UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 27, 2014
TRANS-LUX CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-2257 13-1394750
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
950 Third Avenue, Ste. 2804, New York, NY 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (800) 243-5544
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01
Entry into Material Definitive Agreement;
Item 3.02
Unregistered Sale of Equity Securities;
Item 3.03(b) Material Modification to Rights of Security Holders
On June 27, 2014, Trans-Lux Corporation (the “Company”) entered into that certain Securities Purchase Agreement (the “SPA”) with Retop Industrial (Hong Kong) Limited (“Retop”), pursuant to which Retop purchased 333,333 shares of the Company’s common stock, par value $.001 per share (“Common Stock”), for a purchase price of $2,000,000 (the “Purchase”). A copy of the SPA is filed herewith. The SPA requires that the proceeds of the Purchase are to be utilized solely in connection with the Company’s LED display business unit, including for working capital and general corporate purposes related thereto. The issuance of the Common Stock was completed in accordance with the exemption provided by Section 4(2) of the Securities Act of 1933, as amended. In connection with the SPA, the
Company has issued warrants to purchase 33,333 shares of the Company’s Common Stock to Retop at an exercise price of $8.00 per share. The issuance of the warrants was completed in accordance with the exemption provided by Section 4(2) of the Securities Act of 1933, as amended.
Item 5.02.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 27, 2014, the Board of Directors appointed Yaozhong Shi as a Class B member of the Board of Directors of the Company, thereby filling the vacancy left by the departure of Jean Firstenberg, to serve until the Annual Meeting of Stockholders in 2016, or until his successor is duly elected and qualified. Mr. Shi is the Chairman of Retop. See the disclosure under Item 1.01 Entry into Material Definitive Agreement; Item 3.02 Unregistered Sale of Equity Securities and Item 3.03(b) Material Modification to Rights of Security Holders with respect to a description of the transactions between the Company and Retop.
Item 9.01
Financial Statements and Exhibits.
(d)
Exhibits.
4.01 Warrants issued to Retop Industrial (Hong Kong) Limited.
99.1
Securities Purchase Agreement dated as of June 27, 2014 between Trans-Lux Corporation and Retop Industrial (Hong Kong) Limited.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized:
TRANS-LUX CORPORATION
By: /s/ Robert J. Conologue
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Robert J. Conologue
Chief Financial Officer
By: /s/ Todd Dupee
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Todd Dupee
Vice President, Finance
and Controller
Dated: June 30, 2014
Exhibit 4.01
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
WARRANT
TRANS-LUX CORPORATION
Warrant Shares: 33,333
Initial Exercise Date: June 27, 2014
THIS WARRANT (the “Warrant”) certifies that, for value received, Retop Industrial (Hong Kong) Limited (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, (A) at any time on or after the initial exercise date hereof (the “Initial Exercise Date”) , and (B) on or prior to the close of business on the two-year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Trans-Lux Corporation, a Delaware corporation (the “Company”), up to 33,333 shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s common stock, par value $.001 per share (“Common Stock”) of the Company. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 1(b).
Section 1.
Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times after the Initial Exercise Date as specified above and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise form annexed hereto. Within three (3) business days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) business days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding
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number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) business day of receipt of such notice. The Holder, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b)
Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $8.00 subject to adjustment hereunder (the “Exercise Price”).
c)
Mechanics of Exercise.
i.
Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent to the Holder free of restrictive legends unless a registration statement covering the resale of the Warrant Shares and naming the Holder as a selling stockholder thereunder is not then effective, or the Warrant Shares are not freely transferable without volume restrictions pursuant to Rule 144 under the Securities Act, in each case by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) business days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required), and (C) payment of the aggregate Exercise Price as set forth above (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price except for a Cashless Exercise as set forth in Section 2 (e), prior to the issuance of such shares, having been paid.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
iv.
Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the
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Holder, provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder; and provided further, that the Holder shall be responsible for any legal fees associated with the preparation and delivery of any opinion of counsel that may be required to be delivered upon transfer of the Warrant or any portion thereof..
v.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
Section 2.
Certain Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 2(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b)
Reclassification, Exchange, Combinations or Substitution. Upon any event whereby all of the outstanding shares of the Common Stock are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Warrant Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this Section 2(b) shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similar events.
(c)
Fundamental Transactions. If, at any time while this Warrant is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 2(b) above) (in any such case, a "Fundamental Transaction"), then the Holder shall have the right
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thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the Holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the "Alternate Consideration"). The aggregate Exercise Price for this Warrant will not be affected by any such Fundamental Transaction, but the Company shall apportion such aggregate Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. In the event of a Fundamental Transaction, the Company or the successor or purchasing person, as the case may be, shall execute with the Holder a written agreement providing that:
(x)
this Warrant shall thereafter entitle the Holder to purchase the Alternate Consideration in accordance with this Section 2(c);
(y)
in the case of any such successor or purchasing person, upon such consolidation, merger, statutory exchange, combination, sale or conveyance, such successor or purchasing person shall be jointly and severally liable with the Company for the performance of all of the Company's obligations under this Warrant and the Securities Purchase Agreement; and
(z)
if registration or qualification is required under the Securities Act or applicable state law for the public resale by the Holder of shares of stock and other securities so issuable upon exercise of this Warrant, all rights applicable to registration of the Common Stock issuable upon exercise of this Warrant shall apply to the Alternate Consideration.
If, in the case of any Fundamental Transaction, the Alternate Consideration includes shares of stock, other securities, other property or assets of a person other than the Company or any such successor or purchasing person, as the case may be, in such Fundamental Transaction, then such written agreement shall also be executed by such other person and shall contain such additional provisions to protect the interests of the Holder as the Board of Directors of the Company shall reasonably consider necessary by reason of the foregoing. At the Holder's request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder's right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Subsection (d) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. If any Fundamental Transaction constitutes or results in a change of control, the Company (or any such successor or surviving entity) will purchase the Warrant from the Holder for a purchase price, payable in cash within five business days after such request (or, if later, on the effective date of the Fundamental Transaction), equal to the Black-Scholes value of the remaining unexercised portion of this Warrant on the date of such request.
