EXHIBIT 10.2
PLEASE READ CAREFULLY BEFORE SIGNING
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SUBSCRIPTION AGREEMENT
BCT International, Inc.
3000 N.E. 30th Place
Fort Lauderdale, Florida 33306-1957
PURCHASE OF _______ SHARE OF
PREFERRED STOCK OF BCT INTERNATIONAL, INC.
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Gentlemen:
The undersigned (individually or collectively, as the case may be, referred to
as "Investor") hereby represents, warrants, covenants and agrees to the
following:
1. Subscription; Offering. Investor hereby agrees to purchase ______ shares
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(the "Shares") of Series B Convertible Preferred Stock, $1.00 par value (the
"Preferred Stock"), of BCT International, Inc. (the "Company") at a price of
$1.00 per Share and upon the terms and conditions set forth herein. The purchase
price shall be tendered immediately upon execution of this Agreement by
Investor. This Agreement shall become effective when it has been executed and
delivered, together with the purchase price, by Investor and accepted by the
Company. This subscription is made pursuant to a private offering by the Company
of up to 2,500,000 shares of Preferred Stock. The net proceeds of the Offering
will be used by the Company (i) to pay off some or all of the Company's Series A
Convertible Subordinated Debentures due March 31, 1994, the principal amount of
which is $1,777,000 as of February 1, 1994, and (ii) to the extent that Offering
proceeds remain available after the Debentures are paid in full, for general
working capital. A Commission equal to 5% of the gross proceeds of the Offering
will be paid to the Company's placement agent, Barber & Bronson, Inc., Fort
Lauderdale, Florida ("BBI"), to the extent that such proceeds are procured
through BBI. Simultaneous with the issuance of the Shares, Investor shall
receive Class B warrants (the "Warrants") to purchase ______ shares of the
Company's $.04 par value common stock (the "Common Stock"), representing one
Warrant for each 2.25 Shares of Preferred Stock purchased. BBI will also receive
a commission equal to 5% of the gross proceeds of the exercise of Warrants by
investors procured through BBI. See section 5 below for a description of the
Preferred Stock and the Warrants.
2. Investment Purpose. Investor hereby represents that the Shares and
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Warrants are being acquired solely for his account and for investment purposes
only, within the meaning of the Securities Act of 1993 and the rules and
regulations thereunder, as amended (the "1933 Act"), and that he has no plan,
intention, contract, understanding, agreement or arrangement with any person to
sell, assign, pledge, hypothecate or otherwise transfer to any person the
Shares, the Warrants or any part thereof.
3. Risk Factors. Investor understands that his investment in the Shares and
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Warrants is speculative and involves a high degree of risk. Investor has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of investments generally and of
his investment
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in the Shares and Warrants in particular and is ABLE TO BEAR THE ECONOMIC RISK
OF THIS INVESTMENT WITH FULL UNDERSTANDING THAT HE MAY LOSE HIS ENTIRE
INVESTMENT. In particular, Investor recognizes and understands that:
(a) Equity Risk. The Shares are equity, and not debt, instruments, and
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therefore the Company is not legally required to pay dividends and/or redeem the
Shares in the event that, at the time of a scheduled payment, (i) the Company's
capital surplus and/or profits are insufficient or (ii) in the good faith
judgment of the Company's Board of Directors, the Company has insufficient funds
with which to make the payment given the Company's other needs. In the event of
a liquidation of the Company, all of the Company's creditors and Senior
Preferred Stock holders (see item 3(b) below) must be paid in full before any
payments may be made on account of the Shares. Under Delaware law, dividends may
be paid only out of the Company's capital surplus or profits from the then
current or prior fiscal year, and stock may be redeemed only to the extent that
the Company's capital is not impaired and the redemption payment will not impair
capital.
(b) Subordination to Senior Preferred Stock. Payment of dividends on the
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Preferred Stock as well as redemption payments and payments on liquidation of
the Company are subordinate to the prior payment of all amounts due on the
Company's $1.00 par value Series A Convertible Preferred Stock, which consists
of 810,000 shares (750,000 issued in May 1992 and 60,000 issued in February
1994) bearing a 12% annual dividend payable quarterly, with redemption scheduled
for five years from the date of issuance (the Senior Preferred Stock").
(c) Operating History. Although the Company has operated profitably since the
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beginning of the fiscal year ended February 28, 1993, reversing major losses in
the fiscal year ended in February 1992, 1991, respectively, this recent
improvement in the Company's operating results may not be indicative of future
results. Further, the Company continues to suffer from a shortage of liquidity
and working capital due to its growth and other factors, and there can be no
assurances that this shortage will be eliminated.
