EXECUTION VERSION
EXHIBIT 10.38
STOCK PURCHASE AGREEMENT
TransTechnology Corporation
000 Xxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx,
Vice President, Chief Financial Officer and Treasurer
Ladies & Gentlemen:
The undersigned, Wynnefield Partners Small Cap Value, L.P., Wynnefield
Partners Small Cap Value, L.P. I and Wynnefield Small Cap Value Offshore Fund,
Ltd. (collectively referred to herein as the "Investor"), hereby confirm their
agreement with TransTechnology Corporation as follows:
1. This Stock Purchase Agreement (the "Stock Purchase Agreement") is made as of
February 15, 2006 between TransTechnology Corporation, a Delaware corporation
(the "Company"), and the Investor.
2. The Company has authorized the sale and issuance of up to 2,500,000 shares of
common stock of the Company, $0.01 par value per share (the "Common Stock"), to
certain investors in a private placement (the "Offering").
3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor 770,833 shares of
Common Stock (the "Shares")(1) for a purchase price of $7.50 in cash per share
(the "Purchase Price"), or an aggregate purchase price of $5,781,247.50 (the
"Aggregate Purchase Price"), pursuant to the Terms and Conditions for Purchase
of Shares attached hereto as Annex I and incorporated herein by reference as if
fully set forth herein (the "Terms and Conditions"). This Stock Purchase
Agreement, together with the Terms and Conditions which are incorporated herein
by reference as if fully set forth herein, may hereinafter be referred to as the
"Agreement." Unless otherwise requested by the Investor, certificates
representing the Shares purchased by the Investor will be registered in the
Investor's name and address as set forth below.
4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or persons known to it to be affiliates of the Company, (b) neither
it, nor any group of which it is a member or to which it is related,
beneficially owns (including the right to acquire or vote) any securities of the
Company and (c) it has no direct or indirect affiliation or association with any
NASD member as of the date hereof. Exceptions:
Existing Share Ownership of Investor
[Signature Page Follows]
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(1) Wynnefield Partners Small Cap Value, L.P. to receive 178,833 shares for an
aggregate purchase price of $1,341,247.50, Wynnefield Partners Small Cap
Value, L.P. I to receive 268,250 shares for an aggregate purchase price of
$2,011,875 and Wynnefield Small Cap Value Offshore Fund Ltd. to receive
323,750 shares for an aggregate purchase price of $2,428,125.
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Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose. By executing
this Agreement, the Investor acknowledges that the Company may use the
information in paragraph 4 above and the name and address information below in
preparation of the one or more registration statements (as defined in the
Registration Agreement). This Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument.
AGREED AND ACCEPTED: WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P.
TRANSTECHNOLOGY CORPORATION By: Wynnefield Capital Management, LLC,
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, Co-Managing Member
/s/ Xxxxxx X. Xxxxxxx
-------------------------------
By: Xxxxxx X. Xxxxxxx
Vice President, Chief Financial Tax ID No.: ______________________________
Officer and Treasurer
State of Formation: New York
----------------------
Principal Place of Business: New York
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WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P. I
By: Wynnefield Capital Management, LLC,
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx, Co-Managing Member
Tax ID No.:
-------------------------------
State of Formation: New York
-----------------------
Principal Place of Business: New York
--------------
WYNNEFIELD SMALL CAP VALUE OFFSHORE FUND,
LTD.
By: Wynnefield Capital, Inc.,
its Investment Manager
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx
Tax ID No.:
-------------------------------
State of Formation Cayman Islands
------------------------
Principal Place of Business: New York
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TABLE OF CONTENTS
1. Authorization and Sale of the Shares.............................. 2
2. Agreement to Sell and Purchase the Shares; Subscription Date...... 2
3. Delivery of the Shares at Closing................................. 2
4. Representations and Warranties of the Company..................... 3
5. Representations, Warranties and Covenants of the Investor......... 8
6. Covenants......................................................... 9
7. Survival of Company Representations, Warranties; Indemnification. 10
8. Registration of the Shares; Right of First Offer................. 11
9. Notices.......................................................... 12
10. Changes.......................................................... 13
11. Headings......................................................... 13
12. Severability..................................................... 13
13. Governing Law.................................................... 13
14. Counterparts..................................................... 13
15. Entire Agreement................................................. 14
16. Confidential Information......................................... 14
17. No Third-Party Beneficiaries..................................... 14
18. Knowledge........................................................ 14
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ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES
1. Authorization and Sale of the Shares. Subject to these Terms and
Conditions, the Company has authorized the sale of up to 2,500,000 shares of
Common Stock to the Investor and Other Investors.
2. Agreement to Sell and Purchase the Shares; Subscription Date.
2.1. At the Closing (as defined in Section 3), the Company will sell
to the Investor, and the Investor will purchase from the Company, upon the terms
and conditions hereinafter set forth, the number of Shares, each as set forth in
Section 3 of the Stock Purchase Agreement to which these Terms and Conditions
are attached at the Purchase Price set forth thereon.
2.2. The Company may enter into a substantially similar form of
Stock Purchase Agreement, including these Terms and Conditions, with other
investors (the "Other Investors") and expects to complete sales of shares of the
Company's common stock to the Other Investors.
2.3. The obligations of the Other Investors under any similar
subscription agreement are several and not joint with the obligations of any
Other Investors and the Investor, and no Other Investor, including the Investor,
shall be responsible in any way for the performance of the obligations of any
Other Investors under any agreement. Nothing contained herein, and no action
taken by the Investor, shall be deemed to constitute a partnership, an
association, a joint venture or any other kind of entity between the Investor
and the Other Investors, or create a presumption that the Other Investors and
the Investor are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated hereby. The Investor shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement (provided, that such rights
may be modified, amended or waived in accordance with Section 9 below), and it
shall not be necessary for any Other Investors to be joined as an additional
party in any proceeding for such purpose.
