herein, and wishes to issue to the Holders an aggregate of 4,000,000 shares of
Common Stock, in the individual amounts set forth opposite each Holder's name on
Schedule 1.1, in exchange for the surrender of the Senior Notes, in each case,
subject to the terms and conditions of this Agreement; and
WHEREAS, the New Purchasers wish to purchase an aggregate of 11,000,000
shares of Common Stock, in the individual amounts set forth opposite each New
Purchaser's name on Schedule 1.1, subject to the terms and conditions of this
Agreement; and
WHEREAS, the Holders wish to exchange the Senior Notes, in the
aggregate principal amount of $2,500,000, for an aggregate of 4,000,000 shares
of Common Stock, in the individual amounts set forth opposite each Holder's name
on Schedule 1.1, subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and upon the terms and conditions hereinafter set forth, the Company
and the Purchasers, intending to be mutually bound, agree as follows:
ARTICLE I
PURCHASE AND SALE OR EXCHANGE OF COMMON STOCK
1.1 Authorization of Common Stock.
The Company has authorized (i) the issuance and sale to the New
Purchasers at the Closing of an aggregate of 11,000,000 shares of Common Stock,
in the individual amounts set forth opposite each New Purchaser's name on
Schedule 1.1, and (ii) the issuance to the Holders of an aggregate of 4,000,000
shares of Common Stock, in the individual
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amounts set forth opposite each Holder's name on Schedule 1.1, in exchange for
the surrender of the Senior Notes, in the aggregate principal amount of
$2,500,000.
1.2 Sale and Purchase of Securities.
On the Closing Date, the Company will sell to the New Purchasers and
the New Purchasers will purchase from the Company, subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants of the Company contained herein, 11,000,000 shares of Common
Stock, registered in the name of the New Purchasers in the individual amounts
set forth opposite each New Purchaser's name on Schedule 1.1, in consideration
of an aggregate purchase price of $11,000,000 ($1.00 per share) (the "New
Purchasers Purchase Price"). The New Purchasers Purchase Price shall be payable
in cash by wire transfer of immediately available funds to the Company's bank
account with American Bank of Texas (the "Cash Payment"), in accordance with
wire transfer instructions delivered by the Company to the New Purchasers at
least one business day prior to the Closing.
1.3 Exchange of Senior Notes for Securities.
On the Closing Date, the Company will sell to each of the Holders and
each Holder severally will purchase from the Company, subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants of the Company contained herein, an aggregate of 4,000,000 shares
of Common Stock, registered in the names of the Holders in the individual
amounts set forth opposite each Holder's name on Schedule 1.1, in consideration
of an aggregate purchase price of $2,500,000 ($0.625 per share) (the "Holders'
Purchase Price"). The Holders' Purchase Price shall be payable by the surrender
and delivery by the Holders to the Company of the Senior Notes, in the aggregate
principal amount of $2,500,000.
1.4 Closing.
The sale and purchase or exchange (the "Closing") of the shares of
Common Stock (the "Securities") shall take place on the date hereof (the
"Closing Date") at the offices of Xxxxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. At the Closing the Company will deliver to each
Purchaser certificates for the shares of Common Stock purchased hereunder, each
dated the Closing Date, and registered in the names and amounts as set forth on
Schedule 1.1 hereto, against delivery by the Purchasers of the Purchase Price in
the form of the Cash Payment and the surrender for cancellation of the Senior
Notes. The failure of any Purchaser to deliver such Purchase Price shall not
excuse any other Purchaser from delivery of his or its Purchase Price.
1.5 Application of Proceeds.
The Company shall apply the proceeds from the sale of the Securities as
set forth in Schedule 1.5 attached hereto.
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1.6 Purchaser's Conditions of Closing.
Each Purchaser's obligations to purchase and pay for the Securities to
be purchased by him or it is subject to satisfaction, prior to or simultaneously
with the closing, of the following conditions:
(a) The Company shall have delivered a certificate of the President of
the Company, dated the Closing Date, certifying that the representations and
warranties of the Company contained in this Agreement and any Exhibit to which
the Company is a party are true and correct in all material respects and that
the Company has performed in all material respects all agreements and complied
with all conditions contained in this Agreement and in any Exhibit to which it
is a party that are required to be performed or complied with on or before the
Closing Date.
(b) The Company shall have delivered a certificate of the Secretary of
the Company, dated the Closing Date, certifying as to (i) the certificate of
incorporation of the Company and any amendments thereto, (ii) the by-laws of the
Company, and (iii) resolutions of the Board of Directors of the Company
authorizing the issuance of the shares of Common Stock and the execution and
delivery of this Agreement.
(c) The Company shall have executed and delivered to the New Purchasers
the Registration Rights Joinder Agreement, substantially in the form of Exhibit
"A" hereto.
(d) Messrs. Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx and one other
person designated by the Managing Member shall have been duly elected to the
Board of Directors of the Company, effective and conditioned upon the Closing.
(e) Fulbright & Xxxxxxxx L.L.P., counsel for the Company, shall have
delivered to the Purchasers the Opinion of Company Counsel, substantially in the
form of Exhibit "B" hereto.
(f) All proceedings taken in connection with the authorization,
issuance and sale of the Securities and the consummation of the transactions
contemplated hereby to occur on or prior to the Closing Date and all documents
and papers relating thereto shall be satisfactory in form, scope and substance
to the Purchasers and their counsel, and each Purchaser and their counsel shall
have received copies (executed or certified as may be appropriate) of such
documents and papers as each may reasonably request in connection therewith.
(g) The Company shall have paid the reasonable legal fees and other
expenses of the Purchasers' counsel and all other expenses for which the Company
is obligated to pay pursuant to Section 6.1 and for which the Company shall have
received invoices on or prior to the Closing.
(h) The Company shall have consummated the acquisition of Fishing
Tools, Inc. on substantially the terms described in the White Owl PPM. (i) White
Owl shall have raised $10 million pursuant to the White Owl PPM.
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(j) The Company shall be in compliance with all covenants under its
loan agreements with KBK Financial, Inc. and not otherwise in default under any
of such agreements.
