EXHIBIT 10.0
STOCK SUBSCRIPTION AGREEMENT
This Stock Subscription Agreement (the "Agreement") is made
and entered into as of September 27, 2000 between HCI Direct, Inc., a Delaware
corporation (the "Company"), and Kelso Investment Associates V, L.P. ("KIA V")
and Kelso Equity Partners V, .P. ("KEP V" and together with KIA V, "Kelso" or
the "Investor").
WHEREAS, the Investor desires to subscribe for and purchase,
and the Company desires to sell to the Investor, the number of shares of
Pay-In-Kind Preferred Stock, par value $.01 per share (the "PIK Preferred
Stock") at the purchase price described in Section 1 herein, and on the other
terms and conditions specified herein.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, representations and warranties herein contained, the Investor and the
Company hereby agree as follows:
1. Purchase and Sale of the Shares.
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(a) Purchase and Sale of the Shares. Subject to all the terms
and conditions of this Agreement and in reliance upon the representations and
warranties contained herein, the Investor hereby subscribes for and shall
purchase, and the Company shall sell to the Investor, at the Closing (as defined
below) provided for in Section 2(a) hereof, 499,900 shares of PIK Preferred
Stock, at a price of $10 per share (the "Shares") for an aggregate price of
$4,999,000. Notwithstanding anything in this Agreement to the contrary, the
Company shall have no obligation to sell any Shares to any person who is a
resident of a jurisdiction in which the sale of shares of the PIK Preferred
Stock or Series A Preferred Stock to him would constitute a violation of the
securities, "blue sky" or other similar laws or such jurisdiction.
(b) Consideration. Subject to all of the terms and conditions
of this Agreement, at the Closing provided for in Section 2(a) hereof, the
Investor shall purchase the Shares by delivering to the Company aggregate
consideration in cash in an amount (the "Consideration Amount") equal to
$4,999,000.
2. Closing.
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(a) Delivery by the Company. Against delivery of the
Consideration Amount, the Company will deliver to the Investor stock
certificate(s) registered in the Investor's name and representing the Shares,
which certificate(s) shall bear the legend set forth in the Letter Agreement,
dated as of October 17, 1994, by and among the Company, KIA V, KEP V.
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(b) Delivery by the Investor. On or prior to September 28,
2000 (the "Closing"), the Investor will deliver the Consideration Amount as
provided in Section 1(b) hereof.
3. Representations and Warranties.
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The Investor represents and warrants as of the date hereof, and as of the
Closing hereunder, as follows:
(a) Investment Intention.
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The Investor is acquiring the Shares solely for the Investor's own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof.
(b) Federal Securities Laws Matters. The Investor acknowledges
receipt of advice from the Company that (i) the Shares have not been registered
under the Securities Act of 1933 (the "Securities Act"), (ii) the Shares must be
held indefinitely and the Investor must continue to bear the economic risk of
the investment in the Shares, unless such Shares are subsequently registered
under the Securities Act, or an exemption from such registration is available,
(iii) it is not anticipated that there will be any public market for the Shares
in the foreseeable future, (iv) Rule 144 promulgated under the Securities Act is
not presently available with respect to the sales of any securities of the
Company, including the Shares, and the Company has made no covenant to make such
rule available and such rule is not anticipated to be available in the
foreseeable future, (v) when and if the Shares may be disposed of without
registration in reliance upon Rule 144, such disposition can be made only in
limited amounts and in accordance with the terms and conditions of such rule,
(vi) if the exemption afforded by Rule 144 is not available, public sale of the
Shares without registration will require the availability of an exemption under
the Securities Act, (vii) the restrictive legend in the form set forth below
shall be placed on the certificate(s) representing the Shares and (viii) a
notation shall be made in the appropriate records of the Company indicating that
the Shares are subject to restrictions on transfer and, if the Company should in
the future engage the services of a stock transfer agent, appropriate
stop-transfer restrictions will be issued to such transfer agent with respect to
the Shares.
(c) Investor Status. Either (i) the Investor is an "accredited
investor" as such term is defined in Rule 501(a) promulgated under the
Securities Act or (ii) (A) the Investor's financial situation is such that the
Investor can afford to bear the economic risk of holding the Shares for an
indefinite period of time, (B) the Investor can afford to suffer complete loss
of his investment in the Shares, (C) the Investor's knowledge and experience in
financial and business matters are such that the Investor is capable of
evaluating the merits and risks of the Investor's investment in the Shares, and
(D) the Investor understands and has taken cognizance of all the risk factors
related to purchase of the Shares.