(d) Control. The Company's current officers and director own a majority of the
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Company's Common Stock, and, accordingly, for the forseeable future those
persons will be able to continue to elect the entire Board of Directors and
otherwise control the Company.
(e) Lack of Public Market for Preferred Stock. No public trading market is
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expected to develop for the Preferred Stock. The sale, transfer or other
disposition of the Preferred Stock or underlying Common Stock and Warrants is
substantially restricted and may not be made unless the securities are
registered under the 1933 Act unless their resale is exempt therefrom.
(f) Thin Public Market for Common Stock. Although the Company's Common Stock
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is publicly traded on the NASDAQ Stock Market, the Common Stock historically has
registered low trading volume and, consequently, the price of the Common Stock
has been quite volatile. Further, pursuant to NASDAQ rules, the Company's
Common Stock could be delisted in the event that its equity, stock price or
certain other indicators fail to meet minimum NASDAQ standards. A delisting
would severely reduce the already limited liquidity of the Common Stock.
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4. Disclosure. Investor acknowledges that the executive officers and
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directors of the Company have provided him with access to all material books and
records of the Company, including but not limited to all material contracts and
accounting records of the Company, and otherwise have provided him with access
to such information concerning the Company and its affairs as is necessary in
order for him to evaluate the merits and risks of his investment in the Shares
and Warrants. Investor also acknowledges that the Company has given him the
opportunity to ask questions of and receive answers from the directors and the
executive officers of the Company and other persons acting on their behalf
concerning the terms and conditions of the offer to him of the Shares and
Warrants and to obtain any additional information concerning the Company, to the
extent that the directors, executive officers and others possess such
information or can acquire it without unreasonable effort or expense so that he
can verify the accuracy of the information given to him at the time of the offer
and his purchase of the Shares and Warrants. Investor further acknowledges
receipt of, and confirms that he has reviewed and understood, the following
documents relating to the Company: (i) 1993 Annual Report to Shareholders; (ii)
1993 Form 10-K as filed with the Securities and Exchange Commission; (iii) 1993
annual proxy statement; and (iv) Form 10-Q Reports as filed with the Securities
and Exchange Commission for the quarters ended May 31, August 31 and November
30, 1993.
5. Description of Preferred Stock and Warrants. Investor understands the
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rights of holders of the Preferred Stock and Warrants, which are set forth in
the Certificate of Designations, Preferences and Rights of the Preferred Stock
attached hereto as Exhibit "A" and the form of Warrant attached hereto as
Exhibit "B" both of which Investor has read and understood. These rights are
summarized as follows:
(a) Dividend Rights. Holders of shares of Preferred Stock are entitled to
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receive, when and as declared by the Company's Board of Directors out of the
funds of the Company legally available for the payment of dividends, cash
dividends at the rate of $.09 per share (9%) per annum, payable quarterly on the
1st day of each of January, April, July and October. Dividends on the Preferred
Stock are cumulative and accrue from the date of original issue. No interest
will be paid by the Company on dividends in arrears. No cash dividend may be
declared and paid or set apart for payment upon the Company's Common Stock until
any past quarterly dividend on the Preferred Stock has been fully paid or
declared and set apart for payment.
(b) Voting Rights. The Preferred Stock will have no voting rights, except with
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respect to action affecting the terms or priority of the Preferred Stock, in
which case a majority vote of the outstanding Preferred Stock, voting as a
class, will be required to approve such action.
(c) Liquidation Rights. In the event of a voluntary or involuntary liquidation
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of the Company, the holders of Preferred Stock will be entitled to receive $1.00
per share plus all accrued and unpaid dividends before any distribution is made
to the holders of the Company's Common Stock or any other class or series of
stock ranking junior to the Preferred Stock as to distribution of assets.
(d) Preemptive Rights. Holders of Preferred Stock will have no preemptive
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right to purchase any securities of the Company.
(e) Conversion; Redemption. The Preferred Stock will be convertible into the
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Company's Common Stock at a ratio of 2.25 shares of Preferred Stock for each
share of Common Stock (the "Conversion Ratio"). The Company may require
conversion at the conversion ratio beginning six months after the date of
issuance in the event that the Common Stock's closing bid price or last sale
price as reported by NASDAQ is at or above
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$3.50 per share for 20 consecutive trading days. If the Preferred Stock is not
converted within three years of issuance, it shall be redeemed by the Company at
a price of $1.00 per share, plus all accrued and unpaid dividends, to the extent
that funds are legally available therefor.