(d)
Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or
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solicits stockholder approval for any Fundamental Transaction, or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least 20 calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.
(e)
Cashless Exercise. Provided that the Company's Common Stock is listed on a Listed Stock Exchange, the Holder may satisfy its obligation to pay the Exercise Price through a "cashless exercise," in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this Warrant is being exercised.
A = the arithmetic average of the closing prices for the five trading days (as reflected on such Listed Stock Exchange) immediately prior to (but not including) the Exercise Date.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued.
(f)
Calculations. All calculations under this Section 2 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 2, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
(g)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 2, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or
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a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K or issue a press release disclosing such material non-public information. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
(h)
The Company's obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit the Holder's right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof
Section 3.
Transfer of Warrant.
a)
Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are not transferable by Holder at any time, either in whole or in
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part. Notwithstanding the foregoing, the Warrant Shares issued upon the exercise of this Warrant may be transferred in accordance with all applicable securities laws.
b)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the Holder. The Company may deem and treat the Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
c)
Acknowledgement. Holder acknowledges that, at any time this Warrant is exercised, unless the Warrant Shares are either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Holder will receive the applicable Warrant Shares in the form of restricted stock of the Company.
d)
Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.
Section 4.
Miscellaneous.
a)
No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 1(c)(i).
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a business day, then, such action may be taken or such right may be exercised on the next succeeding business day.
d)
Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or
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regulation, or of any requirements of the domestic securities exchange trading market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e)
Governing Law. This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of New York.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.
g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h)
Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return
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receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 4(d)(h).
| If to the Company: | TRANS-LUX CORPORATION 950 Third Avenue, Suite 2804 New York, NY 10022 Facsimile: 203-229-0691 E-mail: jmallain@trans-lux.com Attention: J.M. Allain, President and CEO |
| If to the Holder: | Unit 27,13/F,Shing Yip Industrial Building 19-21 Shing Yip Street, Kwun Tong, Kowloon, HongKong Facsimile: +86-755-26002666 E-mail: 2375997478@qq.com Attention: Yaozhong Shi |
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company. The provisions of this Warrant are intended to be solely for the benefit of the Holder of this Warrant and shall be enforceable by the Holder.
l)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| TRANS-LUX CORPORATION |
| By:__________________________________________ Name: Title: |
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NOTICE OF EXERCISE
TO:
TRANS-LUX CORPORATION
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall take the form of [ ] cashier’s check or [ ] wire transfer in lawful money of the United States.
(3)
Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:
DWAC Account No.: _______________________________
or
Physical Address
_______________________________
_______________________________
_______________________________
Name of Holder: ___________________________________________________
Signature of Holder: _________________________________________________
Date: ________________________________________________________________________________________
EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
between
TRANS-LUX CORPORATION
and
RETOP INDUSTRIAL (HONG KONG) LIMITED
dated as of
June 27, 2014
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1
ARTICLE II
PURCHASE AND SALE
3
Section 2.01
Purchase and Sale
2
Section 2.02
Transactions Effected at the Closing
4
Section 2.03
Closing
5
Section 2.04
Use of Proceeds
5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5
Section 3.01
Organization, Qualification and Authority of the Company
5
Section 3.02
Subsidiaries
6
Section 3.03
Capitalization
6
Section 3.04
No Conflicts; Consents
7
Section 3.05
Valid Issuance of Purchased Shares
7
Section 3.06
Filings, Consents and Approvals
7
Section 3.07
Financial Statements
7
Section 3.08
No Material Adverse Effect
8
Section 3.09
Insurance
8
Section 3.10
Legal Proceedings; Governmental Orders
8
Section 3.11
Permits
9
Section 3.12
Compliance With Laws
9
Section 3.13
Material Contracts
9
Section 3.14
Title to Assets
9
Section 3.15
Taxes
9
Section 3.16
Brokers
10
Section 3.17
Exchange Act Reports
10
Section 3.18
Intellectual Property
10
Section 3.19
Internal Accounting and Disclosure Controls
10
Section 3.20
Certain Securities Law Matters
11
Section 3.21
Affiliate Transactions
11
Section 3.22
Anti-Corruption Laws
11
Section 3.23
No Other Representations or Warranties
11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTOR
11
Section 4.01
Organization and Authority of Investor
11
Section 4.02
No Conflicts; Consents
12
Section 4.03
Investment Purpose
12
Section 4.04
Independent Investigation
12
Section 4.05
Brokers
12
ARTICLE V
COVENANTS AND ADDITIONAL AGREEMENTS
12
Section 5.01
Covenants
12
Section 5.02
Director Appointment
13
Section 5.03
Registration Rights
14
Section 5.04
Cooperation Regarding Rule 144
16
Section 5.05
Preferred Supplier
16
Section 5.06
Further Assurances
16
ARTICLE VI
INDEMNIFICATION
16
Section 6.01
Survival
16
Section 6.02
Indemnification
16
Section 6.03
Certain Limitations
18
Section 6.04
Tax Treatment of Indemnification Payments
18
Section 6.05
Exclusive Remedies
18
ARTICLE VII
MISCELLANEOUS
18
Section 7.01
Expenses
18
Section 7.02
Notices
18
Section 7.03
Interpretation
18
Section 7.04
Headings
18
Section 7.05
Severability
18
Section 7.06
Entire Agreement
18
Section 7.07
Successors and Assigns
18
Section 7.08
No Third-party Beneficiaries
19
Section 7.09
Amendment and Modification; Waiver
19
Section 7.10
Governing Law
19
Section 7.11
Dispute Resolution
19
Section 7.12
Waiver of Jury Trial
20
Section 7.13
Counterparts
20
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”), dated as of June 27, 2014, is entered into by and between TRANS-LUX CORPORATION, a Delaware corporation (the “Company”) and Retop Industrial (Hong Kong) Limited, a company incorporated in Hong Kong (“Investor”).
