Exhibit 4.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of January __,
2002, by and between StockerYale, Inc., a Massachusetts corporation (the
"COMPANY"), and the investor named on the signature page hereof (the
"INVESTOR").
W I T N E S S E T H
WHEREAS, the Company is offering for sale up to 1,200,000 shares (the
"SHARES") of its Common Stock (as defined below) at the price per share of
Common Stock negotiated with each purchaser, pursuant to a Confidential Offering
Memorandum dated as of January 17, 2002 (the "MEMORANDUM"), this transaction
generally being herein referred to as the "PRIVATE PLACEMENT"; and
WHEREAS, the Investor desires to purchase from the Company shares of
Common Stock on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for good and valuable consideration the receipt of which
is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS. Unless specifically defined herein, capitalized terms
used herein have the meaning ascribed to such terms in the Memorandum except
that, unless the context requires otherwise, the following terms have the
meanings indicated:
"BUSINESS DAY" shall mean any day except Saturday, Sunday and any day
which shall be in Boston, Massachusetts a legal holiday or a day on which
banking institutions are authorized or required by law or other government
action to close.
"COMMON STOCK" shall mean the Common Stock, par value $0.001 per share,
of the Company.
"INVESTORS" shall mean all of the purchasers of Shares sold in the
Private Placement.
"PERSON" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"TOTAL PURCHASE PRICE" shall mean the aggregate purchase price for all
of the Shares sold in the Private Placement.
2. PURCHASE OF COMMON STOCK. Subject and pursuant to the terms and conditions
set forth in this Agreement, the Company agrees that it will issue and sell to
the Investor and the Investor agrees that it will purchase from the Company, at
$____ per share of Common Stock
(the "PER SHARE PURCHASE PRICE"), _________ shares of Common Stock (the
"INVESTOR SHARES"). The aggregate purchase price for the shares of Common Stock
shall be $_________ (the "AGGREGATE PURCHASE PRICE"). The shares of Common Stock
are being offered pursuant to the Memorandum.
3. DELIVERIES AT CLOSING.
(a) DELIVERIES BY THE INVESTOR. At the Closing of the transactions
contemplated hereby, the Investor shall deliver to the Company the following:
(1) the Aggregate Purchase Price by wire transfer of
immediately available funds to an account designated by the Company as
set forth on ANNEX V hereto, which funds will be delivered to the
Company in consideration of the Investor Shares issued at the closing
of the transaction contemplated hereby;
(2) an executed Investor Questionnaire in the form attached
as ANNEX I;
(3) an executed Managed Account Representation Letter in the
form attached as ANNEX II, if the Investor is acting on behalf of a
managed account in the purchase of the Investor Shares; and
(4) a completed Registration Statement Questionnaire in the
form attached as ANNEX III.
(b) DELIVERIES BY THE COMPANY. At the Closing of the transactions
contemplated hereby, the Company shall deliver to the Investor one or more
certificates representing the Investor Shares registered in the name of the
Investor or its nominee(s), as the Investor has specified in writing to the
Company.
4. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
(a) INVESTOR REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Investor represents, warrants and agrees as follows:
(1) The Investor has received and reviewed a copy of the
Memorandum, and all appendices and supplements (if any) thereto,
relating to the Shares and understands that no Person has been
authorized to give any information or to make any representations that
were not contained in the Memorandum, and the Investor has not relied
on any such other information or representations in making a decision
to purchase the Investor Shares. The Investor has had access to such
financial and other information and has had the opportunity to ask
questions and receive answers as deemed necessary in respect of the
decision to purchase the Investor Shares, and has consulted with its
advisors concerning the proposed investment in the Company. The
Investor understands
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that an investment in the Company involves a high degree of risk for
the reasons, among others, set forth under the caption "Risk Factors"
in the Memorandum.
(2) The Investor has decided to invest in the Shares and, in
making the decision to so invest, is not in any way relying on the fact
that any other Person has decided to invest in the Shares.
(3) The Investor represents that the Investor (or, if
applicable, each managed account on whose behalf the Investor Shares
are being purchased by such Investor) is an "accredited investor" as
defined in Rule 501 under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), as certified by the Investor in the Investor
Questionnaire attached hereto as ANNEX I. The Investor further
represents that the Investor (or, if applicable, each managed account
on whose behalf the Investor Shares are being purchased) has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of an investment in the
Shares and can bear the economic risk of loss of the entire investment
in the Shares being purchased.
(4) The Investor understands and expressly acknowledges and
agrees that none of the Shares has been, or will be, registered or
qualified under the Securities Act, or under any applicable securities
laws of any State of the United States ("APPLICABLE STATE LAW") and
therefore may not be offered, sold, transferred, assigned, pledged,
hypothecated or otherwise disposed of, directly or indirectly, unless
subsequently registered or qualified under the Securities Act and under
Applicable State Law or unless an exemption from the registration
requirements of the Securities Act and Applicable State Law is
available, in each case to the extent permitted by the terms of this
Agreement.
(5) The Investor understands and agrees that all certificates
representing the Investor Shares shall bear a legend which will be
substantially in the form of the following:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS ("APPLICABLE
STATE LAW"). THESE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, TRANSFERRED OR HYPOTHECATED OR OTHERWISE ASSIGNED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM
REGISTRATION UNDER THE ACT OR APPLICABLE STATE LAW RELATING TO
DISPOSITION OF SECURITIES."
