STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") is
entered into as of this ____ day of September, 1996 between American Film
Technologies, Inc., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Company"), and Xxxxx X. Xxxxxx (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company is in need of additional capital
to continue to finance its operations and to continue its business; and
WHEREAS, Purchaser is willing to acquire from the
Company Six Hundred and Sixty Six Thousand Six Hundred and Sixty Seven (666,667)
shares of $.002 par value per share common stock of the Company (the "Common
Stock") (the "Purchased Shares") for an aggregate purchase price of One Hundred
Thousand Dollars ($100,000) (the "Purchase Price");
WHEREAS, the Company is willing to sell to the
Purchaser the Shares for the Purchase Price and such other terms and conditions
as set forth herein; and
NOW, THEREFORE, in consideration of the foregoing,
the mutual promises contained herein and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Company and
Purchaser agree as follows:
1. Purchase and Sale of the Shares. Upon satisfaction
of the conditions set forth in Sections 2 and 3 below, the Company shall sell to
Purchaser and Purchaser shall purchase from the Company the Shares for the
Purchase Price (the "Sale").
2. Approval of the Board of Directors. The Company's
obligations hereunder are subject to and conditioned upon the approval by the
Company's the Board of Directors on or before September 25, 1996 of the Sale and
the authorization of the issuance of the Shares by the Company in connection
with the Sale ("Board Approval").
3. Conditions Precedent, Delivery of the Shares.
(a) The obligations of the Company hereunder
shall be subject to and conditioned upon the satisfaction of all of the
following conditions:
i. The execution of this Agreement
by the parties hereto;
ii. Board Approval;
iii. The completion, execution and
delivery by the Purchaser to the Company of the Purchaser's Questionnaire,
attached hereto as Exhibit "A";
iv. The delivery by the Purchaser to
the Company of the Purchase Price; and
v. All of the representations and
warranties of the Purchaser contained herein remain true and correct.
(b) Upon satisfaction of all of the
conditions precedent set forth in Section 3(a) above, the Company shall cause to
be delivered to the Purchaser at the address set forth in Section 8(b) below a
stock certificate representing the Shares. Said stock certificate shall contain
a restrictive legend substantially similar to that set forth in Section 7 below
(the "Certificate").
4. Representations of the Company. The Company
represents and warrants that:
(a) upon issuance, the Shares will be (i)
validly issued, fully paid and nonassessable; and (ii) free of any liens or
encumbrances;
(b) the Sale has been duly authorized and
approved; and
(c) the consummation of the Sale as
contemplated by this Agreement does not violate the terms of the Company's
Certificate of Incorporation or By-Laws.
Except as expressly set forth above, the Company makes no representations or
warranties of any kind or nature to the Purchaser.
5. Representations of Purchaser.
Purchaser represents and warrants in favor
of the Company that:
(a) it is acquiring the Shares for its own
account, for investment purposes only, and not with a view to or for the resale,
distribution or assignment thereof, in whole or in part;
(b) it understands that the offer and sale
of the Shares is intended to be exempt from registration under the Securities
Act of 1933, as amended (the "Act"), and under the laws of any other
jurisdiction; that the Company does not intend and is under no obligation to so
register the Shares; that the Shares may not therefore be sold, assigned,
pledged or otherwise transferred unless subsequently registered under the Act or
pursuant to an exemption therefrom; and that legends to the foregoing effect
will be placed on the Certificate evidencing the Shares;
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(c) Purchaser has the financial ability to
bear the economic risk of its investment in the Company, including its possible
loss, has adequate means of providing for his current needs and personal
contingencies and has no need for liquidity with respect to its investment in
the Company;
(d) Purchaser has the knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Shares and has obtained, in its
judgment, sufficient information from the Company to evaluate the merits and
risks of an investment in the Shares;
(e) Purchaser is an "accredited investor" as
such term is defined in Rule 501(a) of Regulation D, promulgated under the
Securities Act of 1933, as amended;
(f) Purchaser will not sell, assign, pledge
or otherwise transfer the Shares unless such action is registered under the Act
or is exempt from registration pursuant to an exemption therefrom, and
acknowledges that the Company is under no obligation whatsoever to register the
Shares under the Act or to assist the Purchaser in any way to secure an
exemption from registration;
(g) Purchaser has been provided an
opportunity to obtain information concerning the offering, the Company and all
other information to the extent the Company or its representatives possess such
information or can acquire it without unreasonable effort or expense;
(h) Purchaser has been given the opportunity
to ask questions of and receive answers from the representatives of the Company
concerning the Company, the Shares, the terms and conditions of the Sale and
other matters pertaining to this investment, and has been given the opportunity
to obtain additional information necessary to verify the accuracy of the
information provided in order for it to evaluate the merits and risks of an
investment in the Company to the extent the representatives possess such
information or can acquire it without unreasonable effort or expense, and has
not been furnished any offering literature or prospectus except the SEC Reports,
as hereinafter defined;
(i) Purchaser has determined that its
investment in in the Company through its purchase of the Shares is a suitable
investment for it and that at this time it can bear a complete loss of its
investment;
(j) In making his decision to invest in the
Company through the purchase of the Shares the Purchaser has relied solely upon
independent investigations made by it;
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(k) Purchaser has reached the age of
majority in the state in which it resides and is a bona fide resident and
domiciliary of the state set forth on the signature page.
(l) Purchaser represents and acknowledges
that it has received, read and understood the following documents:
i. The Company's Form 10-K Report
for its fiscal year ended June 30, 1995;
ii. The Company's Form 10-Q Reports
for the fiscal quarters ended September 30, 1995, December 31, 1995 and March
31, 1996; and
iii. The Company's draft Form 10-K
Report for the fiscal year ended June 30, 1996. Purchaser agrees to keep
confidential and not to disclose any non-public information contained in such
Report prior to its filing with the Securities and Exchange Commission (the
"SEC").
(Said documents included in i, ii and iii above are hereinafter collectively
referred to as the "SEC Reports").
(l) Purchaser is not subscribing as a result
of or subsequent to:
i. any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio; or
ii. any seminar or meeting whose
attendees, including the Purchaser, had been invited as result of, subsequent to
or pursuant to any of the foregoing.
(m) Any information which the Purchaser has
heretofore furnished to the Company with respect to its financial position and
business experience, including without limitation its Purchaser Questionnaire,
attached hereto as Exhibit "A", is complete and correct as of the date of this
Agreement and if there should be any material change in such information at any
time prior to or after acceptance of the Sale, the Purchaser will immediately
furnish such revised or corrected information to the Company.
(n) Purchaser and/or Purchaser's investment
advisors, if any, have carefully read and reviewed this Agreement, Exhibit A
hereto and the SEC Documents and understand the risks of, and other
considerations relating to, a purchase of Sale, including, but not limited to,
the risks set forth under "Risk Factors" in the Company's draft 1996 Form 10-K
Report. In connection therewith, Purchaser is aware of the fact that the Company
has recently emerged from a Chapter 11 Bankruptcy proceeding, has not engaged in
ongoing business operations in over thirty (30) months and will need additional
financing in
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order to remain in business and significant additional financing thereafter to
implement its business plan.
(o) Purchaser will be the only person with a
direct or indirect interest in the Shares purchased pursuant to this Agreement.
(p) Purchaser acknowledges, represents,
agrees and is aware that:
i. no Federal or state agency has
passed upon the Sale or the Shares issuable in connection therewith or made any
findings or determinations as to the fairness of this investment;
ii. there are substantial risks of
loss of investment incidental to the purchase of the Shares;
iii. the investment is an illiquid
investment;
iv. the representations, warranties,
agreements, undertakings and acknowledgments made by the Purchaser in this
Agreement are made with the intent that they be relied upon by the Company and
its officers in determining his suitability as a purchaser of the Shares, and
shall survive the acceptance by the Company of this subscription, In addition,
the Purchaser agrees to notify the Company immediately of any change in any
representation, warranty or other information relating to the undersigned set
forth herein;
v. Purchaser has read and understood
the SEC Documents.
