EXHIBIT 4.3
EXCHANGE AGREEMENT
AGREEMENT, dated as of April 22, 2002, among Xxxx Communications
Systems, Inc., a Georgia corporation ("XXXX"), and the individuals and entities
set forth on the signature pages hereto (each, a "TRANSFEROR" and, collectively,
the "TRANSFERORS").
RECITALS
Each of the parties hereto deems it advisable and for the benefit of
such party that the Transferors exchange certain shares of preferred stock of
Xxxx for shares of other preferred stock of Xxxx.
NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
THE EXCHANGE
1.01 TRANSFER AND EXCHANGE. Subject to and in accordance with the
terms and conditions of this Agreement, on the date hereof, each of the
Transferors shall transfer and deliver to Xxxx (a) the number of shares of the
Series A Preferred Stock, no par value, of Xxxx set forth next to such
Transferor's name on Exhibit A hereto, together with accrued and unpaid
dividends thereon (the "SERIES A PREFERRED STOCK") and/or (b) the number of
shares of the Series B Preferred Stock, no par value, of Xxxx set forth next to
such Transferor's name on Exhibit A hereto, together with accrued and unpaid
dividends thereon (the "SERIES B PREFERRED STOCK"), and Xxxx shall issue and
deliver to each of the Transferors a number of duly authorized, validly issued,
fully paid and nonassessable shares of Series C Convertible Preferred Stock, no
par value, of Xxxx, having the terms and conditions set forth on Exhibit B
hereto (the "SERIES C PREFERRED STOCK"), equal to that number of Series A
Preferred Stock and/or Series B Preferred Stock set forth next to such
Transferor's name on Exhibit A hereto. The shares of Series C Preferred Stock to
be received by each Transferor hereunder are sometimes hereinafter referred to
as the "SHARES."
1.02 THE CLOSING. The closing of the transfer and exchange
described in Section 1.01 (the "CLOSING") shall take place at the offices of
Xxxx on the date hereof.
1.03 DELIVERIES BY TRANSFERORS. At the Closing, each of the
Transferors, as applicable, shall deliver to Xxxx certificates representing the
Series A Preferred Stock and/or Series B Preferred Stock to be exchanged by such
Transferor, duly endorsed in blank, in proper form for transfer.
1.04 DELIVERIES BY XXXX. At the Closing, Xxxx shall deliver to each
of the Transferors, as applicable, against delivery of the Series A Preferred
Stock and/or Series B
Preferred Stock to be exchanged hereunder, certificates registered in the name
of each Transferor representing the number of shares of Series C Preferred Stock
set forth next to such Transferor's name on Exhibit A and, if applicable, a cash
payment in settlement of any fractional shares based on the liquidation
preference of the shares of Series B Preferred Stock to be exchanged.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF THE TRANSFERORS
Each Transferor represents and warrants to, and agrees with, Xxxx as
follows:
2.01 Such Transferor has good and marketable title to the shares of
Series A Preferred Stock and/or Series B Preferred Stock set forth next to such
Transferor's name on Exhibit A, free and clear of all liens, claims and
encumbrances of any nature whatsoever ("LIENS").
2.02 Neither such Transferor nor any person acting on behalf of
such Transferor has negotiated with any finder, broker, intermediary or similar
person in connection with the transactions contemplated hereby.
2.03 The Transferor has received a copy of the Disclosure
Documents. "DISCLOSURE DOCUMENTS" means the Confidential Private Placement
Memorandum of Xxxx dated April 19, 2002, including the documents attached
thereto, as heretofore supplemented or amended (the "MEMORANDUM"), Xxxx'x Annual
Report on Form 10-K for the fiscal year ended December 31, 2001 and its Proxy
Statement for its 2001 Annual Meeting of Shareholders.
2.04 In addition to other applicable restrictions, the Transferor
agrees not to offer, sell, assign, pledge, or otherwise dispose of or transfer
all or any part of the Shares or the shares of Class B Common Stock, no par
value (the "CLASS B COMMON STOCK"), of Xxxx into which the Shares are
convertible unless and until the Shares or the Class B Common Stock are
registered under the Securities Act of 1933, as amended (the "1933 ACT"), and
applicable state securities laws, or an opinion is given by counsel satisfactory
to Xxxx that registration is not required.
2.05 The Transferor is acquiring the Shares for the Transferor's
own account for investment, not for the account of any other person, not for
resale to any other person, and not with a view to or in connection with a sale
or distribution, and acknowledges that the offering and sale of the Shares is
intended to be exempt from registration under the 1933 Act by virtue of Section
4(2) of the 1933 Act and the provisions of Regulation D promulgated thereunder.
2.06 All information furnished by the Transferor in the
Transferor's Accredited Investor Questionnaire previously delivered to Xxxx
remains true, correct, and complete in all respects.