RECITALS
WHEREAS, the Company has authorized the issuance by the Company of up to 333,333 shares of its common stock, par value $0.001 per share (the “Common Shares”); and
WHEREAS, the Company wishes to sell to Investor, and Investor wishes to purchase from the Company, 333,333 Common Shares, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
The following terms have the meanings specified or referred to in this ARTICLE I:
“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise .
“Agreement” has the meaning set forth in the preamble.
“Audited Financial Statements” has the meaning set forth in Section 3.07.
“Balance Sheet” has the meaning set forth in Section 3.07.
“Balance Sheet Date” has the meaning set forth in Section 3.07.
“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in New York City are authorized or required by Law to be closed for business.
“Closing” has the meaning set forth in Section 2.03.
“Closing Date” has the meaning set forth in Section 2.03.
“Commission” means U.S. Securities and Exchange Commission.
“Common Shares” has the meaning set forth in the recitals.
“Company” has the meaning set forth in the preamble.
“Company’s Knowledge” or any other similar knowledge qualification, means the actual knowledge of any director or named executive officer of the Company.
“Dollars or $” means the lawful currency of the United States.
“Exchange Act” has the meaning set forth in Section 3.16.
“GAAP” means United States generally accepted accounting principles in effect from time to time.
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
“Indemnitees” has the meaning set forth in Section 6.02.
“Insurance Policies” has the meaning set forth in Section 3.09.
“Intellectual Property” has the meaning set forth in Section 3.17.
“Investor” has the meaning set forth in the preamble.
“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.
“Lien” means any lien (statutory or other), security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, or other encumbrance of any kind or nature.
“Losses” means actual out-of-pocket losses, damages, liabilities, deficiencies, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, that “Losses” shall not include punitive damages, or any incidental, consequential, special or indirect damages.
“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to the business, results of operations, condition (financial or otherwise) or assets of the Company and its Subsidiaries, taken as a whole; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Company operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement; (vi) any changes in applicable Laws or accounting rules, including GAAP; or (vii) the public announcement, pendency or completion of the transactions contemplated by this Agreement; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Company and its Subsidiaries, taken as a whole, compared to other participants in the industries in which the Company conducts its businesses.
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“Material Contracts” has the meaning set forth in Section 3.12.
“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.
“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.
“Purchased Shares” has the meaning set forth in Section 2.01.
“Purchase Price” has the meaning set forth in Section 2.01.
“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Repricing Period” means the period commencing on the Closing Date and ending on the date upon which the Company shall issue additional Common Shares to any other investor(s) at a price equal to or greater than $6.00 per share; provided that the aggregate purchase price for the issuance of such shares shall be at least equal to or greater than $2,000,000.
“Securities Act” means the Securities Act of 1933, as amended.
“SEC Reports” has the meaning set forth in Section 3.16.
“Subsidiaries” has the meaning set forth in Section 3.02.
“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to income taxes, including any schedule or attachment thereto, and including any amendment thereof, in each case which are required to be filed by the Company.
“Trading Market” means The NASDAQ Global Market or any other national securities exchange, market or trading or quotation facility on which the Common Shares is then listed or quoted.
Section 2.01
Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, the Company shall sell to Investor, and Investor shall purchase from the Company, for an aggregate purchase price of $2,000,000 (the “Purchase Price”), 333,333 Common Shares (the “Purchased Shares”). The parties hereto agree that if Company shall, at any time or from time to time during the Repricing Period, issue any additional Common Shares to any other investor at a price lower than $6.00 per share, then Investor shall be entitled to adjust its stock price per share under this Agreement ($6.00 per share) to such lower stock price per share and the number of Purchased Shares shall be proportionally increased to account for this adjustment. Upon payment of the Purchase Price, the Investor shall be granted two year warrants to purchase up to 33,333 shares of the Company’s common stock (the “Warrants”) pursuant to a warrant agreement in the form agreed to between the parties (collectively, the “Warrant Agreement”). The Warrant Agreement shall provide that the Warrants shall vest immediately upon the initial exercise date thereof. The initial exercise date of the Warrants shall be the same date as the date of this Agreement. The Warrants shall have an exercise price equal to $8.00 per share. The Warrants shall be exercisable by the Investor at any time after such Warrants have vested and prior to the date that the Warrants terminate in accordance with the terms of the Warrant Agreement.
3
Section 2.02
Transactions Effected at the Closing.
(a)
At the Closing, Investor shall deliver to the Company:
(i)
the Purchase Price by wire transfer of immediately available funds to an account of the Company designated in writing by the Company to Investor with the Purchased Shares held in escrow by the Company’s outside counsel to be released to Investor upon the payment; and
(ii)
an executed copy of this Agreement and all other agreements, documents, instruments or certificates required to be delivered by Investor at or prior to the Closing pursuant to the terms of this Agreement.
