Exhibit 10.5
PURCHASE AGREEMENT
PURCHASE AGREEMENT (the "Agreement"), dated as of March 2, 2007,
between National Patent Development Corporation, a Delaware corporation (the
"Company"), and Xxxxxx Xxxxxx (the "Buyer").
Recitals:
The Company wishes to sell to the Buyer, and the Buyer wishes to
purchase from the Company, 200,000 shares (the "Shares") of the Company's common
stock, par value $0.01 per share (the "Common Stock"), in accordance with the
terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1. Purchase and Sale.
(a) Purchase of Shares. On the date hereof, the Company is selling to the Buyer,
and the Buyer is purchasing from the Company, the Shares.
(b) Purchase Price. The purchase price for the Shares is $2.40 per Share, or an
aggregate of $480,000 (the "Purchase Price").
(c) Deliveries. On the date hereof, (i) the Company shall deliver or cause to be
delivered to the Buyer one or more stock certificates evidencing the Shares and
any other documents or instruments necessary to evidence or effect any of the
transactions contemplated hereunder and (ii) the Buyer shall pay to the Company
the Purchase Price by certified check or wire transfer of immediately available
funds to an account designated in writing by the Company, and shall deliver to
the Company any other documents or instruments necessary to evidence or effect
any of the transactions contemplated hereunder.
2. Exchange of Shares.
(a) Exchange Right. The Buyer shall have the right (the "Exchange Right") to
exchange each Share for six (the "Exchange Rate") shares of common stock, par
value $0.01 per share (the "FS Stock"), of Five Star Products, Inc. ("Five
Star") then owned by the Company, in the manner and subject to the provisions
set forth in this Section 2 (the shares of FS Stock for which all the Shares may
be exchanged are collectively referred to as the "FS Shares"). Notwithstanding
the foregoing but subject to the provisions of Section 2(c), the Buyer shall not
have the right to exchange the Shares into a number of shares of FS Stock in
excess of the number of shares of FS Stock then held by the Company.
(b) Manner of Exchange. Subject to the provisions hereof, the Shares may be
exchanged for the FS Shares at any time and from time to time during the
Exchange Period (as defined below) by the Buyer, in whole or in part, by
delivery of the certificate or certificates representing the Shares being
exchanged together with a completed exchange notice in the form attached hereto
as Exhibit A to the Company (with such modifications thereto as are required to
conform to the provisions of this Section 2) at the Company's principal
executive offices. The certificates representing the FS Shares shall be
delivered by the Company to the Buyer within a reasonable time after the Buyer
has properly exercised the Exchange Right. Such certificates shall be registered
in the name of the Buyer and shall be in such denominations as may be requested
by the Buyer. For purposes of this Agreement, "Exchange Period" means the period
commencing on the date hereof and ending at the time that the Company no longer
holds any FS Stock.
(c) Sale of FS Stock by the Company. In the event that the Company proposes at
any time after the date hereof to sell, transfer or otherwise dispose of a
number of shares of FS Stock such that, following such disposition, it would
cease to own a sufficient number of shares of FS Stock to permit the Buyer to
exercise his Exchange Right in full, then the Company shall give the Buyer 10
days prior written notice (a "Shortfall Notice") of such disposition, which
Shortfall Notice shall set forth the amount of the Shortfall (as defined below)
and the consideration to be received by the Company for each share of FS Stock
(the "FS Stock Consideration"). Within 10 days of receipt of the Shortfall
Notice, the Buyer, upon notice to the Company, shall either (i) elect to receive
from the Company in exchange for the Excess Shares (as defined below), the
amount of the FS Stock Consideration received by the Company multiplied by the
amount of the Shortfall or (ii) forever waive the right to exchange the Excess
Shares. For purposes of this Agreement, "Shortfall" means the difference between
(i) the number of shares of FS Stock to be owned by the Company following such
disposition and (ii) the number of shares of FS Stock which the Buyer would be
entitled to receive upon exchange of all his Shares and "Excess Shares" means
the number of Shares which if exchanged would give rise to the Shortfall.