2.07 The Transferor understands that the Shares are a new issue of
securities of Xxxx and that an investment in Xxxx involves substantial risks,
and the Transferor has received and carefully reviewed the Disclosure Documents
and has evaluated the risks related to an
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investment in the Shares, including those set forth under the caption "Risk
Factors" in the Memorandum.
2.08 The Transferor has analyzed and reviewed the Disclosure
Documents, this Agreement and related documents and has had the opportunity to
consult with the Transferor's legal, tax, and financial advisors with respect to
such documents and the investment in the Shares. In addition, the Transferor has
had the opportunity to ask questions of and receive answers from Xxxx or a
person or persons acting on the Xxxx'x behalf concerning the terms and
conditions of the Transferor's investment to verify the accuracy of the
information contained in the Disclosure Documents, as well as such other
information as the Transferor desired in order to evaluate an investment in
Xxxx. All such questions have been answered to the full satisfaction of the
Transferor; none of the answers was in any way inconsistent with the Memorandum.
2.09 In making the decision to acquire the Shares, the Transferor
has relied solely upon the Disclosure Documents, the representations,
warranties, agreements, undertakings, and acknowledgments of Xxxx in this
Agreement and independent investigations made by such Transferor.
2.10 The Transferor is able to bear the substantial economic risks
of an investment in Xxxx. The Transferor has adequate net worth and means of
providing for current needs and personal contingencies to sustain a complete
loss of the Transferor's investment in Xxxx, and the Transferor has no need for
liquidity in this investment.
2.11 The Transferor and the Transferor's legal, tax and financial
advisers have substantial knowledge and experience in making investment
decisions of this type and are capable of evaluating the merits and risks of
investment.
2.12 If the Transferor is a corporation, partnership, trust, or
other entity, it represents that: (i) it is duly organized, validly existing,
and in good standing in its jurisdiction of incorporation or organization and
has all the requisite power and authority to execute, deliver and perform this
Agreement; (ii) its execution, delivery and performance of this Agreement does
not result in any violation of, or conflict with, any term or provision of the
charter or bylaws or equivalent organizational documents of the Transferor or
any instrument or agreement to which the Transferor is a party or by which the
Transferor is bound; (iii) its execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on behalf of the
Transferor; and (iv) this Agreement has been duly executed and delivered on
behalf of the Transferor and constitutes a legal, valid, and binding agreement
of the Transferor.
2.13 THE TRANSFEROR IS AN "ACCREDITED INVESTOR" (AS DEFINED IN
REGULATION D PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
1933 ACT).
2.14 The Transferor hereby consents to the authorization and
issuance by Xxxx of the Series C Preferred Stock having the terms and conditions
set forth on Exhibit B hereto.
2.15 The Transferor shall indemnify and hold harmless Xxxx and any
of its officers, employees, registered representatives, directors, agents, and
control persons who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
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whether civil, criminal, administrative or investigative, by reason of or
arising from any actual or alleged misrepresentation or misstatement of facts or
omission to represent or state facts made by the Transferor to Xxxx concerning
himself or his financial position in connection with the transactions
contemplated hereby which is not remedied by timely notice to Xxxx, against
losses, liabilities and expenses for which Xxxx or any of its officers,
employees, registered representatives, directors, agents, or control persons
have not otherwise been reimbursed (including attorneys' fees, judgments, fines
and amounts paid in settlement) as actually and reasonably incurred by such
person or entity in connection with such action, suit, or proceeding.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF XXXX
Xxxx represents and warrants to, and agrees with, the Transferors as
follows:
3.01 Xxxx represents that: (i) it is duly organized, validly
existing, and in good standing in its jurisdiction of incorporation and has all
the requisite corporate power and authority to execute, deliver and perform this
Agreement; (ii) its execution, delivery and performance of this Agreement does
not result in any violation of, or conflict with, any term or provision of its
charter or bylaws or any instrument or agreement to which it is a party or by
which it is bound; (iii) its execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate action by Xxxx;
and (iv) this Agreement has been duly executed and delivered on behalf of Xxxx
and constitutes a legal, valid, and binding agreement of Xxxx. The shares of
Series C Preferred Stock to be issued and delivered by Xxxx hereunder have been
duly authorized and, upon receipt by Xxxx from the Transferors of the Series A
Preferred Stock and Series B Preferred Stock being transferred pursuant to this
Agreement, will be validly issued, fully paid, and nonassessable, will not have
been issued in violation of any preemptive right of shareholders or rights of
first refusal, and each Transferor will receive good title to the shares of
Series C Preferred Stock, free and clear of all Liens (other than any created by
such Transferor).
3.02 FINDER OR BROKER. Neither Xxxx nor any person acting on behalf
of Xxxx has negotiated with any finder, broker, intermediary or similar person
in connection with the transactions contemplated hereby.