(b)
At the Closing, the Company shall deliver to Investor:
(i)
Documentation representing issuance of the Purchased Shares in certificated form, which shares shall be issued in the name of Investor;
(ii)
A Certificate, executed by the Company’s Chief Executive Officer or its Chief Financial Officer, dated as of the Closing Date, certifying that (A) the representations and warranties made by the Company herein are true and correct in all material respects; (B) the Company has performed all obligations and covenants herein required to be performed by it on the Closing Date, (C) the Company has obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the purchase and sale of the Purchased Shares and the consummation of the transactions contemplated by this Agreement, all of which shall be in full force and effect, (D) no judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any Governmental Authority, shall have been issued, and no Action shall have been instituted by any Governmental Authority, enjoining or preventing the consummation of the transactions contemplated by the Agreement; (E) no stop order or suspension of trading shall have been imposed by the Commission or any other Governmental Authority having jurisdiction over the Company or the market(s) where the Common Shares are listed or quoted, with respect to public trading; and (F) there shall be no Material Adverse Effect with respect to the Company as of the Closing Date;
(iii)
A Certificate, executed by the Company’s Secretary, dated as of the Closing Date, certifying (A) the resolutions duly adopted by the Company’s board of directors approving the transactions contemplated by this Agreement and the issuance of the Purchased Shares, (B) the current versions of the Certificate of Incorporation and Bylaws of the Company, (C) the valid existence and good standing of the Company and its Subsidiaries, and (D) as to the signatures and authority of persons signing this Agreement and related documents on behalf of the Company;
(iv)
A good standing certificate issued by the Secretary of State of Delaware as of a date not more than five business days prior to the Closing Date with respect to the Company’s good standing;
4
(v)
An Opinion of Counsel duly executed by the Company’s legal counsel on the Closing Date, addressed to Investor, in form and substance as agreed to by the Company and Investor, with respect to the matters set forth on Annex A hereto; and
(vi)
An executed copy of this Agreement and all other agreements, documents, instruments or certificates required to be delivered by Investor at or prior to the Closing pursuant to the terms of this Agreement.
Section 2.03
Closing. Subject to the terms and conditions of this Agreement, the purchase and sale of the Purchased Shares contemplated hereby shall take place on the date upon which the Purchase Price shall be received by the Company (the “Closing”) remotely by electronic mail and/or facsimile, or at such other time or on such other date or at such other place or by such other method as the Company and Investor may mutually agree upon orally or in writing (the day on which the Closing takes place shall be referred to herein as the “Closing Date”).
Section 2.04
Use of Proceeds. The proceeds from the issuance of the Purchased Shares shall be used by the Company in connection with its LED display business unit, including for working capital and general corporate purposes related thereto, and not for any other purpose or any other business unit, such as the Company’s LED lighting unit.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Investor that the statements contained in this ARTICLE III are true and correct as of the Closing Date.
Section 3.01
Organization, Qualification and Authority of the Company. The Company and each of its Subsidiaries (as defined below) is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and is qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the properties owned, leased or operated, or the business conducted, by it requires such qualification or licensing, except to the extent that the failure to so qualify or be licensed would not have a Material Adverse Effect. The Company has full corporate power and authority to (a) enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby, and (b) own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. The execution and delivery by the Company of this Agreement, the performance by the Company of its obligations hereunder and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Company. All corporate action on the part of the Company necessary for the authorization, execution and delivery by the Company of this Agreement and the performance of all obligations of the Company hereunder, including the authorization, issuance, sale and delivery of the Purchased Shares, has been taken and no further action is required by the Company, its board of directors or its stockholders in connection therewith. This Agreement has been duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by Investor) this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws and equitable principles related to or affecting creditors’ rights generally or the effect of general principles of equity.
5
Section 3.02
Subsidiaries. A true and correct listing of all of the Company’s subsidiaries as of December 31, 2013 is set forth in Exhibit 21 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the Commission on May 13, 2014. The subsidiaries on such list, excluding Trans-Lux Southwest Corporation and Trans-Lux Montezuma Corporation, shall be collectively referred to herein as “Subsidiaries”. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. There are no outstanding (a) securities of the Company or any Subsidiary convertible into or exchangeable for shares of capital stock or voting securities of any Subsidiary or (b) options or other rights to acquire from the Company or any Subsidiary, or other obligation of the Company or any Subsidiary to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of any Subsidiary (the items in clauses (a) and (b) being referred to collectively as the “Subsidiary Securities”). There are no outstanding obligations of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.
Section 3.03
Capitalization.
(a)
Schedule 3.03 sets forth as of the date hereof and as of immediately following the Closing after giving effect to the transactions contemplated by this Agreement (a) the authorized capital stock of the Company; (b) the number and class of shares of capital stock of the Company issued and outstanding; (c) the number and class of shares of capital stock of the Company issuable pursuant to the Company’s 2012 Long Term Incentive Plan and other award programs; and (d) the number and class of shares of capital stock of the Company issuable and reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for any shares of capital stock of the Company and a description of the number and rights of such securities.
(b)
As of immediately following the Closing after giving effect to the transactions contemplated by this Agreement, to the Company’s Knowledge and assuming Investor’s representations in Section 4.02 are true and correct in all respects, (i) all of the issued and outstanding shares of capital stock of the Company will have been duly authorized, validly issued, fully paid and non-assessable, (ii) all of the issued and outstanding shares of capital stock of the Company will have been issued in compliance with all applicable federal and state securities Laws, and (iii) none of the issued and outstanding shares of capital stock of the Company will have been issued in violation of any agreement, arrangement or commitment to which the Company or any of its Affiliates is a party or is subject to or in violation of any preemptive or similar rights of any Person.
(c)
Except as described in Schedule 3.03, no Person has any right of first refusal, preemptive right, right of participation, right of first refusal, right of co-sale or similar right in favor of stockholders with respect to any of the Purchased Shares, or the issuance or sale thereof, whether pursuant to the Company’s certificate of incorporation or bylaws, applicable law, contract or otherwise.
(d)
Except as described in Schedule 3.03, there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or voting securities of the Company or securities convertible into or exchangeable for capital stock or voting securities of the Company. Except as described in Schedule 3.03, there are no outstanding shares of capital stock or securities that can be convertible into or exchangeable for any shares of capital stock or voting securities of the Company or its Subsidiaries.
