Exhibit 10.1
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement") made as of the last date set
forth on the signature page hereof between Trans-Lux Corporation, a Delaware
corporation (the "Company"), and Xxxxxx Family Associates LLC (the
"Subscriber").
W I T N E S S E T H:
WHEREAS, the Company is conducting a private offering (the "Offering")
to the Subscriber for which X.X. Xxxxxxxx & Co., Inc. is acting as placement
agent (the "Placement Agent"), consisting of a maximum of $650,000 of 4.0%
secured notes of the Company (the "Notes"), pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act") and Rule 506
promulgated thereunder; and
WHEREAS, in connection with the purchase of the Notes, Subscriber will
receive a five-year warrant (the "Warrant", and collectively with the Note, the
"Securities") to purchase 1,000,000 shares of Common Stock of the Company at an
exercise price of $1.00 per share (subject to adjustment as provided in the
Warrant)(the "Exercise Price"); and
WHEREAS, the Subscriber desires to purchase such principal amount of
Note as set forth on the signature page hereof on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto do
hereby agree as follows:
I. SUBSCRIPTION FOR SHARES AND REPRESENTATIONS BY SUBSCRIBER
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1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company, and
the Company agrees to sell to the Subscriber, the principal amount of Notes as
is set forth on the signature page hereof. The purchase price is payable by
wire transfer to the Company as follows:
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1.2 The Subscriber recognizes that the purchase of the Securities
involves a high degree of risk including, but not limited to, the following:
(a) the Company requires substantial funds in addition to the proceeds of the
Offering; (b) an investment in the Company is highly speculative, and only
investors who can afford the loss of their entire investment should consider
investing in the Company and the Securities; (c) the Subscriber may not be able
to liquidate its investment; (d) transferability of the Securities is extremely
limited; (e) in the event of a disposition, the Subscriber could sustain the
loss of its entire investment; (f) the Company does not anticipate paying any
dividends; and (g) the other risks related to the Company and its business as
set forth in the Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 2011 and its Annual Report on Form 10-K for the fiscal year
ended December 31, 2010.
1.3 The Subscriber represents that the Subscriber is an "accredited
investor" as such term is defined in Rule 501 of Regulation D ("Regulation D")
promulgated under the Securities Act, as indicated by the Subscriber's responses
to the questions contained in Article VII hereof, and that the Subscriber is
able to bear the economic risk of an investment in the Securities.
1.4 The Subscriber hereby acknowledges and represents that (a) the
Subscriber has knowledge and experience in business and financial matters, prior
investment experience, including investment in securities that are non-listed,
unregistered and/or not traded on a national securities exchange or the
Subscriber has employed the services of a "purchaser representative" (as defined
in Rule 501 of Regulation D), attorney and/or accountant to read all of the
documents furnished or made available by the Company both to the Subscriber and
to all other prospective investors in the Securities to evaluate the merits and
risks of such an investment on the Subscriber's behalf; (b) the Subscriber
recognizes the highly speculative nature of this investment; and (c) the
Subscriber is able to bear the economic risk that the Subscriber hereby assumes.
1.5 The Subscriber hereby acknowledges receipt and careful review of
this Agreement, the Note, the Warrant and all other exhibits thereto
(collectively referred to as the "Offering Materials") and hereby represents
that the Subscriber has been furnished by the Company during the course of the
Offering with all information regarding the Company, the terms and conditions of
the Offering and any additional information that the Subscriber has requested or
desired to know, and has been afforded the opportunity to review the Company's
SEC Reports (as defined below) and to ask questions of and receive answers from
duly authorized officers or other representatives of the Company concerning the
Company and the terms and conditions of the Offering; provided, however that no
investigation performed by or on behalf of the Subscriber shall limit or
otherwise affect its right to rely on the representations and warranties of the
Company contained herein.
1.6 (a) In making the decision to invest in the Securities the
Subscriber has relied solely upon the information provided by the Company in the
Offering Materials. To the extent necessary, the Subscriber has retained, at
its own expense, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement and the
purchase of the Securities hereunder. The Subscriber disclaims reliance on any
statements made or information provided by any person or entity in the course of
Subscriber's consideration of an investment in the Securities other than the
Offering Materials.
(b) The Subscriber represents that (i) the Subscriber was contacted
regarding the sale of the Securities by the Company (or another person whom the
Subscriber believed to be an authorized agent or representative thereof) with
whom the Subscriber had a
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prior substantial pre-existing relationship and (ii) it did not learn of the
offering of the Securities by means of any form of general solicitation or
general advertising, and in connection therewith, the Subscriber did not (A)
receive or review any advertisement, article, notice or other communication
published in a newspaper or magazine or similar media or broadcast over
television or radio, whether closed circuit, or generally available; or (B)
attend any seminar meeting or industry investor conference whose attendees were
invited by any general solicitation or general advertising.