(f) Subordination to Senior Preferred Stock. No payments (whether dividend,
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redemption or liquidation payments) may be made on account of the Preferred
Stock if at the time scheduled for such payments any amount is due but unpaid
with respect to the Senior Preferred Stock.
(g) Warrants. Each Warrant shall entitle Investor to purchase one share of
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Common Stock for three years from the date of issuance at an exercise price of
$3.00 per share. The Warrants may be redeemed by the Company, at its option,
beginning six months after the date of issuance, at a price of $.05 each in the
event that the Common Stock's closing bid price or last sale price is at or
above $3.50 for 20 consecutive trading days.
6. Restrictions on Transfer. Investor is aware of the fact that neither the
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Shares nor the Common Stock into which they are convertible (the "Conversion
Stock") nor the Warrants or the Common Stock issuable upon their exercise have
been registered nor is registration contemplated under the 1933 Act, and
accordingly, that such Shares, Warrants and underlying securities must be held
until they are subsequently registered under said Act or unless, in the opinion
of counsel for the Company, a sale or transfer may be made without registration
thereunder. Investor agrees that any certificate evidencing the Shares,
Warrants or underlying securities will bear a legend restricting the transfer
thereof consistent with the foregoing and that a notation will be made in the
records of the Company restricting the transfer thereof consistent with the
foregoing.
7. Private Offering. Investor acknowledges that neither the Company nor any
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person acting on behalf of the Company offered to sell the Shares or Warrants by
means of any form of general advertising, including but not limited to media
advertising or seminars.
8. Suitability of Investment. Investor, after carefully reviewing the merits
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and risks of his proposed investment in the Shares and Warrants, including those
risks described in the Disclosure Documents and herein, together with those
risks particular to his personal situation, has determined that this investment
is suitable for him. Investor has adequate financial resources for an
investment of this character, and at this time Investor could bear a complete
loss of his investment. Further, Investor will continue to have, after making
his investment in the Shares and Warrants, adequate means of providing for his
current needs, the needs of those dependent on him, and possible personal
contingencies and will have no need to liquidate his investment in the Shares
and Warrants for an indefinite period of time. Investor's overall commitment to
investments which are not readily marketable is not disproportionate to
Investor's net worth.
9. Unregistered Offering. Investor understands that the Shares and Warrants
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are not being registered, and the Company has no intention of registering the
Shares and Warrants under, the 1933 Act on the basis that the offering of the
Shares and Warrants is exempt from registration under the 1933 Act as a
"transaction by an issuer not involving any public offering" and that reliance
on such exemption is predicated, in part, on Investor's representations and
warranties contained in this Subscription Agreement and those of other
purchasers of the Shares and Warrants. In the view of the SEC, the statutory
basis for the exemption claimed by the Company in connection with the offering
of Shares and Warrants would not be present if,
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notwithstanding Investor's representations and warranties (or the
representations and warranties of other subscribers), Investor has (or they
have) the intention of acquiring the Shares or Warrants for resale upon the
occurrence or nonoccurrence of some predetermined event.
10. Absence of Official Evaluation. Investor understands that no federal or
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state agency has made any findings or determinations as to the fairness of the
terms of an investment in the Shares and Warrants nor any recommendation or
endorsement of a purchase of the Shares and Warrants.
11. Residence. If Investor is an individual, his principal residence is in
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the country and state or other jurisdiction indicated, and his citizenship is as
indicated at Item I.5, page 2, of the Purchaser Questionnaire. If Investor is a
corporation, partnership, trust, estate, or other entity, its principal office
is in the country and state or other jurisdiction indicated at Item III.4, page
3, of the Purchaser Questionnaire. Investor has no intention of changing his
residence, citizenship, or principal office to any other country or state or
jurisdiction.
12. Accpetance. Investor acknowledges that the Company shall, in its sole
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discretion, have the right to accept or reject his subscription, in whole or in
part, for any reason or for no reason. If Investor's subscription is accepted
by the Company, he shall, and he hereby agrees to, execute any and all
additional documents necessary in the opinion of the Company to complete his
subscription and acquisition of the Shares and Warrants.