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(6) The Investor (or, if applicable, each managed account on
whose behalf the Investor Shares are being purchased by the Investor)
will acquire the Investor Shares pursuant to this Agreement for its own
account for investment and not with a view to, or in connection with,
the resale or distribution thereof or in any arrangement or
understanding with any other persons regarding the distribution of such
Investor Shares. The Investor hereby covenants and agrees that, during
the six month period following the Closing, the Investor shall execute
a lockup agreement, containing a restriction on the sale of Investor
Shares for a period terminating on the earlier of the ninetieth day
following closing of a primary offering by the Company or the six month
anniversary of the Closing, and other standard terms and conditions,
with any requesting underwriter participating in a primary offering (as
defined in Section 5(a)(1) below).
(7) The Investor hereby covenants and agrees with the Company
not to, directly or indirectly, sell, offer, contract or grant any
option to sell (including without limitation any short sale), pledge,
transfer, establish a "put equivalent position" as such term is defined
by Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), or otherwise dispose of any Investor Shares,
options or warrants to acquire Investor Shares, or securities
exchangeable or exercisable for or convertible into Investor Shares
owned either of record or beneficially (as defined in Rule 13d-3 under
the Exchange Act) by the Investor or publicly announce the Investor's
intention to do any of the foregoing or enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the
economic benefits or risks of ownership of the Investor Shares, prior
to the date on which the Registration Statement (as defined in Section
5(a)(2)) is declared effective (other than in connection with a sale
pursuant to a registration statement effected under Section 5(a)(1)
hereof).
(8) The Investor hereby covenants and agrees with the Company
not to make any sale of the Investor Shares without causing the
prospectus delivery requirement under the Securities Act to be
satisfied or otherwise complying with the Securities Act, and the
Investor acknowledges and agrees that the Investor Shares are not
transferable on the books of the Company unless the certificate
submitted to the transfer agent evidencing the Investor Shares is
accompanied by (a) a separate certificate (i) in the form of ANNEX V
hereto, (ii) executed by an officer of, or other authorized person
designated by, the Investor, and (iii) to the effect that (A) the
Investor Shares have been sold in accordance with a registration
statement pursuant to Section 5 hereof and (B) the requirement of
delivering a current prospectus has been satisfied; or (b) an opinion
of counsel reasonably satisfactory to the Company stating that an
exemption from registration is available under the Securities Act. The
Investor acknowledges that there may be times when the Company may
suspend the use of the prospectus forming a part of a registration
statement in the event that, and during such period as, pending
negotiations relating to, or consummation of, a transaction, or the
occurrence of any other event, would require additional disclosure of
material information by the Company in the registration statement and
the Company determines that disclosing such information would (x)
adversely affect the Company, (y) make it impractical or inadvisable to
cause
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the registration statement to be filed or to become effective or
to amend or supplement the registration statement or (z) otherwise
render the Company unable to comply with the requirements of the
Securities and Exchange Commission (the "COMMISSION"). In such event,
subject to the last sentence of this Section 4(a)(8), the Company may
suspend the use of such prospectus until such time as an amendment to
such registration statement has been filed by the Company and declared
effective by the Commission, or until such time as the Company has
filed an appropriate report with the Commission pursuant to the
Exchange Act. The Investor hereby covenants and agrees that it will not
sell any Investor Shares pursuant to said prospectus during the period
commencing at the time at which the Company gives the Investor written
notice of the suspension of the use of said prospectus and ending the
date on which the Company gives the Investor written notice that the
Investor may thereafter effect sales pursuant to said prospectus.
Anything herein to the contrary notwithstanding, the Company does not
have the right to suspend the use of such prospectus for a period of
more than forty-five (45) business days per suspension and the Company
may not exercise this right to suspend the use of such prospectus more
than twice in any twelve month period.
(9) The execution and delivery of this Agreement by the
Investor and the performance of this Agreement and the consummation by
the Investor or the Investor's advisory clients, as the case may be, of
the transactions contemplated hereby have been duly authorized by all
necessary (corporate, in the case of a corporation) action of the
Investor and, if applicable, the Investor's advisory clients; and this
Agreement, when duly executed and delivered by the Investor, will
constitute a valid and legally binding instrument, enforceable in
accordance with its terms against the Investor or any of the Investor's
advisory clients, as the case may be.
(10) The Investor represents that:
(A) If the Investor is a corporation, it is a
corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
with full power and authority (corporate and other) to perform its
obligations under this Agreement. If the Investor is a limited
liability company, it is a limited liability company duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, with full power and
authority (limited liability company and other) to perform its
obligations under this Agreement. The execution and delivery of
this Agreement and the performance by the Investor of the
transactions contemplated hereby have been duly authorized by all
necessary corporate or other action of the Investor.
(B) If the Investor is a corporation acting in an
advisory capacity, it is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, with full power and authority (corporate and
other) to act on behalf of its advisory clients under this
Agreement. If the Investor is a limited liability company acting
in an advisory capacity, it is a limited liability company duly
organized, validly existing and in good
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standing under the laws of the jurisdiction of its incorporation,
with full power and authority (corporate and other) to act on
behalf of its advisory clients under this Agreement.