1.7 The Subscriber hereby acknowledges that the Offering has not been
reviewed by the United States Securities and Exchange Commission (the "SEC") nor
any state regulatory authority since the Offering is intended to be exempt from
the registration requirements of Section 5 of the Securities Act, pursuant to
Regulation D. The Subscriber understands that the Securities have not been
registered under the Securities Act or under any state securities or "blue sky"
laws and agrees not to sell, pledge, assign or otherwise transfer or dispose of
the Securities unless they are registered under the Securities Act and under any
applicable state securities or "blue sky" laws or unless an exemption from such
registration is available.
1.8 The Subscriber understands that the Securities have not been
registered under the Securities Act by reason of a claimed exemption under the
provisions of the Securities Act that depends, in part, upon the Subscriber's
investment intention. In this connection, the Subscriber hereby represents that
the Subscriber is purchasing the Securities for the Subscriber's own account for
investment and not with a view toward the resale or distribution to others;
provided, however, that nothing contained herein shall constitute an agreement
by the Subscriber to hold the Securities for any particular length of time and
the Company acknowledges that the Subscriber shall at all times retain the right
to dispose of its property as it may determine in its sole discretion, subject
to any restrictions imposed by applicable law. The Subscriber, if an entity,
further represents that it was not formed for the purpose of purchasing the
Securities.
1.9 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Securities and, when issued, the
shares of Common Stock issuable upon exercise of the Warrant (the "Warrant
Shares") that such securities have not been registered under the Securities Act
or any state securities or "blue sky" laws and setting forth or referring to the
restrictions on transferability and sale thereof contained in this Agreement.
The Subscriber is aware that the Company will make a notation in its appropriate
records with respect to the restrictions on the transferability of such
Securities. The legend to be placed on each certificate shall be in form
substantially similar to the following:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
OR ANY STATE SECURITIES OR "BLUE SKY LAWS," AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE
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COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED."
1.10 The Subscriber hereby represents that the address of the Subscriber
furnished by Subscriber on the signature page hereof is the Subscriber's
principal residence if Subscriber is an individual or its principal business
address if it is a corporation or other entity.
1.11 The Subscriber represents that the Subscriber has full power and
authority (corporate, statutory and otherwise) to execute and deliver this
Agreement and to purchase the Securities. This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms.
1.12 If the Subscriber is a corporation, partnership, limited liability
company, trust, employee benefit plan, individual retirement account, Xxxxx
Plan, or other tax-exempt entity, it is authorized and qualified to invest in
the Company and the person signing this Agreement on behalf of such entity has
been duly authorized by such entity to do so.
1.13 The Subscriber acknowledges that if he or she is a Registered
Representative of a Financial Industry Regulatory Authority ("FINRA") member
firm, he or she must give such firm the notice required by the FINRA's Rules of
Fair Practice, receipt of which must be acknowledged by such firm in Section 7.4
below.
II. REPRESENTATIONS BY AND COVENANTS OF THE COMPANY
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The Company hereby represents and warrants to the Subscriber that:
2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to own and
use its properties and its assets and conduct its business as currently
conducted. Each of the Company's subsidiaries (the "Subsidiaries") is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with the requisite corporate power and
authority to own and use its properties and assets and to conduct its business
as currently conducted, except where the failure to remain in good standing
would not result in a Material Adverse Effect as defined in this Section 2.1
Neither the Company, nor any of its Subsidiaries is in violation of any of the
provisions of their respective articles of incorporation, by-laws or other
organizational or charter documents, including, but not limited to the Charter
Documents (as defined below). Each of the Company and, to the Company's best
knowledge, each its Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not result in a direct and/or indirect (i) material
adverse effect on the legality, validity or enforceability of any of the
Securities and/or this Agreement, (ii) material adverse effect on the results of
operations, assets, business, condition (financial and other) or prospects of
the Company and its Subsidiaries, taken as a whole, or (iii) material adverse
effect on the Company's ability to perform in any material respect on a timely
basis its obligations under the Transaction Documents (as defined below) (any of
(i), (ii) or (iii), a "Material Adverse Effect").
