EXHIBIT 4.2
SUBSCRIPTION AGREEMENT
To: CPI Aerostructures, Inc.
200A Executive Drive
Edgewood, NY 11717
1. Subject to the terms and conditions hereinafter set forth, the
undersigned, with an address set forth on the signature page attached hereto
(the "Purchaser"), hereby subscribes for and purchases the number of units (the
"Units"), set forth on the signature page hereof, each Unit consisting of (i)
25,000 shares of common stock, par value $.001 per share (the "Common Stock"),
of CPI Aerostructures, Inc. (the "Company"), a New York corporation, with
offices at 200A Executive Drive, Edgewood, NY 11717, and (ii) warrants (the
"Warrants") to purchase 12,500 shares of Common Stock at an exercise price of
$2.00 per share. The Units will be sold at $25,000 per Unit. The Units being
purchased hereby are part of a private placement of an aggregate of 80 Units
(the "Offering").
2. Upon acceptance of this Agreement by the Company, it will issue and
sell to the Purchaser the number of Units subscribed for at a price of $25,000
per Unit. The purchase price for the Units is payable upon execution of this
Agreement in United States Dollars either by bank cashier's check or by wire
transfer payable to the order of the Escrow Agent. Such purchase price shall be
payable against delivery of Common Stock and Warrant certificates in definitive
form which shall be registered in the Purchaser's name.
3. The Purchaser hereby represents that the Purchaser has been
furnished by the Company with all information regarding the Company which the
Purchaser had requested or desired to know, including the Company's Annual
Report on Form 10-KSB, as amended, for the year ended December 31, 1995; Proxy
Statement dated December 11, 1995, relating to its Annual Meeting of
Stockholders held on January 12, 1996; and any Form 10-QSB for any quarter of
the Company's fiscal year ending December 31, 1996, or any Form 8-K, that the
Company filed prior to the dated of this Agreement (collectively the "Public
Documents"), which are exhibits to the Company's Confidential Private Placement
Memorandum dated May 10, 1996 (the "Memorandum"), for the purpose of evaluating
the merits and risks of the purchase of the Units. The Company has also provided
the Purchaser or the Purchaser's representative with an opportunity to meet and
confer with its principals regarding all aspects of the Company's business.
4. The Purchaser is aware that:
(a) An investment in the Units to be sold hereby involves a
high degree of risk and restricted transferability. Accordingly, the Purchaser
acknowledges that the Purchaser can afford a loss of the Purchaser's entire
investment. Neither the United States Securities and Exchange Commission ("SEC")
nor any state agency nor any other agency or authority outside the United
States has passed upon the adequacy or accuracy of this offering or made any
finding or determination as to the fairness of this investment. Any
representation to the contrary is a criminal offense.
(b) Neither the Units nor any of the securities included
therein have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state or the laws or
regulations of any jurisdiction outside the United States. The Units will be
offered and sold in reliance on exemptions from the registration requirements of
these laws, including, but not limited to, Section 4(2) of the Securities Act
and Regulation D promulgated by the SEC thereunder.
Notwithstanding the restricted nature of this investment,
the Company has agreed to file by September 5, 1996, a registration statement to
register the Common Stock included in the Units and the Common Stock issuable
upon exercise of the Warrants in accordance with the terms and conditions for
registration set forth in a Registration Rights Agreement attached as an exhibit
to the Memorandum.
(c) An investment in the Company depends on the Purchaser's
particular circumstances. No information concerning the Company other than that
described above in Section 3, or disclosed herein has been provided to the
Purchaser. The Purchaser is cautioned not to construe this Subscription
Agreement, the Memorandum or any prior or subsequent communications as
constituting legal advice. The Company and its officers, directors, employees
and representatives make no representations or warranties with respect to the
Company except as specifically set forth herein.
(d) This Subscription Agreement does not constitute an offer
to sell the Units to or a solicitation of an offer to buy the Units from anyone
in any state or in any other jurisdiction in which an offer or solicitation is
not authorized.