(C) If the Investor is a trust, the trustee thereunder
has been duly appointed as trustee of such Investor with full
power and authority to act on behalf of such Investor and to
perform the obligations of such Investor under this Agreement.
Furthermore, the trustee under such trust has independently
determined that the purchase of the Investor Shares is a suitable
investment for such trust as authorized by the terms thereof and
applicable laws and regulations.
(D) If the Investor is a limited partnership, it is a
limited partnership duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization,
with full power and authority to perform its obligations under
this Agreement.
(E) If the Investor is a limited partnership acting in
an advisory capacity, it is a limited partnership duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization, with full power and authority to
act on behalf of its advisory clients under this Agreement.
(F) If the Investor is a corporation, limited liability
company, partnership, trust or other form of business entity, the
execution and delivery of this Agreement will not contravene or
result in a default under any provision of existing law or
regulations to which the Investor is subject, the provisions of
its trust instrument, charter, by-laws or other governing
documents or any indenture, mortgage or other agreement or
instrument to which it is a party or by which it is bound and does
not require on its part any approval, authorization, license or
filing from or with any foreign, federal, state or municipal board
or agency which has not been obtained or duly made.
(G) If the Investor is an individual, the Investor has
full power and authority to perform its obligations under this
Agreement.
(11) The Investor agrees to complete and execute and return
to the Company (a) the Investor Questionnaire attached as ANNEX I to
this Agreement representing that the Investor is investing in Shares as
an "accredited investor;" (b) if the Investor is acting on behalf of a
managed account in the purchase of any Investor Shares, the Managed
Accounts Representation Letter attached as ANNEX II to this Agreement;
and (c) the Registration Statement Questionnaire attached as ANNEX III,
in each case together with an executed signature page to this
Agreement. The Investor represents and warrants that the answers
thereto are true and correct as of the date hereof and will be true and
correct as of the effective date of the Registration Statement (as
defined in Section 5). If any of the answers provided by the Investor
in the questionnaires change prior to the effective date of the
Registration Statement, the Investor will provide the Company with
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prompt written notice of such changes. The Investor further represents
and warrants that it is not purchasing the Investor Shares on behalf of
any managed account other than as listed in the Managed Account
Representation Letter.
(12) The Investor has not entered into any contracts,
arrangements, understandings or relationships (written or otherwise)
with any other Person or Persons (other than the Company or a limited
partner/member or affiliate of Investor, which in any case shall not
violate any securities laws) with respect to any securities of the
Company (including but not limited to transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of profits, division of profits or loss, or
the giving or withholding of proxies) or the operations, management or
control of the Company; the Investor is not bound together, under
common control with, in a common enterprise with, or otherwise acting
in concert with, any other Person or Persons (other than a limited
partner/member or affiliate of Investor, which in any case shall not
violate any securities laws) in connection with the transactions
contemplated by this Agreement; and the Investor does not own any
securities of the Company which are pledged or otherwise subject to a
contingency the occurrence of which would give another Person voting
power or investment power over such securities.
(13) Except as otherwise set forth in ANNEX III, as of the
date hereof, the Investor does not beneficially own any shares of
Common Stock.
(14) No state, federal or foreign regulatory approvals,
permits, licenses or consents or other contractual or legal obligations
are required for the Investor to enter into this Agreement or otherwise
purchase the Investor Shares.
(15) The Investor hereby covenants and agrees not to disclose
any confidential information provided to the Investor by the Company in
the Memorandum or otherwise in connection with the Private Placement
with respect to the Company, except as otherwise required by law.
(b) COMPANY REPRESENTATIONS, WARRANTIES AND COVENANTS. The Company
hereby represents, warrants and agrees as follows:
(1) The Company has been duly incorporated and is validly
existing in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority (corporate and other) to
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
(2) The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary action
of the Company and the Agreement has been duly executed and delivered
by the Company; and this Agreement,
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when duly executed and delivered by the Investor, will constitute a
valid and legally binding instrument of the Company enforceable in
accordance with its terms.
(3) The Investor Shares have been duly authorized by the
Company, and when issued and delivered by the Company against payment
therefor as contemplated hereby and in accordance with the terms of the
Memorandum, the Investor Shares will be validly issued, fully paid and
nonassessable, free of preemptive rights and free from all taxes,
liens, charges and security interests in respect of the issuance
thereof.
(4) The execution and delivery of this Agreement, the
consummation by the Company of the transactions herein contemplated and
the compliance by the Company with the terms hereof do not and will not
(i) violate the Articles of Organization (as amended to date) of the
Company, or the By-Laws (as amended to date) of the Company, or (ii)
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of their properties or assets
are subject, or any applicable statute or any order, judgment, decree,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets other than a breach or violation that could
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business, assets or results of
operations of the Company (a "MATERIAL ADVERSE EFFECT"); and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required
for the valid authorization, execution, delivery and performance by the
Company of this Agreement, the issue of the Investor Shares or the
consummation by the Company of the other transactions contemplated by
this Agreement, except for such consents, approvals, authorizations,
registrations or qualifications as may be required under Federal or
state securities or "blue sky" laws or, with respect to requirements
applicable to the Investor and except where the failure to obtain such
consents, approvals, authorizations, registrations or qualifications
that could not reasonably be expected to have a Material Adverse
Effect.