13. Purchaser Questionnaire. Investor understands that acceptance of his
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subscription is based, in part, on the information set forth in the Purchaser
Questionnaire attached hereto. Investor represents that the information set
forth in the Purchaser Questionnaire is true, correct, and complete at the date
hereof and agrees to notify the Company immediately of any material change in
such information. Investor understands that the information furnished in
response to such questionnaire is intended to enable the Company to discharge
its responsibilities under the private placement exemption of the 1933 Act and
certain state securities laws and that the Company will rely upon such
information.
Investor understands and agrees that, although the Company will use its best
efforts to keep the information provided in the Questionnaire strictly
confidential, the Company may present the Questionnaire and the information
provided in answers to it to such parties as he may deem advisable if called
upon to establish the availability under any federal or state securities laws of
an exemption from registration or if the contents thereof are relevant to any
issue in any action, suit or proceeding to which the Company is a party, or by
which the Company is or may be bound.
14. Entity as Investor. If the Investor is a corporation, partnership, trust
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or other entity (i) it is
authorized and qualified to make its investment in the Shares and Warrants by
the Articles (or Certificate)
of Incorporation and Bylaws of the corporation or by the trust or partnership
agreement, as the case may be; (ii) it has not been formed for the specific
purpose of acquiring an interest in the Shares and Warrants and it has
substantial business activities in addition to the investment in the Shares and
Warrants; (iii) it has not been in existence for less than 90 days prior to the
date hereof; (iv) the person signing this Subscription Agreement on behalf of
such entity has been duly authorized by such entity to do so; and (v) on a
consolidated basis, it meets the net worth requirements, as evidenced in its
most recent financial statement,
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for an investment in the Shares and Warrants. An Investor corporation, upon
request of the Company or counsel to the Company, shall furnish the Company a
true and correct copy of the provisions of the corporation's Articles (or
Certificate) of Incorporation or Bylaws, or both, authorizing the corporation to
make such investment, and shall supply herewith a copy (certified by the
secretary or other authorized officer) of appropriate corporate resolutions
authorizing the specific investment. In the case of a trust or partnership, the
trustee or managing partner, as the case may be, shall supply herewith a true
and correct copy of the provisions of the trust instrument or partnership
agreement authorizing the trustee or managing partner to make such investment on
behalf of the trust or partnership.
If the Investor is an individual retirement account or annuity, Keogh plan, or
pension, profit sharing, retirement, or other employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974 (a
"Plan"), the Investor has so advised the Company by checking the following
_______ [check if applicable] and the undersigned's decision to invest in the
Shares and Warrants was made by a duly authorized person who is independent of
the Company and its affiliates, and who did not receive any advise or
recommendation from the Company or its affiliates based upon the particular
facts and circumstances of the Plan or its beneficiaries.
15. Nonreliance. Investor is not relying on the Company or any of its
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officers, directors or agents with respect to the tax and/or economic effect if
his investment in the Shares and Warrants. Except as set forth in the
Disclosure Documents or herein, no representations or warranties have been made
to Investor by the Company or any agent, employee or affiliate thereof and in
entering into this transaction Investor is not relying upon information other
than that contained in the Disclosure Documents or herein and the results of his
own independent investigation.
16. Prohibitions on Cancellation Termination, Revocation, Transferability and
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Assignment. Investor hereby acknowledges and agrees that, except as may be
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specifically provided herein or by applicable law, he is not entitled to cancel,
terminate, or revoke this Subscription Agreement or his subscription set forth
herein, and this Subscription Agreement shall survive his death or disability or
any assignment of his Shares and Warrants. He further agrees that he may not
transfer or assign his rights under this Subscription Agreement, and
transferability of the Shares and Warrants will be restricted.
17. Indemnification of the Company. Investor agrees to indemnify and hold
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harmless the Company and its officers, directors, employees, agents,
representatives and affiliates against any and all loss, liability, claim,
damage, and expenses whatsoever (including, but not limited to, any and all
attorneys' fees and expenses reasonably incurred in investigating, preparing, or
defending against any litigation commenced or threatened, or any claim
whatsoever, through all appeals) arising out of or based upon any false
representation or warranty by Investor or breach or failure by Investor to
comply with any covenant or agreement made by him herein or in any other
document furnished by him in connection with his subscription to purchase the
Shares and Warrants.
