Exhibit No. 6/ AFGL International, Inc./ Form S-3
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of the date of
acceptance set forth below, is entered into by and between AFGL
INTERNATIONAL, INC., a Nevada corporation, with headquarters
located at 850 Third Avenue, New York, New York (the "Company"),
and the undersigned (the "Buyer").
WITNESSETH:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon the exemption from
securities registration afforded by Rule 506 under Regulation D
("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "1933 Act "); and
WHEREAS, the Buyer wishes to purchase, upon the terms and
subject to the conditions of this Agreement, 8% Series D
Convertible Preferred Stock (no par value) (the "Preferred
Stock") of the Company which will be convertible into shares of
Common Stock, $.0l par value (the "Common Stock"), of the Company
upon the terms and subject to the conditions of such Preferred
Stock, subject to acceptance of this Agreement by the Company;
NOW THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase. The undersigned hereby agrees to purchase
from the Company Preferred Stock of the Company, in the
liquidation preference set forth on the signature page of this
Agreement and having the terms and conditions and being in the
form attached hereto as Annex 1. The purchase price for the
Preferred Stock shall be as set forth on the signature page
hereto and shall be payable in United States Dollars.
b. Form of Payment. The Buyer shall pay the purchase price
for the Preferred Stock by delivering immediately available good
funds in United States Dollars to the escrow agent (the "Escrow
Agent") identified in the Joint Escrow Instructions attached
hereto as Annex II (the "Joint Escrow Instructions") as set forth
below. Promptly following payment by the Buyer to the Escrow
Agent of the purchase price of the Preferred Stock, the Company
shall deliver a Certificate for the Preferred Stock duly executed
on behalf of the Company, to the Escrow Agent. By signing this
Agreement, the Buyer and the Company each agrees to all of the
terms and conditions of, and becomes a party to, the Joint Escrow
Instructions, all of the provisions of which are incorporated
herein by this reference as if set forth in full.
c. Method of Payment. Payment into escrow of the purchase
price for the Preferred Stock shall be made by wire transfer of
funds to:
Bank of New York
350 Fifth Avenue
New York, New York 10001
ABA# 021000018
For credit to the account of Krieger & Prager,
Esqs.
Escrow Account No. 105-0036843
Not later than 1:00 p.m., New York time, on the date which is
three (3) New York Stock Exchange trading days after the Company
shall have accepted this Agreement and returned a signed
counterpart of this Agreement to the Escrow Agent by facsimile,
the Buyer shall deposit with the Escrow Agent the aggregate
purchase price for the Preferred Stock, in currently available
funds. Time is of the essence with respect to such payment, and
failure by the Buyer to make such payment, shall allow the
Company to cancel this Agreement.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and
agrees with, the Company as follows:
a. The Buyer is purchasing the Preferred Stock and would be
acquiring the shares of Common Stock issuable upon conversion of
the Preferred Stock for its own account for investment only and
not with a view towards the public sale or distribution thereof
and not with a view to or for sale in connection with any
distribution thereof;
b. The Buyer is (i) an "accredited investor" as that term
is defined in Rule 501 of the General Rules and Regulations under
the 1933 Act by reason of Rule 501(a)(3), and (ii) experienced in
making investments of the kind described in this Agreement, and
the related documents, (iii) able, by reason of the business and
financial experience of its officers and professional advisors
(who are not affiliated with or compensated in any way by the
Company or any of its affiliates or selling agents), to protect
its own interests in connection with the transactions described
in this Agreement, and the related documents, and (iv) able to
afford the entire loss of its investment in the Preferred Stock;
c. All subsequent offers and sales of the Preferred Stock
and the shares of Common Stock issuable upon conversion of, or in
lieu of payment of interest on, the Preferred Stock (the "Shares"
and, together with the Preferred Stock, the "Securities") by the
Buyer shall be made pursuant to registration of the Shares under
the 1933 Act or with respect to the Preferred Stock pursuant to
an exemption from registration;
d. The Buyer understands that the Preferred Stock is being
offered and sold, and the Shares are being offered, to it in
reliance on specific exemptions from the registration
requirements of United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the
Preferred Stock and to receive an offer of the Shares;
e. The Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and
sale of the Preferred Stock and the offer of the Shares which
have been requested by the Buyer, including Exhibit A hereto.