(5) The information contained in the following documents,
which the Company has furnished to the Investor does not contain any
untrue statement of material fact or omit to state any material fact
necessary in order to make the statements therein in light of the
circumstances in which they were made not misleading as of the
respective final dates of the documents. Each of the documents listed
in (A), (B) and (C) below complied as to form in all material respects
with the applicable requirements of the Securities Act or Exchange Act
as of the date filed with the Commission.
(A) the Company's Annual Report to Stockholders on Form
10-KSB for the fiscal year ended December 31, 2000, as amended
(without exhibits);
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(B) Notice to Stockholders and Proxy Statement for its
Special Meeting in lieu of an Annual Meeting of Stockholders held
May 24, 2001;
(C) the Company's Quarterly Reports on Form 10-QSB for
the quarters ended March 31, 2001, June 30, 2001(as amended) and
September 30, 2001; and
(D) the Memorandum.
(6) The balance sheets of the Company for the nine months
ended September 30, 2001 have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis,
are consistent in all material respects with the books and records of
the Company and accurately present in all material respects the
financial position of the Company and its subsidiaries as of September
30, 2001. There has been no material adverse change in the financial
condition or business or results of operations of the Company or its
subsidiaries since September 30, 2001.
(c) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Investor herein and in the certificates for the Investor Shares delivered
pursuant hereto shall survive the execution of this Agreement, the delivery to
the Investor of the Investor Shares and the payment therefor.
5. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
(a) REGISTRATION RIGHTS; REGISTRATION PROCEDURES AND EXPENSES.
(1) If at any time or times after the date hereof, the
Company shall determine or be required to register any shares of its
Common Stock or other equity securities for sale under the Securities
Act in exchange for cash (whether in connection with a public offering
of securities by the Company (a "PRIMARY OFFERING"), a public offering
of securities by stockholders of the Company (a "SECONDARY OFFERING")
or both), but not in connection with a registration effected solely to
implement an employee benefit plan or a transaction to which Rule 145
or any other similar rule of the Commission under the Securities Act is
applicable, the Company shall:
(A) Promptly give written notice thereof to each of the
Investors.
(B) Use commercially reasonable efforts to effect the
registration under the Securities Act of all Investor Shares (but
not any other shares) which such Investors request to be
registered in a writing delivered to the Company within 10 days
after such Investors' receipt of the notice referred to above,
subject to subparagraph (iii) below.
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(C) In the case of the registration of shares of Common
Stock by the Company in connection with an underwritten public
offering, (a) the Company shall not be required to include any
Investor Shares in such underwriting unless the Investors thereof
accept the terms of the underwriting as agreed upon between the
Company and the underwriter or underwriters selected by it, and
(b) if the underwriter(s) determines that marketing factors
require a limitation on the number of Investor Shares to be
offered, the Company shall not be required to register Investor
Shares of the Investors in excess of the amount, if any, of shares
of the capital stock which the principal underwriter of such
underwritten offering shall reasonably and in good faith agree to
include in such offering in excess of any amount to be registered
for the Company, and in the event of any such limitation, the
number of Investor Shares of any Investor requesting inclusion in
such registration shall be based upon the relative holdings of
Common Stock of all Investors requesting such registration (and if
any Investor would thus be entitled to include more Investor
Shares than such Investor requested to be registered, the excess
shall be allocated among other requesting Investors PRO RATA based
upon their relative holdings of Common Stock). All expenses
relating to the registration and offering of Investor
Shares pursuant to this Section 5(a)(1) and pursuant to Section
5(a)(2) below shall be borne by the Company, except that the
Investors shall bear underwriting and selling commissions
attributable to their Investor Shares being registered, any
transfer taxes on shares being sold by such Investors and the
costs of any counsel or other professional advisors engaged by the
Investors.
Notwithstanding the foregoing, the Company's obligations pursuant to this
Section 5(a)(1) shall be suspended for so long as the Registration Statement
filed pursuant to Section 5(a)(2) is effective.
(2) The Company shall:
(A) Subject to the provisions of subparagraph (B) of
this Section 5(a)(2) and Sections 5(c) and 5(d) below, use
commercially reasonable efforts to prepare and file with the
Commission within 30 days of the Closing a registration statement
under Rule 415 under the Securities Act (the "REGISTRATION
STATEMENT") to enable the public offering and sale of the Investor
Shares by the Investor from time to time through the Nasdaq
National Market, the over-the-counter market or in
privately-negotiated transactions or otherwise.
(B) The Company shall use commercially reasonable
efforts, subject to receipt of necessary information from the
Investor, to cause the Registration Statement to become effective
within 90 days after the Closing.
(C) Promptly prepare and file with the Commission such
amendments and supplements to the Registration Statement and the
prospectus used in connection therewith as may be necessary to
keep the Registration Statement
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effective for a period not exceeding the second anniversary of the
Closing, or such shorter period which will terminate on the
earlier of the date when (i) the Shares held by the Investor may
be sold without registration under the Securities Act or (ii) all
of the Shares covered by such Registration Statement have been
sold pursuant to such Registration Statement or otherwise.
(D) Promptly furnish to the Investor with respect to the
Investor Shares registered under the Registration Statement (and
to each underwriter, if any, of such Investor Shares) such number
of copies of the Registration Statement and any amendment or
supplement thereto and of prospectuses and preliminary
prospectuses in conformity with the requirements of the Securities
Act as the Investor shall reasonably request.
(E) Promptly file documents required of the Company for
customary "blue sky" clearance in states specified in writing by
the Investor and reasonably required by the Investor in order to
resell its Investor Shares; PROVIDED, HOWEVER, that the Company
shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so
qualified or has not so consented.
(F) Promptly inform the Investor when any stop order by
the Commission has been issued with respect to the Investor Shares
and use commercially reasonable efforts to promptly cause such
stop order to be withdrawn.
(G) Take such other actions as may reasonably be
necessary to effect the registration of the resale of the Investor
Shares in accordance with the terms of this Agreement and to allow
such Investor Shares to trade in the same market system or
exchange where the Company's Common Stock then trades.
(H) File the reports required to be filed by it under
the Securities Act and the Exchange Act (or, if the Company is not
required to file such reports, it will, upon the request of any
holder of Investor Shares, make publicly available other
information so long as necessary to permit sales under Rule 144
under the Securities Act), all to the extent required from time to
time to enable the Investor to sell Investor Shares without
registration under the Securities Act within the limitations
provided by (i) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the Commission; PROVIDED,
HOWEVER, that, except as otherwise expressly provided in this
Section 5(a)(2)(H), nothing in this Agreement shall
require the Company to file reports under the Securities Act or
the Exchange Act, to register any of its securities under the
Exchange Act, or to make publicly available any information
concerning the Company at any time when it is not required by law
or by any agreement by which it is bound to do any of the
foregoing.
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A questionnaire related to the Registration Statement to be completed by the
Investor is attached hereto as ANNEX IV.
(b) TRANSFER OF SHARES. The Investor agrees not to effect any
disposition of the Investor Shares or the right to purchase the Investor Shares
that would constitute a sale within the meaning of the Securities Act except as
contemplated in Sections 5(a)(1) and (2) or pursuant to an exemption from
registration under the Securities Act. The Investor agrees to promptly notify
the Company of any changes in the information set forth in any registration
statement regarding the Investor Shares or the Investor.
(c) The Investor hereby acknowledges and agrees that in the event that
the Company makes any filing with the SEC in connection with a primary
underwritten offering within 30 days following the Closing Date, the time period
for preparing and filing a Registration Statement as contemplated by Section
5(a)(2) above shall be extended until May 31, 2002 and the Company shall use
commercially reasonable efforts, subject to the receipt of necessary information
from the Investor, to cause the Registration Statement to become effective as
promptly thereafter as practicable.
(d) POSTPONEMENT. The Company may postpone the filing or effectiveness
of any registration statement to be filed pursuant to this Section 5 for a
reasonable period of time if (i) the Company is engaged in confidential
negotiations or other confidential business activities, disclosure of which
would be required in such registration statement and (ii) the Board of Directors
of the Company determines in good faith that such disclosure would have a
material adverse effect on any such confidential negotiations or other
confidential business activities or would be materially detrimental to the
Company.
(e) INDEMNIFICATION AND CONTRIBUTION.
(1) For the purpose of this Section 5(e):
(A) The term "SELLING SHAREHOLDER" shall include the
Investor, officers, directors, trustees, or any affiliate of such
Investor and each person, if any, who controls the Selling
Shareholder within the meaning of the Securities Act and
(B) The term "REGISTRATION STATEMENT" shall include (i)
the Registration Statement and any final prospectus, exhibit,
supplement or amendment included in or relating to the
Registration Statement and (ii) any registration statement filed
in connection with Section 5(a)(1) and any final prospectus,
exhibit, supplement or amendment included in or relating to such
registration statement; and
(2) The Company agrees to indemnify and hold harmless each
Selling Shareholder from and against any losses, claims, damages or
liabilities to which such Selling Shareholder may become subject (under
the Securities Act or otherwise) insofar
12
as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or arise out
of any failure by the Company to fulfill any undertaking included in
the Registration Statement and the Company will reimburse such Selling
Shareholder for any reasonable legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such
action, proceeding or claim, PROVIDED, HOWEVER, that the Company shall
not be liable in any such case to the extent that such loss, claim,
damage or liability arises out of, or is based upon, any such untrue
statement or omission made in such Registration Statement in reliance
upon written information furnished to the Company by or on behalf of
such Selling Shareholder for use in preparation of the Registration
Statement, or the failure of such Selling Shareholder to comply with
the covenants and agreements contained in Sections 4(a)(7) and 5(b)
hereof respecting sale of the Shares or any statement or omission in
any prospectus that is corrected or made not misleading in any
subsequent prospectus that was delivered to the Investor prior to the
pertinent sale or sales by the Investor. The Company will reimburse
such Selling Shareholder, as the case may be, for any legal or other
expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim.