3. Delivery of the Shares at Closing.
3.1. The completion of the purchase and sale of the Shares hereunder
(the "Closing") shall occur on February 17, 2006 (the "Closing Date"), at the
offices of Xxxx Xxxxxx & Parks LLP. At the Closing, upon receipt by the Company
of the Aggregate Purchase Price, the transfer agent for the Company shall
deliver to the Investor one or more stock certificates representing the number
of Shares as set forth pursuant to Section 3 of the Stock Purchase Agreement,
each such certificate to be registered in the name of the Investor or, if so
indicated on the signature page of the Stock Purchase Agreement, in the name of
a nominee designated by the Investor.
3.2. The Company's obligation to issue and deliver the Shares to the
Investor shall be subject to the following conditions, any one or more of which
may be waived by the Company: (a) receipt by the Company of a certified or
official bank check or wire transfer of immediately available funds in the full
amount of the Aggregate Purchase Price; (b) the accuracy of the representations
and warranties made by the Investor herein and the fulfillment of the Investor's
obligations hereunder prior to the Closing and (c) the absence of any order,
court injunction, law, statue, or rule prohibiting the transactions contemplated
hereby.
3.3. The Investor's obligation to purchase the Shares shall be
subject to the following conditions, any one or more of which may be waived by
the Investor: (a) Investor and the Company shall have executed this Agreement
and the Registration Rights Agreement, (b) the representations and warranties of
the Company set forth herein shall be true and correct as of the Closing Date in
all material respects (except for representations and warranties that speak as
of a specific date, which representations and warranties shall be true and
correct as of such date), (c) the Company shall have complied in all material
respects with all pre-Closing covenants of the Company hereunder and (d) the
Investor shall have received such documents as the Investor shall reasonably
have requested, including, an opinion of the Company's counsel, in substantially
the form attached hereto as Exhibit 1.
3.4. Legend; Restrictions on Transfer. The certificate or
certificates for the Shares (and any securities issued in respect of or exchange
for the Shares) shall be subject to a legend or legends restricting transfer
under the Securities Act and referring to restrictions on transfer herein, such
legend to be substantially as follows:
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
The Company and the Investor acknowledge and agree that the Investor may, as
permitted by law, from time to time pledge pursuant to a bona fide margin
agreement or grant a security interest in some or all of the Shares and, if
required under the terms of such arrangement, Investor may, as permitted by law,
transfer pledged or secured Shares to the pledgees or secured parties. So long
as Investor is not an affiliate of the Company, such a pledge or transfer would
not be subject to approval or consent of the Company, provided that, upon the
request of the Company, a legal opinion of legal counsel to the pledgee, secured
party or pledgor shall be obtained. At the Investor's expense, so long as the
Shares are subject to the legend required by this Section 3.4, the Company will
use its best efforts to execute and deliver such reasonable documentation as a
pledgee or secured party of Shares may reasonably request in connection with a
pledge or transfer of the Shares.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor, as follows:
4.1. Organization. The Company and each of its Subsidiaries (as
defined in Rule 405 under the Securities Act) is duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization. Each of the Company and its Subsidiaries has full power and
authority to own, lease, operate and occupy its properties and assets and to
conduct its business as presently conducted and as described in the documents
filed by the Company under the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (the "Exchange Act"),
including, without limitation, its most recent report on Form 10-K (the
"Exchange Act Documents") and is registered or qualified to do business and in
good standing in each jurisdiction in which the nature of the business conducted
by it or the location of the properties owned or leased by it requires such
qualification and where the failure to be so qualified would have a material
adverse effect upon the condition (financial or otherwise), earnings, cash flow,
business or business prospects, properties, assets, liabilities or operations of
the Company and its Subsidiaries, considered as one enterprise (a "Material
Adverse Effect"), and no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification.
4.2. Due Authorization and Valid Issuance. The Company has all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement and the related Registration Rights Agreement attached as
Exhibit 2 hereto (collectively the "Agreements"), and the Agreements have been
duly authorized and validly executed and delivered by the Company and constitute
legal, valid and binding agreements of the Company enforceable against the
Company in accordance with their terms, except as rights to indemnity and
contribution may be limited by state or federal securities laws or the public
policy underlying such laws, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.3. Non-Contravention. The execution and delivery of the
Agreements, the issuance and sale of the Shares under this Agreement, the
fulfillment of the terms of the Agreements and the consummation of the
transactions contemplated hereby and thereby will not (A) conflict with or
constitute a violation of, or default (with the passage of time or otherwise)
under, (i) any material bond, debenture, note or other evidence of indebtedness,
lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company or any Subsidiary
is a party or by which it or any of its Subsidiaries or their respective
properties are bound, (ii) the charter, by-laws or other organizational
documents of the Company or any Subsidiary, or (iii) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company or any Subsidiary or their
respective assets or properties, except in the case of clauses (i) and (iii) for
any such conflicts, violations or defaults which are not reasonably likely to
have a Material Adverse Effect, or (B) result in the creation or imposition of
any lien, encumbrance, claim, security interest or restriction whatsoever upon
any of the material properties or assets of the Company or any Subsidiary or an
acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
any indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company or any Subsidiary is a party or by which any of
them is bound or to which any of the material property or assets of the Company
or any Subsidiary is subject. No consent, approval, authorization or other order
of, or registration, qualification or filing with, any regulatory body,
administrative agency, or other governmental body in the United States or any
foreign jurisdiction or any other person is required for the
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execution and delivery of the Agreements and the valid issuance and sale of the
Shares pursuant to the Agreements, other than such as have been made or
obtained, and except for any post-closing securities filings or notifications
required to be made under federal or state securities laws.
