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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Forward Industries, Inc.
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(Name of Issuer)
Common Stock, $0.01 par value
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(Title of Class of Securities)
349862300
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(CUSIP Number)
Neil I. Jacobs, Esq.
355 Lexington Avenue, 6th Floor
New York, NY 10017
(212) 233-1480
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(Name, address and telephone number of Person
Authorized to Receive Notices and Communications)
December 8, 2011
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
This information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
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SCHEDULE 13D
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CUSIP NO. 349862300 Page 2 of 6
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
Terence Bernard Wise
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS (See Instructions)
PF
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
UK
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7. SOLE VOTING POWER
1,076,808
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
1,076,808
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10. SHARED DISPOSITIVE POWER
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,583,541
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [X]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.58%
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14. TYPE OF REPORTING PERSON
IN
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CUSIP NO. 349862300 Page 3 of 6
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Item 1. Security and Issuer
This Schedule 13D relates to the Common Stock, $.01 par value per
Share (the "Common Stock”) of Forward Industries, Inc., a New York corporation (the "Issuer"). The address of the principal executive offices of the Issuer is 3110 Main St, Suite 400, Santa Monica CA 90405.
Item 2. Identity and Background
(a) – (c). This statement is filed by an individual, Terence Bernard Wise, who resides at Brambledown, 8 Valley Way, Gerrards Cross, Buckinghamshire SL9 7PN, United Kingdom. Mr. Wise is a UK resident and citizen, and is a private businessman involved in the furniture manufacturing industry.
(d)- (f). Mr. Wise, who is a U.K. citizen, has not, during the past five years, been convicted of any criminal proceeding (excluding traffic violations or similar misdemeanors), nor been a party to a civil proceeding of a judicial or administrative body of competent judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
The source of funds used for the purchase of the Issuer's Common Stock
was the personal funds of Mr. Wise. The aggregate funds used by Mr. Wise
to make the purchase were approximately $2,040,012.
Item 4. Purpose of Transaction
Mr. Wise has acquired the Issuer's Common Stock for investment purposes, and such purchases have been made in Mr. Wise’ ordinary course of business. The purchases were made in a private transaction away from the market. The Purchase was made pursuant to a Stock Purchase Agreement (“SPA”), dated December 8, 2011 and an Option Agreement (“Option Agreement”) of even date, by and between the same parties. The SPA provided for the sellers thereunder, LaGrange Capital Partners, L.P., LaGrange Capital Partners Offshore Funds Ltd., and LaGrange Special Situations Master Fund, Ltd. (collectively, “Sellers”) to sell an aggregate of 1,076,808 shares of the Issuer’s Common Stock to Mr. Wise at the purchase price of $1.8945 per share. Both the SPA and the Option Agreement are more fully described below. The Sellers are, upon information and belief, affiliates of Frank LaGrange Johnson, Chairman and a significant shareholder of the Issuer. Although Mr. Wise has known Mr. Johnson and his brother, Brett M. Johnson, Issuer’s CEO, for some time in a personal and business capacity, they are not acting as part of a “group” as defined under Rule 13d-3 and Mr. Wise in no way claims beneficial ownership of any shares of the Issuer’s Common Stock owned by Mr. Johnson or his affiliates.
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CUSIP NO. 349862300 Page 4 of 6
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The Option Agreement consists of both a “put” and “call” option. The “call” option is in favor of Mr. Wise, the “put” option is in favor of the Sellers. Both options cover an aggregate of 506,733 shares of Issuer Common Stock owned by the Sellers, and are exercisable in whole (but not in part) at an exercise price of $1.80 per share. The “put” option is exercisable at any time until July 8, 2013 (“Termination Date”); the “call” option is exercisable on the Termination Date if a Corporate Transaction (as defined above, has not taken place between the Issuer and third parties by such date.
The foregoing descriptions of the SPA and Option Agreement are qualified in their entirety by reference to the full text of such documents which are attached as Exhibits 99.1 and 99.2 hereto and are incorporated herein by this reference.