(3) The Investor agrees to indemnify and hold harmless the
Company (and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, each officer of the
Company who signs the Registration Statement and each director of the
Company) from and against any losses, claims, damages or liabilities to
which the Company (or any such officer, director or controlling person)
may become subject (under the Securities Act or otherwise), insofar as
such losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Sections 4(a)(7)
and 5(b) hereof respecting sale of the Shares, or any untrue statement
of a material fact contained in the Registration Statement on the
effective date thereof if such untrue statement was made in reliance
upon written information furnished by or on behalf of the Investor for
use in preparation of the Registration Statement, PROVIDED, HOWEVER,
that such Investor shall not be liable in any such case to the extent
that the Investor has furnished in writing to the Company information
expressly for use in such Registration Statement or any amendment
thereof or supplement thereto which corrected or made not misleading
information previously furnished to the Company prior to the filing of
the Registration Statement, and if furnished to the Company after the
filing of the Registration Statement, has notified the Company of such
information immediately upon its occurrence or the Investor's knowledge
of its occurrence. The Investor will reimburse the Company (or such
officer, director or controlling person), as the case may be, for any
legal or other expenses reasonably incurred in investigating, defending
or preparing to defend any such action, proceeding or claim. In no
event shall the liability of the Investor hereunder be greater in
amount than the dollar amount of the proceeds received by such
13
Investor (net of any underwriting discount) upon the sale of the Shares
giving rise to such indemnification obligation.
(4) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which
indemnity is to be sought against an indemnifying person pursuant to
this Section 5(e), such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of
such action, and, subject to the provisions hereinafter stated, in case
any such action shall be brought against an indemnified person and such
indemnifying person shall be entitled to participate therein, and, to
the extent it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified person. After notice from
the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be
liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense
thereof, PROVIDED, HOWEVER, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion
of counsel to the indemnified person, for the same counsel to represent
both the indemnified person and such indemnifying person or any
affiliate or associate thereof, the indemnified person shall be
entitled to retain its own counsel at the expense of such indemnifying
person; PROVIDED, HOWEVER, that no indemnifying person shall be
responsible for the fees and expenses of more than one separate counsel
for all indemnified parties. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written
consent, but, if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify
the indemnified party or parties in accordance with the provisions of
this Section 5(e).
(5) If the indemnification provided for in this Section 5(e)
from the indemnifying person is determined by a court of competent
jurisdiction to be unavailable to an indemnified person hereunder in
respect of any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying person, in lieu of
indemnifying such indemnified person, shall contribute to the amount
paid or payable by such indemnified person 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 person
and indemnified persons 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 person and indemnified persons 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,
has been made by, or relates to information supplied by, such
indemnifying person or indemnified persons, 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, subject to the limitations set forth
in this Section 5(e), any reasonable legal or other fees
14
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 Section 5(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(e), no Investor shall be
required to contribute any amount in excess of the dollar amount of the proceeds
received by such Investor (net of any underwriting discount) upon the sale of
the Shares giving rise to such contribution obligation. 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.
(f) TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 4(a)(8) or this Section 5 upon the transferability of the
Investor Shares shall cease and terminate as to any particular number of the
Investor Shares when such Investor Shares shall have been effectively registered
under the Securities Act and sold or otherwise disposed of in accordance with
the intended method of disposition set forth in the registration statement
covering such Investor Shares or when such Investor Shares shall have been sold
or otherwise disposed following receipt by the Company of an opinion of counsel
satisfactory to the Company stating that an exemption from registration is
available under the Securities Act to sell or otherwise dispose of such Investor
Shares.
(g) INFORMATION AVAILABLE. So long as a registration statement is
effective covering the resale of the Investor Shares, the Company will furnish
to the Investor:
(1) As soon as practicable after available (but in the case
of the Company's Annual Report to Shareholders, within one hundred
twenty (120) days after the end of each fiscal year of the Company),
one copy of (i) its Annual Report to Shareholders (which Annual Report
shall contain financial statements audited in accordance with generally
accepted accounting principles by a national firm of certified public
accountants), (ii) if not included in substance in the Annual Report to
Shareholders, its Annual Report on Form 10-KSB or equivalent form,
(iii) its Quarterly Reports to Shareholders, (iv) if not included in
substance in its Quarterly Reports to Shareholders, its quarterly
reports on Form 10-QSB or equivalent form, and (v) a full copy of the
particular registration statement covering the Shares (the foregoing,
in each case, excluding exhibits); and
(2) Upon the reasonable request of the Investor, all exhibits
to the reports and registration statement provided to the Investor
pursuant to subparagraph (1) of this Section 5(g) and all other
information that is made available to shareholders;
(3) Upon the reasonable request of the Investor, an adequate
number of copies of the prospectuses to supply to any other party
requiring such prospectuses;
15
and the Company, upon the reasonable request of the Investor, will meet with the
Investor or a representative thereof at the Company's headquarters to discuss
all information relevant for disclosure in the registration statement covering
the Investor Shares and will otherwise reasonably cooperate with any Investor
conducting an investigation for the purpose of reducing or eliminating such
Investor's exposure to liability under the Securities Act, including the
reasonable production of information at the Company's headquarters.
6. MISCELLANEOUS.
(a) FEES AND EXPENSES. Each of the parties hereto shall be
responsible for their own expenses incurred in connection with the transactions
contemplated hereby. The Company shall reimburse the Investor for its reasonable
out-of-pocket expenses, if any, incurred in connection with the procedures in
Section 5(a)(2)(A) through (H) hereof, other than fees and expenses, if any, of
one counsel or other advisors to all of the Investors upon delivery to the
Company of reasonable documentation setting forth such out-of-pocket expenses.