1.7 Company's Conditions of Closing.
The Company's obligations to issue and sell the Securities are subject
to satisfaction, prior to or simultaneously with the closing, of the following
conditions:
(a) Each of the Purchasers shall have delivered a certificate, dated
the Closing Date, certifying that the representations and warranties of such
Purchaser contained in this Agreement and any Exhibit to which the Purchaser is
a party are true and correct in all material respects and that the Purchaser has
performed in all material respects all agreements and complied with all
conditions contained in this Agreement and in any Exhibit to which it is a party
that are required to be performed or complied with on or before the Closing
Date.
(b) Each of the Holders shall have surrendered to the Company for
cancellation the Senior Note registered in his name.
(c) All proceedings taken in connection with the purchase by the
Purchasers of the Securities and the consummation of the transactions
contemplated hereby to occur on or prior to the Closing Date and all documents
and papers relating thereto shall be satisfactory in form, scope and substance
to the Company and its counsel, and the Company and its counsel shall have
received copies (executed or certified as may be appropriate) of such documents
and papers as each may reasonably request in connection therewith.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
2.1 Organization, Authority and Capitalization of the Company;
Stock Ownership.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own or hold under lease the property it
purports to own or hold under lease, to carry on its business as now conducted,
to enter into this Agreement and the other Exhibits to which it is or is to be a
party, to issue and sell the Securities, to perform its obligations under this
Agreement and the other Exhibits to which it is or is to be a party and to
consummate the transactions contemplated hereby and thereby. The Company has, by
all necessary corporate action (no action of stockholders of the Company being
required by law, by its charter or by-laws, or otherwise in connection
therewith), duly authorized the execution and delivery of this Agreement, the
Securities, and the other Exhibits to which it is
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or is to be a party, the performance of its obligations hereunder and thereunder
and the consummation of the transactions contemplated hereby and thereby.
(b) Schedule 2.1(b) sets forth the authorized capital stock of the
Company. All such authorized capital stock has been duly and validly authorized,
and either are, or will be when issued, duly and validly issued and outstanding
and are, or will be, fully paid and nonassessable. Such capital stock is not
subject to any rights (either preemptive or otherwise) or warrants to subscribe
for or to purchase, nor any options for the purchase of, nor any agreements
providing for the issue (contingent or otherwise) of, nor any calls, commitments
or claims of any character relating thereto or any stock or securities
convertible into or exchangeable for any capital stock, other than as set forth
in Schedule 2.1(b). The sale of the Securities pursuant to this Agreement will
not trigger any anti-dilution rights of any holder of any securities of the
Company, nor require the Company to issue any securities to any person other
than the Purchasers, or adjust the number or purchase price of any securities
subject to options, warrants or similar rights issued or granted by the Company
(including, without limitation, those described on Schedule 2.1(b). All
securities of the Company have been issued in compliance with the Securities Act
and applicable state securities laws.
(c) Schedule 2.1(c) sets forth the authorized, issued and outstanding
capital stock of each Subsidiary, including the record ownership thereof, and
the ownership interests of the Company (direct and indirect), in any other
Person. There are no liens on any capital stock of any Subsidiary or on the
Company's ownership interests in any other Person, except as set forth in
Schedule 2.1(c). There are no outstanding rights, options, warrants, conversion
rights or agreements for the purchase or acquisition from the Company or any
Subsidiary of any shares of capital stock of any Subsidiary or any other
securities convertible into or exchangeable for any shares of capital stock of
any Subsidiary, except as set forth in Schedule 2.1(c).
2.2 Subsidiaries.
(a) Schedule 2.2 sets forth the name and jurisdiction of incorporation
or other organization of each Subsidiary. Except for the Subsidiaries and as
indicated on Schedule 2.2, the Company does not directly or indirectly own any
interest in any other Person.
(b) Each of the Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and authority to own or hold
under lease the property it purports to own or hold under lease, and to carry on
its business as conducted by it.
2.3 Qualification; Enforceability.
(a) Each of the Company and each Subsidiary is duly qualified or
licensed and in good standing as a foreign corporation duly authorized to do
business in each jurisdiction in which the nature of the activities or the
character of the properties owned or
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leased makes such qualification or licensing necessary, except for jurisdictions
in which the failure to be so qualified would not have a Material Adverse
Effect.
(b) This Agreement and the Exhibits hereto to which the Company is a
party have been (or at the Closing will be, as the case may be) duly executed
and delivered by the Company and, assuming due execution and delivery by the
Purchasers of this Agreement and the Exhibits that require execution by the
Purchasers, constitute (or upon execution and delivery at the Closing, will
constitute) the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect relating
to or affecting the enforcement of creditors' rights generally or by the
application of equitable principles (whether such application is considered in
equity or in law).
2.4 Business and Property; Financial Statements.
The Company has furnished to each Purchaser a true and complete copy of
the Offering Disclosure Documents (other than the PPM, which was prepared by the
Purchasers, in large part, with information with respect to the Company and its
industry provided by or on behalf of the Company). The Offering Disclosure
Documents correctly describe in all material respects the business and material
properties of the Company and its Subsidiaries and the nature of their
operations as of the date thereof. The Financial Statements included in the
Offering Disclosure Documents, were prepared in accordance with GAAP, applied on
a consistent basis throughout the periods specified, and present fairly in all
material respects the financial position of the Company and its Subsidiaries for
the respective periods specified. Except as specifically described in the
Financial Statements contained in the Offering Disclosure Documents, neither the
Company nor any Subsidiary has as of the date thereof any material liabilities,
contingent or otherwise, which under GAAP are required to be disclosed therein.
There has been no material adverse change in the financial position or condition
of the Company and its Subsidiaries since the date of such Financial Statements.
2.5 Compliance with Laws, Other Instruments; No Conflicts, etc.
(a) Except as set forth in Schedule 2.5, neither the Company nor any
Subsidiary is (i) in violation of any term or provision of its corporate charter
or by-laws or (ii) in violation of or default under (A) any term or provision of
any agreement, indenture, mortgage, instrument, permit or license to which it is
a party or by which it or any of its properties may be bound or affected or (B)
to the Company's knowledge, any existing statute, law, governmental rule,
regulation or ordinance, or any order of any court, arbitrator or Governmental
Body applicable to it or its properties (including, without limitation, any
statute, law, rule, regulation, ordinance or order relating to occupational
health and safety standards, or equal employment practice requirements), the
consequences of which violation or default, either in any one case or taken
together with all other such violations or defaults, (x) could have a Material
Adverse Effect or (y) could materially and adversely affect the ability of the
Company to perform its obligations under this Agreement or any Exhibit to which
it is a party.