Mr. Wise does not, at present, seek control of the Issuer and has acquired the Common Stock for investment purposes. In pursuing such investment purposes, Mr. Wise may further purchase, hold, vote, trade, dispose or otherwise deal in the Common Stock at times, and in such manner, as he deems advisable to benefit from changes in market prices of the Common Stock, changes in the Issuer's operations, business strategy or prospects, or from sale or merger of the Issuer. To evaluate such alternatives, Mr. Wise routinely monitors the Issuer's operations, prospects, business development, management, competitive and strategic matters, capital structure, and prevailing market conditions, as well as alternative investment opportunities, his personal liquidity requirements and other investment considerations. Consistent with his investment research methods and evaluation criteria, Mr. Wise may discuss such matters with management or directors of the Issuer, other shareholders, industry analysts, existing or potential strategic partners or competitors, investment and financing professionals, sources of credit and other investors. Such factors and discussions may materially affect, and result in, Mr. Wise' modifying his
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CUSIP NO. 349862300 Page 5 of 6
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ownership of the Common Stock, exchanging information with the Issuer pursuant to appropriate confidentiality or similar agreements, proposing changes in the Issuer's operations, governance or capitalization, or in proposing one or more of the other actions described in subsections (a) through (j) of Item 4 of Schedule 13D.
Mr. Wise reserves the right to formulate other plans and/or make other proposals, and take such actions with respect to his investment in the Issuer, including any or all of the actions set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D, or acquire additional Common Stock or dispose of all or part of the Common Stock beneficially owned by him, in the public market or privately negotiated transactions. Mr. Wise may at any time reconsider and change his plans or proposals relating to the foregoing.
Item 5. Interest in Common Stock of the Issuer
(a) and (b). As of the date hereof, Mr. Wise beneficially owns 1,076,808 shares of Common Stock of the Issuer. As discussed in Item 4 above, he also has an Option to acquire an additional 506,733 shares of common stock exercisable 18 months from now. However, he also has the obligation to purchase such shares of Common Stock should they be “put” to him, which could occur at any time during the term of the Option Agreement. Thus, his total beneficial ownership of Issuer Common Stock, as calculated under Rule 13d-3, is 1,583,541 shares or 19.58% (based on an aggregate of 8,087,886 shares of Common Stock outstanding as reported in the Issuer’s Quarterly Report on Form 10-Q filed August 11, 2011)of the issued and outstanding shares of Common Stock. He retains sole dispositive power over the 1,076,808 shares owned by him.
(c) In the 60 days prior to this filing, Mr. Wise has not acquired any Issuer Common Stock in the open market.
(d) and (e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Common Stock of the Issuer
Mr. Wise has no understandings, arrangements, relationships or contracts relating to the Issuer's Common Stock which have not been described above.
Item 7. Material to Be Filed as Exhibits
Exh. 99.1 Stock Purchase Agreement, dated December 8, 2011, by and among Terence B. Wise and LaGrange Capital Partners LP, LaGrange Capital Partners Offshore Fund Ltd., and LaGrange Special Situations Master Fund, Ltd.
Exh. 99.2 Option Agreement, dated December 8, 2011, by and among Terence B. Wise and LaGrange Capital Partners LP, LaGrange Capital Partners Offshore Fund Ltd., and LaGrange Special Situations Master Fund, Ltd.
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CUSIP NO. 349862300 Page 6 of 6
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
/s/ Terence Bernard Wise
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Dated: December 13, 2011 Terence Bernard Wise
Exhibit 99.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the “Agreement”), dated and effective as of December 8, 2011 (the “Effective Date”), by and among LaGrange Capital Partners, LP, LaGrange Capital Partners Offshore Fund, Ltd., LaGrange Special Situations Yield Master Fund, Ltd. (each a “Seller” and collectively, the “Sellers”) and Terence Bernard Wise (the “Purchaser”).
