Form of] SUBSCRIPTION AND INFORMATION AGENT AGREEMENT
Exhibit 4.2
[Form of]
SUBSCRIPTION AND INFORMATION AGENT AGREEMENT
This Subscription and Information Agent Agreement (this “Agreement”) is entered into as of this 17th day of August, 2017 by and between The LGL Group, Inc., a Delaware corporation (the “Company”), and Broadridge Corporate Issuer Solutions, Inc., a company having its principal offices in Philadelphia, Pennsylvania (“Broadridge”).
WHEREAS, pursuant to a rights offering (the “Rights Offering”), eligible holders of the Company’s common stock, $0.01 par value per share (the “Common Stock”), will be given the transferable subscription right (the “Subscription Rights”) to purchase in the aggregate up to 1,783,643 shares of the Company’s Common Stock at a subscription price of $5.50 per whole share, as more fully set forth in a prospectus and related offering documents (collectively, the “Offering Documents”) to be prepared by the Company and filed with the Securities and Exchange Commission under the Securities Act of 1933 (the “1933 Act”), as amended, for the purpose of effecting the Rights Offering; and
WHEREAS, the Company has authorized and directed the Agent to hold funds (the “Subscription Funds”) submitted by stockholders who exercise Subscription Rights in accordance with the terms and provisions of this Agreement;
WHEREAS, upon the terms and conditions set forth in the applicable Offering Documents, the Agent will record properly exercised Subscription Rights from holders of the Common Stock on the Record Date (as defined in the applicable Offering Documents), as well as record and deposit the Subscription Funds for the purchase of the shares of Common Stock pursuant to the Rights Offering; and
WHEREAS, the Company desires that Broadridge act as both Subscription Agent and Information Agent under the Rights Offering (in such capacities, the “Agent”), and Broadridge has indicated its willingness to do so.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:
1. Appointment of Subscription and Information Agent. The Company hereby confirms the appointment of Broadridge as the Agent, and Broadridge hereby agrees to serve as the Agent, upon the terms and conditions set forth herein.
2. Acceptance and Receipt of Subscription Documents.
A. After receiving from the Company acknowledgement of the commencement of the Rights Offering, on the date specified by the Company, which shall be at least five (5) business days prior to the anticipated mailing date, the Agent shall promptly mail to each holder of Common Stock as of the Record Date (i) the appropriate Offering Documents as approved by the Company (which shall specify that the exercise of Subscription Rights shall be effected, and risk of loss of Subscription Funds shall pass, only upon receipt by the Agent of the properly completed subscription rights certificate and Subscription Funds required to effect the exercise of Subscription Rights under the Rights Offering) and (ii) an envelope addressed to the Agent for use by such holder in exercising his or her Subscription Rights (clauses (i) and (ii) collectively, the “Mailing”).
B. The Agent, upon receipt of Subscription Funds and duly, completely and correctly executed subscription rights certificates and other documents that the Company requires for the exercise of Subscription Rights, shall create a report of the exercised Subscription Rights and Subscription Funds received. Upon the closing of the Rights Offering and as promptly as feasible upon the Agent’s receipt of the Company’s acceptance and approval of said subscription rights certificates, (i) the Company will authorize the Agent to no longer accept any subscription documents and to prepare the final subscription list, which list shall accurately identify the number of shares of Common Stock for which each stockholder has subscribed, for the issuance of stock certificates by the Company’s transfer agent (the “Certificates”), and (ii) the Agent will release to the Company the aggregate Subscription Funds minus any agreed upon fees and expense reimbursements (incurred or reserved for disbursements) due to the Agent from the Company as set forth in Exhibit A (clauses (i) and (ii) directly preceding constituting the “Closing”). No interest on the Subscription Funds will accrue to either the Company or the Company’s stockholders.
3. Notification and Processing. The Agent is hereby authorized and directed to, and hereby agrees to perform certain functions, including but not limited to the following:
A. Accept and respond to all telephone requests from stockholders for information relative to the exercise of Subscription Rights (except that the Agent will not answer questions relating to the sufficiency of the consideration or the tax implications of the Rights Offering); answer questions regarding the proper method of exercising Subscription Rights, including the completion of subscription rights certificates and other documents related to the Rights Offering; maintain a toll-free number to respond to inquiries; provide assistance to holders of Common Stock and monitor the response to the Rights Offering; enclose and re-mail the subscription documents in the Mailing to interested holders of Common Stock; and provide periodic reports as requested to the Company as to the status of the Rights Offering.
B. Date stamp each document relating to its duties hereunder when received;
C. Receive and examine all documents submitted to the Agent in connection with the exercise of Subscription Rights under the Rights Offering and confirm whether such documents are properly completed and executed in accordance with their terms. If the Common Stock underlying a Subscription Right are held by more than one record holder, the applicable Offering Documents must be signed by each such holder; if a holder or joint holders (registrants) hold more than one position in the Company, as indicated by different accounts on the relevant record holder list, then separate, properly completed and executed subscriptions must be submitted for each such position held by that or those joint holders (registrants).
D. Return to any holders (as applicable) those subscription rights certificates evidencing some deficiency in execution; provided, however, that in any instance where the Agent cannot reconcile such deficiencies, prior to returning the subscription rights certificates, the Agent shall consult with the Company for instructions as to whether the Agent may accept such exercise of Subscription Rights. In the absence of such instructions by Company in writing or email within twenty-four (24) hours after the Agent first requests such instructions, the Agent is authorized not to accept such exercise of Subscription Rights and shall notify the exercising stockholder that its exercise is deficient;
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▇. ▇▇▇▇▇▇ subscription rights certificates and other documents signed by persons acting in a fiduciary or representative capacity only if such capacity is properly shown on such documents and proper evidence of their authority so to act has been submitted;
F. Accept subscriptions for Common Stock to be issued other than in the name that appears on the Company record holder list submitted for such subscription, where (i) the signature thereon is guaranteed by a financial institution which is a participant in the Securities Transfer Agents Medallion Program (“STAMP”), the New York Stock Exchange, Inc. Medallion Signature Program (“MSP”), or The Stock Exchange Medallion Program (“SEMP”), (ii) any necessary stock transfer taxes are paid and proof of such payment is submitted or funds therefor are provided to the Agent, or it is established by the holder that no such taxes are due and payable and (iii) the “Special Issuance Instructions” on the rights certificate have been properly completed;
G. Retain all subscriptions accepted and retain such related documents pending further instructions from the Company;
H. Return at the Company’s request any and all necessary records, information and material concerning and representing unsubscribed Common Stock under the Rights Offering; and
I. Maintain on a continuing basis a list of holders of Common Stock that have not yet exercised their Subscription Rights.
4. Concerning the Agent.
The Agent:
| A. | Shall have no duties or obligations other than those set forth herein, including those described under “Included Services” on Exhibit A, and no duties or obligations shall be inferred or implied, nor shall the Agent be obligated nor expected to perform those services described under “Non-Included Services” on Exhibit A; |
| B. | May rely on, and shall be held harmless by, the Company in acting upon any certificate, statement, instrument, opinion, notice, letter, facsimile transmission, telegram electronic mail or other document, or any security delivered to it, and reasonably believed by it to be genuine and to have been made or signed by the proper party or parties; |
| C. | May rely on and shall be held harmless by the Company in acting upon written or oral instructions from the Company with respect to any matter relating to its acting as the Agent; |
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| D. | May consult with counsel reasonably satisfactory to it (including counsel for the Company) and shall be held harmless by the Company in relying on the advice or opinion of such counsel in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion of such counsel; |
| E. | Shall make the final determination as to whether or not a rights certificate received by the Agent is duly, completely and correctly executed in order to qualify for the Rights Offering and the Agent shall be held harmless by the Company in respect of any action taken, suffered or omitted by the Agent hereunder in good faith and in accordance with its determination; |
| F. | Shall not be obligated to take any action hereunder which might, in its reasonable judgment subject or expose it to any expense or liability unless it shall have been furnished with an indemnity satisfactory to it; |
| G. | Shall not be liable or responsible for any recital or statement contained in any Offering Document or any other documents relating thereto, unless such statement was provided or confirmed in writing by the Agent; |
| H. | Shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to the Offering, including without limitation obligations under applicable regulation or law; and |
| I. | Shall at all times act in good faith and agrees to use its commercially reasonable efforts within reasonable time limits to insure the accuracy and timeliness of all services performed hereunder. |
No later than the first business day after the Mailing, the Company will provide the Agent with a final list of talking points for dealing with anticipated questions from holders of Common Stock. It is understood and agreed that the Agent will not provide tax advice, will not interpret tax regulations, will not opine regarding the merits of the Rights Offering, and will not provide any comments related to any legal proceedings related to the Company.
This Agreement does not contemplate any service to be provided by the Agent in the case where the conditions of the Offering have not been met in a timely manner. If necessary, service to be provided by the Agent under such circumstances and remuneration to the Agent therefor, will be established in a mutual agreement between the Agent and the Company, which will become a part of this Agreement.
5. Compensation of the Agent by the Company. The Company shall pay fees for the services rendered hereunder, as set forth in the Fee Schedule (attached hereto as Exhibit A). The Agent shall also be entitled to reimbursement from the Company for all reasonable and necessary expenses paid or incurred by it in connection with the administration by the Agent of its duties hereunder. The fees must be paid upon execution of this Agreement, before any services hereunder commence. An invoice for any out-of-pocket and/or per item fees incurred will be rendered to and payable by the Company within fifteen (15) days of the date of said invoice. It is understood and agreed that all responsibilities and duties of, and services to be performed by, the Agent shall cease if full payment for its services has not been received in accordance with the above schedule, and said services will not commence thereafter until all payment due has been received by the Agent.
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6. Reminder Mailings. The Company agrees that any follow up mailing program will be coordinated exclusively through the Agent. The Agent, or a preferred vendor of the Agent, may conduct follow up mailings through electronic mail, to the extent the email address of the intended recipient stockholder has been provided by the Company to the Agent.
7. Indemnification, Limitation of Liability.
A. The Company covenants and agrees to indemnify and to hold the Agent harmless against any claims, actions, judgments, liabilities, costs, expenses (including reasonable fees of its legal counsel), losses or damages, which may be paid, incurred or suffered by or to which it may become subject, arising out of or incident to this Agreement, including the Agent’s compliance with instructions set forth herein or with any instructions delivered to the Agent pursuant hereto, or as a result of defending itself against any claim or liability resulting from its actions as the Agent, including any claim against the Agent by any stockholder or the Company, which covenant and agreement shall survive the termination hereof. Promptly after the receipt by the Agent of notice of any demand or claim, or the commencement of any action, suit, proceeding or investigation relating to its duties under this Agreement, the Agent shall notify the Company thereof in writing. However, failure to so notify the Company shall not operate in any manner whatsoever to relieve the Company from any liability which it may have on account of this Section 7 if no prejudice occurs. The Company shall be entitled to participate at its own expense in the defense of any such claim or proceeding, and, if it so elects at any time after receipt of such notice, it may assume the defense of any suit brought to enforce any such claim or of any other legal action or proceeding. Neither the Agent nor the Company shall without the other party’s prior written consent, settle or compromise or consent to the entry of any judgment to any pending or threatened action in respect of which indemnification may be sought hereunder.
B. The Agent’s aggregate liability during any term of this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid or payable hereunder by the Company to the Agent as fees and charges, but not including reimbursable expenses.
C. In the event any question or dispute arises with respect to the proper interpretation of this Agreement or the Agent’s duties hereunder or the rights of the Company or of any stockholders exercising Subscription Rights in the Rights Offering, the Agent shall not be required to act and shall not be held liable or responsible for refusing to act until the question or dispute has been judicially settled (and the Agent may, if it deems it advisable, but shall not be obligated to, file a suit in interpleader or for a declaratory judgment for such purpose) by final judgment rendered by a court of competent jurisdiction, binding on all stockholders and parties interested in the matter which is no longer subject to review or appeal, or settled by a written document in form and substance satisfactory to the Agent and executed by the Company and each such stockholder and party. In addition, the Agent may require for such purpose, but shall not be obligated to require, the execution of such written settlement by all the stockholders and all other parties that may have an interest in the settlement.