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(b) Except as set forth in Schedule 2.5, neither the execution,
delivery or performance by the Company of this Agreement or any other Exhibit to
which it is a party, nor compliance by the Company with the respective terms
hereof and thereof, as the case may be, will result in (i) any violation of or
be in conflict with or constitute a default under (A) any term or provision of
the corporate charter or by-laws of the Company or any Subsidiary, (B) any term
or provision of any agreement, indenture, mortgage, instrument, permit or
license to which it is a party or by which it or any of its properties may be
bound or affected, or (C) to the Company's knowledge, any existing statute, law,
governmental rule, regulation or ordinance, or any order of any court,
arbitrator or Governmental Body applicable to it or its properties, or (ii) the
creation of (or impose any obligation on the Company or any Subsidiary to
create) any lien upon any of the properties or assets of the Company or any
Subsidiary.
2.6 Consents and Approvals.
Except as set forth on Schedule 2.6, no consent, approval or
authorization of, or filing or registration with, or the taking of any other
action in respect of, any Governmental Body or any other Person (including any
trustee or holder of any indebtedness, securities or other obligations of the
Company or any Subsidiary) is required (i) for or in connection with the valid
execution and delivery by the Company of, or the performance by the Company of
any obligation under, this Agreement or any Exhibit to which it is a party or
the consummation by the Company of the transactions contemplated hereby and
thereby, including, without limitation, the offer, issue, sale and delivery of
the Securities or (ii) as a condition to the legality, validity or
enforceability as against the Company of this Agreement or any Exhibit to which
it is a party.
2.7 Litigation.
Except as set forth on Schedule 2.7, there are no actions, suits or
proceedings pending (or, to the knowledge of the Company, threatened) against
the Company or any Subsidiary or affecting any of their respective properties in
any court or before any arbitrator of any kind or before or by any Governmental
Body, which (i) question the validity or legality of this Agreement or any
Exhibit or any action taken or to be taken pursuant hereto or thereto or (ii)
might result, either in any one case or in the aggregate, in (A) a material
impairment of the ability of the Company to perform its obligations under this
Agreement or any other Exhibit to which it is a party, or (B) a Material Adverse
Effect.
2.8 Private Offering.
Neither the Company, any Subsidiary, nor any other person acting on
behalf of the Company or any Subsidiary has taken, or will take, any action
which would subject the issuance or sale of the Securities to Section 5 of the
Securities Act or to the registration or qualification requirements of any
securities law of any state.
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2.9 No Defaults; Debt, etc; Liens.
(a) Schedule 2.9 correctly lists (i) all secured and unsecured funded
debt of the Company and any Subsidiary and (ii) any liens (other than Permitted
Liens) on any assets of the Company or any Subsidiary, in each case, as of the
date hereof. Upon receipt of any Required Consent, no default or event of
default, after giving effect to the issuance and sale of the Units and the
consummation of the other transactions contemplated by this Agreement and the
Exhibits, will exist (or, but for the waiver thereof, would exist) under any
instrument or agreement evidencing, providing for the issuance or securing of,
or otherwise relating to, any such debt or liens.
(b) There is no pending foreclosure with respect to any assets or
properties of the Company or any Subsidiary, and as of the Closing there will
not be any pending foreclosure with respect thereto.
2.10 Full Disclosure.
None of this Agreement, any Exhibit, the Offering Disclosure Documents
or any document, certificate or instrument delivered to the Purchasers by or on
behalf of the Company or any Subsidiary in connection with the transactions
contemplated by this Agreement as of their respective dates contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which the same were made, not misleading.
2.11 Environmental Matters.
(a) To the Company's knowledge, the Company and the Subsidiaries hold
all Environmental Permits required under all Environmental Laws except to the
extent failure to have any such Environmental Permit has not had and will not
have a Material Adverse Effect.
(b) To the Company's knowledge, the Company and the Subsidiaries
currently are, and at all times heretofore have been, in compliance with all
terms and conditions of all such Environmental Permits and all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in all applicable Environmental
Laws except to the extent failure to comply therewith, in any one case or in the
aggregate, has not had and will not have a Material Adverse Effect.
(c) Neither any of the Company nor any Subsidiary has ever received,
and, to the Company's knowledge, no predecessor in interest of any the Company
and the Subsidiaries has ever received in respect of any of the Company
Premises, from any Governmental Body or other Person any written notice of, and
the Company has no knowledge of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans that could
reasonably be expected to interfere with or prevent compliance or continued
compliance in all material respects with the Environmental Permits referred to
in Section 2.11(a) or any scheduled renewals thereof or any Environmental Laws,
or that could reasonably be expected to give rise to any liability on the part
of any the Company and the Subsidiaries or otherwise form the basis of any
claim,
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action, demand, request, notice, suit, proceeding, hearing, study or
investigation (collectively, "Environmental Claims") involving any of the
Company and the Subsidiaries based on or related to (i) a violation of any
Environmental Law or (ii) the manufacture, refining, generation, processing,
distribution, use, sale, treatment, receipt, storage, disposal, transport,
arranging for transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Substance, other than
liabilities or Environmental Claims referred to in this Section 2.11(c) that
have not had and will not have, either in any one case or in the aggregate, a
Material Adverse Effect.
(d) To the Company's knowledge, there has not been any civil, criminal
or administrative action, suit, demand, summons, citation, claim, hearing,
notice or demand letter, information request, notice of violation, judgment,
order, lien, investigation, study or proceeding pending or threatened against
any of the Company or the Subsidiaries, or against any predecessor in interest
thereof, in its capacity as such, relating to any such Environmental Permits or
any scheduled renewals thereof or any Environmental Laws that has had or will
have, either in any one case or in the aggregate, a Material Adverse Effect.