(d) Adjustment to Exchange Rate. If either the Company or Five Star, at any time
during the Exchange Period, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) its shares of
common stock into a greater number of shares, or combines (by reverse stock
split, recapitalization, reorganization, reclassification or otherwise) its
shares of common stock into a smaller number of shares, then, after the date of
record for effecting such subdivision or combination, the Exchange Rate in
effect immediately prior to such subdivision will be proportionately increased
or reduced.
(e) Consolidation or Merger of Five Star. In case the Company ceases to own the
FS Stock as the result of the occurrence at any time during the Exchange Period
of a merger, consolidation, or similar transaction involving Five Star (each, a
"Five Star Event"), the Buyer shall have the right to acquire and receive upon
the exchange of each Share, in lieu of the number of FS Shares into which such
Share was exchangeable immediately prior to such Five Star Event, such shares of
stock, securities, cash or assets as were issued or paid to the Company in the
Five Star Event in exchange for such number of FS Shares.
(f) Distribution of Assets by Five Star. In case Five Star shall, at any time
during the Exchange Period, declare or make any cash or other dividend or
distribution to all holders of the FS Stock (each, a "Five Star Distribution"),
then, upon the exchange of each Share, the Buyer shall be entitled to receive
the amount of such cash or other assets as the Company receives in the Five Star
2
Distribution with respect to the number of FS Shares into which such Share was
exchangeable.
(g) Consolidation or Merger of the Company. In case the Buyer ceases to own the
Shares as the result of the occurrence at any time during the Exchange Period of
a merger, consolidation, or similar transaction involving the Company (each, a
"Company Event"), the Buyer will have the right to acquire and receive upon the
exchange of such shares of stock, securities, cash or assets as were issued or
paid to the Buyer in the Company Event in exchange for each Share, the number of
FS Shares into which such Share was exchangeable immediately prior to the
Company Event.
(h) Distribution of Assets by the Company. In case the Company shall, at any
time during the Exchange Period, declare or make any cash or other distribution
to all holders of Common Stock (each, a "Company Distribution"), then, upon the
exchange of each Share, the Buyer shall be required to also transfer back to the
Company the amount of such cash or other assets as Buyer receives in the Company
Distribution with respect to such Share.
(i) No Fractional Shares. No fractional shares of FS Stock are to be issued upon
the exchange, but the Company shall pay a cash adjustment in respect of any
fractional share which would otherwise be issuable in an amount equal to the
same fraction of the relevant price of a share of FS Stock determined in good
faith by the Board of Directors of the Company to represent the reasonable value
of such fraction of a share of FS Stock.
3. Representations and Warranties of the Company. The Company represents and
warrants to the Buyer as follows:
(a) Validity of Issuance of Shares. The Shares have been duly authorized and
when issued in accordance with the terms hereof will be validly issued, fully
paid, and nonassessable.
(b) Title to FS Shares. If the Buyer exercises the Exchange Right, the FS Shares
will be transferred to the Buyer free and clear of any and all pledges, liens,
encumbrances or security interests of every kind or nature (collectively,
"Encumbrances"), other than Encumbrances resulting from the acts or failures to
act of the Buyer.
(c) Organization. The Company (i) is a corporation validly existing and in good
standing under the laws of the State of Delaware and (ii) has the corporate
power and authority to own its property and assets and to transact the business
in which it is engaged.
(d) Authority. The Company has the corporate power to execute, deliver and carry
out the terms and provisions of this Agreement and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement by the Company.
(e) No Consent Required. No authorization, consent or approval of, or exemption
by, any governmental or public body or authority is required to authorize, or is
required in connection with, the execution, delivery and performance of this
Agreement, or the taking of any action contemplated hereby, by the Company,
except those that have been obtained or are available.
3
(f) No Violation. Neither the execution and delivery of this Agreement, nor
compliance with any of the terms and provisions hereof, nor the consummation of
any of the transactions herein contemplated will: (i) violate any law,
regulation, order, writ, injunction or decree of any court or governmental
department, commission, board, bureau, agency or instrumentality applicable to
the Company, or (ii) conflict or be inconsistent with, or result in any breach
of, any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any lien, charge or encumbrance upon any of the property or
assets of the Company pursuant to the terms of any indenture, mortgage, deed of
trust, agreement or other instrument, to which the Company is a party or by
which it may be bound or to which it may be subject, or (iii) violate any
provision of any of the organizational documents of the Company.
(g) SEC Documents. The Company has filed all reports, schedules, forms,
statements and other documents, together with all exhibits, financial statements
and schedules thereto required to be filed by it with the Securities and
Exchange Commission (the "SEC") pursuant to the reporting requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") (all of the foregoing,
whether heretofore or hereafter filed with the SEC since January 1, 2006 being
hereinafter referred to as the "SEC Documents"). As of their respective dates,
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated herein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
4. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Company as follows:
(a) No Registration of the Shares. The Buyer understands that: (i) the Shares
are being sold to the Buyer under certain exemptions from the registration
provisions of the Securities Act of 1933 (the "Securities Act"); (ii) the Buyer
is purchasing such Shares without being furnished any offering literature or
prospectus; and (iii) the sale of the Shares has not been examined by the SEC or
by any agency charged with the administration of the securities laws of any
state or other jurisdiction. The Buyer represents and warrants that he has such
knowledge and experience in financial and business matters that he is capable of
evaluating the merits and risks of an investment in the Shares and of making an
informed investment decision with respect thereto. The Buyer understands that
the Company is relying on the truth and accuracy of the representations,
declarations and warranties made herein by the Buyer in selling the Shares
hereunder without having first registered such Shares under the Securities Act
or under the securities laws of any state or other jurisdiction.
(b) Buyer Status. Buyer is an "accredited investor" as defined in Rule 501(a)
under the Securities Act by reason of either having (i) an individual net worth,
or joint net worth with his spouse, that exceeds $1 million at the date hereof
or (ii) income exceeding $200,000 in each of the two most recent years or joint
income with a spouse exceeding $300,000 for those years and a reasonable
expectation of the same income level in the current year.
(c) Investment Intent. The Buyer confirms that: (i) he understands that there
are substantial restrictions on the transferability of the Shares and,
accordingly, it may not be possible for him to liquidate his investment in the
4
Shares in case of emergency; and (ii) he is able to bear the economic risk of
this investment in the Shares, to hold the Shares for an indefinite period of
time, and currently to afford a complete loss of this investment. The Shares
being acquired by the Buyer hereunder are being acquired in good faith solely
for his own personal account, for investment purposes only, and are not being
purchased with a view to or for the resale, distribution, subdivision or
fractionalization thereof. The Buyer does not have any contract, undertaking,
understanding, agreement or arrangement, formal or informal, with any person to
sell, transfer or pledge to any person the Shares being acquired hereunder, or
any part thereof, and has no current plan to enter into any such contract,
undertaking, agreement or arrangement. The Buyer understands that the legal
consequences of the foregoing representations and warranties are that he must
bear the economic risk of this investment in the Shares for an indefinite period
of time because the Shares have not been registered under the Securities Act.
(d) Decision to Invest. The Buyer confirms that, in making his decision to
invest in the Shares, he has relied solely upon independent investigations made
by him or his representatives and advisors, and that he and such representatives
and advisors have been given the opportunity to ask questions of, and to receive
answers from, management of the Company with respect to the Company and the
Common Stock.
(e) Authority. The Buyer has the power to execute, deliver and carry out the
terms and provisions of this Agreement.
(f) Title. If the Buyer exercises the Exchange Right, the Shares will be
transferred to the Company free and clear of any and all Encumbrances, other
than Encumbrances resulting from the acts or failures to act of the Company.
(g) No Consent Required. No authorization, consent or approval of, or exemption
by, any governmental or public body or authority is required to authorize, or is
required in connection with, the execution, delivery and performance of any of
this Agreement, or the taking of any action contemplated hereby, by the Buyer,
except those that have been obtained or are available.
(h) No Violation. Neither the execution and delivery of this Agreement, nor
compliance with any of the terms and provisions hereof, nor the consummation of
any of the transactions herein contemplated will: (i) violate any law,
regulation, order, writ, injunction or decree of any court or governmental
department, commission, board, bureau, agency or instrumentality applicable to
the Buyer, or (ii) conflict or be inconsistent with, or result in any breach of,
any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any lien, charge or encumbrance upon any of the property or
assets of the Buyer pursuant to the terms of any indenture, mortgage, deed of
trust, agreement or other instrument, to which the Buyer is a party or by which
he may be bound or to which he may be subject.
5
5. Lock-Up.
(a) Lock-Up Period. The Buyer agrees that until the expiration of the Lock-Up
Period (as defined below), he will not, without the prior written consent of the
Board of Directors of the Company, directly or indirectly, (x) offer, pledge,
hypothecate, sell, contract to sell, enter any agreement to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant for the sale of, or otherwise dispose of or
transfer any Shares or any FS Shares (collectively, the "Securities"), or (y)
enter into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of any
Securities, whether any such transaction is to be settled by delivery of the
Securities or other securities, in cash or otherwise. For purposes of this
Agreement, the Lock-Up Period shall mean the Term (as defined in the agreement,
dated as of the date hereof, between Five Star and the Buyer (the "LF
Agreement")); provided, however, that in the event of an Early Termination (as
defined in the LF Agreement) pursuant to Section 9(c) of the LF Agreement, the
Lock-Up Period shall end on the third anniversary of the date hereof. Upon
request of the Buyer, at the end of the Lock-Up Period, the Company agrees to
cause the legend relating to the lock-up to be promptly removed from any
certificates representing the Securities.
(b) Registration Rights. Notwithstanding the provisions of Section 5(a), the
Company agrees to grant to the Buyer certain registration rights pursuant to the
registration rights agreement, dated as of the date hereof.
(c) Restrictive Legend. Each certificate for the Securities, and any shares of
capital stock received in respect thereof, whether by reason of a stock split or
share reclassification thereof, a stock dividend thereon or otherwise, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP
AGREEMENT.
6. Purchase of Shares.
(a) Purchase Right. If on the last day of the Term (the "Put Date"), the Fair
Market Value (as defined below) of the shares (the "LF Shares") of FS Stock
issued to the Buyer pursuant to Section 4(b) of the LF Agreement is less than
$280,000 minus the fair market value of any Five Star Distributions received by
the Buyer with respect to the LF Shares ($280,000 minus such fair market value
is hereinafter referred to as the "Buyback Price"), then subject to the terms
and conditions of this Section 6 and provided that there was not an Early
Termination pursuant to Section 8(c) of the LF Agreement, the Buyer shall have
the right to require the Company to purchase all (but not less than all) of the
LF Shares for the Buyback Price. The Buyer shall not have the right to require
the Company to purchase the LF Shares if he has previously sold, transferred or
otherwise disposed of any of the LF Shares. For purposes of this Agreement,
6
"Fair Market Value" of the LF Shares means (i) if on the Put Date the FS Stock
is listed on an established national or regional stock exchange, or is publicly
traded on an established securities market, the product of (A) the total number
of LF Shares and (B) the average closing price of a share of FS Stock for the
five trading day period ending with the trading day immediately prior to the Put
Date (if there is no such reported closing price for any day during such period,
the average of the highest bid and the lowest asked prices shall be used instead
of the closing price for such day) or (ii) if on the Put Date the FS Stock is
not listed on an established national or regional stock exchange and is not
publicly traded on an established securities market, the value of the LF Shares
as determined by the Board of Directors of the Company in good faith.
(b) Manner of Exchange. Subject to the provisions hereof, the Buyer may require
the Company to purchase the LF Shares, by delivery of a notice (a "Purchase
Notice"), to the Company within ten days of the Put Date, at the Company's
principal executive offices requesting the Company to purchase the Shares.
(c) Closing. The closing of such purchase shall take place at 10:00 A.M., local
time, at the principal executive offices of the Company, on the 30th business
day after the date of delivery of the Purchase Notice or at such different date,
different place, or both as the parties to such purchase agree in writing.
Certificates representing the LF Shares to be purchased shall be delivered by
the Buyer at the closing against payment. Each such certificate shall be
endorsed in blank or have attached a duly executed stock power, in each case in
proper form for transfer, with signatures guaranteed by a commercial bank, and
with all applicable stock transfer tax stamps affixed thereto. By delivering the
certificates at the closing, the Buyer shall be deemed to represent to the
Company that he owns beneficially and of record all of the LF Shares, free and
clear of any and all pledges, liens, encumbrances or security interests of every
kind or nature and all the LF Shares are freely transferable by the Buyer, and
are not subject to any voting trusts, proxies or other agreements relating to
the voting or transfer thereof. The Company shall pay to the Buyer the Purchase
Price by certified check or wire transfer of immediately available funds to an
account designated in writing by the Buyer.
7. Miscellaneous.
(a) Further Actions At any time and from time to time, each party agrees, at its
or his expense, to take such actions and to execute and deliver such documents
as may be reasonably necessary to effectuate the purposes of this Agreement.
(b) Availability of Equitable Remedies. Since a breach of the provisions of this
Agreement could not adequately be compensated by money damages, any party shall
be entitled, either before or after the Closing, in addition to any other right
or remedy available to it, to an injunction restraining such breach or a
threatened breach and to specific performance of any such provision of this
Agreement, and in either case no bond or other security shall be required in
connection therewith, and the parties hereby consent to the issuance of such an
injunction and to the ordering of specific performance.
7
(c) Survival. The covenants, agreements, representations, and warranties
contained in or made pursuant to this Agreement shall survive the sale of the
Shares and any delivery of the Purchase Price by the Buyer, irrespective of any
investigation made by or on behalf of any party.
(d) Modification. This Agreement and the Exhibit hereto set forth the entire
understanding of the parties with respect to the subject matter hereof,
supersede all existing agreements among them concerning such subject matter, and
may be modified only by a written instrument duly executed by each party.
(e) Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by Federal Express, Express
Mail, or similar overnight delivery or courier service or delivered (in person
or by telecopy, telex, or similar telecommunications equipment) against receipt
to the party to whom it is to be given at the address of such party set forth
below (or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 7(e)). Any notice or other
communication shall be deemed given at the time of receipt thereof.
If to the Buyer: Xxxxxx Xxxxxx
0000 Xxxx Xxxxx Xxxxxxxxx
XX 000
Xxxxxx, XX 00000
Fax: (000) 000-0000
If to the Company: National Patent Development Corporation
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
Attn: President
(f) Waiver. Any waiver by any party of a breach of any term of this Agreement
shall not operate as or be construed to be a waiver of any other breach of that
term or of any breach of any other term of this Agreement. The failure of a
party to insist upon strict adherence to any term of this Agreement on one or
more occasions will not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing.
(g) Binding Effect. The provisions of this Agreement shall be binding upon and
inure to the benefit of the Company and its successors and assigns and the Buyer
and his assigns, heirs, and personal representatives,.
(h) No Third Party Beneficiaries. This Agreement does not create, and shall not
be construed as creating, any rights enforceable by any person not a party to
this Agreement
(i) Separability. If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
8
(j) Headings. The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
(k) Counterparts; Governing Law. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but both of which together shall
constitute one and the same instrument. It shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflict of laws. Any action, suit, or proceeding arising out of, based on, or
in connection with this Agreement or the transactions contemplated hereby may be
brought only in the United States District Court for the Southern District of
New York or any court of the State of New York located in the Borough of
Manhattan of the City of New York, and each party covenants and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such action, suit,
or proceeding, any claim that it or he is not subject personally to the
jurisdiction of such court, that its or his property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is brought in an
inconvenient forum, that the venue of the action, suit, or proceeding is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court.