4.4. Capitalization. The equity capitalization of the Company is as
set forth in the most recent applicable Exchange Act Documents, increased as set
forth in the next sentence. The Company has not issued any capital stock since
that date other than pursuant to (i) employee benefit plans disclosed in the
Exchange Act Documents, or (ii) outstanding warrants, options or other
securities disclosed in the Exchange Act Documents. The Shares to be sold
pursuant to this Agreement have been duly authorized, and when issued and paid
for in accordance with the terms of this Agreement, will be duly and validly
issued, fully paid and nonassessable and free of any preemptive rights for any
other securityholder of the Company. The outstanding shares of capital stock of
the Company have been duly and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. Except as set forth in
or contemplated by the Exchange Act Documents, there are no outstanding rights
(including, without limitation, preemptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any shares of
capital stock or other equity interest in the Company or any Subsidiary, or any
contract, commitment, agreement, understanding or arrangement of any kind to
which the Company is a party or of which the Company has knowledge and relating
to the issuance or sale of any capital stock of the Company or any Subsidiary,
any such convertible or exchangeable securities or any such rights, warrants or
options. Without limiting the foregoing, no preemptive right, co-sale right,
right of first refusal, registration right, or other similar right exists with
respect to the Shares or the issuance and sale thereof. No further approval or
authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Shares. The Company owns the entire equity
interest in each of its Subsidiaries, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest, other than as
described in the Exchange Act Documents. There are no stockholders agreements,
voting agreements or other similar agreements with respect to the Common Stock
to which the Company is a party or, to the knowledge of the Company between or
among any of the Company's stockholders.
4.5. Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened to which the
Company or any Subsidiary or any of their officers or directors is or may be a
party or of which the business, assets or property of the Company or any
Subsidiary is subject that is not disclosed in the Exchange Act Documents. There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the accountants and lawyers formerly or
presently employed by the Company and the Company is current with respect to any
fees owed to its accountants and lawyers.
4.6. No Violations. Neither the Company nor any Subsidiary is (i) in
violation of its charter, bylaws, or other organizational document, or (ii) in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority applicable to the Company
or any Subsidiary, except for such violations, individually or in the aggregate,
which would not be material to the Company and its Subsidiaries or (iii) is in
default (and there exists no condition which, with the passage of time or
otherwise, would constitute a default) in any material respect in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound, except for such default which would not be
material to the Company and its Subsidiaries.
4.7. Governmental Permits, Etc. Each of the Company and its
Subsidiaries has and is in material compliance with all necessary franchises,
licenses, certificates, permits and other authorizations from any foreign,
federal, state or local government or governmental agency, department, or body
that are currently necessary for the operation of the business of the Company
and its Subsidiaries as currently conducted and as described in the Exchange Act
Documents except where the failure to currently possess such could not
reasonably be expected to have a Material Adverse Effect. To the knowledge of
the Company, all necessary franchises, licenses, certificates, permits and other
authorizations are in full force and effect, and no suspension or cancellation
of the same is threatened or reasonably likely.
4.8. Intellectual Property. Except as disclosed in the Exchange Act
Documents (i) each of the Company and its Subsidiaries owns, or has the valid
right to use, without limitation, all United States and foreign patents, patent
rights, patent applications, trademarks, trademark applications, service marks,
copyrights, copyright registrations, licenses, inventions, software, trade
secrets, trade names; know-how and other similar rights (collectively,
"Intellectual Property") necessary for the conduct of its business as now
conducted except where the failure to currently own or have the right to use
would not be material to the Company and its Subsidiaries and (ii) to the
knowledge of the Company, neither the Company nor any of its Subsidiaries is
infringing, or has
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received any notice of, or has any knowledge of, any asserted infringement by
the Company or any of its Subsidiaries of, any rights of a third party with
respect to any Intellectual Property.
4.9. Financial Statements.
(a) The financial statements of the Company and the related
notes and management's discussion thereof contained in the Exchange Act
Documents present fairly, in accordance with generally accepted accounting
principles, the financial position of the Company and its Subsidiaries as of the
dates indicated, and the results of its operations and cash flows for the
periods therein specified consistent with the books and records of the Company
and its Subsidiaries except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which are not
material in amount. Such financial statements (including the related notes) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods therein specified, except
as may be disclosed in the notes to such financial statements, or in the case of
unaudited statements, as may be permitted by the Securities and Exchange
Commission (the "SEC") on Form 10-Q under the Exchange Act and except as
disclosed in the Exchange Act Documents and complied in all material respects
with all applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto. The other financial information
contained in the Exchange Act Documents has been prepared on a basis consistent
with the financial statements of the Company.
(b) (i) The Company's assets do not constitute unreasonably
small capital to carry on its business for the current fiscal year as now
conducted taking into account the current and projected capital requirements of
the business conducted by the Company and projected capital availability; and
(ii) the current cash flow of the Company, together with the proceeds the
Company would receive upon liquidation of its assets, after taking into account
all anticipated uses of such amounts, would be sufficient to pay all such
liabilities and obligations when such is required to be paid. The Company does
not intend to incur liabilities and other obligations beyond its ability to pay
such as they mature or are required to be paid. The Company has no knowledge of
any facts or circumstances which lead it to believe that it will be required to
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction, and has no present intention to so file.
(c) Except as set forth in any Exchange Act Documents, there
are no obligations of the Company to officers, directors, stockholders or
employees of the Company other than (i) for payment of salary for services
rendered and for bonus payments; (ii) reimbursements for reasonable expenses
incurred on behalf of the Company; (iii) for other standard employee benefits
made generally available to all employees (including stock option agreements
outstanding under any stock option plan approved by the Board of Directors); and
(iv) obligations listed in the Company's financial statements. Except as
described above or in any Exchange Act Documents, none of the officers,
directors or, to the knowledge of the Company, key employees or stockholders of
the Company or any members of their immediate families, are indebted to the
Company, individually or in the aggregate, in excess of $60,000 or have any
direct or indirect ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business relationship, or
any firm or corporation which competes with the Company, other than passive
investments in publicly traded companies (representing less than one percent
(1%) of such company) which may compete with the Company. Except as described
above, no officer, director or stockholder, or any member of their immediate
families, is, directly or indirectly, interested in any material contract with
the Company and no agreements, understandings or transactions are contemplated
between the Company and any such person. Except as set forth in any Exchange Act
Documents, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation.