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2.2 Capitalization and Voting Rights. The authorized, issued and
outstanding capital stock of the Company is as set forth in Schedule 2.2 hereto
and all issued and outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable. Except as set forth in Schedule
2.2 hereto, (i) there are no outstanding securities of the Company or any of its
Subsidiaries which contain any preemptive, redemption or similar provisions, nor
is any holder of securities of the Company or any Subsidiary entitled to
preemptive or similar rights arising out of any agreement or understanding with
the Company or any Subsidiary by virtue of any of the Transaction Documents, and
there are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (ii) neither the Company nor any
Subsidiary has any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement; and (iii) there are no outstanding
options, warrants, agreements, convertible securities, preemptive rights or
other rights to subscribe for or to purchase or acquire, any shares of capital
stock of the Company or any Subsidiary or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may
become bound to issue any shares of capital stock of the Company or any
Subsidiary, or securities or rights convertible or exchangeable into shares of
capital stock of the Company or any Subsidiary. Except as set forth in Schedule
2.2 and as otherwise required by law, there are no restrictions upon the voting
or transfer of any of the shares of capital stock of the Company pursuant to the
Company's Charter Documents (as defined below) or other governing documents or
any agreement or other instruments to which the Company is a party or by which
the Company is bound. All of the issued and outstanding shares of capital stock
of the Company are validly issued, fully paid and nonassessable and the shares
of capital stock of the Subsidiaries are owned by the Company, free and clear of
any mortgages, pledges, liens, claims, charges, encumbrances or other
restrictions (collectively, "Encumbrances"). All of such outstanding capital
stock has been issued in compliance with applicable federal and state securities
laws. The issuance and sale of the Securities and, upon issuance, the Warrant
Shares, as contemplated hereby will not obligate the Company to issue shares of
Common Stock or other securities to any other person (other than the Subscriber)
and will not result in the adjustment of the exercise, conversion, exchange or
reset price of any outstanding security. The Company does not have outstanding
stockholder purchase rights or "poison pill" or any similar arrangement in
effect giving any person the right to purchase any equity interest in the
Company upon the occurrence of certain events.
2.3 Authorization; Enforceability. Except as set forth in Schedule 2.3
hereto, the Company has all corporate right, power and authority to enter into,
execute and deliver this Agreement and each other agreement, document,
instrument and certificate to be executed by the Company in connection with the
consummation of the transactions contemplated hereby, including, but not limited
to the Warrants (collectively, the "Transaction Documents") and to perform fully
its obligations hereunder and thereunder. All corporate action on the part of
the Company, its directors and stockholders necessary for the (a) authorization
execution, delivery and performance of this Agreement and the Transaction
Documents by the Company; and (b) authorization, sale, issuance and delivery of
the Securities and upon issuance, the Warrant Shares contemplated hereby and the
performance of the Company's obligations under this Agreement and the
Transaction Documents has been taken. This Agreement and the Transaction
Documents have been duly executed and delivered by the Company and each
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constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy. The Note and Warrant
Shares, when issued and fully paid for in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable, free and clear
of all Encumbrances, except for restrictions on transfer set forth in the
Transaction Documents or imposed by applicable securities laws. The Company has
reserved a sufficient number of shares of Common Stock for issuance upon the
exercise of the Warrants, free and clear of all Encumbrances, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws. The issuance and sale of the Securities (including
the Warrant Shares) contemplated hereby will not give rise to any preemptive
rights or rights of first refusal on behalf of any person.
2.4 No Conflict; Governmental Consents.
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(a) Except as set forth in Schedule 2.4 hereto, the execution and
delivery by the Company of this Agreement and the Transaction Documents, the
issuance and sale of the Securities (including, when issued, the Warrant Shares)
and the consummation of the other transactions contemplated hereby or thereby do
not and will not (i) result in the violation of any law, statute, rule,
regulation, order, writ, injunction, judgment or decree of any court or
governmental authority to or by which the Company is bound, (ii) conflict with
or violate any provision of the Company's Articles of Incorporation (the
"Articles"), as amended or the Bylaws, (and collectively with the Articles, the
"Charter Documents") of the Company, and (iii) conflict with, or result in a
material breach or violation of, any of the terms or provisions of, or
constitute (with or without due notice or lapse of time or both) a default or
give to others any rights of termination, amendment, acceleration or
cancellation (with or without due notice, lapse of time or both) under any
agreement, credit facility, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which any of their
respective properties or assets is subject, nor result in the creation or
imposition of any Encumbrances upon any of the properties or assets of the
Company or any Subsidiary.
(b) Except as set forth in Schedule 2.4 hereto, no approval by the
holders of Common Stock, or other equity securities of the Company is required
to be obtained by the Company in connection with the authorization, execution,
delivery and performance of this Agreement and the other Transaction Documents
or in connection with the authorization, issue and sale of the Securities and,
upon issuance, the Warrant Shares, except as has been previously obtained.
(c) Except as set forth in Schedule 2.4 hereto, no consent,
approval, authorization or other order of any governmental authority or any
other person is required to be obtained by the Company in connection with the
authorization, execution, delivery and performance of this Agreement and the
other Transaction Documents or in connection with the authorization, issue and
sale of the Securities and, upon issuance, the Warrant Shares, except such
post-sale filings as may be required to be made with the SEC, FINRA and with any
state or foreign blue sky or securities regulatory authority, all of which shall
be made when required.
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2.5 Consents of Third Parties TC "4.4 Consents of Third Parties".