9
IN WITNESS WHEREOF, the Buyer have hereunto executed this Agreement the
day and year first above written.
NATIONAL PATENT DEVELOPMENT CORPORATION
By:______________________________
Name:
Title:
Xxxxxx Xxxxxx
10
Exhibit A
FORM OF EXCHANGE NOTICE
To: National Patent Development Corporation
Attn: President
The undersigned hereby irrevocably exercises the right to exchange
________shares (the "Shares") of the common stock of National Patent Development
Corporation, a Delaware corporation (the "Company"), for __________ shares (the
"FS Shares") of common stock of Five Star Products, Inc., a Delaware corporation
("Five Star"). To the extent that the undersigned is surrendering a certificate
or certificates representing shares of the Company in addition to the Shares,
the Company shall deliver to the undersigned at the address set forth below a
certificate representing such additional shares.
The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any FS Shares, except as permitted by the terms of the Purchase
Agreement, dated as of February __, 2007, between the undersigned and the
Company (the "PA"). Capitalized terms not otherwise defined herein shall have
the defined meanings specified in the PA.
The undersigned requests that the Company issue and deliver, or cause
its transfer agent to issue and deliver, to the undersigned physical
certificates representing the FS Shares.
The undersigned represents and warrants that:
(a) The undersigned understands that: (i) the FS Shares are being sold
to the undersigned under certain exemptions from the registration provisions of
the Securities Act; (ii) the undersigned is purchasing the FS Shares without
being furnished any offering literature or prospectus; and (iii) the sale of the
FS Shares has not been examined by the SEC or by any agency charged with the
administration of the securities laws of any state or other jurisdiction. The
undersigned represents and warrants that he has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of an investment in the FS Shares and of making an informed investment
decision with respect thereto. The undersigned understands that the Company is
relying on the truth and accuracy of the representations, declarations and
warranties made herein by the undersigned in selling the FS Shares hereunder
without having first registered such FS Shares under the Securities Act or under
the securities laws of any state or other jurisdiction.
(b) The undersigned is an "accredited investor" as defined in Rule
501(a) under the Securities Act by reason of either having (i) as individual net
worth, or joint net worth with his spouse, that exceeds $1 million (or such
different amount as may be specified in such rule on the date hereof) on the
date hereof or (ii) income exceeding $200,000 (or such different amount as may
be specified in such rule on the date hereof) in each of the two most recent
years or joint income with a spouse exceeding $300,000 (or such different amount
as may be specified in such rule on the date hereof) for those years and a
reasonable expectation of the same income level in the current year.
(c) The undersigned confirms that: (i) he understands that there are
substantial restrictions on the transferability of the FS Shares and,
accordingly, it may not be possible for him to liquidate his investment in the
FS Shares in case of emergency; and (ii) he is able to bear the economic risk of
this investment in the FS Shares, to hold the FS Shares for an indefinite period
of time, and currently to afford a complete loss of this investment. The FS
Shares being acquired by the undersigned hereunder are being acquired in good
faith solely for his own personal account, for investment purposes only, and are
not being purchased with a view to or for the resale, distribution, subdivision
or fractionalization thereof. The undersigned does not have any contract,
undertaking, understanding, agreement or arrangement, formal or informal, with
any person to sell, transfer or pledge to any person the FS Shares being
acquired hereunder, or any part thereof, and has no current plan to enter into
any such contract, undertaking, agreement or arrangement. The undersigned
understands that the legal consequences of the foregoing representations and
warranties are that he must bear the economic risk of this investment in the FS
Shares for an indefinite period of time because the FS Shares have not been
registered under the Securities Act.
(d) The undersigned confirms that, in making his decision to invest in
the FS Shares, he has relied solely upon independent investigations made by him
or his representatives and advisors.
(e) The Shares are being transferred to the Company free and clear of
any and all Encumbrances, other than Encumbrances resulting from the acts or
failure to act of the Company.
Dated: __________, 20__
Xxxxxx Xxxxxx
Address:
---------------------------