(e)
Except as described on Schedule 3.03, the issuance and sale of the Purchased Shares will not obligate the Company to issue Common Shares or other securities to any Person (other than Investor) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.
6
(f)
Except as described on Schedule 3.03 or pursuant to equity awards granted under the Company’s 2012 Long Term Incentive Plan or other award programs, there are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among the Company and any of the security holders of the Company relating to the securities of the Company held by them.
(g)
Except as described on Schedule 3.03, no Person has the right to require the Company to register any securities of the Company under the Securities Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person.
Section 3.04
No Conflicts; Consents. The execution, delivery and performance by the Company of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not, to the Company’s Knowledge: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of the Company or any Subsidiary; (b) materially conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, except where the conflict, violation, breach, default, termination, amendment, acceleration or cancellation or failure to give notice would not, individually or in the aggregate, have a Material Adverse Effect. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to the Company in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, except for such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which, in the aggregate, would not have a Material Adverse Effect.
Section 3.05
Valid Issuance of Purchased Shares. The Purchased Shares, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly authorized, validly issued, fully paid and nonassessable, and will be free and clear of all Liens, other than restrictions on transfer under applicable state and federal securities laws.
Section 3.06
Filings, Consents and Approvals. Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other Governmental Body or other Person in connection with the execution, delivery and performance by the Company of any of the Transaction Documents, other than such post-sale exemption notice filings pursuant to applicable federal and state securities laws which the Company undertakes to file within the applicable time periods.
Section 3.07
Financial Statements. Complete copies of the Company’s audited financial statements consisting of the balance sheet of the Company as at December 31, 2013 (the “Balance Sheet”) and the related statements of income and retained earnings, stockholders’ equity and cash flow for the year then ended (the “Audited Financial Statements”) have been delivered to Investor. The Audited Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved. The Audited Financial Statements are based on the books and records of the Company, and, fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations of the Company for the periods indicated in accordance with GAAP. The date of the Balance Sheet is referred to herein as the “Balance Sheet Date”.
7
Section 3.08
Section 3.09
Insurance. The Company currently carries policies or binders of fire, liability, umbrella liability, real and personal property, workers’ compensation, vehicular, directors and officers’ liability, and other casualty and property insurance maintained by the Company or its Affiliates and relating to the assets, business, operations, employees, officers and directors of the Company (collectively, the “Insurance Policies”). Such Insurance Policies are in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated by this Agreement. To the Company’s Knowledge, the insurance coverage provided by such policies is customary for the industry in which the Company and the Subsidiaries operate. Each of the Company and the Subsidiaries has complied with the provisions of each such policy under which it is an insured party, except for instances of noncompliance that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. There are no pending or, to the Company’s Knowledge, threatened claims under any insurance policy that individually or in the aggregate have had or would reasonably be expected to have a Material Adverse Effect.
Section 3.10
Legal Proceedings; Governmental Orders.
(a)
There are no Actions pending or, to the Company’s Knowledge, threatened against or by the Company that questions the validity of this Agreement, or the right of the Company to enter into or to consummate the transactions contemplated hereby, or which would or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(b)
To the Company’s Knowledge, there are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting the Company or any of its properties or assets which, individually or in the aggregate, would have a Material Adverse Effect.
(c)
To the Company’s Knowledge, there are no Commission inquiries or investigations, other governmental inquiries or investigations or internal investigations pending or threatened in each case regarding any accounting practices of the Company or any alleged malfeasance by any director or executive officer of the Company.
8
Section 3.11
Permits. The Company and its Subsidiaries possess all Permits necessary for the present conduct of their respective businesses, other than where the failure to have such Permits would not reasonably be expected to cause a Material Adverse Effect.
Section 3.12
Section 3.13
Material Contracts. All material contracts, plans and arrangements to which the Company or any Subsidiary is a party or any of their respective properties or assets is subject that are required to be filed as an exhibit to any SEC Report have been so filed with the Commission (such documents, the “Material Contracts”). All the Material Contracts are valid and in full force and effect, except to the extent they have previously expired or terminated in accordance with their terms and except for any invalidity or failure to be in full force and effect that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the Company’s Knowledge, none of the Company or any Subsidiary is in violation of or default (with or without notice or lapse of time or both) under, or has waived or failed to enforce any rights or benefits under, any Material Contract, except for violations, defaults, waivers or failures to enforce rights or benefits that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. To the Company’s Knowledge, no other party to any Material Contract is in breach thereof or default thereunder, except for breaches or defaults that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.
Section 3.14
Title to Assets. To the Company’s Knowledge, each of the Company and its Subsidiaries has good, valid and marketable title to, or in the case of leased properties and assets, valid leasehold interests in, all the assets and properties that it owns or uses and that are reflected on the Balance Sheet, or that were thereafter acquired (except for assets and properties sold, consumed or otherwise disposed of in the ordinary course of business since such date) except where the failure to have such title or valid leaseholds would not reasonably be expected to have a Material Adverse Effect.
Section 3.15
Taxes.
(a)
The Company has timely filed all Tax Returns that it was required to file as of the Balance Sheet Date. To the Company’s Knowledge at the time of such filings, all such Tax Returns were complete and correct in all material respects. All taxes shown as due on any Tax Return by the Company have been, to the Company’s Knowledge, timely paid, duly provided for, or are being contested in good faith by appropriate proceedings. The Company has disclosed to the Investor material tax issues that are being contested. Any non-disclosure of the tax issues would not reasonably be expected to have a Material Adverse Effect.
(b)
The Company has withheld and paid each tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, shareholder or other party, and complied in all material respects with all information reporting and backup withholding provisions of applicable Law, except where non-compliance would not, individually or in the aggregate, have a Material Adverse Effect.