The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. Without
limiting the generality of the foregoing, the Buyer has also had
the opportunity to obtain and to review the Company's (1) Annual
Report on Form 10-KSB for the fiscal year ended December 31,
1995, and (2) Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 1996.
f. The Buyer understands that its investment in the
Securities involves a high degree of risk;
g. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the
Securities; and
h. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of
equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights
generally.
i. The Buyer is not purchasing the Preferred Stock for the
purpose of covering any short sales of the Common Stock made by
the Buyer with the Shares.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
a. Concerning the Shares. The Shares have been duly
authorized and, when issued upon conversion of the Preferred
Stock, will be duly and validly issued, fully paid and non-
assessable and will not subject the holder thereof to personal
liability by reason of being such holder. There are no
preemptive rights of any Stockholder of the Company, as such, to
acquire the Shares. The COMPANY has registered its common stock
pursuant to Section 12 of the Exchange Act and the common stock
trades on NASDAQ/Small Cap Market, and has received no notice,
either oral or written, with respect to discontinuance of its
continued eligibility for such listing.
b. Stock Purchase Agreement; Registration Rights Agreement
and Stock. This Agreement and the Registration Rights Agreement,
the form of which is attached hereto as Annex III (the
"Registration Rights Agreement"), have been duly and validly
authorized by the Company, this Agreement has been duly executed
and delivered by the Company and this Agreement is, and the
Registration Rights Agreement, when executed and delivered by the
Company, will be, valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as
to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium, and other similar laws
affecting the enforcement of creditors' rights generally; and the
Preferred Stock will be duly and validly authorized and, when
executed and delivered on behalf of the Company in accordance
with this Agreement, will be a valid and binding obligation of
the Company in accordance with its terms, subject to general
principles of equity and to bankruptcy, insolvency, moratorium,
or other similar laws affecting the enforcement of creditors'
rights generally.
c. Non-contravention. The execution and delivery of this
Agreement and the Registration Rights Agreement by the Company
and the consummation by the Company of the issuance of the
Securities and the other transactions contemplated by this
Agreement, the Registration Rights Agreement, and the Preferred
Stock do not and will not conflict with or result in a breach by
the Company of any of the terms or provisions of, or constitute a
default under, the certificate of incorporation or by-laws of the
Company, or any indenture, mortgage, deed of trust, or other
material agreement or instrument to which the Company is a party
or by which it or any of its properties or assets are bound, or
any material existing applicable law, rule, or regulation or any
applicable decree, judgment, or order of any court, United States
federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company or any of
its properties or assets.
d. Approvals. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the Stockholders of
the Company is required to be obtained by the Company for the
issuance and sale of the Securities to the Buyer as contemplated
by this Agreement.
e. Information Provided. The information provided by or on
behalf of the Company to the Buyer and referred to in Section
2(e) of this Agreement does not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make
the statements therein, in the light of the circumstances under
which they are made, not misleading.
f. Absence of Certain Changes. Since December 31, 1995,
there has been no material adverse change and no material adverse
development in the business, properties, operations, financial
condition, outstanding securities, results of operations or
prospects of the Company, except as disclosed in the documents
referred to in Section 2(e) hereof.
g. Absence of Litigation. Except as disclosed in Exhibit A
hereto, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body
pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company or any
of its subsidiaries, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the properties,
business, condition (financial or other), results of operations
or prospects of the Company and its subsidiaries taken as a whole
or the transactions contemplated by this Agreement or any of the
documents contemplated hereby or which would adversely affect the
validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement or any
of such other documents.