(e) To the Company's knowledge, (i) no part of the Company Premises or,
so far as is known to the Company, the area surrounding the Company Premises is
being used, or has been used at any time in the past, to manufacture, generate,
refine, process, distribute, use, sell, treat, receive, store, dispose of,
transport, arrange for transport of, handle, or conduct any other activity
involving any Hazardous Substance except in a manner that has been in compliance
in all material respects with all applicable Environmental Laws and
Environmental Permits and to an extent that has not had and will not have a
Material Adverse Effect; and (ii) neither the Company nor any Subsidiary is
conducting or has ever conducted any such activities anywhere else except in a
manner that has been in compliance in all material respects with all applicable
Environmental Laws and Environmental Permits and to an extent that has not had
and will not have a Material Adverse Effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally as to himself, represents and warrants as
follows:
3.1 Investment Representation. (a) The Purchaser of the Securities
hereby acknowledges that the Securities are not being registered (i) under the
Securities Act or (ii) under any applicable state securities law; and that the
Company's reliance on the Section 4(2) exemption of the Act and under applicable
state securities laws is predicated in part on the representations hereby made
to the Company in the Agreement.
(b) The Purchaser of the Securities will not sell or transfer all or
any part of the Securities unless and until he shall first have given notice to
the Company describing such sale or transfer and, if requested by the Company,
furnished to the Company either (a) an opinion, reasonably satisfactory to
counsel for the Company, of counsel skilled in securities matters (selected by
the Purchaser and reasonably satisfactory to the Company) to the effect that the
proposed sale or transfer may be made without registration under the Act and
without registration or qualification under applicable state law, or (b) an
interpretive
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letter from the Commission to the effect that no enforcement action will be
recommended if the proposed sale or transfer is made without registration under
the Act. The Purchaser acknowledges that the certificates representing the
Common Stock subscribed for hereby will bear a legend restricting transfer
thereof as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ISSUED PURSUANT TO A
CLAIM OF EXEMPTION FROM THE REGISTRATION OR QUALIFICATION PROVISIONS OF
FEDERAL AND STATE SECURITIES LAWS BASED, IN PART, ON AN INVESTMENT
REPRESENTATION OF THE PART OF THE PURCHASER THEREOF. THESE SECURITIES
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM."
(c) The Company may refuse to recognize a transfer of the Securities on
its books should a Purchaser attempt to transfer the Securities otherwise than
in compliance with this Section 3.1.
(d) The Purchaser has adequate means of providing for his or its
current needs and possible personal contingencies, he or it anticipates no need
now or in the foreseeable future to sell the Securities which he or it is
purchasing and he or it can afford the loss of his or its entire investment in
the Company.
(e) If an individual, the Purchaser either
(i) has a net worth or joint net worth with spouse which
exceeds $1,000,000; or
(ii) has had an individual income in excess of $200,000 in
each of 1995 and 1996 or joint income with spouse in excess of $300,000
in each of those years and has a reasonable expectation of reaching the
same income level in 1997.
(f) The Purchaser has such knowledge and experience in financial and
business matters that he or it is capable of evaluating the merits and risks of
investment in the Company and of making an informed investment decision.
(g) The Purchaser has received and read and is familiar with the
Offering Disclosure Documents and confirms that all documents, records and books
pertaining to his or its proposed investment in the Company have been made
available to him or it. The
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Purchaser is aware that no federal or state agency has passed upon the
Securities or made any finding or determination concerning the fairness of the
investment represented thereby.
(h) The Purchaser had an opportunity to ask questions of and receive
answers from representatives of the Company concerning the terms and conditions
of this investment, and all such questions have been answered to the full
satisfaction of the Purchaser. The Purchaser understands that no person other
than the Company has been authorized to make any representation or warranty
other than as contained herein (inclusive of the Exhibits hereto) or in the
Offering Disclosure Documents and, if made, such representation may not be
relied on unless it is made in writing and signed by the Company. The Company
has not rendered any investment or tax advice to the Purchaser with respect to
the suitability of an investment in the Securities or the tax consequences
thereof. The Company has urged each Purchaser to consult his or its own tax
adviser concerning any tax matters relating to this investment.
(i) The Securities which Purchaser is acquiring will be acquired for
his or its own account for investment. The Purchaser intends to hold the
Securities indefinitely and he or it is not purchasing such securities with a
view toward distribution in a manner which would require registration under the
Securities Act, and he or it does not presently have any reasons to anticipate
any change in his or its circumstances or other particular occasion or event
which would cause him or it to sell, the Securities which he or it is purchasing
hereunder, subject, nevertheless, to any requirement of law that the disposition
of his or its property shall at all times be within his or its control.
(j) The Purchaser acknowledges that it has been called to his or its
attention both in the Offering Disclosure Documents and by those individuals
with whom he has dealt in connection with his investment in the Company that his
or its investment in the Company involves a high degree of risk.
(k) The Purchaser has received no representations or warranties from
the Company other than those contained herein (inclusive of the Exhibits hereto)
or in the Offering Disclosure Documents or otherwise furnished in writing and
signed by the Company.
3.2 Organization and Authority of the New Purchasers; No
Conflicts; Approvals; Enforceability.
(a) White Owl is a limited liability company organized, validly
existing and in good standing under the laws of the State of Delaware. SCP is a
general partnership organized and validly existing under the laws of the State
of New York. Each of the New Purchasers has all requisite power and authority to
enter into this Agreement, to perform its obligations under this Agreement and
the other Exhibits to which it is or is to be a party and to consummate the
transactions contemplated hereby and thereby. Each of the New Purchasers has by
all requisite action as required by law and its governing instruments duly
authorized the execution and delivery of this Agreement and the other Exhibits
to which it is or is to be a party, the performance of its obligations hereunder
or thereunder and the consummation of the transactions contemplated hereby and
thereby.
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(b) Neither of the New Purchasers is in violation of or in default with
respect to any term or provision of its organizational documents or any terms or
provision of any agreement, indenture, mortgage, instrument, permit or license
to which it is a party or by which it or any of its properties may be bound or
affected or any existing statute, law, governmental rule, regulation or
ordinance, or any order of any court the consequences of such violation or
default would conflict with this Agreement or any Exhibit to which the New
Purchaser is or is to be a party or adversely affect the ability of the New
Purchaser's to perform its obligations hereunder or thereunder.