9
(c)
Since December 31, 2011, no extensions or waivers of statutes of limitations have been given or requested with respect to any taxes of the Company.
(d)
The Company is not a party to any Action by any taxing authority. There are no pending or threatened Actions by any taxing authority.
Section 3.16
Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.
Section 3.17
Exchange Act Reports. The Company has filed all reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) required to be filed by it from January 1, 2012 through the date hereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein being collectively referred to herein as the “SEC Reports”), except for the Company’s Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2014. As of their respective filing dates (or, if amended, as of the date of such amendment), the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except to the extent corrected by an SEC Report filed subsequently (but prior to the date hereof). There are no outstanding or unresolved comments in comment letters received from the Commission staff with respect to any of the SEC Reports.
Section 3.18
Intellectual Property. To the Company’s Knowledge, the Company and the Subsidiaries own a valid right, title, interest or license in and to the intellectual property necessary or material for the operation of their respective businesses, which includes all patents, patent applications, provisional patents, copyrights, common law copyrights, trade names, trademarks, service marks, technology, customer lists, internet domain names, know-how, processes, or any other intangible property rights, including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems, procedures or registrations or applications relating to the same (“Intellectual Property”), except where the failure to so have would not, individually or in the aggregate, have a Material Adverse Effect. To the Company’s Knowledge, neither the Company nor any Subsidiary has violated or infringed upon the Intellectual Property rights of any other Person. There are no claims pending or, to the Company’s Knowledge, threatened against the Company or any Subsidiary regarding any claim or infringement of any Intellectual Property belonging to any other Person and the Company has not received any notice (written or otherwise) of any claim of any such infringement. To the Company’s Knowledge, all such Intellectual Property rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property rights.
Section 3.19
Internal Accounting and Disclosure Controls. The Company maintains a system of internal accounting controls that are designed to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorization, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization and (d) the recorded accountability for assets is compared with the existing assets at quarterly intervals and appropriate action is taken with respect to any material differences. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act) that are designed to provide reasonable assurance 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 rules and forms of the SEC, 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 officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure.
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Section 3.20
Certain Securities Law Matters.
(a)
Neither the Company nor any of its Affiliates, or any person acting on its or their behalf, directly or indirectly, has conducted or will conduct any general solicitation or general advertising (as those terms are used in Regulation D as promulgated by the Commission under the Securities Act) in connection with the offer or sale of any of the Purchased Shares.
(b)
Subject to the accuracy of Investor’s representations and warranties set forth in Article IV, the offer and sale of the Purchased Shares by the Company to Investor on the Closing Date will not require registration under the Securities Act or any applicable state securities law. The Company is issuing the Purchased Shares in accordance with and in reliance upon the exemption from securities registration afforded, inter alia, by Rule 506 under Regulation D as promulgated by the Commission under the Securities Act.
Section 3.21
Affiliate Transactions. Except as disclosed in the SEC Reports, there have been no transactions, agreements, arrangements or understandings between the Company or any Subsidiary, on the one hand, and their respective directors, officers or Affiliates, on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K as promulgated by the Commission under the Exchange Act.
Section 3.22
Anti-Corruption Laws. None of the Company or its Subsidiaries, and to the Company’s Knowledge, any of its respective officers, directors, agents or employees have, directly or indirectly, made or authorized any contribution, payment or gift of funds, or property to any official, employee or agent of any governmental agency, authority or instrumentality in any jurisdiction where either the payment or gift or the purposes of such contribution, payment or gift was, is, or will be prohibited under applicable law of any relevant locality at the time of such contribution, payment or gift, including without limitation, the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations promulgated thereunder and any other applicable anti-bribery or anti-corruption laws or regulations of any jurisdiction.
Section 3.23
No Other Representations or Warranties. Except for the representations and warranties contained in this Article III, neither the Company nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor represents and warrants to the Company that the statements contained in this ARTICLE IV are true and correct as of the Closing Date.
Section 4.01
Organization and Authority of Investor. Investor is a company duly organized, validly existing and in good standing under the Laws of Hong Kong. Investor has full corporate power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Investor of this Agreement, the performance by Investor of its obligations hereunder and the consummation by Investor of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Investor. This Agreement has been duly executed and delivered by Investor, and (assuming due authorization, execution and delivery by the Company) this Agreement constitutes a legal, valid and binding obligation of Investor enforceable against Investor in accordance with its terms.
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Section 4.02
No Conflicts; Consents. The execution, delivery and performance by Investor of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of Investor; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Investor; or (c) require the consent, notice or other action by any Person under any contract to which Investor is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Investor in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
Section 4.03
Investment Purpose. Investor is acquiring the Purchased Shares solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Investor acknowledges that the Purchased Shares are not registered under the Securities Act, or any state securities laws, and that the Purchased Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act, or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable. Investor is able to bear the economic risk of holding the Purchased Shares and, at the present time, is able to afford a complete loss of such investment. Investor has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment.
Section 4.04
Independent Investigation. Investor has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records and other documents and data of the Company for such purpose. Investor acknowledges and agrees that (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Investor has relied solely upon its own investigation and the express representations and warranties of the Company set forth in Article III of this Agreement, and (b) neither the Company nor any other Person has made any representation or warranty as to the Company or this Agreement, except as expressly set forth in Article III of this Agreement.
Section 4.05
Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Investor.
ARTICLE V
COVENANTS AND ADDITIONAL AGREEMENTS
Section 5.01
Covenants. Unless the Company has received the prior written consent or waiver of Investor, the Company shall be subject to each of the following covenants:
(a)
The Company shall at all times maintain (i) under the Laws of the state of Delaware its valid corporate existence and good standing, (ii) its due license and qualification to do business and good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary and (iii) all material Permits necessary to the conduct of its businesses, in each case, except where the failure to comply with this Section 5.01 shall not have, individually or in the aggregate, a Material Adverse Effect.