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(d) Due Execution and Delivery. The Investor has duly executed
and delivered this Agreement; this Agreement constitutes legal, valid and
binding obligations of the Investor, enforceable in accordance with its terms;
and no consent, approval, authorization, order, filing, registration or
qualification of or with any court, governmental authority or third person is
required to be obtained by the Investor in connection with the execution and
delivery of this Agreement or the performance of the Investor's obligations
hereunder.
(e) Agreement to Be Bound. Pursuant to the Stockholders
Agreement, dated as of October 17, 1994 (the "Stockholders Agreement"), among
the Corporation, Kelso and certain other stockholders, the Investor agrees to be
bound to the terms of the Stockholders Agreement in connection with the purchase
of the Shares.
4. Representations and Warranties of the Company.
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The Company represents and warrants to the Investor as of the date hereof, and
as of the Closing hereunder, as follows:
(a) Corporate Form. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now conducted.
(b) Corporate Authority. The Company has all requisite
corporate power and authority to enter into and perform all of its obligations
under this Agreement and to issue the Shares and to carry out the transactions
contemplated hereby. The Shares, when issued, delivered and paid for in
accordance with the terms hereof, will be duly and validly issued, fully paid
and nonassessable.
(c) Actions Authorized. The Company has taken all corporate
actions necessary to authorize it to enter into and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and
constitutes legal, valid and binding obligations of the Company enforceable in
accordance with its terms.
(d) Required Filings and Approvals. The execution and delivery
of this Agreement by the Company and the consummation of the transactions
contemplated hereby by the Company do not require a consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority on the part of the Company, other than the filings,
registrations or qualifications that may be required under (i) Regulation D
under the Securities Act and (ii) the state securities laws or "blue sky" laws
of any state of the United States of America that may be required to be made or
obtained, all of which the Company will comply with prior to the date of the
Closing.
(e) No Conflicts. None of the execution, delivery or
performance of this Agreement by the Company will conflict with the Restated
Certificate of Incorporation or the By-laws of the Company, in each case as in
effect as of the Closing, or result in any material breach of, or constitute a
material default under any material contract, agreement or instrument to which
the Company is a party or by which it or any of its assets is bound.
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5. Miscellaneous.
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(a) Binding Effect; Benefits. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person other than the
parties to this Agreement and their respective successors or permitted assigns
any legal or equitable right, remedy or claim under or in respect of any
agreement or any provision contained herein.
(b) Waiver. Either party hereto may by written notice to the
other (i) extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (ii) waive compliance with any of the
conditions or covenants of the other contained in this Agreement; and (iii)
waive or modify performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of either party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representations, warranties,
covenants or agreements contained herein. The waiver by either party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any preceding or succeeding breach and no failure by either party to
exercise any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of such
party's rights to exercise the same at any subsequent time or times hereunder.
(c) Stock Certificate Legend.
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Each certificate representing the Shares of PIK Preferred Stock owned by the
Investor shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND OTHER CONDITIONS, AS SPECIFIED IN THE LETTER AGREEMENT, DATED AS OF
OCTOBER 17, 1994, AMONG THE COMPANY AND CERTAIN OTHER STOCKHOLDERS OF THE
COMPANY, WHICH LETTER AGREEMENT INCORPORATES CERTAIN SPECIFIED PROVISIONS
CONTAINED IN THE STOCKHOLDERS AGREEMENT OF THE COMPANY, DATED AS OF OCTOBER 17,
1994, COPIES OF SUCH AGREEMENTS ARE ON FILE AT THE OFFICE OF THE COMPANY AND
WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON WRITTEN
REQUEST."
(d) Amendments. Neither this Agreement nor any term or
provision hereof may be amended, modified, waived or supplemented orally, but
only by a written instrument executed by the Investor and the Company.
(e) Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the Investor without the prior written
consent of the other party.
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(f) Applicable Law.
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This Agreement shall be governed by and construed in accordance with the law of
the State of Delaware, regardless of the law that might be applied under
principles of conflicts of law.
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IN WITNESS WHEREOF, the Company and the Investor have executed
this Agreement as of the date first above written.
HCI DIRECT, INC.
By: /s/ Michael D. Rowley
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Name: Michael D. Rowley
Title: Chief Financial Officer
KELSO INVESTMENT ASSOCIATES V, L.P.
By: /s/ George E. Matelich
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Name: George E. Matelich
Title: Partner
KELSO EQUITY PARTNERS V, L.P.
By: /s/ George E. Matelich
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Name: George E. Matelich
Title: Partner
