EXHIBIT 10O
AUTOINFO, INC.
6413 Congress Ave, Suite 240
Boca Raton, Florida 33487
January 5, 2006
Kinderhook Partners, LP
1 Executive Drive, Suite 160
Fort Lee, NJ 07024
Vinodray R. Shah
50 Hilltop Road
Longmeadow, MA 01106
This letter constitutes an agreement between Kinderhook Partners, LP, Vinodray
Shah and/or their affiliates (each a "Purchaser" and collectively, the
"Purchasers") and AutoInfo, Inc. ("AutoInfo" or the "Company").
1. AutoInfo acknowledges that the Purchasers have agreed to buy from certain
stockholders of the Company who are signatories hereto (individually, a "Seller"
and collectively, the "Sellers") up to 1,000,000 shares of AutoInfo common stock
(the "AutoInfo Shares") pursuant to a Stock Purchase Agreement of even date
herewith. AutoInfo further acknowledges that it is a condition to the Stock
Purchase Agreement that the Company enter into this agreement with the
Purchasers and that transactions contemplated by the Stock Purchase Agreement
are in the best interests of the Company.
2. AutoInfo represents and warrants:
(a) it is duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and is duly qualified to do business and is
in good standing in each jurisdiction in which such qualification is required by
law; except where the failure to so qualify would not have a material adverse
effect on the Company;
(b) it has the corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts;
(c) it has the full right, power and authority to enter into this agreement and
perform the transactions contemplated hereunder;
(d) this agreement has been duly executed and delivered on behalf of AutoInfo
and constitutes the valid and binding obligation of AutoInfo, enforceable in
accordance with its terms;
(e) the execution, delivery and performance of this agreement, and compliance
with the provisions hereof by AutoInfo, do not and will not, with or without the
passage of time or the giving of notice or both, (i) violate any provision of
law, statute, ordinance, rule or regulation or any ruling, writ, injunction,
order, judgment or decree of any court, administrative agency or other
governmental body, or (ii) result in any breach of any of the terms, conditions
or provisions of, or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under
any note, indenture, mortgage or lease, or any other material contract or other
instrument, document or agreement, to which AutoInfo is a party or by which it
or any of its property is bound or affected;
(f) AutoInfo is not a party to, subject to or bound by any agreement or any
judgment, order, writ, prohibition, injunction or decree of any court or other
governmental body which would prevent the execution or delivery of this
agreement;
(g) all consents, approvals or authorizations of, or registrations, filings or
declarations with, any governmental authority, stock exchange or market,
AutoInfo's board of directors and shareholders, or any other person, required in
connection with the execution, delivery and performance of this agreement or the
transactions contemplated hereby have been obtained by AutoInfo and are in full
force and effect; and
(h) there are no actions, investigations, demands, suits or proceedings pending
or threatened against or affecting AutoInfo, or affecting the rights of AutoInfo
to enter into this agreement or consummate the transactions contemplated hereby.
3. AutoInfo covenants and agrees as follows:
(a) to file a registration statement on or before March 31, 2006 (the "Filing
Date") on Form SB-2, or such other form that is appropriate, covering the resale
of the AutoInfo Shares (the "Registrable Securities"). AutoInfo will cause the
registration statement to become effective on or before June 30, 2006 (the
"Effectiveness Date"); provided that, if (1) the registration statement is not
filed by the Filing Date, (2) the registration statement is not declared
effective by the Effectiveness Date, or (3) prior to the time that the
Registrable Securities may be resold pursuant to Rule 144, the registration
statement shall cease to be available for use by the Purchasers due to the fault
of AutoInfo (including, without limitation, by reason of a stop order, a
material misstatement or omission in such registration statement or the
information contained in such registration statement having become outdated),
then each Seller shall pay to the Purchasers an amount equal to one percent (1%)
of the purchase price paid to such Seller for the AutoInfo Shares purchased by
the Purchasers. Thereafter, for every 30 days that pass during which any of the
events described in clauses (1), (2), and (3) above is continuing (the "Blackout
Period"), each Seller shall pay to the Purchasers an additional amount equal to
one percent (1%) of the purchase price paid to such Seller for the AutoInfo
Shares purchased by the Purchasers. Each such payment shall be due within five
(5) days of the end of each calendar month of the Blackout Period until the
termination of the Blackout Period and within five (5) days after such
termination. Such payments shall be in partial compensation to the Purchasers,
and shall not constitute the Purchasers' exclusive remedy for such events. The
Blackout Period shall terminate upon (x) the filing of the registration
statement in the case of clause (1) above; and (y) the effectiveness of the
registration statement in the case of clauses (2) and (3) above. Notwithstanding
anything to the contrary contained in this Agreement, provided that a
registration statement covering the Registrable Securities has been filed and
declared effective, no amounts shall be due and payable to the Purchasers as a
result of blackout periods imposed by the Company due to (i) the Company being
involved in a confidential proposed transaction involving a merger or
acquisition, purchase or sale of assets, contractual agreement or negotiations
therefor, (ii) an imminent public announcement by the Company of an updated or
new product or technology or (iii) the financial statements included in the
prospectus covering the Registrable Securities requiring updating and the
required annual audited financial statements not being available; provided,
however, that such
blackout periods shall not exceed thirty (30) trading days in the aggregate per
year nor more than twenty (20) consecutive calendar days.