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(b)
The Company shall comply with all Laws applicable to it or its business, properties or assets, the violation of which would reasonably be expected to have a Material Adverse Effect.
(c)
The Company shall maintain with financially sound and reputable insurance companies (i) property and casualty and other insurance covering risks and hazards of such types and in such amounts as are customary for adequately-insured companies of similar size engaged in similar industries and lines of business, and (ii) directors and officers liability insurance.
(d)
The Company shall keep adequate books, accounts and records in accordance with past custom and practice as used in the preparation of its financial statements.
(e)
No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Investor is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Investor could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and Investors.
(f)
The Company agrees that: (i) if the Company applies to have the Common Shares traded on any Trading Market other than the OTC Market, it will include in such application the Purchased Shares, and will take such other action as is necessary or desirable to cause the Purchased Shares to be listed on such other Trading Market as promptly as possible, and (ii) if the Company applies to have the Common Shares traded on any Trading Market other than the OTC Market, it will take all action reasonably necessary to continue the listing and trading of its Common Shares on a Trading Market and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.
(g)
Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate for any security of the Company and, in the case of loss, theft or destruction, upon delivery of an undertaking by the holder thereof to indemnify the Company (and, if requested by the Company, the delivery of an indemnity bond sufficient in the judgment of the Company to protect the Company from any loss it may suffer if a certificate is replaced), or, in the mutilation, upon surrender and cancellation thereof, the Company will issue a new certificate for an equivalent number of shares or another security of like tenor, as the case may be.
Section 5.02
Director Appointment. Within ten days of the Closing Date, the board of directors of the Company shall pass a resolution that Yaozhong Shi shall become a director of the board of directors of the Company.
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Section 5.03
Registration Rights.
(a)
Definitions. For purposes of this Section 5.03:
(i)
The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement.
(ii)
Registrable Securities. The term “Registrable Securities” means: (A) the Purchased Shares and the Warrant Shares under this Agreement and (B) any Common Shares issued as a dividend or other distribution with respect to, in exchange for or in replacement of the Purchased Shares.
(b)
Piggyback Registrations. The Company shall notify Investor in writing at least thirty (30) days prior to filing any registration statement under the Securities Act for purposes of effecting a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding registration statements on a form S-8 or S-4, or any successor forms) and will afford Investor an opportunity to include in such registration statement all or any part of the Registrable Securities then held by Investor. Investor desiring to include in any such registration statement all or any part of the Registrable Securities held by Investor shall, within twenty (20) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities Investor wishes to include in such registration statement. If Investor decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, Investor shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.
(i)
Underwriting. If a registration statement under which the Company gives notice under this Section is for an underwritten offering, then the Company shall so advise the Investor. In such event, the right of Investor to include Registrable Securities in a registration pursuant to this Section 5.03 shall be conditioned upon Investor’s participation in such underwriting and the inclusion of Investor’s Registrable Securities in the underwriting to the extent provided herein. If Investor proposes to distribute its Registrable Securities through such underwriting, Investor shall enter into an underwriting agreement in customary form with the managing underwriter or underwriter(s) selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the managing underwriter(s) determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares (including Registrable Securities) from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Company, and second, to Investor. If Investor disapproves of the terms of any such underwriting, Investor may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration.
(ii)
Expenses. All registration expenses incurred in connection with a registration pursuant to this Section shall be borne by the Company. Investor participating in a registration pursuant to this Section shall bear its proportionate share (based on the total number of shares sold in such registration other than for the account of the Company) of all discounts, commissions and selling expenses incurred in connection with a registration pursuant to this Section.
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(c)
Indemnification. In the event any Registrable Securities are included in a registration statement:
(i)
By the Company. To the extent permitted by law, the Company will indemnify and hold harmless Investor and each of its Representatives, against any Losses to which it may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such Losses arise out of or are based upon any of the following statements, omissions or violations (each a “Violation”): (1) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (2) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (3) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement; and the Company will reimburse Investor and its Representatives for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such Loss; provided, however, that the indemnity agreement contained in this subsection shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such Loss to the extent that it arises out of or is based upon a violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by Investor or its Representatives.
(ii)
By Investor. To the extent permitted by law, Investor will indemnify and hold harmless the Company and each of its Representatives and any underwriter, against any Losses to which the Company or any such Representative or underwriter may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such Losses arise out of or are based upon any violation, in each case to the extent (and only to the extent) that such violation occurs in reliance upon and in conformity with written information furnished by Investor expressly for use in connection with such registration; and Investor will reimburse any legal or other expenses reasonably incurred by the Company or any such Representative or underwriter in connection with investigating or defending any such Loss; provided, however, that the indemnity agreement contained in this Section shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of Investor, which consent shall not be unreasonably withheld; and provided further, that the total amounts payable in indemnity by Investor under this Section in respect of any violation shall not exceed the net proceeds received by Investor in the registered offering out of which such violation arises.
(iii)
Notice. Promptly after receipt by an indemnified party under this Section of notice of the commencement of any Action (including any governmental Action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflict of interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party to the extent of such prejudice under this Section, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section.
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(iv)
Survival. The obligations of the Company and Investor under this Section shall survive the completion of any offering of Registrable Securities in a registration statement.
Section 5.04
Cooperation Regarding Rule 144. As long as Investor owns any Purchased Shares, the Company will use commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as Investor owns any Purchased Shares, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to Investor and make publicly available in accordance with Rule 144(c) such information as is required for Investor to sell Purchased Shares under Rule 144. The Company further covenants that it will take such further action as Investor may reasonably request (including to cause its counsel to issue appropriate legal opinions and to direct its transfer agent accordingly) to the extent required from time to time to enable the Investor to sell Purchased Shares without registration under the Securities Act in accordance with Rule 144.