Except as set forth in Schedule 2.5 hereto, no vote, approval or consent of any
holder of capital stock of the Company or any other third parties is required or
necessary to be obtained by the Company in connection with the authorization,
execution, deliver and performance of this Agreement and the other Transaction
Documents or in connection with the authorization, issue and sale of the
Securities and, upon issuance, the Warrant Shares, except as previously
obtained, each of which is in full force and effect.
2.6 SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and Securities
Exchange Act of 1934 (the "Exchange Act"), including pursuant to Section 13(a)
or 15(d) thereof, for the twelve months preceding the date hereof (or such
shorter period as the Company was required by law to file such reports) (the
foregoing materials being collectively referred to herein as the "SEC Reports"
and, together with the Schedules to this Agreement (if any), the "Disclosure
Materials") on a timely basis or has timely filed a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the SEC promulgated 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 light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the footnotes thereto, and fairly
present in all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments or
adjustments due to the adoption of accounting standards prescribing derivative
liability accounting in connection with anti-dilution protection features found
in certain of its securities issued to investors in the past (such anti-dilution
protection features having been fully disclosed in the Company's previous SEC
Reports).
2.7 Licenses. Except as otherwise set forth in the SEC Reports, the
Company and its Subsidiaries have sufficient licenses, permits and other
governmental authorizations currently required for the conduct of their
respective businesses or ownership of properties and is in all material respects
in compliance therewith.
2.8 Litigation. Except as set forth in the SEC Reports, the Company
knows of no pending or threatened legal or governmental proceedings against the
Company or any Subsidiary which could materially adversely affect the business,
property, financial condition or operations of the Company and its Subsidiaries,
taken as a whole, or which materially and adversely questions the validity of
this Agreement or the other Transaction Documents or the right of the Company to
enter into this Agreement and the other Transaction Documents, or to perform its
obligations hereunder and thereunder. Neither the Company nor any Subsidiary is
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a party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality which could
materially adversely affect the business, property, financial condition or
operations of the Company and its Subsidiaries taken as a whole. Except as
disclosed on Schedule 2.8, there is no action, suit, proceeding or investigation
by the Company or any Subsidiary currently pending in any court or before any
arbitrator or that the Company or any Subsidiary intends to initiate. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or since
March 31, 2011 has been the subject of any action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the Company's knowledge, there is
not pending or contemplated, any investigation by the SEC involving the Company
or any current or former director or officer of the Company.
2.9 Disclosure. The information set forth in the Offering Materials as
of the date hereof and as of the date of each Closing contains no untrue
statement of a material fact nor omits to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.
2.10 Investment Company. The Company is not an "investment company"
within the meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.
2.11 Brokers. Except for the Placement Agent or as set forth on
Schedule 2.11, neither the Company nor any of the Company's officers or
directors has employed or engaged any broker or finder in connection with the
transactions contemplated by this Agreement and no fee or other compensation is
or will be due and owing to any broker, finder, underwriter, placement agent or
similar person in connection with the transactions contemplated by this
Agreement. The Company is not party to any agreement, arrangement or
understanding whereby any person has an exclusive right to raise funds and/or
place or purchase any debt or equity securities for or on behalf of the Company.
2.12 Intellectual Property; Employees.
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(a) The Company owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes necessary for
its business as now conducted and as presently proposed to be conducted, without
any known infringement of the rights of others. Except as disclosed in the
Disclosure Materials , there are no material outstanding options, licenses or
agreements of any kind relating to the foregoing proprietary rights, nor is the
Company bound by or a party to any material options, licenses or agreements of
any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes of any other person or entity other than such licenses or
agreements arising from the purchase of "off the shelf" or standard products.
Except as disclosed on Schedule 2.12, the Company has not received any written
communications alleging that the Company has violated or, by conducting its
business as presently proposed to be conducted, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity.
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(b) Except as disclosed in the SEC Reports, the Company is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or that would conflict with the
Company's business as presently conducted.
(c) Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as presently conducted, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated.
(d) To the Company's knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in violation of any term of
any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business conducted by
the Company; and to the Company's knowledge the continued employment by the
Company of its present employees, and the performance of the Company's contracts
with its independent contractors, will not result in any such violation. The
Company has not received any written notice alleging that any such violation has
occurred. Except as disclosed in the Disclosure Materials or on Schedule 2.12,
no employee of the Company has been granted the right to continued employment by
the Company or to any compensation following termination of employment with the
Company except for any of the same which would not have a Material Adverse
Effect on the business of the Company. Except as otherwise disclosed, the
Company is not aware that any officer, key employee or group of employees
intends to terminate his, her or their employment with the Company, nor does the
Company have a present intention to terminate the employment of any officer, key
employee or group of employees.
2.13 Title to Properties and Assets; Liens, Etc. Except as described in
the SEC Reports, the Company has good and marketable title to its properties and
assets, including the properties and assets reflected in the most recent balance
sheet included in the Company's financial statements, and good title to its
leasehold estates, in each case subject to no Encumbrances, other than (a) those
resulting from taxes which have not yet become delinquent; and (b) Encumbrances
which do not materially detract from the value of the property subject thereto
or materially impair the operations of the Company; and (c) those that have
otherwise arisen in the ordinary course of business, none of which are material.
The Company is in compliance with all material terms of each lease to which it
is a party or is otherwise bound.
2.14 Obligations to Related Parties. Except as described in the SEC
Reports, there are no obligations of the Company to officers, directors,
stockholders, or employees of the Company other than (a) for payment of salary
or other compensation for services rendered, (b) reimbursement for reasonable
expenses incurred on behalf of the Company and (c) for other standard employee
benefits made generally available to all employees (including stock option
agreements outstanding under any stock option plan approved by the Board of
Directors of the Company). Except as disclosed in the SEC Reports, none of the
officers or
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directors of the Company and, to the Company's knowledge, none of the employees
of the Company is presently a party to any transaction with the Company or any
Subsidiary (other than as holders of stock options and/or warrants, and for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
Company's knowledge, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
2.15 Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the Disclosure Materials, (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables, accrued expenses and other liabilities
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company's financial
statements pursuant to generally accepted accounting principles or required to
be disclosed in filings made with the SEC, (iii) the Company has not altered its
method of accounting or the identity of its auditors, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock, and (v) the Company has not issued any equity
securities to any officer, director or affiliate, except pursuant to existing
Company stock option plans. The Company does not have pending before the SEC
any request for confidential treatment of information.
2.16 Compliance. The Company is in compliance with all effective
requirements of the Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules and
regulations thereunder, that are applicable to it, except where such
noncompliance could not have or reasonably be expected to result in a Material
Adverse Effect.
2.17 No General Solicitation. None of the Company, its Subsidiaries,
any of their affiliates, and any person acting on their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Securities.
2.18 No Integrated Offering. Except as disclosed in Disclosure
Materials, none of the Company, its Subsidiaries, any of their affiliates, and
any person acting on their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of any of the Securities under the
Securities Act or cause this offering of the Securities to be integrated with
prior offerings by the Company for purposes of the Securities Act or any
applicable stockholder approval provisions, including without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated. Except as
disclosed in the Disclosure Materials, none of the Company, its Subsidiaries,
their affiliates and any person acting on their behalf, have taken any action or
steps referred to in the preceding sentence that would require registration of
any of the
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Securities under the Securities Act or cause the offering of the Securities to
be integrated with other offerings.
2.19 Application of Takeover Protections. The Company has taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
Charter Documents or the laws of its state of incorporation that is or could
become applicable to the Subscriber as a result of the Subscriber and the
Company fulfilling their obligations or exercising their rights under this
Agreement, including, without limitation, the Company's issuance of the
Securities and the Subscriber' ownership of the Securities.
2.20 Taxes. Each of the Company and its subsidiaries has filed all U.S.
federal, state, local and foreign tax returns which are required to be filed by
each of them and all such returns are true and correct in all material respects,
except for such failures to file which could not reasonably be expected to have
a Material Adverse Effect. The Company and each subsidiary has paid all taxes
pursuant to such returns or pursuant to any assessments received by any of them
or by which any of them are obligated to withhold from amounts owing to any
employee, creditor or third party. The Company and each subsidiary has properly
accrued all taxes required to be accrued and/or paid, except where the failure
to accrue would not have a Material Adverse Effect. To the knowledge of the
Company, the tax returns of the Company and its subsidiaries are not currently
being audited by any state, local or federal authorities. Neither the Company
nor any subsidiary has waived any statute of limitations with respect to taxes
or agreed to any extension of time with respect to any tax assessment or
deficiency. The Company has set aside on its books adequate provision for the
payment of any unpaid taxes.
III. TERMS OF SUBSCRIPTION
---------------------
3.1 All funds shall be deposited by Subscriber in the account identified
in Section 1.1 hereof.
3.2 Certificates representing the Warrants purchased by the Subscriber
pursuant to this Agreement will be prepared for delivery to the Subscriber as
soon as practicable, but in no event no later than 5 business days following
closing of the transaction contemplated by this Agreement. The Subscriber
hereby authorizes and directs the Company to deliver the certificates
representing the Warrants purchased by the Subscriber pursuant to this Agreement
directly to the Subscriber's residential or business or brokerage house address
indicated on the signature page hereto.