(c) No approval by, from or with, and not other action, in respect of,
any Governmental Body or any other Person is required in connection with the
execution and delivery of this Agreement or any Exhibit to which the New
Purchasers are or will be parties and the consummation of the transactions
contemplated hereby and thereby.
(d) This Agreement has been duly executed and delivered by the New
Purchasers and is a legal, valid and binding obligation of each of the New
Purchasers, enforceable against the New Purchasers in accordance with its terms
and conditions, except to the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally and by general equity
principles (regardless of whether such enforceability is considered in a
proceeding a law or in equity).
ARTICLE IV
COVENANTS
The Company, so long as at least 10% of the Common Stock is owned by
the Purchasers, agrees to perform and comply with each of the following
covenants.
4.1 Financial Statements; Information.
The Company shall furnish to each Purchaser the following:
(a) Financial Information. The Company shall send, or cause to be sent,
to each Purchaser (i) its consolidated audited annual financial statements,
fairly and accurately presenting in all material respects the financial
condition and the results of operations and cash flows of the Company and its
Subsidiaries, prepared in accordance with GAAP, as soon as is practicable after
the same have been issued but in any case within ninety days of the end of its
fiscal year, together with the report thereon by independent public auditors as
may be acceptable to the Majority-in-Interest, (ii) its unaudited quarterly
consolidated financial statements, of each of the first three fiscal quarters of
its fiscal year, fairly and accurately presenting in all material respects the
financial condition and the results of operations and cash flows of the Company
and its Subsidiaries, prepared in accordance with GAAP, as soon as is
practicable after the end of each fiscal quarter but in any case within
forty-five days of the end of its fiscal quarters, certified by its duly
authorized chief financial officer, (iii) a copy of any monthly financial report
or statement of the Company
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and/or any of its Subsidiaries as may be prepared by or for the directors of
such company or for any other Person, as soon as same is available, and (iv)
such financial or other information relating to the Company and its Subsidiaries
or any of the transactions contemplated by this Agreement or any Exhibit to
which the Company is a party, as may be reasonably requested by a
Majority-in-Interest of the Purchasers.
(b) Information Delivered to Creditors. Concurrently with the
furnishing thereof, copies of any statements, reports or documents relating to
the business or condition generally of the Company or any Subsidiary which are
furnished by the Company or any Subsidiary to any other holder of funded debt of
the Company or Subsidiary, or any notices which are so furnished, in each case
pursuant to the terms of any indenture, loan, credit or similar agreement and
not otherwise required to be furnished pursuant to any other clause of this
Section 4.1
(c) Commission and Other Reports. Promptly upon their becoming
available (and in any event within five Business Days thereafter), copies of (i)
all financial statements, reports, notices, proxy statements and other
information sent or made available generally by the Company to any class of its
security holders (in their capacity as such) or by any Subsidiary to any class
of its security holders other than the Company or another Subsidiary, (ii) all
regular and periodic reports and all registration statements, forms and
prospectuses filed by the Company or any of its Subsidiaries with any securities
exchange or with the Commission, and (iii) all press releases and other
statements made available generally by the Company or any of its Subsidiaries to
the public concerning material developments in the business of the Company or
any of its Subsidiaries.
(d) Defaults, etc. Promptly upon and in any event within five Business
Days after any officer of the Company obtaining knowledge of any condition or
event which constitutes a default or an event of default under any agreement
with respect to any debt for borrowed money in excess of $100,000 of the Company
or any Subsidiary or becoming aware that any person has given any notice to the
Company or any of its Subsidiaries or taken any other action with respect to a
claimed default under or in respect of any debt for borrowed money in excess of
$100,000 or with respect to the occurrence or existence of any event or
condition of such type, written notice in reasonable detail specifying the facts
and circumstances of such condition, event or action.
(e) Litigation, etc. Promptly and in any event within five Business
Days after any officer of the Company obtains knowledge of any litigation,
administrative proceeding or judgment (i) affecting the Company or any of its
Subsidiaries which involves claims against the Company or its Subsidiaries
aggregating, when taken together with all other such litigation, proceedings and
judgments, $100,000 which are not considered by the Company, in its reasonable
judgment, to be covered by insurance, or (ii) relating in any material way to
this Agreement or any Exhibit to which the Company is a party, notice thereof
specifying in each case in reasonable detail the facts and circumstances
surrounding such litigation, proceeding or judgment.
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4.2 Corporate Existence.
The Company will, and will cause each of its Subsidiaries to, do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.
4.3 Compliance with Laws; Government Filings.
The Company shall, and shall cause each of its Subsidiaries to, comply
in all material respects with all laws, statutes, rules, regulations and
ordinances and all orders of, and restrictions imposed by, any court, arbitrator
or Governmental Body in respect of the conduct of the business of the Company or
Subsidiary and the ownership of the properties of the Company or Subsidiary
(including, without limitation, applicable laws, statutes, rules, regulations,
ordinances and orders relating to occupational health and safety standards,
consumer protection and equal employment opportunities), except to the extent
that the applicability or validity of any such law, statute, rule, regulation,
ordinance or order is being contested in good faith by appropriate and timely
actions or proceedings diligently pursued, and for which such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made.
4.4 Environmental Matters.
(a) The Company shall, and shall cause each of its Subsidiaries to, (i)
obtain and maintain in full force and affect all Environmental Permits that may
be required from time to time in order for the Company and such Subsidiary to
comply in all material respects with all Environmental Laws applicable to the
Company or such Subsidiaries and (ii) be and remain in compliance in all
material respects with all terms and conditions of all such Environmental
Permits and with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
all applicable Environmental Laws.
(b) The Company shall not, and shall not permit any of its Subsidiaries
to, (i) cause or allow (A) any Hazardous Substance to be present at any time on,
in, under or above the Company Premises or any part thereof or (B) the Company
Premises or any part thereof to be used at any time to manufacture, generate,
refine, process, distribute, use, sell, treat, receive, store, dispose of,
transport, arrange for transport of, handle, or be involved in any other
activity involving, any Hazardous Substance, or (ii) conduct any such activities
described in the foregoing clause (i) on the Company Premises or anywhere else,
except, in each case referred to in the foregoing clauses (i) and (ii), in a
manner that is in compliance in all material respects with all applicable
Environmental Laws and Environmental Permits or to an extent that will not have
a Material Adverse Effect.