WHEREAS, the Sellers desire to sell to the Purchaser, and the Purchaser desires to purchase from the Sellers, subject to the terms and conditions set forth herein, 1,076,808 shares (the “Shares) of common stock, $0.01 par value per share (the “Common Stock”), of Forward Industries, Inc., a New York corporation (the “Company”) for aggregate consideration of $2,040,012.76 and Purchaser and Sellers wish to enter into an option agreement relating to the purchase and sale of an additional 506,733 shares of Common Stock as set forth herein.
NOW, THEREFORE, in consideration of the premises, mutual promises and covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intended to be legally bound, agree as follows:
Section 1. Purchase and Sale of the Shares. Subject to the terms and conditions set forth herein, Purchaser hereby agrees to purchase from the Sellers, and the Sellers hereby agree to sell, transfer and assign to Purchaser, free and clear of any (a) lien, charge, pledge, tax, security interests, option, warrant, purchase right, contract, commitment, claim, derivative right, voting trust, community property interest, transfer restriction or other encumbrance or charge of any kind or nature, whether direct or indirect incurred by any Seller and (b) liability, obligation, debt or claim of any kind or nature, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due, the 1,076,808 Shares, including the rights to any accrued but unpaid dividends thereon, if and when declared, at a cash purchase price of $1.8945 per share, for an aggregate purchase price of $2,040,012.76 (the “Purchase Price”). Purchaser agrees to transfer the Purchase Price by wire transfer of immediately available funds in U.S. Dollars, on or before the Effective Date, to Littman Krooks LLP, as escrow agent (the “Escrow Agent”) pursuant to Section 2.2 below.
As a condition of the agreements contained in this Agreement, Purchaser and Sellers are entering into an option agreement of even date herewith for an additional 506,733 shares of Common Stock on the terms and subject to the conditions of the form of Option Agreement attached hereto as Exhibit A.
2.2 Purchase Price in Escrow. Sellers and Purchaser agree that Escrow Agent will act as Escrow Agent hereunder and hold the Purchase Price in escrow pursuant to the terms of this Agreement. Escrow Agent hereby accepts such appointment hereunder and agrees to hold the Purchase Price until Escrow Agent’s receipt of evidence of the delivery of the Shares as described in Section 2.3 below. Sellers and the Purchaser agree that the duties of Escrow Agent hereunder are purely ministerial in nature and that Escrow Agent shall incur no liability hereunder or otherwise (except in the event, and to the extent, of its gross negligence or willful misconduct) for any action taken by it hereunder or for any failure or refusal to act pursuant to this Agreement. Each Seller and the Purchaser releases Escrow Agent from any act done or omitted to be done by the Escrow Agent in good faith in the performance of the Escrow Agent’s duties hereunder.
2.3 Release of Purchase Price from Escrow. Sellers acknowledge and agree that no funds representing the Purchase Price shall be released by the Escrow Agent from escrow to the Sellers in connection with the purchase by the Purchaser of the Shares from the Sellers hereunder without the receipt by the Escrow Agent of (x) physical share certificates representing the Shares in the name of the Purchaser, or (y) a written confirmation from DWAC confirming receipt from Sellers of the Shares into the account of the Purchaser’s broker with the Depository Trust Company. Immediately upon Escrow Agent’s receipt of the physical share certificates or confirmation from DWAC, as applicable, Escrow Agent shall release the Purchase Price and wire the funds to the Sellers in the amounts to the wiring instructions set forth on Schedule B hereto.
Section 3. Representations, Warranties and Covenants of the Sellers. Each Seller, jointly and severally, hereby represents and warrants to Purchaser as follows:
3.1A Organization. Each Seller is duly organized, validly existing and in good standing under the laws of the State or country or organization and each has full power and authority to own, lease and operate its properties and assets and to conduct its business as conducted.
3.1 Corporate Action, Binding Effect. All corporate and partnership action (including, if applicable, consent of the limited partners) on the part of each Seller necessary for the authorization, execution, delivery, and performance of all of each such Seller's obligations under this Agreement has been taken. This Agreement has been duly executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms except as such enforceability may be limited by (a) bankruptcy, insolvency, moratorium, reorganization and other laws affecting creditors’ rights generally, and (b) general principles of equity, regardless of whether asserted in a proceeding in equity or at law.
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3.2 Ownership of the Shares. The Seller has good and valid title to the Shares, free and clear of all liens, charges, claims or encumbrances. There are no outstanding or authorized options, warrants, rights, calls, commitments, conversion rights, rights of exchange or other agreements of any character, contingent or otherwise, providing for the purchase, issuance or sale of any of the Shares, or any arrangements that require or permit any of the Shares to be voted by or at the discretion of anyone other than the Seller, and there are no restrictions of any kind on the transfer of any of the Shares.
3.3 Authorization. All action on the part of Seller, necessary for the authorization, execution and delivery of this Agreement, and the performance of all obligations of the Seller hereunder has been taken prior to the Closing.
3.5 Compliance with Laws. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority, on the part of the Seller, is required in connection with the consummation of the transactions contemplated by this Agreement.
3.6 Exempt Transaction. Based in part upon Seller’s reliance on the Purchaser’s representations in Section 4.3 hereof, the sale of the Common Stock contemplated by this Agreement is exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”).
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Section 4. Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to each Seller as follows:
4.1 Binding Effect. This Agreement has been duly executed and delivered by the Purchaser and constitutes the legal, valid and binding obligation of the Purchaser enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, moratorium, reorganization and other laws affecting creditors’ rights generally and (b) general principles of equity, regardless of whether asserted in a proceeding in equity or at law
4.2 Authorization. All action on the part of the Purchaser, necessary for the authorization, execution and delivery of this Agreement, and the performance of all obligations of the Purchaser hereunder has been taken prior to the Closing.
4.3 Accredited Investor. The Purchaser confirms that such Purchaser is an “accredited investor” pursuant to Rule 501 of Regulation D under the 1933 Act.
4.4 Non-Contravention. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by the Purchaser will not result in any violation of any instrument, judgment, order, writ, decree or contract, statute, rule or regulation to which the Purchaser is subject.
4.5 Compliance with Laws. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority, on the part of the Purchaser, is required in connection with the consummation of the transactions contemplated by this Agreement.
4.6 Sellers as “Affiliates” of the Company. Purchaser acknowledges that it has been informed that the Sellers are “affiliates” of the Company as that term is defined in Rule 144(a)(1) as promulgated under the 1933 Act, has consulted with counsel and is aware of the restrictions on transfer of the Shares under U.S. federal and state securities laws and regulations.
4.7 Voting. Purchaser covenants that, if during the term of the Option Agreement dated as of the date hereof by and among the Sellers and the Purchaser, (the “Option Agreement”), the Company shall consider a Corporate Transaction (as defined in the Option Agreement) and Sellers notify the Purchaser of the Sellers’ intention to vote any shares of the Company’s capital stock in favor of such proposed Corporate Transaction, that Purchaser shall vote the Shares and any other shares of the Company’s capital stock now owned or hereafter acquired by Purchaser in favor of such proposed Corporate Transaction. If any shares of capital stock of the Company are acquired by any affiliate of the Purchaser, Purchaser shall cause such affiliate(s) to vote such shares in accordance with this Section 4.7.
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Section 5. Indemnification.
5.1 Sellers, jointly and severally, shall indemnify and hold harmless the Purchaser, and its officers, managers, members, agents, assigns, affiliates, successors and personal representatives, from and against any and all damages, losses, obligations, claims, actions or causes of action, encumbrances, costs, expenses (including reasonable costs and attorneys’ fees incurred by the indemnified party) or other liabilities of any kind or nature (collectively, “Damages”) arising from or related to the breach by any Seller of any representation, warranty or agreement made by the Sellers hereunder.
5.2 The Purchaser shall indemnify and hold harmless the Sellers and their respective officers, managers, members, agents, assigns, affiliates, successors and personal representatives from and against any and all Damages arising from the breach by the Purchaser of any representation, warranty or agreement made by the Purchaser hereunder.
Section 6. Additional Terms.