IV. CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBER
-------------------------------------------
4.1 The Subscriber's obligation to purchase the Securities at the
Closing at which such purchase is to be consummated is subject to the
fulfillment on or prior to such Closing of the following conditions, which
conditions may be waived at the option of the Subscriber to the extent permitted
by law:
11
(a) Representations and Warranties; Covenants. The representations
and warranties made by the Company in Section 2 hereof qualified as to
materiality shall be true and correct at all times prior to and on the Closing
Date, except to the extent any such representation or warranty expressly speaks
as of an earlier date, in which case such representation or warranty shall be
true and correct as of such earlier date, and, the representations and
warranties made by the Company in Section 2 hereof not qualified as to
materiality shall be true and correct in all material respects at all times
prior to and on the Closing Date, except to the extent any such representation
or warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects as
of such earlier date. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the date of such
Closing shall have been performed or complied with in all material respects.
(b) No Legal Order Pending. There shall not then be in effect any
legal or other order enjoining or restraining the transactions contemplated by
this Agreement.
(c) No Law Prohibiting or Restricting Such Sale. There shall not be
in effect any law, rule or regulation prohibiting or restricting such sale or
requiring any consent or approval of any person, which shall not have been
obtained, to issue the Securities (except as otherwise provided in this
Agreement).
(d) Required Consents. The Company shall have obtained any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities and the consummation
of the other transactions contemplated by the Transaction Documents, all of
which shall be in full force and effect.
(e) Adverse Changes. Since the date of execution of this Agreement,
no event or series of events shall have occurred that reasonably could have or
result in a Material Adverse Effect.
(f)
(i) Disclosure Schedules. The Company shall have delivered to the
Subscriber a copy of its Disclosure Schedules qualifying any of the
representations and warranties contained in Section 2.
V. COVENANTS OF THE COMPANY
------------------------
5.1 Listing of Securities. The Company agrees, (i) if the Company
applies to have the Common Stock traded on any other trading market, it will
include in such application the Warrant Shares, and will take such other action
as is necessary or desirable to cause the Warrant Shares to be listed on such
other trading market as promptly as possible, and (ii) it will take all action
reasonably necessary to continue the listing and trading of its Common Stock 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.
12
5.2 Reservation of Shares. The Company shall at all times while the
Warrants are outstanding maintain a reserve from its duly authorized shares of
Common Stock of a number of shares of Common Stock sufficient to allow for the
issuance of the Warrant Shares.
5.3 Replacement of Securities. If any certificate or instrument
evidencing any Securities or the Warrant Shares is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement securities.
If a replacement certificate or instrument evidencing any securities is
requested due to a mutilation thereof, the Company may require delivery of such
mutilated certificate or instrument as a condition precedent to any issuance of
a replacement.
5.4 Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless the
Subscriber, its affiliates and their respective officers, directors, employees,
agents and controlling persons (collectively, the "Indemnified Parties") from
and against , any and all loss, liability, damage or deficiency suffered or
incurred by any Indemnified Party by reason of any misrepresentation or breach
of warranty by the Company or, after any applicable notice and/or cure periods,
nonfulfillment of any covenant or agreement to be performed or complied with by
the Company under this Agreement, the Transaction Documents; and will promptly
reimburse the Indemnified Parties for all expenses (including reasonable fees
and expenses of legal counsel) as incurred in connection with the investigation
of, preparation for or defense of any pending or threatened claim related to or
arising in any manner out of any of the foregoing, or any action or proceeding
arising therefrom (collectively, "Proceedings"), whether or not such Indemnified
Party is a formal party to any such Proceeding.
(b) If for any reason (other than a final non-appealable judgment
finding any Indemnified Party liable for losses, claims, damages, liabilities or
expenses for its gross negligence or willful misconduct) the foregoing indemnity
is unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party harmless, then the Company shall contribute to the amount paid or payable
by an Indemnified Party as a result of such loss, claim, damage, liability or
expense in such proportion as is appropriate to reflect not only the relative
benefits received by the Company on the one hand and the Indemnified Party on
the other, but also the relative fault by the Company and the Indemnified Party,
as well as any relevant equitable considerations.
(c) Each Subscriber agrees to severally and not jointly indemnify,
hold harmless, reimburse and defend the Company, its Subsidiaries and each of
its officers, directors, agents, Affiliates, control persons and principal
shareholders, against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon the Company, its Subsidiary or any such person which results, arises out of
or is based upon (i) any material misrepresentation by the Subscriber or
13
breach of any warranty by the Subscriber in this Agreement or in any Exhibits or
Schedules attached hereto or (ii) after any applicable notice and/or cure
periods, any breach or default in performance by the Subscriber of any covenant
or undertaking to be performed by the Subscriber hereunder, or any other
Transaction Documents entered into by the Company and Subscriber relating
hereto. Notwithstanding the foregoing, in no event shall the liability of the
Subscriber hereunder be greater than the aggregate subscription amount paid for
the Securities as set forth on the signature page hereto.