ARTICLE V
CERTAIN OTHER COVENANTS
5.1 Use of Proceeds. The Company covenants and agrees to use the
proceeds of the sale of the Securities as provided in Schedule 1.5.
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ARTICLE VI
MISCELLANEOUS
6.1 Expenses.
Whether or not the transactions contemplated by Article I hereof are
consummated, the Company shall: (a) directly pay the reasonable fees and
expenses of special counsel to the Purchasers rendered in connection with such
transactions (up to $40,000) or in connection with any actual or proposed
amendment, waiver or consent pursuant to the provisions hereof, and all other
expenses in connection with the foregoing (including, without limitation,
document production and reproduction expenses); (b) reimburse each Purchaser for
his reasonable out-of-pocket expenses in connection with each such actual or
proposed amendment, waiver or consent pursuant to the provisions of this
Agreement, and any items of the character referred to in clause (a) which shall
have been paid by any Purchaser; (c) pay, and save each Purchaser of any
Securities harmless from and against, any and all liability and loss with
respect to or resulting from the nonpayment or delayed payment of any and all
placement fees and other liability to pay any agent or finder in connection with
the sale of the Securities to each Purchaser; (d) pay all fees and other charges
payable in connection with the filings, recordings and registrations
contemplated by this Agreement or any other Exhibit; and (e) pay all
documentary, stamp or similar taxes (including interest and penalties) which may
be payable in respect of the execution and delivery or issuance (but not the
transfer) of any of the Securities or of any amendment of, or waiver or consent
under or with respect to, this Agreement, any of the Securities or any other
Exhibit and save each Purchaser of the Securities harmless against each
Purchaser any loss or liability resulting from nonpayment or delay in payment of
any such tax.
6.2 Reliance on and Survival of Representations.
All agreements, covenants, representations and warranties of the
Company herein or of (or on behalf of) the Company in any Exhibit or in any
certificate or other instrument delivered pursuant hereto or thereto shall: (a)
be deemed to be material and to have been relied upon by each Purchaser,
notwithstanding any investigation heretofore or hereafter made by each Purchaser
or on his or its behalf, and (b) survive the execution and delivery of this
Agreement and the execution and delivery of the Securities to each Purchaser and
any investigation made at any time by him or it or on his or its behalf or any
disposition of any of the Securities, until the expiration of any applicable
statute of limitations.
6.3 Amendment and Waiver.
(a) Any term, provision, covenant, agreement or condition of this
Agreement or any other Exhibit hereto may, with the written consent of the
Company, be amended or modified, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by one or more substantially concurrent written instruments
signed by the Purchasers.
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6.4 Directly or Indirectly.
Where any provision of this Agreement refers to actions to be taken by
any person, or which such person is prohibited from taking, such provision shall
be applicable whether the action in question is taken directly or indirectly by
such person.
6.5 Successors and Assigns.
All covenants and agreements in this Agreement by or on behalf of the
respective parties hereto shall bind and inure to the benefit of their
respective successors and assigns.
6.6 Notices.
Unless otherwise expressly provided in this Agreement, all notices,
opinions and other communications provided for in this Agreement shall be in
writing and delivered by hand or mailed, first class postage prepaid, return
receipt requested or sent by overnight courier, or by confirmed telefax
transmission (confirmed by hand-delivered, mailed or overnight courier copy)
addressed (a) if to the Company, to the Company at 0000 Xxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000 (with a copy sent by telefax transmission to it at (713)
850-7730), marked to the attention of the President, with a copy to Fulbright &
Xxxxxxxx L.L.P., 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxx 00000,
telecopy number (000) 000-0000, to the attention of Xxxxxxx Xxxxxx, Esq., or at
such other address as the Company may hereafter designate by notice to each
Purchaser of Securities, or (b) if to the Purchasers, at the address of each
Purchaser as set forth in Schedule 1.1 or at such other address as such
Purchaser may hereafter designate by notice to the Company.
6.7 LAW GOVERNING.
THIS AGREEMENT AND ALL AMENDMENTS, SUPPLEMENTS, MODIFICATIONS, WAIVERS
AND CONSENTS RELATING HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THE STATE OF NEW YORK.
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6.8 SUBMISSION TO JURISDICTION;
Service of Process.
(a) THE COMPANY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK, AND
IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR
ANY EXHIBIT MAY BE LITIGATED IN SUCH COURTS, AND THE COMPANY WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO
THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT.
(b) In relation to any dispute arising out of or in connection with
this Agreement or any Exhibit, and for the exclusive benefit of the Purchasers
and any Holders, the Company irrevocably and unconditionally submits to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York, and to the non-exclusive jurisdiction of any court of the
State of New York located in the City and County of New York, for the purposes
of any suit, action or other proceeding arising out of, or relating to, this
Agreement or any Exhibit or any of the transactions contemplated hereby or
thereby, and hereby waives, and agrees not to assert, by way of motion, as a
defense, or otherwise, that it is not personally subject to the jurisdiction of
the above named courts for any reason whatsoever, that such suit, action or
proceeding is brought in an inconvenient forum, or that the venue of such suit,
action or proceeding is improper, or that this Agreement or any Exhibit or the
subject matter hereof may not be enforced in or by such courts. The Company
hereby agrees that process against it may be served by mail or delivery of
service of process in any of the aforementioned action, suits or proceedings to
CT Corporation System, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (such agent being
hereinafter called the "Process Agent"), which the Company hereby irrevocably
designates and appoints as its attorney-in-fact to receive service of process in
any action, suit or proceeding with respect to any matter as to which it submits
to jurisdiction as set forth above, it being agreed that service to such office
or upon such agent shall constitute valid service upon the Company. The Company
hereby directs the Process Agent to receive and accept all process on its
behalf. The Company shall promptly notify the Purchasers of any change in the
address of the Process Agent and may, with prior notice given to Holders,
appoint a successor Process Agent; provided, however, that if the Process Agent
shall at any time cease to exist or its agency shall for any reason cease, the
Company shall designate forthwith a successor Process Agent in the County and
State of New York and shall give prompt notice of such designation to the
Holders, together with evidence of the acceptance of any such appointment. The
Company agrees irrevocably to the service of process of any of the
aforementioned courts in any suit, action or proceeding described above by
mailing of copies of such process to the Company at its address specified in
Section 6.7 hereof. Nothing herein shall preclude service of process in any
other manner permitted by applicable law or prohibit any Holder from commencing
legal proceedings against the Company or any of its properties in any other
jurisdiction.
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6.9 Headings, etc.
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning or construction of any of
the terms hereof. Unless otherwise specified, any reference in this Agreement to
a particular section, clause or other subdivision, or a particular schedule or
exhibit, shall be considered a reference to that section, clause or other
subdivision of, or to that schedule or exhibit to, this Agreement.
6.10 Entire Agreement.
This Agreement (inclusive of the Exhibits hereto) embodies the entire
agreement and understanding among the Company and the Purchasers and supersedes
all prior agreements and understandings among such parties relating to the
subject matter hereof.
6.11 WAIVER OF TRIAL BY JURY.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES
HERETO IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY EXHIBIT HERETO OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF THE PURCHASERS
IN THE NEGOTIATION OR ENFORCEMENT HEREOF OR THEREOF.
6.12 Indemnification.
In consideration of the execution and delivery of this Agreement by
each Purchaser, the Company hereby agrees to indemnify, defend and hold each
Purchaser and the Managing Member and each partner of the Managing Member and
the employees and agents thereof (herein called the "Indemnitees"), free and
harmless from and against any and all claims, actions, causes of action, suits
or other proceedings (whether or not any such Indemnitee is a party thereto),
losses, liabilities and damages, and expenses in connection therewith,
including, without limitation, fees and disbursements of counsel, consultants
and experts and claims relating to personal injury or property damage (herein
called the "Indemnified Liabilities", which term shall not include, however, in
respect of any particular Indemnitee, liabilities incurred by reason of the
gross negligence or willful misconduct of such Indemnitee) incurred by the
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any transaction financed or to be financed in whole or in part directly or
indirectly with proceeds from the sale of any Securities, or (b) the execution,
delivery, performance or enforcement of this Agreement or any Exhibit, or the
consummation of any of the transactions contemplated hereby or thereby or (c)
any failure of any representation or warranty set forth in Section 2.11 to be
true and correct when made or any failure by the Company to comply with any of
its covenants or agreements set forth in Section 4.4 or any liability of the
Company arising pursuant to Environmental Laws. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment of each of the
Indemnified Liabilities
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which is permissible under applicable law. The provisions of, and obligations of
the Company under, this Section 6.13 shall survive the execution and delivery of
this Agreement, the enforcement of any provision hereof, the consummation of the
transactions to occur on the Closing Date, and any amendments or waivers, and
shall be enforceable by each Indemnitee separately or together; and any such
Indemnitee seeking to enforce the indemnification provided for hereunder may
initially proceed directly against the Company without first resorting to any
other rights of indemnification or otherwise that it may have.
6.13 Interpretive Provision.
Wherever any representation, warranty or other statement made by the
Company in this Agreement is limited to the Company's knowledge, such limitation
shall mean the actual knowledge or awareness of any person who, on the date
hereof, is an executive officer or director of the Company after due inquiry of
the circumstances thereof.
6.14 Severability.
Any provision of this Agreement which shall be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or enforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
6.15 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
6.16 Finder's Fee.
(a) The Company represents and warrants that it has not incurred any
obligation or liability to any broker or finder for any fee or payment with
respect to the offering or sale of the Securities and agrees to indemnify and
hold the Purchasers harmless against any claims or liabilities asserted against
them by any person acting or claiming to act as a broker or finder on behalf of
the Company or any Subsidiary.
(b) Each Purchaser represents and warrants that it has not incurred any
obligation or liability to any broker or finder for any fee or payment with
respect to the offering or sale of the Securities and agrees to indemnify and
hold the Company harmless against any claims or liabilities asserted against
them by any person acting or claiming to act as a broker or finder on behalf of
such Purchaser.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first before written.
COMPANY:
XXXXXX INDUSTRIES, INC.
By:
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
PURCHASERS:
WHITE OWL INVESTORS, L.L.C.
By: White Owl Capital Partners,
Managing Member
By:
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Partner
SOMERSET CAPITAL PARTNERS
By:
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Partner
WHITE OWL CAPITAL PARTNERS
By:
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Partner
------------------------------
Xxxxxx Xxxxxx, Individually
------------------------------
Antony X. X. Xxxxx, Individually
------------------------------
Xxxx Xxxxxxx, Individually
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APPENDIX I
DEFINITIONS
As used in this Agreement the following terms shall have the meanings
ascribed thereto:
"Agreement" means this agreement, as it may be amended from time to
time, including all schedules and exhibits thereto.
"Bridge Loan Securities Purchase Agreement" means that certain
Securities Purchase Agreement dated as of October 15, 1997, between the Company
and the Holders.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which commercial banks are required or authorized by law or regulation to
be closed in New York, New York.
"Cash Payment" has the meaning set forth in Section 1.2.
"Closing" has the meaning set forth in Section 1.4.
"Commission" means the Securities and Exchange Commission or any other
United States agency at the time administering the Securities Act.
"Common Stock" means common stock of the Company having a par value of
$.01 per share.
"Company" means Xxxxxx Industries, Inc., a Delaware corporation.
"Company Premises" means real property in which (a) the Company, (b)
any Subsidiary of any person referred to in clause (a) of this definition or (c)
any person which has at any time been a Subsidiary of any person referred to in
clause (a) of this definition at any time has or ever had any direct or indirect
interest, including, without limitation, ownership thereof, or any arrangement
for the lease, rental or other use thereof, or the retention or claim of any
mortgage or security interest therein or thereon.
"Environmental Claims" has the meaning set forth in Section 2.12(c).
"Environmental Law" any past, present or future Federal, state, local
or foreign statutory or common law, or any regulation, ordinance, code, plan,
Order, permit, grant, franchise, concession, restriction or agreement issued,
entered, promulgated or approved thereunder, relating to (a) the environment,
human health or safety, including, without limitation, emissions, discharges,
releases or threatened releases of Hazardous Substances into the environment
(including, without limitation, air, surface water, groundwater or land), or (b)
the manufacture, generation, refining, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport, arranging for transport, or
handling of Hazardous Substances,
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"Environmental Permit" means any and all permits, consents, licenses,
approvals and registrations of any nature at any time required pursuant to or in
order to comply with any Environmental Law.