(b) BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding
upon, and shall inure solely to the benefit of, each of the parties hereto, and
each of their respective heirs, executors, administrators, successors and
permitted assigns, and no other person shall acquire or have any right under or
by virtue of this Agreement. The Investor may not assign any of its rights or
obligations hereunder to any other person or entity without the prior written
consent of the Company.
(c) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
may be amended only by written execution by both parties. By executing this
Agreement below, the Investor agrees to be bound by all of the terms,
provisions, warranties, covenants and conditions contained herein. Upon
acceptance by the Company, this Agreement shall be binding on both parties
hereto.
(d) CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE ENFORCED,
GOVERNED AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS, WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS
PRINCIPLES. FURTHERMORE, EACH INVESTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE UNITED
STATES OF AMERICA FOR THE DISTRICT OF MASSACHUSETTS IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(e) NOTICES. All notices, requests, consents and other
communication hereunder shall be in writing, shall be mailed by first class
registered or certified mail, or nationally recognized overnight express courier
postage prepaid, and shall be deemed given when so mailed and shall be delivered
as addressed as follows:
16
if to the Company, to:
StockerYale, Inc.
32 Hampshire Road
Salem, New Hampshire 03079
Attn: Mark W. Blodgett,
Chief Executive Officer
with a copy mailed to:
Goodwin Procter LLP
Exchange Place
Boston, Massachusetts 02109
Attn: Stuart M. Cable, P.C.
or to such other person at such other place as the Company shall designate to
the Investor in writing; and
if to the Investor, at its address as set forth at the end of this Agreement, or
at such other address or addresses as may have been furnished to the Company in
writing.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one in the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
STOCKERYALE, INC.
By:
-------------------------------
Name:
Title:
Accepted and Agreed as of the date first above written:
- -----------------------------------------------------
Name of Investor (Print)
By:
-----------------------------------------------
Name:
Title
Address:
---------------------------------------
---------------------------------------
---------------------------------------
Telephone:
-------------------------------------------
Facsimile:
-------------------------------------------
Nominee (name in which Investor
Shares are to be registered, if
different than name of Investor)
--------------------
Address of Nominee:
---------------------------------------
---------------------------------------
---------------------------------------
Taxpayer I.D. Number:
--------------------------------
(if acquired in the name of a nominee, the taxpayer I.D. number of such
nominee)
EACH INVESTOR EXECUTING THESE PURCHASE AGREEMENT SIGNATURE
PAGES ON BEHALF OF ONE OR MORE MANAGED ACCOUNTS SHOULD PROVIDE
THE NAME OF, AND FOREGOING INFORMATION WITH RESPECT TO, EACH
SUCH MANAGED ACCOUNT.
ANNEX I
INVESTOR QUESTIONNAIRE
The Shares are being offered for sale to "accredited investors" as that
term is defined in Rule 501 under the Securities Act of 1933, as amended (the
"Act").
The undersigned entity certifies that it (and each managed account on
whose behalf Investor Shares are being purchased by it) is an "accredited
investor" because it is (check one or more items below):
- -------- i. a bank as defined in section 3(a)(2) of the Act whether
acting in its individual or fiduciary capacity;
- -------- ii. a savings and loan association or other institution as
defined in section 3(a)(5)(A) of the Act whether acting in
its individual or fiduciary capacity;
- -------- iii. a broker dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934, as amended;
- -------- iv. an insurance company as defined in section 2(13) of the Act;
- -------- v. an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act");
- -------- vi. a business development company as defined in section
2(a)(48) of the 1940 Act;
- -------- vii. a Small Business Investment Company licensed by the U.S.
Small Business Administration under section 301(c) or (d)
of the Small Business Investment Act of 1958;
- -------- viii. a plan established and maintained by a state or its
political subdivision for the benefit of its employees,
provided that such plan has total assets in excess of
$5,000,000;
- -------- ix. an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974 ("ERISA"),
provided that the investment decision is made by a plan
fiduciary, as defined in section 3(21) of ERISA, and the plan
fiduciary is either a bank, savings and loan association,
insurance company or registered investment adviser or
provided that the employee benefit plan has total assets in
excess of $5,000,000; or if a self-directed plan, with
investment decisions made solely by persons that are
accredited investors;
- -------- x. a private business development company as defined in
section 202(a)(22) of the Investment Advisers Act of 1940;
ANNEX I
Page 2
- -------- xi. an organization described in section 501(c)(3) of the
Internal Revenue Code, not formed for the specific purpose
of acquiring the Investor Shares, with total assets in
excess of $5,000,000;
- -------- xii. a director or executive officer, or general partner of the
Company;
- -------- xiii. a corporation, Massachusetts or similar business trust,
limited liability company or partnership, not formed for
the specific purpose of acquiring the Investor Shares, with
total assets in excess of $5,000,000;
- -------- xiv. a trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Investor
Shares, and the purchase of the Investor Shares is directed
by a sophisticated person as described in Rule 506(b)(2)(ii)
under the Act;
- -------- xv. a natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his
purchase exceeds $1,000,000;
- -------- xvi. a natural person who had an individual income in excess of
$200,000 in each of 1998 and 1999 or joint income with that
person's spouse in excess of $300,000 in each of those years
and has a reasonable expectation of reaching the same income
level in 2000;
- -------- xvii. an entity in which all of the equity owners are accredited
investors (described in any of (i)-(xvi) above).