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8. Further Assurance. From time-to-time and after the date hereof, the Company shall deliver or cause to be delivered to the Agent such further documents and instruments and shall do and cause to be done such further acts as the Agent shall reasonably request (it being understood that the Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.
9. Representations, Warranties and Covenants. The Company represents, warrants and covenants that: (a) it is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation; (b) the making and consummation of the Rights Offering and the execution, delivery and performance of all transactions contemplated thereby (including without limitation this Agreement) have been duly authorized by all necessary corporate action and will not result in a material breach of or constitute a default under the certificate of incorporation or bylaws of the Company or any indenture, agreement or instrument to which it is a party or is bound; (c) this Agreement has been duly executed and delivered by the Company and constitutes a legal, valid, binding and enforceable obligation of it; (d) the Rights Offering will comply in all material respects with all applicable requirements of law; and (e) to the best of its knowledge, there is no litigation pending or threatened as of the date hereof in connection with the Rights Offering.
10. Term. The Company may terminate this Agreement with or without cause at any time by providing at least sixty (60) days’ written notification to the Agent. The Agent may terminate this Agreement with or without cause by providing at least sixty (60) days’ written notice to the Company, except that the Agent may terminate this Agreement immediately at any time Company has not paid in full an invoice from the Agent within the time period described in Section 5 hereof. Upon the effective date of termination of this Agreement, all cash and other property then held by the Agent on behalf of the Company, all canceled certificates and related documentation then held by the Agent, if any, will be returned to the Company. Upon termination of this Agreement, all subscription documents received and related documentation will be returned to the Company.
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11. Notices. Until further notice in writing by either party hereto to the other party, all written reports, notices and other communications between the Agent and the Company required or permitted hereunder shall be delivered or mailed by first class mail, postage prepaid, addressed as follows:
| If to the Company, to: | The LGL Group, Inc. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. | |||
| If to the Agent, to: | Broadridge Corporate Issuer Solutions, Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn: Corporate Actions Department
with a copy (which shall not constitute notice) to:
Broadridge Financial Solutions, Inc. ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Attn: General Counsel | |||
12. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania and shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successors and assigns of the parties hereto.
13. Assignment. This Agreement may not be assigned by the Company without the prior written consent of Agent, which consent shall not be unreasonably withheld. This Agreement shall be binding upon and shall inure to the benefit of Agent and the Company and their respective successors and permitted assigns and is made solely and specifically for their benefit. No other person shall have any rights, interest or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third-party beneficiary or otherwise.
14. Amendment. This Agreement may not be modified, amended or supplemented without an express written agreement executed by each of the parties hereto.
15. Counterparts. This Agreement may be executed in separate counterparts, each of which, when executed and delivered, shall be an original, but all such counterparts shall together constitute but one and the same instrument.
16. No Joint Venture. This Agreement does not constitute an agreement for a partnership or joint venture between the Agent and the Company. Neither party shall make any commitments with third parties that are binding on the other party without the other party’s prior written consent.
17. Force Majeure. In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage that is reasonably beyond its control, or other cause that is reasonably beyond its control (except, in the case of the Agent, for acts of subcontractors), such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. Performance under this Agreement shall resume when the affected party or parties are able to perform substantially that party’s duties.
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18. Consequential Damages. Neither party to this Agreement shall be liable for any consequential, indirect, special or incidental damages under any provision of this Agreement or for any consequential, indirect, penal, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.
19. Severability. If any provision of this Agreement shall be held invalid, unlawful, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired.
20. Confidentiality. The Agent and the Company agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement, including the fees for services set forth in the attached schedule, shall remain confidential and shall not be voluntarily disclosed to any third party (except the party’s attorneys, advisors and affiliates), except with the written approval of the other party or as may be required by law or regulatory authority.