No other offering literature or advertising in any form
is being employed in the sale and purchase of the Units except for this
Subscription Agreement, the Memorandum and the Public Documents (collectively,
the "Offering Documents"). No person is authorized to give any information or to
make any representation not contained in the Offering Documents. Any
representation not contained herein must not be relied upon as having been
authorized by the Company or its officers. Any distribution or reproduction of
the Offering Documents, in whole or in part, or the divulgence of any of its
contents, without the prior written consent of the Company, is prohibited.
(f) The Purchaser recognizes that: (i) the Purchaser must bear
the economic risk of investment in the Company for an indefinite period of time
since the Units have not been registered under the Securities Act and,
therefore, cannot be sold unless they are subsequently registered under the
Securities Act or an exemption from such registration is available and a
favorable opinion of counsel for the Company to such effect is obtained; (ii)
the Company will place a legend on the certificate(s) evidencing the Common
Stock and Warrants stating that they have not been registered
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under the Securities Act and may not be sold, transferred, pledged, hypothecated
or otherwise disposed of in the absence of either an effective registration
statement or an available exemption from the registration provisions of the
Securities Act; (iii) the Company will instruct its transfer agent to make a
notation in its records with respect to the restrictions on the sale, transfer
or disposition of the Units; and (iv) because of the relatively large number of
shares of Common Stock issuable in this Offering in comparison to the number of
shares currently outstanding and held by the public, this investment in the
Company is not likely to be a fully liquid investment even after registration.
(g) The Purchaser agrees that this subscription is and shall
be irrevocable, but the Purchaser's obligations hereunder will terminate if this
subscription is not accepted by the Company pursuant to the terms contained
herein.
5. The Purchaser represents and warrants to the Company and the
Placement Agent that:
(a) The Purchaser has sufficient available financial resources
to provide adequately for the Purchaser's current needs, including all possible
contingencies, and can bear the economic risk of a complete loss of the
Purchaser's investment hereunder without materially affecting the Purchaser's
financial condition.
(b) The Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of evaluating the
merits and risks of an investment in the Company and of making an informed
investment decision. The Purchaser acknowledges that the Purchaser also has
significant prior investment experience, and that the Purchaser recognizes the
highly speculative nature of this investment.
(c) The Purchaser is familiar with the financial condition and
prospects of the Company's business, has reviewed the Company's most recent
financial statements, has been furnished any materials relating to the Company
and its activities, the sale and purchase of the Units or anything set forth in
this Subscription Agreement which the Purchaser has requested and has been
afforded the opportunity to obtain any additional information necessary to
verify the accuracy of any representations or information set forth in this
Agreement.
(d) The Company, its officers, directors and employees, have
answered all inquiries that the Purchaser has put to them concerning the Company
and its activities and the purchase and sale of the Units.
(e) The Purchaser has not been furnished any offering
literature other than the Offering Documents, and the Purchaser has relied only
on the information contained herein and therein and in the information furnished
or made available to the Purchaser by the Company as described in subparagraphs
(c) and (d) above.
Furthermore, as set forth above, no representations or warranties have
been made to the Purchaser, or to the Purchaser's advisers, by the Company, or
its officers, directors, employees or representatives with respect to the
business of the Company, the financial condition of the Company,
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and/or the economic, tax, or any other aspects or consequences of a purchase of
Units, and the Purchaser has not relied upon any information concerning this
sale and purchase of the Units, written or oral, other than contained in this
Agreement or provided by the Company upon request.
(f) The Purchaser is relying upon the Purchaser's own counsel,
accountant, business advisor(s) and/or others, concerning legal, tax, business
and related aspects of the Purchaser's subscription hereunder and the
Purchaser's investment in the Company.
(g) The Purchaser is acquiring the Units for which the
Purchaser hereby subscribes for the Purchaser's own account, as principal, for
investment purposes only, and no other person has a direct or indirect
beneficial interest in the Units. The Purchaser agrees that the Purchaser will
not sell, transfer or otherwise dispose of any of the Units unless they are
registered under the Securities Act or unless an exemption from such
registration is available.
(h) The Purchaser is not directly or indirectly in any way
affiliated with any entity that is a competitor of the Company, exclusive of an
equity ownership of not more than 5% in any publicly owned corporation.