VI. MISCELLANEOUS
-------------
6.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, or delivered by hand against written receipt therefor,
addressed as follows:
if to the Company, to it at:
Trans-Lux Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: X.X. Xxxxxx, President and CEO
With a copy to (which shall not constitute notice):
Trans-Lux Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Corporate Counsel
if to the Subscriber, to the Subscriber's address indicated on the
signature page of this Agreement.
With a copy to (which shall not constitute notice):
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Notices shall be deemed to have been given or delivered on the date of receipt.
6.2 Except as otherwise provided herein, this Agreement shall not be
changed, modified or amended except by a writing signed by the parties to be
charged, and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
14
6.3 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them.
6.4 Upon the execution and delivery of this Agreement by the Subscriber
and the Company, this Agreement shall become a binding obligation of the
Subscriber with respect to the purchase of Securities as herein provided,
subject, however, to the right hereby reserved by the Company to enter into the
same agreements with other Subscribers and to reject any subscription, in whole
or in part, provided the Company returns to Subscriber any funds paid by
Subscriber with respect to such rejected subscription or portion thereof,
without interest or deduction.
6.5 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO SUCH STATE'S PRINCIPLES OF CONFLICTS
OF LAW. IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM
FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE
COURTS STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE FEDERAL COURTS
FOR SUCH STATE AND COUNTY, AND ALL RELATED APPELLATE COURTS, THE PARTIES HEREBY
IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.
6.6 In order to discourage frivolous claims the parties agree that
unless a claimant in any proceeding arising out of this Agreement succeeds in
establishing his claim and recovering a judgment against another party
(regardless of whether such claimant succeeds against one of the other parties
to the action), then the other party shall be entitled to recover from such
claimant all of its/their reasonable legal costs and expenses relating to such
proceeding and/or incurred in preparation therefor.
6.7 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If
any provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
15
6.8 It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
6.9 The Company agrees to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
6.10 This Agreement may be executed in two or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a ".pdf" format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or ".pdf" signature page were an original thereof.
6.11 Nothing in this Agreement shall create or be deemed to create any
rights in any person or entity not a party to this Agreement.
6.12 In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the Subscriber and the
Company will be entitled to specific performance under this Agreement. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.
VII. CONFIDENTIAL INVESTOR QUESTIONNAIRE
-----------------------------------
7.1 The Subscriber represents and warrants that he, she or it comes
within one category marked below, and that for any category marked, he, she or
it has truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to furnish
any additional information which the Company deems necessary in order to verify
the answers set forth below.
Category A __ The undersigned is an individual (not a partnership, corporation,
etc.) whose individual net worth, or joint net worth with his or
her spouse, presently exceeds $1,000,000.
Explanation. In calculating net worth you may NOT include equity
in personal property and real estate, including your principal
residence.
Category B __ The undersigned is an individual (not a partnership, corporation,
etc.) who had an income in excess of $200,000 in each of the two
most recent years, or joint income with his or her spouse in
excess of $300,000 in each of those years (in each case including
foreign income, tax exempt income and full amount of capital
gains and losses but excluding any income of other family members
and any unrealized capital appreciation) and has a reasonable
expectation of reaching the same income level in the current
year.
16
Category C __ The undersigned is a director or executive officer of the Company
which is issuing and selling the Securities.
Category D __ The undersigned is a bank; a savings and loan association;
insurance company; registered investment company; registered
business development company; licensed small business investment
company ("SBIC"); or employee benefit plan within the meaning of
Title 1 of ERISA and (a) the investment decision is made by a
plan fiduciary which is either a bank, savings and loan
association, insurance company or registered investment advisor,
or (b) the plan has total assets in excess of $5,000,000 or (c)
is a self directed plan with investment decisions made solely by
persons that are accredited investors. (describe entity)
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Category E __ The undersigned is a private business development company as
defined in section 202(a)(22) of the Investment Advisors Act of
1940. (describe entity)
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-----------------------------------------------------------------
Category F __ The undersigned is either a corporation, partnership,
Massachusetts business trust, or non-profit organization within
the meaning of Section 501(c)(3) of the Internal Revenue Code, in
each case not formed for the specific purpose of acquiring the
Securities and with total assets in excess of $5,000,000.
(describe entity)
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-----------------------------------------------------------------
Category G __ The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
Securities, where the purchase is directed by a "sophisticated
investor" as defined in Regulation 506(b)(2)(ii) under the Act.
Category H _X_ The undersigned is an entity (other than a trust) in which all of
the equity owners are "accredited investors" within one or more
of the above categories. If relying upon this Category alone,
each equity owner must complete a separate copy of this
Agreement. (describe entity)
-----------------------------------------------------------------
-----------------------------------------------------------------
Category I __ The undersigned is not within any of the categories above and is
therefore not an accredited investor.
The undersigned agrees that the undersigned will notify the
Company at any time on or prior to the Closing in the event that
the representations and warranties in this Agreement shall cease
to be true, accurate and complete.