Section 5.05
Preferred Supplier. Investor, Retop LED Display Co., Ltd and its subsidiaries shall be the preferred suppliers of all the Company’s LED display projects; provided that the Company reserves the right to purchase similar or identical products from other suppliers with the consent of Investor (such consent not to be unreasonably withheld), based on, among other things, pricing, product availability, logistics, and specific customer requirements. Investor agrees to provide competitive product, pricing, delivery and service for similar or identical products required or utilized in connection with Company’s business and available in the market.
Section 5.06
Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.
Section 6.01
Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties set forth in Sections 3.01, 3.02, 3.02, 4.01 and 4.02 shall survive the Closing indefinitely and all other representations, warranties, covenants and agreements of each party in this Agreement shall survive the Closing for the period explicitly specified therein and, if not specified, for a period of two years. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant covenant or agreement and such claims shall survive until finally resolved.
Section 6.02
Indemnification. Subject to the other terms and conditions of this ARTICLE VI and notwithstanding Section 5.03, the Company and Investor shall indemnify and defend the other party and their respective Subsidiaries and Representatives (collectively, the “Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Indemnitees based upon, arising out of, with respect to or by reason of:
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(a)
any inaccuracy in or breach of any of the representations or warranties of the such party contained in this Agreement or in any certificate or instrument delivered by or on behalf of the such party pursuant to this Agreement; or
(b)
any breach or non-fulfillment of any covenant, agreement or obligation required to be performed by the such party pursuant to this Agreement.
Section 6.03
Certain Limitations. Notwithstanding anything contained in Section 6.02 or otherwise in this Agreement, the aggregate amount for all Losses for which either party hereto shall be liable pursuant to Sections 5.03 or 6.02 shall not exceed one hundred percent (100%) of the Purchase Price.
Section 6.04
Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for tax purposes, unless otherwise required by Law.
Section 6.05
Exclusive Remedies. The parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in Section 5.03 and this ARTICLE VI. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other party hereto and its Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in Section 5.03 and this ARTICLE VI.
Section 7.01
Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.
Section 7.02
Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 7.02):
| If to the Company: | 950 Third Avenue, Suite 2804, NY, NY 10022 Facsimile: 212-218-4660 E-mail: jmallain@trans-lux.com Attention: J.M. Allain, President and CEO |
| with a copy to: | Kristin A. Kreuder, Esq., Vice President and General Counsel E-mail: kkreuder@trans-lux.com |
| If to Investor: | Unit 27,13/F,Shing Yip Industrial Building 19-21 Shing Yip Street, Kwun Tong, Kowloon, HongKong Facsimile: +86-755-26002666 E-mail: 2375997478@qq.com Attention: Yaozhong Shi |
| with a copy to: | Edwards Wildman Palmer LLP Facsimile: 1 888 325 1667 E-mail: hjiang@edwardswildman.com Attention: Howard Jiang, Esq. |
Section 7.03
Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles and Sections mean the Articles and Sections of this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.
Section 7.04
Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
Section 7.05
Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
Section 7.06
Entire Agreement. This Agreement, together with the Schedules and Annexes referenced herein, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, in each case both written and oral, with respect to such subject matter.
Section 7.07
Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.
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Section 7.08
No Third-party Beneficiaries. Except as provided in ARTICLE VI, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 7.09
Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
Section 7.10
Governing Law.
This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).
Section 7.11
Dispute Resolution. Any dispute, controversy, difference or claim (each, a “Dispute”) arising out of or relating to this Agreement or the interpretation, breach, termination, validity or invalidity thereof, shall be referred to arbitration upon the demand of either party to the dispute with notice (the “Arbitration Notice”) to the other.
(a)
The Dispute shall be settled by arbitration in Hong Kong administered by the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the Hong Kong International Arbitration Centre Administered Arbitration Rules (the “HKIAC Rules”) in force when the Arbitration Notice is submitted. There shall be one (1) arbitrator. The HKIAC council shall select the arbitrator, who shall be qualified to practice law in the State of New York. The official language of the arbitration shall be in English.
(b)
The costs of arbitration shall be determined by the arbitral tribunal.
(c)
The award of the arbitral tribunal shall be final and binding upon the parties thereto, and the prevailing party may apply to a court of competent jurisdiction for enforcement of such award.
(d)
The arbitral tribunal shall decide any Dispute submitted by the parties to the arbitration strictly in accordance with the substantive laws of the State of New York (without regard to principles of conflict of laws thereunder) and shall not apply any other substantive laws and regulations.
(e)
Any party to the Dispute shall be entitled to seek interim measures of protection and emergency relief, if possible, from any court of competent jurisdiction in accordance with the applicable laws and regulations of that jurisdiction pending the resolution of that dispute through arbitration as set forth in this Section 7.11.
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(f)
When any Dispute occurs and when any Dispute is under arbitration, except for the matters in Dispute, the parties shall continue to fulfill their respective obligations and shall be entitled to exercise their rights under this Agreement.
Section 7.12
Waiver of Jury Trial. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.12
Section 7.13
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[Signature page on next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
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| By: | /s/ J.M. Allain | |
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| Name: | J.M. Allain |
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| Title: | President and CEO |
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| RETOP INDUSTRIAL (HONG KONG) LIMITED | ||
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| By: | /s/ Hu Lieyong | |
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| Name: | Hu Lieyong |
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| Title: | President and CEO |
21
Schedules
Schedule 3.03
Capitalization
Please see the attached Schedule 3.03
Schedule 3.08
No Material Adverse Effect
None
22
Annex A
Opinion of Counsel
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