(i) All of the information which the Purchaser has furnished
to the Company with respect to the Purchaser's financial position and business
experience and all representations provided by the Purchaser are correct and
complete as of the date of this Agreement.
(j) The Purchaser is authorized and qualified to become a
shareholder in, and authorized to make its investment in, the Company and any
person signing this Agreement on behalf of the Purchaser has been authorized to
do so.
(k) The Purchaser understands that neither the Units nor the
securities included therein have been registered under the Securities Act and
that the issuance of the securities is being effectuated pursuant to an
exemption from the registration requirements under the Securities Act, in
accordance with Regulation D, and that reliance on such exemption is based, in
part, upon the information being supplied hereunder by the Purchaser.
(l) All the information which the Purchaser has furnished the
Company with respect to Purchaser's financial position and business experience
is correct and complete as of the date of this Agreement and, if there should be
any material change in such information prior to the consummation of the
Purchaser's investment in the Company, the Purchaser will immediately furnish
such revised or corrected information to the Company.
6. The Company shall give to the Purchaser the registration rights
specified in the Registration Rights Agreement.
7. The representations and warranties of the Purchaser and the Company
contained herein shall survive the delivery of this Agreement, the receipt of
payment for the Units by the Company and the issuance and delivery of the Units.
The Purchaser, on the one hand, and the Company and
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the Placement Agent, on the other, agree to hold each other and their respective
directors, officers, employees, agents, trustees, counsel and controlling
persons (and their respective heirs, representatives, successors and assigns)
harmless and to indemnify them against all liabilities, costs and expenses
incurred by them as a result of any breach by either the Purchaser or the
Company of any such representations and warranties, or as a result of any
violation of any securities laws.
8. The Company hereby makes the following representations, warranties
and covenants to the Purchaser, each of which is true and correct as of the date
hereof:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
all requisite corporate power and authority to own and lease its properties, to
carry on its business as currently conducted and to consummate all of the
transactions contemplated by this Agreement. The Company is duly qualified as a
foreign corporation for the transaction of business and is in good standing as a
foreign corporation in each jurisdiction in which the conduct of its business or
ownership or leasing of its properties requires it to be so qualified, except
where the failure to be so qualified would not have a material adverse effect on
the business, financial condition or prospects of the Company.
(b) The authorized capital stock of the Company consists only
of 10,000,000 shares, $.001 par value, of Common Stock. As of the date hereof,
the issued and outstanding capital stock of the Company consists of 3,728,304
shares of Common Stock. All such issued and outstanding shares of the Company
are duly authorized, validly issued, fully paid and non-assessable.
(c) The Company has all requisite corporate power to enter
into this Agreement and to carry out and perform its obligations under the terms
of this Agreement, including the issuance and delivery of the Units and the
underlying Common Stock. The Company has all requisite power and authority
necessary to own or hold its properties and conduct its business and holds all
licenses, permits and other required authorizations from governmental
authorities necessary for the conduct of its business.
(d) The Company is not in violation or material default under,
nor will its execution, delivery and performance of this Agreement result in a
material violation of, or constitute a material default under, the Certificate
of Incorporation, as amended, or Amended and Restated Bylaws of the Company or
any instrument of indebtedness, mortgage or security agreement, lease or other
agreement or instrument to which the Company is a party or by which it or any of
its properties may be bound.
(e) There are no pending or threatened legal or governmental
proceedings to which the Company is a party which could materially and adversely
affect the business, property, financial condition or operations of the Company.
(f) The Units and the reservation of the underlying Common
Stock have been duly and validly authorized and, when issued and paid for in
accordance with the terms of this Agreement, all such securities will be fully
paid and nonassessable.
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(g) This Agreement is a legal, valid and binding agreement of
the Company enforceable in accordance with its terms except as enforceability
may be limited by bankruptcy, insolvency or other laws affecting the rights of
creditors generally or by equitable principles.
(h) With respect to the Company, this Agreement and the
Offering Documents do not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
9. The Purchaser agrees that the Purchaser cannot cancel, terminate or
revoke this Agreement or any of the Purchaser's agreements hereunder and that
this Agreement is not transferable or assignable by the Purchaser; provided,
however, the obligation hereunder will terminate if this subscription is not
accepted by the Company pursuant to the terms contained herein.
10. The primary application of the proceeds to be realized by the Company
in the Offering will be for repayment of the Company's indebtedness to Chrysler
Capital Corporation, with the balance, if any, for working capital purposes.
11. Miscellaneous.
(a) All notices or other communications given or made
hereunder shall be in writing and shall be delivered by hand, against written
receipt, sent by overnight courier service or mailed by registered or certified
mail, return receipt requested, postage prepaid, to the Purchaser at the
Purchaser's address set forth below and to the Company at its address set forth
above. Notices shall be deemed given on the date of receipt or, if mailed, five
business days after mailing, except notices of change of address, which shall be
deemed given when received.
(b) Notwithstanding the place where this Agreement may be
executed by the Purchaser or the Company, the parties agree that all the terms
and provisions hereof shall be construed in accordance with and governed by the
laws of the State of Florida without regard to principles of conflict of laws.
(c) This Agreement constitutes the entire agreement between
the Purchaser and the Company with respect to the subject matter hereof and may
be amended only by a writing executed by each of them.
(d) If the Purchaser is more than one person, the obligations
of the Purchaser shall be joint and several and the representations and
warranties herein contained shall be deemed to be made by, and be binding upon
each such person and such person's heirs, executors, administrators, successors
and assigns. This Agreement shall be binding upon and inure to the benefit of
each of the Purchaser and the Company and their respective heirs, legal
representatives, successors and assigns.
(e) The Purchaser and the Company each hereby submit to the
exclusive jurisdiction of the courts of the State of Florida located in Miami,
Florida, and of the federal courts located in
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the Miami, Florida, with respect to any action or legal proceeding commenced by
either of them with respect to this Agreement or to the Units. Each of them
irrevocably waives any objection they now have or hereafter may have respecting
the venue of any such action or proceeding brought in such a court or respecting
the fact that such court is an inconvenient forum and consents to the service of
process in any such action or proceeding by means of registered or certified
mail, return receipt requested, in care of the address set forth above or below
or at such other address as either of them shall furnish in writing to the
other.
(f) The Purchaser and the Company each hereby waive trial by
jury in any action or proceeding involving any matter (whether sounding in tort,
contract, fraud or otherwise) in any way arising out of or relating to this
Agreement or to the Units.
(g) In order to discourage frivolous claims, should it become
necessary for any party to institute legal action to enforce the terms and
conditions of this Agreement, the successful party will be awarded reasonable
attorneys' fees at all trial and appellate levels, expenses and costs.
(h) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(i) The waiver by either the Purchaser or the Company of a
breach of any provision of this Agreement shall not operate, or be construed, as
a waiver of any subsequent breach of any provision of this Agreement.
(j) The Purchaser and the Company agree to execute and deliver
all further documents, agreements and instruments and to take such other further
action as may be necessary or appropriate to carry out the purposes and intent
of this Agreement.
(k) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
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IN WITNESS WHEREOF, the Purchaser has signed this Subscription
Agreement as of the date indicated below.
Dated:__________________ , 1996
Number of Units
subscribed for: __________.
Amount of check enclosed: $____________ .
Dated:_______________ , 1996
____________________________________
Signature of Investor
(Name of Investor - Please Print)
____________________________________
Social Security Number of Investor
____________________________________
____________________________________
Address of Investor
____________________________________
Signature of Investor
(Name of Investor - Please Print)
Note: If two investors are signing, please check the manner in which the
ownership is to be legally held (the indicated manner shall be construed as if
written out in full accordance with applicable laws or regulations):
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_____ JT TEN: As joint tenants with right of survivorship and not
as tenants in common.
_____ TEN COM: As tenants in common.
_____ TEN ENT: As tenants by the entireties.
Accepted:
Dated: June 17, 1996
CPI Aerostructures, Inc.
By:_____________________
Arthur August
President
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SPECIAL EXECUTION PAGE FOR SUBSCRIPTION BY AN ENTITY
(Not applicable to subscriptions by individuals)
IN WITNESS WHEREOF, subject to acceptance by the Company, the
undersigned has completed this Subscription Agreement to evidence its
subscription to CPI Aerostructures, Inc., on this___ day of__________ , 1996.