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ARTICLE IV
MISCELLANEOUS
4.01 NOTICES. All notices and other communications hereunder shall
be in writing and shall be given by registered or certified mail (postage
prepaid and return receipt requested), by an overnight courier service which
obtains a receipt to evidence delivery, or by facsimile transmission (provided
that written confirmation of receipt is provided), addressed to the appropriate
party at the following addresses (or such other address as any party may
designate to the others in accordance with the aforesaid procedure):
(a) if to Xxxx:
Xxxx Communications Systems, Inc.
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
(b) if to any Transferor, at its address set forth in the stock
register of Xxxx.
All notices and other communications sent by overnight courier service shall be
deemed to have been given as of the second business day after delivery thereof
to such courier service, those given by facsimile transmission shall be deemed
to have been given when sent, and all notices and other communications sent by
mail shall be deemed to have been given as of the fifth business day after the
date of deposit with the United States Postal Service.
4.02 BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall
be binding on and inure to the benefit of the parties hereto and their
respective legal representatives, heirs, successors and permitted assigns.
Neither the Transferors nor Xxxx may sell, assign, transfer, or otherwise convey
any of its rights or delegate any of its duties under this Agreement, without
the prior written consent of the other.
4.03 AMENDMENTS AND WAIVERS. Neither this Agreement nor any term
hereof may be amended or waived (either generally or in a particular instance
and either retroactively or prospectively) absent the written consent of the
Transferors and Xxxx.
4.04 EXPENSES. Each of the Transferors and Xxxx will be responsible
for the payment of all expenses incurred by it in connection with the
preparation, execution and delivery of this Agreement, any other documents
relating to the transactions contemplated by this Agreement, and the
consummation of the transactions herein described.
4.05 SURVIVAL OF REPRESENTATIONS, ETC. The representations,
warranties, covenants, and agreements made herein or in any certificate or
document executed in connection herewith shall survive the execution and
delivery of this Agreement and the consummation of the
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transactions herein described, regardless of any investigation made at any time
by or on behalf of any of the parties hereto.
4.06 DELAYS OR OMISSIONS; WAIVER. No delay or omission to exercise
any right, power, or remedy accruing to either of the Transferors or Xxxx upon
any breach or default by the other under this Agreement shall impair any such
right, power, or remedy nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring.
4.07 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof, and all
prior negotiations, discussions, commitments, and understandings heretofore had
among them with respect thereto are merged herein.
4.08 COUNTERPARTS; GOVERNING LAW. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Georgia, without giving effect to conflicts of laws, rules or principles.
4.09 FURTHER ACTIONS. At any time and from time to time, each party
agrees, without further consideration, to take such actions and to execute and
deliver such documents as may be reasonably necessary to effectuate the purposes
of this Agreement.
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XXXX COMMUNICATIONS SYSTEMS, INC.
By /s/ Xxxxx X. Xxxx
----------------------------------------
Name: Xxxxx X. Xxxx
Title: V.P. - CFO
TRANSFERORS:
/s/ J. Xxxx Xxxxxxxx
-------------------------------------------
J. Xxxx Xxxxxxxx
/s/ Xxxxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxxxx X. Xxxxxxxx
XXXXXXXX X. XXXXXXXX TRUSTEE U\A 08-25-
84 FBO XXXX X. XXXXXXXX
By: /s/ Xxxxxxxx X. Xxxxxxxx - Trustee
----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Trustee
XXXXXXXX X. XXXXXXXX TRUSTEE U\A 08-25-
84 FBO XXXXX X. XXXXXXXX
By: /s/ Xxxxxxxx X. Xxxxxxxx - Trustee
----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Trustee
GEORGIA CASUALTY AND SURETY CO.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: V. Chairman
BANKERS FIDELITY LIFE INSURANCE CO.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: V. Chairman
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DELTA LIFE INSURANCE COMPANY
By: /s/ J. Xxxx Xxxxxxxx
----------------------------------------
Name: J. Xxxx Xxxxxxxx
Title: President
DELTA FIRE & CASUALTY INSURANCE COMPANY
By: /s/ J. Xxxx Xxxxxxxx
----------------------------------------
Name: J. Xxxx Xxxxxxxx
Title: President
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EXHIBIT A
SERIES A PREFERRED SERIES B PREFERRED SERIES C PREFERRED
NAME STOCK STOCK STOCK
---- ------------------ ------------------ ------------------
J. Xxxx Xxxxxxxx 36.0579 36
Xxxxxxxx X. Xxxxxxxx 54.0868 54
Xxxxxxxx X. Xxxxxxxx Trustee 36.0579 36
U\A 08-25-84 FBO Xxxx X.
Xxxxxxxx
Xxxxxxxx X. Xxxxxxxx Trustee 36.0579 00
X\X 00-00-00 XXX Xxxxx X.
Xxxxxxxx
Georgia Casualty and Surety 175 175
Co.
Bankers Fidelity Life 175 175
Insurance Co.
Delta Life Insurance Company 100 198.3183 298
Delta Fire & Casualty 50 50
Insurance Company
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