21. Survival. The provisions of Sections 4, 5, 7, 8, 9, 11, 12, 16, and 18 through 22 shall survive any termination of this Agreement.
22. Merger of Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written.
[Signatures begin on the following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the day and year first above written.
| BROADRIDGE CORPORATE ISSUER | THE LGL GROUP, INC. | |||||||
| SOLUTIONS, INC. | ||||||||
| By: | By: | |||||||
| Title: | Title: | |||||||
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Exhibit A
AGENT FEES AND INCLUDED SERVICES
The outlined fees include all services listed above for approximately 500 common shareholders with the exception of out-of-pockets only.
Subscription and Information Agent Fee of $15,500, plus $2.50 for each line item on Depository Trust Company’s ATOP forms submitted to the Agent. DTCC new CUSIP setup fee of $1,000 per CUSIP
Agent shall be entitled to reimbursement of all reasonable out-of-pocket expenses including but not limited to postage, stationery and supplies, which will be billed as incurred during the performance of Agent’s duties hereunder, including without limitation:
Out of pocket expenses
| • | Postage with shared Pre-Sort savings (to be paid in advance)1 |
| • | Overnight delivery / courier service / photocopy service |
| • | Envelopes – outer and BRE (Business Reply Envelopes)2 |
| • | Brochures and enrollment materials |
| • | Insurance and courier fees |
| • | Printing of check forms and blank stock certificates |
Although Agent may advance payment for these expenses and then invoice the Company, there are occasions when the Agent may require advance payment toward large expense items.
INCLUDED SERVICES
| • | Designating a corporate action account manager to communicate with all parties hereto and their counsel to establish the terms, timing and procedures required to carry out Subscription Agent duties, including document review and execution of legal agreements, subscription rights certificates and other Rights Offering documents and communication materials, project management, and on-going project updates and reporting. |
| • | Designating an Information Agent account manager to review and become familiar with all Offering Documents and provide expert assistance to holders of Common Stock related to matters concerning the Rights Offering. |
| • | Print, prepare and deliver 14C Information Statement mailing to all shareholders |
| • | Preparing mailings that include name, address for the mailing of Offering Documents. |
| 1 | Rates are subject to change upon U.S. and foreign postage rate increases. |
| 2 | Rates are subject to change upon U.S. and foreign postage rate increases. |
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| • | Printing, collating and assembling Offering Documents and envelopes for mailing. |
| • | Addressing and enclosing Offering Documents and return envelopes, for one-time, one-day mailing to holders of Common Stock. |
| • | Receiving, opening and logging in returned subscription rights certificates. |
| • | Checking subscription rights certificates for validity against master list. |
| • | Checking for proper execution of all of subscription rights certificates and other documents necessary to effect a proper exercise of Subscription Rights, including W-9s (if applicable). |
| • | Curing defective subscriptions, including contacting holders of Common Stock via phone and mail in connection with unsigned or improperly executed subscription rights certificates and other Offering Documents. |
| • | Soliciting by mail W-9s from holders of Common Stock who have not executed them or whose TIN’s do not match our records. |
| • | Tracking and reporting as required the number of shares of Common Stock to which stockholders have subscribed. |
| • | For the subscription of shares pursuant to the over-subscription rights, providing a calculation and proration of shares and submissions for the Company’s approval |
| • | Sealing, addressing, posting (not including postage), and providing envelopes for mailing to holders of Common Stock. |
| • | Providing stockholder relations services to all holders of Common Stock related to the Rights Offering, including phone, email, and regular mail inquiries. |
| • | Rights are transferrable and tradable. |
NON-INCLUDED SERVICES
| • | Services associated with new duties, legislation or regulations which become effective after the date of this Agreement (these will be provided on an appraisal basis) |
| • | Reasonable legal review fees if referred to outside counsel upon receipt of prior approval of the Company |
| • | Overtime charges at 100% assessed in the event of late delivery of material for mailings, unless the target mail date is rescheduled |
| • | Dedicated Toll Free 800 Number |
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