h. Absence of Events of Default. No Event of Default, as
defined in any agreement to which the Company is a party, and no
event which, with the giving of notice or the passage of time or
both, would become an Event of Default (as so defined), has
occurred and is continuing.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Buyer acknowledges that (1)
the Preferred Stock has not been and is not being registered
under the provisions of the 1933 Act and, except as provided in
the Registration Rights Agreement, the Shares have not been and
are not being registered under the 1933 Act, and may not be
transferred unless (A) subsequently registered thereunder or (B)
the Buyer shall have delivered to the Company an opinion of
counsel, reasonably satisfactory in form, scope and substance to
the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption
from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made
only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any resale of such Securities under
circumstances in which the seller, or the person through whom the
sale is made, may be deemed to be an underwriter, as that term is
used in the 1933 Act, may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (3) neither the Company nor any other person
is under any obligation to register the Securities (other than
pursuant to the Registration Rights Agreement) under the 1933 Act
or to comply with the terms and conditions of any exemption
thereunder.
b. Restrictive Legend. The Buyer acknowledges and agrees
that the Preferred Stock, and, until such time as the Shares have
been registered under the 1933 Act as contemplated by the
Registration Rights Agreement and sold in accordance with such
Registration Statement, the certificates for the Shares, may bear
a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the
certificates for the Shares):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
c. Registration Rights Agreement. The parties hereto agree
to enter into the Registration Rights Agreement, in the form
attached hereto as Annex III, on or before the Closing Date.
d. Filings. The Company undertakes and agrees to make all
necessary filings in connection with the sale of the Preferred
Stock as required by United States laws and regulations, or by
any domestic securities exchange or trading market, and to
provide a copy thereof to the Buyer promptly after such filing.
e. NASDAQ Notification; Reporting Status. The Company
shall timely file a "NASDAQ SmallCap Market Notification Form for
Listing of Additional Shares and Notification Pursuant to SEC
Rule lOb-17" with respect to the Shares with the National
Association of Securities Dealers, Inc. and shall provide
evidence of such filing to the Buyer. So long as the Buyer
beneficially owns any of the Securities, the Company shall file
all reports required to be filed with the SEC pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the Company shall not terminate its status
as an issuer required to file reports under the 1934 Act even if
the 1934 Act or the rules and regulations thereunder would permit
such termination.
f. Use of Proceeds. The Company will use the proceeds from
the sale of the Preferred Stock (excluding amounts paid by the
Company for legal fees and finder's fees in connection with the
sale of the Preferred Stock) for the repayment of the Company's
debt and internal working capital purposes and shall not,
directly or indirectly, use such proceeds for any loan to or
investment in any other corporation, partnership enterprise or
other person.
5. TRANSFER AGENT INSTRUCTIONS.
Promptly following the delivery by the Buyer of the
aggregate purchase price for the Preferred Stock in accordance
with Section l(c) hereof, and prior to the Closing Date, the
Company will irrevocably instruct its transfer agent to issue
certificates for the Shares from time to time upon conversion of
the Preferred Stock in such amounts as specified from time to
time by the Company to the transfer agent, bearing the
restrictive legend specified in Section 4(b) of this Agreement
prior to registration of the Shares under the 1933 Act,
registered in the name of the Buyer or its nominee and in such
denominations to be specified by the Buyer in connection with
each conversion of the Preferred Stock. The Company warrants
that no instruction other than such instructions referred to in
this Section 5 and stop transfer instructions to give effect to
Section 4(a) hereof prior to registration of the Shares under the
1933 Act will be given by the Company to the transfer agent and
that the Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in
this Agreement, the Registration Rights Agreement, and applicable
law. Nothing in this Section shall affect in any way the Buyer's
obligations and agreement to comply with all applicable
securities laws upon resale of the Securities. If the Buyer
provides the Company with an opinion of counsel reasonably
satisfactory to the Company that registration of a resale by the
Buyer of any of the Securities in accordance with clause (1)(B)
of Section 4(a) of this Agreement is not required under the 1933
Act, the Company shall (except as provided in clause (2) of
Section 4(a) of this Agreement) permit the transfer of the
Securities and, in the case of the Shares, promptly instruct the
Company's transfer agent to issue one or more share certificates
without legend in such name and in such denominations as
specified by the Buyer.