4.10. No Material Adverse Change. Except as disclosed in the
Exchange Act Documents, since December 25, 2005, (A) there has not been (i) any
Material Adverse Effect, (ii) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company or any of its Subsidiaries, or
(iii) any loss or damage (whether or not insured) to the physical property of
the Company or any of its Subsidiaries which has been sustained which has a
Material Adverse Effect, and (B) the Company and its Subsidiaries have operated
the business in the ordinary course, consistent with past practice.
4.11. [Intentionally omitted]
4.12. [Intentionally omitted]
4.13. [Intentionally omitted]
4.14. [Intentionally omitted]
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4.15. [Intentionally omitted]
4.16. [Intentionally omitted]
4.17. [Intentionally omitted]
4.18. Disclosure. The representations and warranties of the Company
contained in this Section 4 as of the date hereof and as of the Closing Date and
all material information provided to the Investor by or on behalf of the
Company, taken as a whole, do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
4.19. Reporting Status. (a) Except as noted in the Exchange Act
Documents, the Company has filed in a timely manner all documents that the
Company was required to file under the Exchange Act or the Securities Act during
the two (2) years preceding the date of this Agreement, including all such
documents filed after the date hereof and prior to the Closing. None of the
Company's Subsidiaries is required to file any form, report, schedule, statement
or other document with the SEC. The Company is not currently eligible to use
Form S-3 under the Securities Act to register the Shares to be offered for the
account of the Investor, but is eligible to effectuate such registration on Form
S-1 under the Securities Act. The following documents complied in all material
respects with the SEC's requirements as of their respective filing dates, and
the information contained therein as of the date thereof did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading:
(i) Annual Report on Form 10-K for the year ended March 31,
2005, Quarterly Reports on Form 10-Q for the quarters ended December 26, 2004;
June 26, 2005; September 25, 2005 and December 25, 2005; Current Reports on Form
8-K filed on January 14, 2005; January 18, 2005; January 28, 2005; February 15,
2005; March 15, 2005; June 9, 2005; June 27, 2005; July 19, 2005; August 19,
2005; September 12, 2005; October 20, 2005; December 23, 2005; and December 28,
2005; and the Definitive Proxy Statement filed September 14, 2005 with respect
to the 2005 annual meeting of the Company's stockholders; and
(ii) all other documents, if any, filed by the Company with
the SEC during the two (2) year period preceding the date of this Agreement
pursuant to the reporting requirements of the Exchange Act.
4.20. Exchange Act Reporting; Compliance. The Company's Common Stock
is registered pursuant to Section 12(g) of the Exchange Act, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act, nor has the Company
received any notification that the SEC or the National Association of Securities
Dealers, Inc. ("NASD") is contemplating terminating such registration. The
Company shall comply with all requirements of the NASD and the SEC with respect
to the issuance of the Shares.
4.21. No Manipulation of Stock. The Company has not taken and will
not take any action designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock.
4.22. Company not an "Investment Company." The Company has been
advised of the rules and requirements under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Company is not, and immediately
after receipt of payment for the Shares will not be, an "investment company" or
an entity "controlled" by an "investment company" within the meaning of the
Investment Company Act and shall conduct its business in a manner so that it
will not become subject to the Investment Company Act.
4.23. Foreign Corrupt Practices. Neither the Company, nor to the
best knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any corrupt funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
4.24. Accountants. To the knowledge of the Company, Deloitte &
Touche LLP, who the Company expects will consent to the incorporation by
reference of its report dated August 12, 2005 with respect to the consolidated
financial
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statements of the Company included in the Company's Annual Report on Form 10-K
for the year ended March 31, 2005 into any Registration Statement (as defined in
the Registration Rights Agreement) and the prospectus which forms a part thereof
contemplated by the Registration Rights Agreement, are and, during the periods
covered by their report, were independent accountants as required by the
Securities Act and the rules and regulations promulgated thereunder.
4.25. Contracts. The contracts described in the Exchange Act
Documents that are material to the Company are in full force and effect on the
date hereof, and neither the Company nor, to the knowledge of the Company, any
other party to such contracts is in breach of or default under any of such
contracts which would have a Material Adverse Effect. The Company has filed with
the SEC all contracts and agreements required to be filed by the Exchange Act
and Securities Act.
4.26. Taxes. The Company has filed all necessary federal, state and
foreign income and franchise tax returns when due (or obtained appropriate
extensions for filing) and has paid or accrued all taxes shown as due thereon,
except for those contested in good faith and adequately disclosed and provided
for in the financial statements of the Company in accordance with GAAP and for
which the Company has provided adequate reserves (in the good faith judgment of
the management of the Company). The Company has (in the good faith judgment of
the management of the Company) adequately reserved for possible adjustments due
to open tax audits or assessments.
4.27. Transfer Taxes. On the Closing Date, all stock transfer or
other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the Investor
hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with.
4.28. Private Offering. Assuming the correctness of the
representations and warranties of the Investor set forth in Section 5 hereof,
the offer and sale of Shares are exempt from registration under the Securities
Act. Except for information provided to those Investors who have entered into a
separate confidentiality agreement with the Company with respect thereto, the
Company has not distributed and will not distribute prior to the Closing Date
any offering material in connection with this Offering and sale of the Shares
other than the documents of which this Agreement is a part or the Exchange Act
Documents. The Company has not in the past nor will it hereafter take any action
independent of the placement agent to sell, offer for sale or solicit offers to
buy any securities of the Company which would bring the offer, issuance or sale
of the Shares within the provisions of Section 5 of the Securities Act, unless
such offer, issuance or sale was or shall be within the exemptions of Section 4
of the Securities Act. Neither the Company nor any person acting on behalf of
the Company has offered or sold any of the Shares by any form of general
solicitation or general advertising. The Company has offered the Shares for sale
only to the Investor and certain other "accredited investors" within the meaning
of Rule 501 under the Securities Act.
4.29. [Intentionally omitted]
4.30. [Intentionally omitted]
4.31. Controls and Procedures. The Company is in material compliance
with all provisions of the Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it
as of the Closing Date. The Company has established and maintains an effective
system of internal control over financial reporting (as such term is defined in
the Exchange Act ) regarding the reliability of financial reporting and
preparation of financial statements for external purposes in accordance with
GAAP and includes policies and procedures that (i) pertain to maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the Company's assets that could have a material impact on the financial
statements. The Company has established and maintains disclosure controls and
procedures (as defined in Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms,
including, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the
Company's management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure. The Company's certifying
officers have evaluated the effectiveness of the Company's disclosure controls
and procedures and presented in the applicable Exchange Act Documents their
conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the periods covered by such
7
Exchange Act Documents based on such evaluation. Since the last such evaluation
date, there has been no change in the Company's internal control over financial
reporting that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting, and no
significant deficiencies or material weaknesses in internal controls over
financial reporting, or other factors that could significantly affect the
Company's internal control over financial reporting, have been identified.
4.32. Section 203 Exemption. The Board of Directors has adopted this
Agreement and the Registration Rights Agreement and the transactions
contemplated hereby and thereby in such manner as is sufficient to render the
restrictions of Section 203 of the Delaware General Corporations Law
inapplicable to the Agreements and all transactions contemplated hereby and
thereby.
4.33. No Registration Rights. No person has the right to require the
Company or any Subsidiary to register any securities for sale under the
Securities Act by reason of the filing of any Registration Statement, as defined
in the Registration Rights Agreement, with the SEC for the issuance and sale of
the Shares.
5. Representations, Warranties and Covenants of the Investor.
5.1. The Investor represents and warrants to, and covenants with,
the Company that: (i) the Investor is an "accredited investor" as defined in
Regulation D under the Securities Act and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to investments in shares presenting an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Shares; (ii) the Investor is
acquiring the number of Shares, each as set forth in Section 3 of the Stock
Purchase Agreement in the ordinary course of its business and for its own
account for investment only and with no present intention of distributing any of
such Shares, or any arrangement or understanding with any other persons
regarding the distribution of such Shares; (iii) the Investor will not, directly
or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy,) any of the Shares except in compliance with the Securities
Act, applicable state securities laws and the respective rules and regulations
promulgated thereunder; and (iv) the Investor has, in connection with its
decision to purchase the number of Shares as set forth in Section 3 of the Stock
Purchase Agreement, relied upon the Exchange Act Documents and the
representations and warranties of the Company contained herein. The Investor
understands that its acquisition of the Shares has not been registered under the
Securities Act or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of the Investor's investment intent as
expressed herein. Subject to compliance with the Securities Act, applicable
securities laws and the respective rules and regulations promulgated thereunder,
nothing contained herein shall be deemed a representation or warranty by such
Investor to hold the Shares for any period of time.
5.2. The Investor acknowledges, represents and agrees that no action
has been or will be taken in any jurisdiction outside the United States by the
Company that would permit an offering of the Shares, or possession or
distribution of offering materials in connection with the issue of the Shares,
in any jurisdiction outside the United States where legal action by the Company
for that purpose is required. Each Investor outside the United States will
comply with all applicable laws and regulations in each foreign jurisdiction in
which it purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense.
5.3. The Investor hereby covenants with the Company not to make any
sale of the Shares without complying with the provisions of this Agreement and
the Registration Rights Agreement and without complying with any prospectus
delivery requirement then applicable to it, and the Investor acknowledges that
the certificates evidencing the Shares will be imprinted with a legend that
prohibits their transfer except in accordance therewith.
5.4. The Investor further represents and warrants to, and covenants
with, the Company that (i) the Investor has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investor
herein may be legally unenforceable.
8
5.5. Neither the Investor nor any person acting on its behalf or at
its direction has engaged in any purchase or sale of Common Stock (including
without limitation any short sale), pledge, transfer, establishment of an open
"put equivalent position" within the meaning of Rule 16a-1(h) under the Exchange
Act) during the thirty (30) trading days immediately preceding the date of this
Agreement or otherwise has engaged or will engage, directly or indirectly, in
any action designed to, or which might be reasonably expected to, cause or
result in any manipulation of the price of the Common Stock. The Investor will
not use any of the restricted Shares acquired pursuant to this Agreement to
cover any short position in the Common Stock of the Company if doing so would be
in violation of applicable securities laws and otherwise will comply with
federal securities laws in the holding and sale of the Shares.
5.6. The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of Shares.
5.7. The Company acknowledges and agrees that Investor does not make
or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Sections 5, 6 and 16(a) of this Agreement, or in the Confidentiality Agreement
(as defined below).
6. Covenants.
6.1. [Intentionally omitted]
6.2. [Intentionally omitted]
6.3. [Intentionally omitted]
6.4. Preservation of NOLs. The Company and the Investor have
discussed, and the Investor is aware, of, the importance to the Company of
preserving the benefits of its substantial net operating loss carry forwards
("NOLs") under the requirements of the Code and Treasury Regulations. In
furtherance of this objective, and notwithstanding anything in this Agreement to
the contrary, The Company will notify Investor and the Other Investors in
writing when, in consultation its independent auditors, it has determined that
additional acquisitions of its equity securities by any of the Investor or Other
Investors may subject the utilization of its NOLs to the Section 382 Limitation
(as defined under the Code). Investor covenants, upon receipt of such notice and
delivery of similar notices to the Other Investors, that neither it nor its
affiliates will acquire any additional Common Stock of the Company until such
time as Investor requests and receives written approval from the Company, which
approval shall not be unreasonably withheld and shall be provided solely on the
basis of whether the Company and its independent auditors have determined that
such proposed acquisition by Investor, upon consideration of the relevant facts
and circumstances known to the Company, would more likely than not subject the
Company to the Section 382 Limitation with respect to the utilization of its
NOLs. The Company and the Investor hereby further agree, following the Closing,
to continue to explore the feasibility of, and to use good faith commercial
efforts to implement, if determined by the Board of Directors to be in the best
interest of the Company, additional mechanisms to ensure protection of the
Company's NOLs in order to avoid the imposition of the Section 382 Limitation on
the Company, including without limitation the possible adoption at the next
annual meeting of shareholders of a charter amendment to impose restrictions
upon the transfer of the Common Stock of the Company. The Company agrees that
the Stock Purchase Agreements entered into with Other Investors will contain
provisions no less restrictive than the restrictions imposed upon the Investor
under this Section 6.4.
6.5. [Intentionally omitted]
6.6. Conduct of Business. During the period from the date of this
Agreement to the Closing, the Company will continue to operate its business in
the ordinary course.
6.7. Use of Proceeds. The Aggregate Purchase Price, together with
all other funds received pursuant to the Offering, net of reasonable and
customary offering fees and expenses, will be used to pay down existing
indebtedness, in the order and amounts set forth on Schedule 6.6 hereof.
6.8. [Intentionally omitted]
6.9. [Intentionally omitted]
9
7. Survival of Company Representations, Warranties; Indemnification.
7.1. Survival of Representations and Warranties. Notwithstanding any
investigation made by any party to this Agreement, all representations and
warranties made by the Company shall survive for two (2) years following the
execution of this Agreement.
7.2. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Investor and each of its partners, officers, managers, employees and
representatives (each an "Investor Indemnitee") from and against (x) any losses,
claims, demands, penalties, fines, actions, damages, costs, expenses (including,
without limitation, reasonable legal fees and expenses incurred by the Investor
Indemnitee in investigating or defending any such proceeding) or liabilities
(all of the foregoing, including associated costs and expenses, a "Loss")
insofar as such Loss arises out of, or is based upon any breach of the
representations or warranties of the Company contained herein or failure to
comply with the covenants and agreements of the Company contained herein, and
(y) any finally judicially determined material diminution in value of the
Investor's Shares as measured against the Purchase Price (a "Diminution")
insofar as such Diminution arises out of, or is based upon any breach of the
representations or warranties of the Company contained herein, provided,
however, that the Company shall not be liable in any such case to the extent
that such Diminution or Loss arises out of, or is based upon, the bad faith,
gross negligence or willful misconduct of the Investor in connection therewith,
provided, further, that the Company shall not have any obligation to indemnify
the Investor from and against any Loss or Diminution until the Investor has
suffered, individually or in the aggregate, any Loss or Diminution in excess of
$346,874.85 (such amount, the "Indemnification Threshold") and then only to the
extent the amount of such Loss or Diminution exceeds the Indemnification
Threshold. Notwithstanding anything to the contrary herein, in no event shall
the Company be obligated to indemnify the Investor Indemnitees pursuant to this
Section 3(a) for an aggregate amount in excess of the Aggregate Purchase Price.
The Company shall reimburse each of the Investor Indemnitee for the
indemnifiable amounts provided for herein on demand as such expenses are
incurred provided that, to the extent that it is finally judicially determined
that an Investor Indemnitee was not entitled to any such reimbursement or any
part of such reimbursement made by the Company, such Investor Indemnitee shall
promptly pay such amount to the Company, together with interest thereon, at the
prime rate announced by the Wall Street Journal, from time to time.
(b) Promptly after receipt by the Investor Indemnitee of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against the Company pursuant to this Section 7.2, such Investor
Indemnitee shall notify the Company in writing of such claim or of the
commencement of such action, but the omission to so notify the Company will not
relieve it from any liability which it may have to the Investor Indemnitee under
this Section 7.2 (except to the extent that such omission materially and
adversely affects the Company's ability to defend such action) or from any
liability otherwise than under this Section 7.2. Subject to the provisions
hereinafter stated, in case any such action shall be brought against an Investor
Indemnitee, the Company shall be entitled to participate therein, and, to the
extent that it shall elect by written notice delivered to the Investor
Indemnitee promptly after receiving the aforesaid notice from such Investor
Indemnitee, shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to such Investor Indemnitee. After notice from the
Company to such Investor Indemnitee of its election to assume the defense
thereof, the Company shall not be liable to such Investor Indemnitee for any
legal expenses subsequently incurred by such Investor Indemnitee in connection
with the defense thereof, provided, however, that if there exists or shall exist
a conflict of interest that would make it inappropriate, in the opinion of
counsel to the Investor Indemnitee, for the same counsel to represent both the
Investor Indemnitee and the Company or any affiliate or associate thereof, the
Investor Indemnitee shall be entitled to retain its own counsel at the expense
of the Company; provided, however, that the Company shall not be responsible for
the fees and expenses of more than one separate counsel (together with
appropriate local counsel) for all indemnified parties. In no event shall the
Company be liable in respect of any amounts paid in settlement of any action
unless the Company shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld, conditioned or delayed.
The Company shall not, without the prior written consent of the Investor
Indemnitee, effect any settlement of any pending or threatened proceeding in
respect of which the Investor Indemnitee is or could have been a party and
indemnification could have been sought hereunder by such Investor Indemnitee,
unless such settlement includes an unconditional release of such Investor
Indemnitee from all liability on claims that are the subject matter of such
proceeding.
(c) For avoidance of confusion, no control person, director,
or officer of the Company is an indemnifying person for purposes of subsection
(a) hereof.
10
7.3. Except for any claim for fraud or intentional
misrepresentation, the indemnification provisions provided pursuant to this
Section 7 shall be the sole remedy of the Investor, provided that, nothing in
this Agreement shall prevent the Investor from seeking to enforce any agreements
or covenants set forth herein (including this indemnification) in any court of
law.
8. Registration of the Shares; Right of First Offer.
8.1. Registration Rights Agreement. The Company and the Investor
shall, at the Closing, enter into a Registration Rights Agreement (the
"Registration Rights Agreement"), in the form attached hereto as Exhibit 2,
governing certain rights and obligations relating to the Shares.
8.2. Right of First Offer.
(a) Right of First Offer. In the event that the Company shall
issue, sell or exchange, agree or obligate itself to issue, sell or exchange, or
reserve or set aside for issuance, sale or exchange, in a private sale
transaction not involving a public offering, any (i) shares of Common Stock,
(ii) any other equity security of the Company, including without limitation,
preferred shares, (iii) any debt security of the Company which by its terms is
convertible into or exchangeable for any equity security of the Company, (iv)
any security of the Company that is a combination of debt and equity, or (v) any
option, warrant or other right to subscribe for, purchase or otherwise acquire
any such equity security or any such debt security of the Company, in each such
case the Company shall first offer to sell such securities (the "Offered
Securities") to the Investor as follows: The Investor shall have the right to
purchase that portion of the Offered Securities determined as follows: the
amount of the Offered Securities shall be multiplied by a fraction, (i) the
numerator of which is the number of shares of Common Stock acquired hereunder
and then held by the Investor and (ii) the denominator of which is the total
number of shares of issued and outstanding Common Stock on a fully diluted
basis, of the Company (the "Investor's Pro Rata Portion"), at a price and on
such other terms as shall have been specified by the Company in writing with
respect to such private sale and delivered to the Investor (the "Offer"), which
Offer by its terms shall remain open and irrevocable for a period of seven (7)
days from receipt of the Offer (the "Offer Acceptance Period").
(b) Notice of Acceptance. Notice of the Investor's intention
to accept, in whole or in part, any Offer made shall be evidenced by a writing
signed by the Investor and delivered to the Company prior to the end of the
7-day period of such Offer, setting forth such of the Investor's Pro Rata
Portion as the Investor elects to purchase (the "Notice of Acceptance").
(c) Conditions to Acceptances and Purchase.
(i) Permitted Sales of Refused Securities. The Company
shall have one hundred eighty (180) days from the expiration of the Offer
Acceptance Period to close the sale of all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the Investor
(the "Refused Securities"), upon terms and conditions, including, without
limitation, unit price and interest rates, which are no more favorable, in the
aggregate, to such other person or persons to whom the Offered Securities are
proposed to be sold or no less favorable to the Company than those set forth in
the Offer.
(ii) Reduction in Amount of Offered Securities. In the
event the Company shall propose to sell an amount of the Offered Securities
which is less than the aggregate amount of all of the Investor's Pro Rata
Portions with respect to the Investor who has timely submitted Notices of
Acceptance (any such sale to be in the manner and on the terms specified above),
then the number of the Offered Securities specified in the Investor's Notice of
Acceptance shall be reduced to an amount which shall be not less than the amount
of the Offered Securities which the Investor elected to purchase pursuant to (b)
above multiplied by a fraction, (i) the numerator of which shall be the amount
of Offered Securities which the Company actually proposes to sell, and (ii) the
denominator of which shall be the amount of all Offered Securities the Company
proposed to sell in its writing delivered pursuant to Section 8.2(a) above. In
the event that the number or amount of Offered Securities specified in the
Investor's Notice of Acceptance, is so reduced, the Company may not sell or
otherwise dispose of more than the reduced amount of the Offered Securities
until such securities have again been offered to the Investor in accordance with
(a) above.
(iii) Closing. At the closing of the sale of the Offered
Securities, which shall include full payment to the Company of the sale to such
other person or persons of all or less than all the Offered Securities, the
Investor shall purchase from the Company, and the Company shall sell to the
Investor, the number of Offered Securities specified in the Notice of
Acceptance, as reduced pursuant to Section 8.2(b) above upon the terms and
conditions specified in the Offer. The purchase by the Investor of any Offered
Securities is subject in all cases to the timely preparation, execution and
delivery by the Company and the
11
Investor of a form of purchase agreement, which shall be the same for each
Investor, relating to such Offered Securities reasonably satisfactory in form
and substance to the Company and the Investor and their respective counsel
reflecting the terms and conditions specified in the Offer. In connection
therewith, the Investor undertakes to use commercially reasonable efforts to
execute and deliver such agreement with respect to the shares to be purchased by
the Investor such that the sale of the Offered Securities by the Company may
take place with such other person or persons in a timely manner as required by
any agreements between or among the Company and such other person or persons.
(d) Further Sale. In each case, any Offered Securities not
purchased by the Investor or other person or persons in accordance with Section
8.2(c)(iii) above may not be sold or otherwise disposed of until they are again
offered to the Investor under the procedures specified in Section
8.2(c)(i)-(iii) above.
(e) Exceptions. The rights of the Investor under this Section
8.2 shall not apply to: (i) Common Stock issued as a stock dividend to holders
of Common Stock or upon any subdivision or combination of shares of Common
Stock; (ii) any capital stock or derivative thereof granted to an employee,
director or consultant under a Company stock or stock option plan or as
compensation for services; (iii) any securities issued as consideration for the
acquisition of another entity by the Company by merger or share exchange
(whereby the Company owns no less than 51% of the voting power of the surviving
entity) or purchase of substantially all of such entity's stock or assets; (iv)
any securities issued in connection with a license, strategic partnership, joint
venture or other similar agreement, provided that the purpose of such
arrangement is not primarily the raising of capital; (v) securities issued in an
underwritten public offering, or (viii) securities of the Company proposed to be
sold by a person, persons or entity other than the Company.
(f) Termination of Right. The Right of First Offer set forth
in this Section 8.2 shall be available so long as the Investor shall continue to
own 50% of the Shares purchased pursuant to this Agreement and shall in any
event terminate two (2) years following the Closing Date.
9. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within the United States
by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile or electronic mail
or other electronic means providing for verifiable proof of receipt by the
addressee thereof (including transmittal in PDF format), or (B) if delivered
from outside the United States, by International Federal Express (or other
recognized international express courier), e-mail or facsimile, and shall be
deemed given (i) if delivered by first-class registered or certified mail, three
business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by
International Federal Express (or other recognized international express
courier), two business days after so mailed, (iv) if delivered by facsimile,
upon electronic confirmation of receipt and (v) if delivered by electronic mail
or other electronic means providing for verifiable proof of receipt by the
address thereof, when transmitted, and shall be delivered as addressed as
follows:
(a) if to the Company, to:
TransTechnology Corporation
000 Xxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Vice President,
Chief Financial Officer and Treasurer
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxx.xxx
12
with a copy to:
Xxxx Xxxxxx & Parks LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attn: F. Xxxxxx X'Xxxxx, Esq.
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxx.xxx
(b) if to the Investor
c/o Wynnefield Capital Management, LLC
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx Xxxx
Fax: (000) 000-0000
E-mail: xxxxx@xxxxxxxxxxxxxxxxx.xxx
With a copy to:
Xxxx Xxxxxxx, P.C.
1350 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
E-mail: Xxxxxxxx@xxxxxxxxxxx.xxx
or at such other address as such party each may specify by written notice to the
others.
10. Changes. This Agreement may be modified, amended or waived pursuant to
a written instrument signed by the Company and the Investor. Any agreements with
Other Investors may be modified, amended or waived only pursuant to a written
instrument signed by the Company and Investor holding a majority of the Shares
issued and sold in the Offering, provided that such modification, amendment or
waiver is made with respect to all Agreements and does not adversely affect the
Investor without adversely affecting all Investors in a similar manner.
11. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
12. Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
13. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, without giving
effect to the principles of conflicts of law.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties. Any signatures delivered by a party by facsimile
transmission or by other electronic means providing for verifiable proof of
receipt by the addressee thereof (including via e-mail transmission and PDF
format) shall be deemed an original signature hereto.
13
15. Entire Agreement. This Agreement and the Schedule annexed hereto,
together with the Confidentiality Agreement, the Registration Rights Agreement
and Opinion attached hereto as exhibits, constitute the entire agreement between
the parties hereto and supersedes any prior understandings or agreements
concerning the purchase and sale of the Shares and the resale registration of
the Shares.
16. Confidential Information.
(a) The Investor represents to the Company that, at all times
during the Company's offering of the Shares, the Investor has maintained in
confidence all non-public information regarding the Company received by the
Investor from the Company or its agents, including information with respect to
the Offering and Investor's participation therein, and covenants that it will
continue to maintain in confidence such information until such information (a)
becomes generally publicly available other than through a violation of this
provision by the Investor or its agents or (b) is required to be disclosed in
legal proceedings (such as by deposition, interrogatory, request for documents,
subpoena, civil investigation demand, filing with any governmental authority or
similar process), provided, however, that before making any use or disclosure in
reliance on this subparagraph (b) the Investor shall, to the extent not
prohibited by applicable law, rule or regulation, promptly notify the Company of
the circumstances giving rise thereto and will furnish only that portion of the
non-public information which is legally required and will exercise its best
efforts to obtain reliable assurance that confidential treatment will be
accorded any non-public information so furnished.
(b) The Company shall promptly after the consummation of the
Offering of which the transactions contemplated by this Agreement is a part,
issue a press release substantially in the form attached hereto as Exhibit 3,
and timely file with the SEC a Form 8-K (which shall include as exhibits the
Agreement), in each case, disclosing the material terms of the transactions
contemplated hereby (including at least the number of Shares sold and proceeds
therefrom). The Company shall not publicly disclose the name of Investor or any
beneficial owner of Shares held by the Investor, or include the name of Investor
or such beneficial owner in any filing with the SEC or any state and federal
regulatory agency (other than the filing of the Agreements with the SEC pursuant
to the Exchange Act), without the prior written consent of Investor, except to
the extent such disclosure is required by law or regulation.
17. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person except as provided in Section 12 of the Registration Rights
Agreement.
18. Knowledge. The term "knowledge" in this Agreement shall mean the
knowledge of the executive officers of the Company after making reasonable
inquiry under the circumstances.
14
INDEX OF DEFINED TERMS
Aggregate Purchase Price................................................ 1
Agreements.............................................................. 3
Closing................................................................. 2
Closing Date............................................................ 2
Common Stock............................................................ 1
Company................................................................. 1
Diminution............................................................. 10
Exchange Act............................................................ 3
Exchange Act Documents.................................................. 3
Indemnification Threshold.............................................. 10
Intellectual Property................................................... 4
Investment Company Act.................................................. 6
Investor................................................................ 1
Investor Indemnitee.................................................... 10
Investor's Pro Rata Portion............................................ 11
Knowledge.............................................................. 14
Loss................................................................... 10
Material Adverse Effect................................................. 3
NASD.................................................................... 6
Notice of Acceptance................................................... 11
Offer.................................................................. 11
Offer Acceptance Period................................................ 11
Offered Securities..................................................... 11
Offering................................................................ 1
Other Investors......................................................... 2
Purchase Price.......................................................... 1
Refused Securities..................................................... 11
Registration Rights Agreement.......................................... 11
SEC..................................................................... 5
Shares.................................................................. 1
Stock Purchase Agreement................................................ 1
Terms and Conditions.................................................... 1
15