17
7.2 SUITABILITY (please answer each question)
-----------
(a) For an individual Subscriber, please describe your current employment,
including the company by which you are employed and its principal business:
own and operate a brokerage firm, X.X. Xxxxxxxx LLC
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(b) For an individual Subscriber, please describe any college or graduate
degrees held by you:
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(c) For all Subscriber, please list types of prior investments:
stock, commodities, bonds, etf, pfd shares, private placement etc.
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(d) For all Subscriber, please state whether you have participated in other
private placements before:
------------------
YES___X___ NO_______
(e) If your answer to question (d) above was "YES", please indicate
frequency of such prior participation in private placements of:
------------------
Public or Private Companies
Public Private with no, or insignificant,
Companies Companies assets and operations
--------- --------- ---------------------
Frequently _____X______ ___________ ___________________________
Occasionally ____________ _____X_____ ___________________________
Never ____________ ___________ ___________________________
(f) For individual Subscriber, do you expect your current level of income to
significantly decrease in the foreseeable future:
YES_______ NO___X___
(g) For trust, corporate, partnership and other institutional Subscriber, do
you expect your total assets to significantly decrease in the foreseeable
future:
YES_______ NO_______
(h) For all Subscriber, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need sudden cash
requirements in excess of cash readily available to you:
YES_______ NO___X___
18
(i) For all Subscriber, are you familiar with the risk aspects and the
non-liquidity of investments such as the securities for which you seek to
subscribe?
YES___X___ NO_______
(j) For all Subscriber, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing your
entire investment?
YES___X___ NO_______
7.3 MANNER IN WHICH TITLE IS TO BE HELD. (circle one)
-----------------------------------
(a) Individual Ownership
(b) CommSharey Property
(c) Joint Tenant with Right of
Survivorship (both parties
must sign)
(d) Partnership *
(e) Tenants in Common
-----------------------
| (f) Company * |
-----------------------
(g) Trust *
(h) Other *
* If Securities are being subscribed for by an entity, the attached
Certificate of Signatory must also be completed.
7.4 FINRA AFFILIATION.
-----------------
Are you affiliated or associated with an FINRA member firm (please check one):
Yes ____X____ No __________
If Yes, please describe:
with X.X. Xxxxxxxx LLC
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
* If Subscriber is a Registered Representative with an FINRA member firm, have
the following acknowledgment signed by the appropriate party:
The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
X.X. Xxxxxxxx LLC
----------------------------------
Name of FINRA Member Firm
By: /s/ Xxxxx Xxxxxx
-------------------------------
Authorized Officer
19
Date: 6/17/2011
----------------------------
7.5 The undersigned is informed of the significance to the Company of
the foregoing representations and answers contained in the Confidential Investor
Questionnaire contained in this Article VII and such answers have been provided
under the assumption that the Company will rely on them.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
20
DOLLAR SUBSCRIPTION $___650,000___
/s/ Xxxxx Xxxxxx
---------------------------------- ----------------------------------
Signature Signature (if purchasing jointly)
Xxxxx Xxxxxx
---------------------------------- ----------------------------------
Name Typed or Printed Name Typed or Printed
Member
---------------------------------- ----------------------------------
Title (if Subscriber is an Entity) Title (if Subscriber is an Entity)
Xxxxxx Family Accoc. LLC
---------------------------------- ----------------------------------
Entity Name (if applicable) Entity Name (if applicable)
000 X 00xx Xx
---------------------------------- ----------------------------------
---------------------------------- ----------------------------------
Xxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
---------------------------------- ----------------------------------
City, State and Zip Code City, State and Zip Code
000-000-0000
---------------------------------- ----------------------------------
Telephone-Business Telephone-Business
---------------------------------- ----------------------------------
Telephone-Residence Telephone-Residence
---------------------------------- ----------------------------------
Facsimile-Business Facsimile-Business
---------------------------------- ----------------------------------
Facsimile-Residence Facsimile-Residence
26-3823839
---------------------------------- ----------------------------------
Tax ID # or Social Security # Tax ID # or Social Security #
Name in which securities should be issued: Xxxxxx Family Assoc. LLC
---------------------------
Dated: June 17 , 2011
---------------------
This Subscription Agreement is agreed to and accepted as of June 17, 2011.
TRANS-LUX CORPORATION
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
21
CERTIFICATE OF SIGNATORY
(To be completed if Securities are
being subscribed for by an entity)
I, Xxxxx Xxxxxx, am the Managing Member of Xxxxxx Family Assoc. LLC (the
"Entity").
I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement and to purchase and hold the
Note, and certify further that the Subscription Agreement has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this 17 day of June , 2011
-------- ------------ --
/s/ Xxxxx Xxxxxx
---------------------------------------
(Signature)
22