18. Representation of Florida Resident. If Investor is a Florida resident, he
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agrees as follows: the Shares and Warrants referred to in this Subscription
Agreement are being sold to and acquired by him in a transaction exempt from
registration under Section 517.061 (11), Florida Statutes. He understands that
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the offering of Shares and Warrants has not been registered under said statute
and that he has the privilege to void his purchase of the Shares and Warrants
within three days after the first tender of consideration is made
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by him to the Company or within three days after the availability of this
privilege is communicated to him, whichever occurs later.
19. Notification, Discharge, Termination. Neither this Subscription Agreement
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nor any provisions hereof may be modified, discharged, or terminated except by
an instrument in writing signed by the party against whom any waiver, change,
discharge, or termination is sought.
20. Notices. Any notice, demand, or other communication that any party hereto
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may be required, or may elect, to give to anyone interested hereunder shall be
in writing and shall be sufficiently given if (a) deposited, postage prepaid, in
United States mail, registered or certified, return receipt requested, addressed
to such address as may be given herein; or (b) delivered personally or by fax at
such address.
21. Separate Signature Pages. This Subscription Agreement may be executed
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through the use of separate signature pages or in any number of counterparts,
and each of such counterparts shall, for all purposes, constitute one agreement
binding on all the parties, notwithstanding that all parties are not signatories
to the same counterpart.
22. Successors and Assigns. Except as otherwise provided herein, this
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Subscription Agreement shall be binding upon and inure to the benefit of
Investor and his heirs, executors, administrators, successors, legal
representatives, and assigns. If Investor is more than one person, the
obligations of Investor shall be joint and several and the agreements,
representations, warranties, and acknowledgments herein contained shall be
deemed to be made by and be binding upon each such person and his heirs,
executors, successors, administrators, legal representatives and assigns.
23. Survival of Representations, Warranties, Covenants and Agreements. The
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representations, warranties, covenants and agreements contained herein shall
survive Investor's payment for the Shares, acceptance by the Company of his
subscription to purchase the Shares, and the delivery of the Shares and
Warrants.
24. Entire Agreement. This Subscription Agreement contains the entire
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agreement of the parties, and there are no representations, covenants, or other
agreements except as stated or referred to herein.
25. Governing Law. This Subscription Agreement shall be governed by and
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construed in accordance with the laws of the State of Florida, both substantive
and remedial.
26. Severability. If any provision of this Subscription Agreement shall be
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held to be void or unenforceable under the laws of any jurisdiction governing
its construction or enforcement, this Subscription Agreement shall not be void
or vitiated thereby, but shall be construed to be in force with the same effect
as though such provision were omitted.
27. Section Headings. The section headings contained herein are for reference
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purposes only and shall not in any way affect the meaning or interpretation of
this Subscription Agreement.
28. Gender. Whenever (i) the singular or plural number, or (ii) the
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masculine, feminine or neuter gender is used herein, it shall equally include
the others and shall apply jointly and severally, where the context so requires.
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29. Subscription Procedure. To subscribe for the Shares the Investor must fill
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in the following blanks and complete, execute and deliver this Subscription
Agreement and the following specified documents to the Company:
a. Number of Shares purchased:____________________.
b. Number of Warrants acquired:___________________.
c. Please indicate how to register the Shares and Warrants.
i._____________________________ investor's name alone.
ii.____________________________ Tenants in Common.
(All parties must sign all required documents).
iii.___________________________ Other (please indicate)__________.
d. The Purchaser Questionnaire must be completed and returned.
e. A check in the amount of $________, payable to the Company, must be
delivered with this completed Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement
this ____ day of ____________, 1994.
ENTITY SUBSCRIBER SIGN HERE: INDIVIDUAL SUBSCRIBER SIGN HERE:
___________________________________ __________________________________
Name of Subscriber Signature
__________________________________
Name of Subsccriber
By:________________________________ Address:__________________________
___________________________________ __________________________________
Name and Title of Person Signing __________________________________
Fax No.___________________________
Address:___________________________ Social Security Number
___________________________________ __________________________________
___________________________________
Fax No.____________________________
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Tax Indentification Number
____________________________________ __________________________________
Signature of Joint Subscriber (if
purchased as tenants in common,
joint tenants, tenants by the
entirety or community property)
__________________________________
Name of Joint Subscriber
Address:__________________________
__________________________________
__________________________________
Fax No.___________________________
Social Security Number
__________________________________
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ACCEPTANCE
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The subscriber of ______________________ to purchase ______________________
Shares of Series B Convertible Preferred Stock of BCT INTERNATIONAL, INC., is
hereby accepted this _______ day of ____________, 1994.
BCT INTERNATIONAL, INC.
By:___________________________
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