"Exhibit" means any of the exhibits to this Agreement, including such
exhibits as executed and delivered pursuant to the terms of this Agreement.
"Financial Statements" means the consolidated balance sheet of the
Company and the Subsidiaries as of August 31, 1997, and the consolidated
statement of operations and cash flows for the year ended August 31, 1997,
together with the notes thereto.
"GAAP" means generally accepted accounting principles as from time to
time set forth in the opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and in statements by the
Financial Accounting Standards Board or in such opinions and statements of such
other entities as shall be approved by a significant segment of the accounting
profession in the United States of America.
"Governmental Body" means any Federal, state, municipal, local or other
governmental department, commission, board, bureau, agency, instrumentality,
political subdivision or taxing authority of any country.
"Hazardous Substances" collectively, contaminants; pollutants; toxic or
hazardous chemicals, substances, materials, wastes and constituents; petroleum
products; polychlorinated biphenyls; medical wastes; infectious wastes;
asbestos; paint containing lead; and urea formaldehyde.
"Holder" means a holder of Senior Notes.
"Holders' Purchase Price" has the meaning set forth in Section 1.3.
"Indemnified Liabilities" has the meaning set forth in Section 6.12.
"Indemnitees" has the meaning set forth in Section 6.12.
"Majority-in-Interest" means the Holders of more than 50% of the Common
Stock purchased hereunder.
"Managing Member" means White Owl Capital Partners, a Texas general
partnership and the managing member of White Owl.
"Material Adverse Effect" means any circumstance or event which is
material and adverse to the financial condition or business operations or
prospects of the Company and its Subsidiaries, taken as a whole.
"Material Contract" means any contract of the Company or any Subsidiary
with any Person that is presently in effect and (i) that either (A) accounted
for 10 percent or more of the annual revenues of the Company or any Subsidiary
during any of the past three fiscal years or (B) is expected to account for 10
percent or more of the annual revenues of the Company or
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any Subsidiary during the present fiscal year or (ii) the expiration or
termination of which would have a Material Adverse Effect.
"Offering Disclosure Documents" means (i) the Annual Report on Form
10-K of the Company for the fiscal year ended August 31, 1997, as filed with the
Commission, (ii) the Financial Statements and (iii) the White Owl PPM, but only
to the extent of the information provided or supplied to White Owl or its
counsel by or on behalf of the Company.
"Opinion of Company Counsel" means the legal opinion of Fulbright &
Xxxxxxxx L.L.P., counsel for the Company, in favor of the Purchasers, in the
form of Exhibit "B" hereto
"Permitted Liens" means (i) liens of carriers, warehousemen, mechanics
and materialmen incurred in the ordinary course of business securing sums not
overdue; (ii) liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of government
insurance or benefits, relating to employees, securing sums (a) not overdue or
(b) being diligently contested in good faith provided that adequate reserves
with respect thereto are maintained on the books of the Company in conformity
with GAAP, (iii) liens for taxes (a) not yet due or (b) being diligently
contested in good faith, provided that adequate reserves with respect thereto
are maintained on the books of the Company in conformity with GAAP.
"Person" means a corporation, a partnership, an organization or
business, an individual, a government or political subdivision thereof or
governmental agency.
"Purchaser" means a person set forth on Schedule 1.1 with respect to
that number of Securities set forth opposite his or its name and a person who
executes and delivers a counterpart signature page to this Agreement, and
Purchasers means two or more Purchasers.
"Registration Rights Joinder Agreement" means that certain registration
rights joinder agreement to be entered into between the Company and the
Purchasers in the form of Exhibit "A" hereto.
"Securities" has the meaning set forth in Section 1.4.
"Securities Act" means the Securities Act of 1933, or any similar
United States statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Senior Notes" means those certain Senior Convertible Promissory Notes
of the Company, in the aggregate principal amount of $2,500,000, executed and
delivered pursuant to the Bridge Loan Securities Purchase Agreement.
"Subsidiary" means any corporation or other legal entity 50% or more of
the voting stock of which is owned by the Company or another Subsidiary of the
Company. For these purposes voting stock means the capital stock or other form
of ownership which ordinarily, in the absence of contingencies, entitles the
holder to elect corporate directors or persons performing similar functions. For
purposes of the covenants contained in Article IV hereof, Subsidiary generally
includes any corporation or other legal entity in which the
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28
Company or any other Subsidiary of the Company hereafter acquires 50% or more of
the voting stock, and specifically includes Signature.
"White Owl PPM" means that certain Confidential Private Placement
Memorandum of White Owl dated December 23, 1997
"The New Purchasers Purchase Price" has the meaning set forth in
Section 1.2.
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29
SCHEDULE 1.1
PURCHASERS
Name, Address, Telefax No.
and Tax Identification No. No. of Shares
of Purchaser Common Stock Price
-------------------------- ------------- -----
White Owl Capital Partners 3,040,000 $1,900,000
00 Xxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
TIN:
Xxxxxx Xxxxxx 400,000 $250,000
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
SSN:
Antony X. X. Xxxxx 400,000 $250,000
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
SSN:
Xxxx Xxxxxxx 160,000 $100,000
c/o Wellington Management Co., LLP
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
SSN:
White Owl Investors, L.L.C. 10,000,000 $10,000,000
00 Xxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
TIN:
Somerset Capital Partners 1,000,000 $1,000,000
00 Xxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
TIN:
Total: 15,000,000 $13,500,000
30
SCHEDULE 1.5
USE OF PROCEEDS
See Attached.
31
SCHEDULE 2.2
SUBSIDIARIES
See Attached.
32
SCHEDULE 2.5
NONCONTRAVENTION
Not Applicable.
33
SCHEDULE 2.6
CONSENTS AND APPROVALS
Not Applicable.
34
SCHEDULE 2.7
LITIGATION
See Attached.
35
SCHEDULE 2.9
DEBTS; LIENS
See Attached.