6.1 Notices. All notices, requests, consents and demands shall be in writing and shall be personally delivered (effective upon receipt), mailed, postage prepaid (effective three business days after dispatch), telecopied or telegraphed (effective upon receipt of telecopy in complete, readable form), or sent via a reputable overnight courier service (effective the following business day), to Sellers and the Purchaser at:
Sellers: Frank LaGrange Johnson
570 Lexington Avenue, 27th Floor
New York, NY 10022
Fax: (212) 993-7056
with a copy to:
Littman Krooks, LLP
655 Third Avenue, 20th Floor
New York, NY 10017
Attn.: Martin W. Enright, Esq.
Fax: (212) 490-2990
or to the Purchaser at:
the address listed on the Signature Page hereto
with a copy to:
N. I. Jacobs & Associates
355 Lexington Avenue, 6th Fl.
New York NY 10017
Fax (646) 219-3050
Attn: Neil I. Jacobs, Esq.
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6.2 Amendments and Waivers; Survival of Covenants, Representations and Warranties. Except as set forth in this Agreement, changes in or additions to this Agreement may be made, or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively), upon the written consent of the Sellers and the Purchaser. The representations, warranties, covenants and agreements of Purchaser and Sellers contained herein shall survive the Closing Date without limit.
6.4 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision herein.
6.5 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of, the parties hereto, the Company and their respective successors and permitted assigns.
6.6 Further Assurances. Each party to this Agreement agrees to perform any and all further acts and to execute and deliver any documents that may reasonably be necessary to carry out the provisions of this Agreement.
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(Signature pages to follow)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above.
SELLERS:
LaGrange Capital Partners, LP.
By: LaGrange Capital Management, L.L.C.,
its General Partner
By:/S/ Frank LaGrange Johnson
Frank LaGrange Johnson,
its sole Member
LaGrange Capital Partners Offshore Fund, Ltd.
By: LaGrange Capital Administration, L.L.C.,
its Investment Manager
By: /S/ Frank LaGrange Johnson
Frank LaGrange Johnson,
its Managing Member
LaGrange Special Situations Yield Master Fund, Ltd.
By: LaGrange Capital Administration, L.L.C.,
its Investment Manager
By:/S/ Frank LaGrange Johnson
Frank LaGrange Johnson,
its Managing Member
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PURCHASER:
/S/ Terenace Bernard Wise
Terence Bernard Wise
Address: Brambledown, 8 Valley Way, Gerrards Cross
Buckinghamshire SL9 7PN, United Kingdom
ESCROW AGENT:
Littman Krooks, LLP
By:/S/ Martin Enright
Name: Martin Enright
Title: Partner
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With Respect to Section 3.8 only:
LaGrange Capital Management, L.L.C.
By: /S/ Frank LaGrange Johnson
Frank LaGrange Johnson,
its sole Member
LaGrange Capital Administration, L.L.C.
By: /S/ Frank LaGrange Johnson
Frank LaGrange Johnson,
its Managing Member
/S/ Frank LaGrange Johnson
Frank LaGrange Johnson
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OPTION AGREEMENT
THIS OPTION AGREEMENT (the “Agreement”) is made as of the 8th day of December, 2011 (the “Effective Date”) by and among Terence Bernard Wise (the “Option Holder”), and the persons designated as Shareholders on the signature pages hereto (each a “Shareholder” and collectively the “Shareholders”).
WHEREAS, the Shareholders are selling, in the aggregate, 1,076,808 shares of Common Stock of Forward Industries, Inc., a New York corporation (the “Company”) to the Option Holder pursuant to a Stock Purchase Agreement of even date herewith (the “SPA”)(such shares being herein referred to as the “Primary Shares”) and a representation letter of even date herewith from Option Holder to the Shareholders (the “Acknowledgment“); and
WHEREAS, the Shareholders wish to grant the Option Holder a Call Option (capitalized terms are defined in Section 1 below) to purchase an additional 506,733 shares of the Company’s Common Stock (the “Option Shares”); and
WHEREAS, the Option Holder wishes to convey to the Shareholders a Put Option to sell the Option Shares to the Option Holder.