6. STOCK DELIVERY INSTRUCTIONS.
The Preferred Stock shall be delivered by the Company to the
Escrow Agent pursuant to Section l(b) hereof on a delivery
against payment basis at the closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the Stock (the
"Closing Date") shall be not later than 12:00 Noon, New York time
on May 28, 1996, or such other mutually agreed to time, but not
later than June 3, 1996 unless waived by the Company. The
closing shall occur on the Closing Date at the offices of the
Escrow Agent.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell
the Preferred Stock to the Buyer pursuant to this Agreement is
conditioned upon:
a. The receipt and acceptance by the Company of such
Agreement as evidenced by execution of such Agreement by the
Company for at least $3,000,000 in Preferred Stock (or such
lesser amount as the Company, in its sole discretion, shall
determine);
b. Delivery by the Buyer to the Escrow Agent of good funds
as payment in full of an amount equal to the purchase price for
the Preferred Stock in accordance with Section l(c) hereof; and
c. The accuracy on the Closing Date of the representations
and warranties of the Buyer contained in this Agreement as if
made on the Closing Date and the performance by the Buyer on or
before the Closing Date of all covenants and agreements of the
Buyer required to be performed on or before the Closing Date.
d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby,
or requiring any consent or approval which shall not have been
obtained.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to
purchase the Preferred Stock is conditioned upon:
a. Acceptance by Purchaser of an Agreement for the sale of
Preferred Stock, as indicated by execution of this Agreement;
b. Delivery by the Company to the Escrow Agent of the Stock
in accordance with this Agreement;
c. The accuracy on the Closing Date of the representations
and warranties of the Company contained in this Agreement as if
made on the Closing Date and the performance by the Company on or
before the Closing Date of all covenants and agreements of the
Company required to be performed on or before the Closing Date;
and
d. On the Closing Date, the Buyer having received an
opinion of counsel for the Company, dated the Closing Date, in
form, scope and substance reasonably satisfactory to the Buyer,
to the effect set forth in Annex IV attached hereto.
10. WARRANTS.
Upon conversion of the Preferred Stock under the terms and
conditions set forth in Annex 1, the Company agrees to deliver to
the shareholder a Warrant Certificate in the form annexed as
Annex V. Said Warrant Certificate shall entitle the holder
thereof to purchase, on or prior to 12:01 A.M., May 1, 1999, one
share of Common Stock for each four shares of Common Stock issued
upon conversion of the Preferred Stock at an exercise price equal
to the Market Price on Closing Date.
11. GOVERNING LAW: MISCELLANEOUS.
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York. A facsimile
transmission of this signed Agreement shall be legal and binding
on all parties hereto. This Agreement may be signed in one or
more counterparts, each of which shall be deemed an original.
The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This
Agreement may be amended only by an instrument in writing signed
by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof. Any
notices required or permitted to be given under the terms of this
Agreement shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in
the mail, if mailed, or upon receipt, if delivered personally or
by courier, in each case addressed to a party at such party's
address shown in the introductory paragraph or on the signature
page of this Agreement or such other address as a party shall
have provided by notice to the other party in accordance with
this provision.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Buyer or one of its officers thereunto duly authorized as of
the date set forth below.
LIQUIDATION PREFERENCE OF PREFERRED STOCK: $
PURCHASE PRICE: $
NAME OF BUYER:
SIGNATURE:
By:
TITLE:
DATE:
ADDRESS:
This Agreement has been accepted as of the date set forth
below.
AFGL INTERNATIONAL, INC.
By:
Title:
Date: