Item 1.01 Entry into a Material Definitive Agreement.
On March 29, 2022, Art's-Way Manufacturing Co., Inc. (the "Company") entered
into a Common Stock Purchase Agreement (the "Purchase Agreement") with Alumni
Capital LP, a Delaware limited partnership ("Alumni Capital"), pursuant to which
the Company agreed to sell, and Alumni Capital agreed to purchase, upon request
of the Company in one or more transactions, a number of shares of the Company's
common stock, par value $0.01 per share (the "Common Stock") providing aggregate
gross proceeds to the Company of up to $3,000,000 (the "Maximum"). The Purchase
Agreement expires upon the earlier of the aggregate gross proceeds from the sale
of shares meeting the Maximum or June 30, 2023.
Among other limitations, unless otherwise agreed upon by Alumni Capital, each
sale of shares will be limited to 50,000 shares and further limited to no more
than the number of shares that would result in the beneficial ownership by
Alumni Capital and its affiliates, at any single point in time, of more than
9.99% of the then-outstanding shares of Common Stock. Alumni Capital will
purchase the shares of Common Stock under the Agreement at a discount ranging
from 3-5% of the lowest traded price of the Common Stock in the five business
days preceding the Company delivering notice of the required purchase of shares
to Alumni Capital.
In exchange for Alumni Capital entering into the Purchase Agreement, the Company
issued 20,000 shares of Common Stock to Alumni Capital upon execution of the
Purchase Agreement (the "Initial Commitment Shares") and will issue another
20,000 shares in connection with the first closing under the Purchase Agreement
(with the Initial Commitment Shares, the "Commitment Shares"). Alumni Capital
represented to the Company, among other things, that it was an "accredited
investor" (as such term is defined in Rule 501(a) of Regulation D under the
Securities Act of 1933, as amended (the "Securities Act")). The Company shares
of Common Stock, including the Commitment Shares, are being offered and sold
under the Purchase Agreement in reliance upon an exemption from the registration
requirements of the Securities Act afforded by Section 4(a)(2) of the Securities
Act and Rule 506(b) of Regulation D promulgated thereunder. The securities sold
may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
The Purchase Agreement provides that the Company will file a registration
statement under the Securities Act covering the resale of the shares issued to
Alumni Capital. Alumni Capital's obligation to purchase shares of Common Stock
under the Purchase Agreement is conditioned upon, among other things, the
registration statement having been declared effective by the Securities and
Exchange Commission.
The Purchase Agreement contains customary representations, warranties and
covenants by each of the Company and Alumni Capital. The Company has the right
to terminate the Purchase Agreement at any time, at no cost or penalty. Actual
sales of shares of Common Stock to Alumni Capital will depend on a variety of
factors to be determined by the Company from time to time, including, among
others, market conditions, the trading price of the Common Stock and
determinations by the Company as to the appropriate sources of funding for the
Company and its operations. Alumni Capital has no right to require any sales by
the Company, but is obligated to make purchases from the Company as it directs
in accordance with the Purchase Agreement. During the term of the Purchase
Agreement, Alumni Capital has covenanted not to cause or engage in any short
selling or hedging of Company shares.
The net proceeds under the Purchase Agreement to the Company will depend on the
frequency and prices at which the Company sells shares of its stock to Alumni
Capital. The Company expects that any proceeds received by the Company from such
sales to Alumni Capital under the Purchase Agreement will be used for general
corporate, working capital purposes, and/or acquisitions of assets, businesses
or operations.
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The foregoing summary of the Purchase Agreement is qualified in its entirety by
reference to the complete agreement, a copy of which is attached hereto as
Exhibit 10.1 and incorporated herein by reference. On April 4, 2022, the Company
issued a press release announcing the entry into the Purchase agreement, a copy
of which is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
Item 3.02 Unregistered Sales of Equity Securities
The information contained above in Item 1.01 is hereby incorporated by reference
into this Item 3.02.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Common Stock Purchase Agreement, dated March 29, 2022, by and
between Art's-Way Manufacturing Co., Inc. and Alumni Capital LP.
99.1 Art's-Way Manufacturing Co., Inc. Press Release, dated April 4,
2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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