NOW, THEREFORE, the Option Holder and the Shareholders agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the definitions ascribed to them below:
(a) “Agreement” shall have the meaning set forth in the Preamble.
(b) “Business Day” shall mean any day other than a Saturday or Sunday or day on which banks in New York, New York are required or authorized to be closed.
(e) “Common Stock” shall mean the Company’s Common Stock, par value $0.01 per share and any other securities into which such Common Stock shall have been changed or any securities resulting from a reclassification of such Common Stock.
(f) “Company” shall have the meaning set forth in the Preamble.
(g) “Corporate Transaction” means any transaction or series of related transactions relating to, directly or indirectly, (a) any consolidation or merger of the Company with or into any corporation or other entity, other than any consolidation or merger resulting in the shareholders of the Company immediately prior to such transaction holding, after such transaction, eighty percent (80%) or more of the capital stock or other equity interests of the surviving or resulting corporation or other entity entitled to vote for the election of directors (or comparable governing body), or (b) any sale or other disposition by the Company of all of substantially all of its assets or (c) any exclusive licensing transaction having substantially the same effect, other than any such sale or other disposition to a buyer in which the shareholders of the Company immediately prior to such sale or other disposition hold, after such transaction, eighty percent (80%) or more of the capital stock or other equity interests entitled to vote for the election of directors (or comparable governing body).
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(h) “Effective Date” shall have the meaning set forth in the Preamble.
(i) “Lien” or “Liens” means any encumbrance, security interest, lien, claim, pledge, preemptive rights, restrictions on transfer (other than pursuant to relevant securities laws), irrevocable proxy, voting agreement, voting trust arrangement or any other encumbrance whatsoever.
Capitalized terms used and not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the SPA. For the avoidance of doubt, the use of defined terms from the SPA shall not be affected by the expiration or termination of the SPA.
2. Call Option.
2.1 Terms of Call Option. For value received, subject to the terms and conditions set forth herein, each Shareholder hereby grants to the Option Holder the right to purchase from such Shareholder during the term of this Option Agreement, at a price per share equal to the Option Price, the Option Holder’s Option Share Allocation.
2.2 Exercise of Call Option. Provided that there has not been a Corporate Transaction by June 8, 2013 (the “Call Option Termination Date”), the Option Holder may exercise the Call Option on the Call Option Termination Date by giving written notice on or prior to the Call Option Termination Date (the “Call Option Exercise Notice”), in the form attached hereto as Exhibit A, to the Shareholders that it elects to exercise its Option to purchase all, but not less than all, the Option Shares pursuant to this Agreement. The Call Option Exercise Notice shall specify in reasonable detail the number of Option Shares being purchased, the aggregate purchase price for such Option Shares and the proposed date of the closing of the purchase and sale of Option Shares, which date shall be not less than five (5) nor more than ten (10) Business Days from the date of such notice, but in no event prior to the Call Option Termination Date (such date, the “Call Option Exercise Date”). In addition to the Option Exercise Notice, upon electing to exercise the Call Option the Option Holder shall complete, execute and deliver to the Shareholders the Investment Representation Statement attached hereto as Exhibit B.
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2.3 No Equity Holder Rights. The Call Option, by itself, as distinguished from any Option Shares purchased hereunder, shall not entitle the Option Holder to any of the rights of an equity holder of the Company.
3. Put Option. Each Shareholder shall have the right at any time during the term of this Agreement to give written notice (the “Put Option Exercise Notice”), in the form attached hereto as Exhibit C, to the Option Holder that it elects to exercise its Put Option to sell all, but not less than all, of its Option Shares pursuant to this Agreement to the Option Holder. Each Put Option Exercise Notice shall specify in reasonable detail the number of Option Shares being sold, the purchase price for such Option Shares and the proposed date of the closing of the purchase and sale of Option Shares, which date shall be not less than five (5) nor more than ten (10) Business Days from the date of such notice (such date, the “Put Option Exercise Date”).
4. Closings. The purchase and sale of Option Shares under this Agreement shall close at the offices of Littman Krooks LLP at 655 Third Avenue, 20th Floor, New York, NY 10017, or remotely via the exchange of documents, signatures, shares and funds on the applicable Call Option Exercise Date or Put Option Exercise Date. At the closing, each selling Shareholder shall deliver to Option Holder an applicable instrument of transfer conveying all of such Shareholder’s Option Shares, which shall include a certification that Option Holder is receiving good and marketable title to such Option Shares, free and clear of all Liens (other than those established by this Agreement), and Option Holder shall pay to each selling Shareholder the purchase price for such Option Shares in cash by certified or bank check or wire transfer of immediately available funds.
5. Adjustment of Option Price and Number of Shares. The number of Option Shares and the Option Price are subject to adjustment upon the occurrence of a share dividend, share split, reverse share split, combination of shares, reclassification, recapitalization or other similar event altering the number of outstanding shares of Common Stock of the Company (for the avoidance of doubt, not including the issuance of new shares to investors or pursuant to the terms of the Company’s option plans).
6. Term and Termination. This Agreement shall be effective as of the Effective Date and shall terminate at the earliest of (i) the Call Option Exercise Date or the Put Option Exercise Date, as the case may be, (ii) the effective date of a Corporate Transaction, (iii) June 8, 2013 or (iv) the date that the Option Holder and the Shareholders voluntarily terminate this Agreement by a writing signed by each thereof.
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7. Representations and Warranties of the Shareholders and the Option Holder. Each Shareholder and the Option Holder hereby restate and incorporate by reference in this Agreement as if fully set forth herein, the representations and warranties of such party contained in the SPA and the Acknowledgement.
8. Additional Covenants.
8.1 Each Shareholder shall not lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any of the Option Shares during the term of this Agreement.
8.2 Each Shareholder shall not permit any Liens to be placed on or otherwise to effect the Option Shares.
8.3 Within ten (10) days of receiving a Call Option Exercise Notice from the Option Holder, and in no event later than one business day prior to the Call Option Exercise Date, the Shareholders shall deliver a notice to the Company to (i) notify the Company with respect to the exercise of the Option and (ii) requesting that the Company reflect on its books and records the registration of the Option Shares in the Option Holder’s Name.
9. Assignment of Rights.
9.1 Transfer of Option. The Call Option is not transferable or assignable, except through the laws of death and descent, except to an entity which is an “Affiliate” of Option Holder. An “Affiliate” of Option Holder is any person or entity controlling, controlled by or under common control with Option Holder.
9.2 No Third Party Beneficiaries. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
10. Miscellaneous. No waiver, amendment or other modification of this Agreement shall be effective unless in writing and signed by each party to be bound hereby. This Agreement, and any claim related directly or indirectly to this Agreement, shall be governed by, and construed in accordance with, the laws of the State of New York without reference to the conflict of laws provisions thereof. The parties hereby irrevocably and unconditionally submit (to the extent permitted by law) to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York and the United States District Court for the Southern District of New York for any legal action or proceeding arising out of this Agreement, and each of the parties hereby irrevocably consents to service of process in any such action or proceeding by certified or registered mail at the address for such party set forth in Section 11 below. The Shareholders and the Option Holder (each on their own behalf and, to the extent permitted by applicable law, on behalf of their equity holders and creditors) waive all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) related to or arising out of this Agreement. The obligations of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and any of their successors, assigns, heirs and personal representatives.
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11. Notice. Any notice given to any party under this Agreement shall be in writing, and any notice hereunder shall be deemed to have been given upon the earlier of delivery thereof by hand delivery, by courier, or by standard form of telecommunication or three (3) business days after the mailing thereof if sent registered mail with postage prepaid, addressed to the Shareholders or the Option Holder, as applicable, at the address listed on the signature page hereof or at such other address as the Option Holder or the Shareholders may have provided.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Option Agreement as of the date first written above.
SHAREHOLDERS:
LaGrange Capital Partners, LP.
By: LaGrange Capital Management, L.L.C.,
its General Partner
By: /S/ Frank LaGrange Johnson
Frank LaGrange Johnson,
its sole Member
LaGrange Capital Partners Offshore Fund, Ltd.
By: LaGrange Capital Administration, L.L.C.,
its Investment Manager
By: /S/ Frank LaGrange Johnson
Frank LaGrange Johnson,
its Managing Member
LaGrange Special Situations Yield Master Fund, Ltd.
By: LaGrange Capital Administration, L.L.C.,
its Investment Manager
By: /S/ Frank LaGrange Johnson
Frank LaGrange Johnson,
its Managing Member
OPTION HOLDER:
/S/ Terence Bernard Wise
Terence Bernard Wise
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EXHIBIT A
CALL OPTION EXERCISE NOTICE
TO: [___________________]
1. Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to them in that certain Option Agreement, dated December 8, 2011, by and among _______________ (the “Option Holder”) and [________________] (the “Shareholders”).
2. Option Holder hereby elects to purchase its Option Share Allocation from the Shareholders pursuant to the Option Agreement and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any, and the Investment Representation Statement.
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(Name)
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(Address)
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
Common Stock
of
Forward Industries, Inc.
In connection with the purchase of the above‑listed securities, the undersigned hereby represents to the Shareholders, as identified in that certain Option Agreement, dated December 8, 2011, and to Forward Industries, Inc. (the “Company”) as follows:
(a) The securities to be received upon the exercise of the Option (the “Option Shares”) will be acquired for investment for its own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof, and the undersigned has no present intention of selling, granting participation in or otherwise distributing the same, but subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control. By executing this Statement, the undersigned further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer, or grant participation to such person or to any third person, with respect to any shares of Option Shares issuable upon exercise of the Option.
(b) The undersigned understands that the Option Shares to be delivered upon exercise of the Option at the time of issuance may not be registered under the Securities Act of 1933, as amended (the “Act”), and applicable state securities laws, on the ground that the issuance of such securities is exempt from registration under the Act and state law exemptions relating to offers and sales not by means of a public offering, and that the Company’s reliance on such exemptions is predicated on the undersigned’s representations set forth herein.
(c) The undersigned agrees that in no event will it make a disposition of any of the Option Shares acquired upon the exercise of the Option unless and until it shall have furnished the Company with an opinion of counsel satisfactory to the Company and Company’s counsel to the effect that (A) appropriate action necessary for compliance with the Act and any applicable state securities laws has been taken or an exemption from the registration requirements of the Act and such laws is available, and (B) the proposed transfer will not violate any of said laws.
(d) The undersigned acknowledges that an investment in the Company is highly speculative and represents that it is able to fend for itself in the transactions contemplated by this Statement, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investments, and has the ability to bear the economic risks (including the risk of a total loss) of its investment. The undersigned represents that it has had the opportunity to ask questions of the Company concerning the Company’s business and assets and to obtain any additional information which it considered necessary to verify the accuracy of or to amplify the Company’s disclosures, and has had all questions which have been asked by it satisfactorily answered by the Company.
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(e) The undersigned acknowledges that the Option Shares issuable upon exercise of the Option must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available. The undersigned is aware of the provisions of Rule 144 promulgated under the Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through a “broker’s transaction” or in transactions directly with a “market makers” (as provided by Rule 144(f)) and the number of shares being sold during any three‑month period not exceeding specified limitations.
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Dated:__________________ |
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EXHIBIT C
PUT OPTION EXERCISE NOTICE
TO: [___________________]
1. Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to them in that certain Option Agreement, dated December 8, 2011, by and among _______________ (the “Option Holder”) and [________________] (the “Shareholders”).
2. The Shareholders hereby elect to sell their Option Share Allocation to the Option Holder pursuant to the Option Agreement. Option Holder shall tender payment of the purchase price in full, together with all applicable transfer taxes, if any, in accordance with the Option Agreement, along with the Investment Representation Statement.
__________________________________
(Name)
__________________________________
(Address)
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[Shareholder] |
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Title:_________________________________ |
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