(b) if at any time prior to the two year anniversary of the date the Purchasers
acquire the Registrable Securities, AutoInfo or any shareholder of AutoInfo
proposes to register any of its common stock or any securities convertible into
common stock under the Securities Act of 1933 (the "Securities Act") (other than
pursuant to an offering of securities in connection with an employee benefit,
share dividend, share ownership or dividend reinvestment plan) and (a) the
Registrable Securities are not then covered by an effective registration
statement, and (b) the registration form to be used may be used by AutoInfo for
the registration of the Registrable Securities, AutoInfo shall give prompt
written notice to the Purchasers of its intention to effect such a registration
(each a "Piggyback Notice") and, shall include in such registration all
Registrable Securities with respect to which AutoInfo has received written
request from the Purchasers for inclusion therein within ten (10) days after the
date of sending the Piggyback Notice (the "Piggyback Registration") to the
Purchasers.
(c) in connection with any registration, AutoInfo will, as expeditiously as
possible:
(i) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement with respect to such securities and use
its best efforts to cause such registration statement to become and remain
effective for a period of time required for the disposition of such securities
by the Purchasers;
(ii) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such registration statement until the
such time as all of such securities have been disposed of;
(iii) furnish to the Purchasers such number of copies of a summary
prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents, as the Purchasers may reasonably request;
(iv) register or qualify the securities covered by such registration
statement under such other securities or blue sky laws of such jurisdictions
within the United States and Puerto Rico as the Purchasers shall reasonably
request (provided, however, that it shall not be obligated to qualify as a
foreign corporation to do business under the laws of any jurisdiction in which
it is not then qualified or to file any general consent to service or process),
and do such other reasonable acts and things as may be required of it to enable
the Purchasers to consummate the disposition in such jurisdiction of the
securities covered by such registration statement;
(v) notify the Purchasers at any time when the Registration Statement
contains an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and at the request of
the Purchasers, prepare and furnish to such person(s) such reasonable number of
copies of any amendment or supplement to the Registration Statement as may be
necessary so that, as thereafter delivered to the purchasers of such shares,
such Registration Statement shall not include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances then
existing;
(vi) keep the Purchasers informed of the Company's best estimate of the
earliest date on which the offering documents will become effective, and
promptly notify the Purchasers of (A) the effectiveness of such offering
documents, (B) a request by the Commission for an amendment or supplement to
such offering documents, (C) the issuance by the Commission of an order
suspending the effectiveness of the offering documents, or of the threat of any
proceeding for that purpose, and (D) the suspension of the qualification of any
securities to be included in the offering documents for sale in any jurisdiction
or the initiation or threat of any proceeding for that purpose;
(vii) cause all Registrable Securities registered hereunder to be listed
on each securities exchange on which similar securities issued by the Company
are then listed; and
(viii) not less than three business days prior to the filing of the
Registration Statement or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall furnish to the Purchasers and its counsel copies
of all such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to the
reasonable review and comment of the Purchasers and their counsel.
(d) all registrations (piggyback or otherwise) made by the Purchasers will be
made solely at AutoInfo's expense, other than (x) the underwriters',
broker-dealers' and placement agents' selling discounts, commissions and fees
relating to the sale of the Purchasers' securities, (y) any costs and expenses
of counsel, accountants or other advisors retained by the Purchasers and (z) all
transfer, franchise, capital stock and other taxes, if any, applicable to the
Purchasers' securities (collectively, "Purchasers' Expenses") which shall be
paid by the Purchasers.