Amount of Commitment
$_____________ for___________ Units
____ TRUST -- (Include copy of trust
agreement)
____ CORPORATION -- (Attach certified corporate resolution authorizing
signature and a copy of the articles of incorporation)
____ PARTNERSHIP -- (Attach a copy of the partnership agreement)
(Please print the following information exactly as you wish it to appear on the
Company records.)
______________________________ ____________________________
(Name of Subscriber) (Address)
______________________________ _____________________________
(Tax Identification Number)
______________________________ _____________________________
(Telephone)
The undersigned trustee, partner or corporate officer certifies that he
has full power and authority from the beneficiaries, partners or directors of
the entity named below to execute this Subscription Agreement on behalf of the
entity and to make the representations and warranties made herein on their
behalf and that investment in the Company has been affirmatively authorized by
the governing board of such entity and is not prohibited by the governing
documents of the entity.
Dated:______________, 1996 ___________________________________________
(Print Name of Entity)
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________________________________
(Print Name and Capacity)
By:_____________________________________
(Signature of authorized trustee,
partner, or corporate officer)
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CORPORATE ACKNOWLEDGMENT
STATE OF )
) ss.:
COUNTY OF )
On this ______ day of ____________ , 1996, before me personally came
________________ to be known, being by me duly sworn, did acknowledge that he
resides at _________ , that he is the __________ of ___________ , the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
----------------------------------
Notary Public
PARTNERSHIP ACKNOWLEDGMENT
STATE OF )
) ss.:
COUNTY OF )
On this ________ day of ___________ , 1996, before me personally came
___________ to be known, to be a partner in ___________ , a partnership, and
known to be the person described in and who executed the foregoing instrument in
the partnership name, and said ______________ duly acknowledged that he executed
the foregoing instrument on behalf of said partnership.
----------------------------------
Notary Public
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CERTAIN NOTICES UNDER STATE SECURITIES LAWS
BLUE SKY NOTICES
ALL STATES
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH, OR
APPROVED OR DISAPPROVED BY, THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
FOR FLORIDA RESIDENTS ONLY
PURSUANT TO SECTION 517.061(11)(a)(5) OF THE FLORIDA SECURITIES ACT,
YOU HAVE A RIGHT TO RESCIND YOUR SUBSCRIPTION BY GIVING NOTICE OF SUCH
RESCISSION BY TELEPHONE, TELEGRAPH OR LETTER, WITHIN THREE DAYS AFTER YOU FIRST
TENDER CONSIDERATION, TO CPI AEROSTRUCTURES, INC. IF NOTICE IS NOT RECEIVED BY
SUCH TIME, THE FOREGOING RIGHT OF RESCISSION SHALL BE NULL AND VOID.
FOR PENNSYLVANIA RESIDENTS
EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM
REGISTRATION BY SECTION 203(d) DIRECTLY FROM AN ISSUER OR AFFILIATE OF AN ISSUER
SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY
TO THE SELLER, UNDERWRITER (IF ANY) OR ANY PERSON, WITHIN TWO BUSINESS DAYS FROM
THE DATE OF RECEIPT BY THE ISSUER
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OF HIS WRITTEN BINDING CONTRACT OF PURCHASE, OR, IN THE CASE OF A TRANSACTION IN
WHICH THERE IS NO WRITTEN BINDING CONTRACT OF PURCHASE, WITHIN TWO BUSINESS DAYS
AFTER HE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED.
YOUR WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO
ACCOMPLISH THIS WITHDRAWAL, YOU NEED ONLY SEND A LETTER OR TELEGRAM TO THE
ISSUER (OR UNDERWRITER) INDICATING YOUR INTENTION TO WITHDRAW. SUCH LETTER OR
TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED
SECOND BUSINESS DAY. IF YOU ARE SENDING A LETTER, IT IS PRUDENT TO SEND IT BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO
TO EVIDENCE THE TIME WHEN IT WAS MAILED. SHOULD YOU MAKE THE REQUEST ORALLY, YOU
SHOULD ASK FOR WRITTEN CONFIRMATION THAT YOUR REQUEST HAS BEEN RECEIVED.
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