INVESTOR:
By:
-----------------------------------
Name:
Title:
ANNEX II
[FORM OF MANAGED ACCOUNTS REPRESENTATION LETTER]
StockerYale, Inc.
32 Hampshire Road
Salem, New Hampshire 03079
Attn: Mark W. Blodgett
Chief Executive Officer
Ladies and Gentlemen:
Reference is hereby made to that certain Stock Purchase Agreement,
dated as of January __, 2002 (the "Agreement"), by and between you and the
undersigned relating to the purchase of shares of the common stock, par value
$0.001 per share (the "Common Stock"), of StockerYale, Inc. ("Stocker").
Capitalized terms used herein that are not defined herein have the meaning set
forth in the Agreement.
The undersigned has executed or is executing the Agreement as an
Investor.
This Managed Accounts Representation Letter will serve to advise you
that in executing the Agreement, the undersigned has acted for or on behalf of
one or more persons ("Accounts") pursuant to authority granted to the
undersigned by each such Account.
The undersigned hereby represents and warrants to, and covenants and
agrees with, you that:
i. the shares of Common Stock being purchased under the
Agreement by or for an Account are being purchased for
the benefit of the Account and the undersigned is not
acting for itself but is acting as a fiduciary on behalf
of such Account;
ii. the representations and warranties of the Investor set
forth in Section 4(a) of the Agreement are true and
correct as to each Account and the Investor Shares being
purchased by or for such Account;
iii. each such Account will be fully bound by and subject to
the Agreement in all respects as an Investor;
iv. the undersigned is fully authorized by each such Account
to enter into the Agreement with full authority
regarding the investment in and disposition of the
Investor Shares, the evaluation of the merits and risks
of the investment and to execute this Managed Accounts
Representation Letter for or on behalf of such Account;
and
ANNEX II
Page 2
v. the undersigned is registered or licensed as either an
investment adviser or a dealer or broker and is in
compliance with all investment adviser or dealer and
broker requirements, as the case may be, in connection
with the sale of the Investor Shares and with all the
statutes, rules and regulations with respect to
registration or licensing in each state in which the
Investor Shares are sold by the undersigned.
Executed as of the date as of which the Agreement is executed by the
undersigned.
ACCOUNT MANAGER:
By:
------------------------------
Name:
Title:
On behalf of the following accounts:
ANNEX III
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
1. For use in the "Selling Stockholder" section of the Registration
Statement, please state your or your organization's name exactly as it should
appear in the Registration Statement:
2. If the Investor Shares are registered in the name of a nominee,
please provide the nominee's name:
3. Please state the number of shares of Common Stock you or your
organization beneficially owned prior to the Purchase of Investor Shares:
4. Please provide the following information, as of the Closing Date:
(1) (2)
Number of Investor Shares Number of shares of Common
which are beingincluded in Number of shares of Common
the Registration Statement Stock, if any, which will
(if all purchased, put all); be owned after completion
of sale of the Investor
Shares included in the
Registration Statement;
5. Have you or your organization had any position, office or other material
relationship within the past three (3) years with the Company or its affiliates
other than as disclosed in the Memorandum?
Yes No
----- -----
If yes, please indicate the nature of any such relationship below:
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
6. Please provide below the names of all persons or entities (including
all natural persons) who may be deemed to "beneficially own" all or a part of
the Investor Shares within the meaning of Rule 13d-3 of the Exchange Act. Rule
13d-3 defines a "beneficial owner" as any person or entity who "directly or
indirectly, through any contract, arrangement, understanding, relationship, or
otherwise has or shares (1) voting power which includes the power to vote, or to
direct the voting of, such security; and/or (2) investment power which includes
the power to dispose, or to direct the disposition of, such security."
7. Are you or your organization a registered broker or dealer or an
affiliate of a registered broker or dealer?
Yes No
----- -----
If you are an affiliate of a registered broker or dealer, please
provide the name of such broker or dealer:
ANNEX IV
Attention:
INVESTOR'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly authorized by]
______________ [fill in official name of individual or institution] hereby
certifies that he/she [said institution] is the Investor in the shares evidenced
by the attached certificate, and as such, sold such shares on ______[date] in
accordance with registration statement number ________________[fill in the
number of or otherwise identify registration statement] and the requirement of
delivering a current prospectus and current annual and quarterly reports by the
Company has been complied with in connection with such sale.
Print or Type:
Name of Investor
(Individual or
Institution)
--------------------------------
Name of Individual
Representing
Investor (if an
Institution):
--------------------------------
Title of Individual
Representing
Investor (if an
Institution):
--------------------------------
Signature by:
Individual Investor or
Individual representing
Investor:
--------------------------------
ANNEX V
WIRE INSTRUCTIONS
AGGREGATE PURCHASE PRICE TO BE WIRED TO:
Fleet Bank
Boston, MA 02211
ABA# 011-000-138
Account name: StockerYale, Inc.
Account # 0562781184