(e) In the event of any registration of any Registrable Securities under the
Securities Act pursuant to this agreement, the Company shall indemnify and hold
harmless the holder of such Registrable Securities, such holder's directors and
officers, and each other person who participated in the offering of such
Registrable Securities and each other person, if any, who controls such holder
or such participating person within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which such
holder or any such director or officer or participating person or controlling
person may become subject under the Securities Act or any other statute or at
common law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any untrue statement or
any alleged untrue statement of any material fact contained, on the effective
date thereof, in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, (ii) any
omission or any alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) any other violation of any applicable securities laws, and in each of the
foregoing circumstances shall reimburse such holder or such director, officer or
participating person or controlling person for any legal or any other expenses
reasonably incurred by such holder or such director, officer or participating
person or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any actual or alleged
untrue statement or actual or alleged omission made in such registration
statement,
preliminary prospectus, prospectus or amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
holder specifically for use therein. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such holder
or such director, officer or participating person or controlling person, and
shall survive the transfer of such securities by such holder.
(f) In the event of any registration of any Registrable Securities under the
Securities Act pursuant to this Agreement, each holder of Registrable
Securities, by acceptance hereof, agrees to indemnify and hold harmless the
Company, its directors and officers and each other person, if any, who controls
the Company within the meaning of the Securities Act and any other holder
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director or officer or any such person may become
subject under the Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or any alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or (ii) any omission or any
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in either case
only to the extent that such untrue statement or omission is (A) made in
reliance on and in conformity with any information furnished in writing by such
holder to the Company concerning such holder specifically for inclusion in the
offering documents relating to such offering, and (B) is not corrected by such
holder and distributed to the purchasers of shares within a reasonable period of
time. Notwithstanding the provisions of this paragraph, no holder shall be
required to indemnify any person pursuant to this paragraph or to contribute
pursuant to paragraph (g) below in an amount in excess of the amount of the
aggregate net proceeds received by such holder in connection with any such
registration under the Securities Act.
(g) If the indemnification provided for above from the indemnifying party is
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this paragraph were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(h) In order to permit the Purchasers to sell the Registrable Securities, if
they so desire, pursuant to any applicable resale exemption under applicable
securities laws and regulations, AutoInfo shall:
(i) comply with all rules and regulations of the Commission in connection
with use of any such resale exemption;
(ii) make and keep available adequate and current public information
regarding the Company; and
(iii) file with the Commission in a timely manner, all reports and other
documents required to be filed under the Securities Act, the Securities Exchange
Act of 1934 (the "Exchange Act"), or other applicable securities laws and
regulations. All rights of the Purchasers under this paragraph 3 shall inure to
the benefit of the Purchasers' successors and assigns, provided that any such
successor or assign obtains Registrable Securities in compliance with all
applicable laws.
4. The representations and warranties of each party contained herein shall
survive the execution and delivery of this agreement. Each party shall
indemnify, defend and hold harmless the other party from and against all
liabilities, losses, and damages, together with all reasonable costs and
expenses related thereto (including, without limitation, reasonable legal fees
and expenses) based upon or arising out of any inaccuracy or breach of any
representation and warranty or covenant contained herein.
5. Each party hereto agrees to take, or cause to be taken, from and after the
date hereof, such further actions to execute, deliver and file, or cause to be
executed, delivered and filed, such further documents and instruments as may be
necessary in order to fully effectuate the purposes, terms and conditions of
this agreement.
6. This agreement shall be governed by the laws of the State of New York without
giving effect to choice of law principles. Any provision of this agreement which
is illegal, invalid, prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such illegality,
invalidity, prohibition or unenforceability without invalidating or impairing
the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction. This agreement shall bind each party
and his or her successors and assigns. This agreement may be modified only with
the written consent of all of the parties hereto. This agreement may be executed
in any number of counterparts and all counterparts shall be construed together
and shall constitute one and the same instrument.
Kinderhook Partners, LP
By: /s/ Stephen Clearman
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Stephen Clearman, Managing Partner
/s/ Vinodray R. Shah
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Vinodray R. Shah
AutoInfo, Inc.
By: /s/ Harry Wachtel
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Harry Wachtel, President
The following individuals join in this
Agreement with respect to their
respective payment obligations set
forth in Section 3 hereof.
/s/ Harry Wachtel
- ----------------------------------
Harry Wachtel
/s/ William Wunderlich
- ----------------------------------
William Wunderlich