(q) Purchaser represents, warrants and
agrees in favor of the Company that Purchaser has determined to make this
investment based on its own investigation of the Company and its prospects, that
neither the Company nor any of its officers, directors, employees, agents,
representatives or attorneys have made any representations to Purchaser
concerning the business or prospects of the Company, that Purchaser has the
business sophistication to determine on its own whether or not to make this
investment.
6. Indemnification.
The Purchaser understands the meanings and legal
consequences of the representations and warranties contained in this Agreement
and agrees to indemnify and hold harmless the Company and its officers and
directors from and against any loss, damage, liability, claim and expense
whatsoever, including but not limited to any and all legal expenses, due to or
arising out of a breach of any representation or warranty of the Purchaser,
whether contained in this Agreement or the Purchaser's Questionnaire, or any
failure by the undersigned to fulfill any covenants or agreements set forth
herein or therein or arising out of the sale or distribution by the Purchaser of
any Shares in violation of the Act or any applicable state Securities laws.
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Notwithstanding any of the representations, warranties, acknowledgments or
agreements made herein by the Purchaser, the Purchaser does not thereby or in
any other manner waive any rights granted to the Purchaser under Federal or
state securities laws.
7. Legends
Purchaser agrees that all Certificates
representing the Shares shall have endorsed thereon a legend in substantially
the following form:
(a) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER UNITED STATES FEDERAL OR STATE SECURITIES LAWS, INCLUDING BUT
NOT LIMITED TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") NOR APPROVED
BY ANY FEDERAL OR STATE REGULATORY AGENCY, INCLUDING BUT NOT LIMITED TO THE
SECURITIES AND EXCHANGE COMMISSION, AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT REGISTRATION
OF SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL OR STATE
SECURITIES LAWS, INCLUDING BUT NOT LIMITED TO THE ACT, OR COMPLIANCE WITH AN
APPLICABLE EXEMPTION THEREFROM, SUCH COMPLIANCE, AT THE DISCRETION OF THE
CORPORATION, TO BE EVIDENCED BY AN OPINION OF SHAREHOLDER'S COUNSEL, IN FORM
ACCEPTABLE TO THE CORPORATION, THAT NO VIOLATION OF SUCH REGISTRATION OR
QUALIFICATION PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR
ASSIGNMENT."; and
(b) "THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON
PARAGRAPH (13) OF CODE SECTION 10-5-9 OF THE 'GEORGIA SECURITIES ACT OF 1973,'
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER
SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT."
8. MISCELLANEOUS.
a. Finders Fees. Xxxxxxx and Purchaser each
acknowledges that he or it has not, directly or indirectly, dealt with anyone
acting as a broker, finder or in a similar capacity, or has incurred any
obligation for any brokerage, finders' or similar fee or commission in
connection with this Agreement or any of the transactions contemplated hereby.
b. Notices. All notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been given (i) upon delivery, if personally delivered, sent by
commercial over night courier (e.g. Federal Express or DHL), or telefaxed with
confirmation copy sent the same day by first class U.S. mail (postage prepaid);
or (ii) upon the expiration of the fifth (5th) business day after deposit, if
mailed by first-class, registered or
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certified U.S. mail, postage prepaid. All notices shall be addressed to each
party at the following address:
If to the Company:
Xxxxxx X. Xxxxxxx
Chief Executive Officer
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No. (000) 000-0000
With a copy to:
Xxxxx Xxxxxx, Esq.
Jeffer, Mangel, Xxxxxx & Marmaro, LLP
2121 Avenue of the Stars
00xx Xxxxx
Xxx Xxxxxxx, XX. 00000
Fax No. (000) 000-0000
If to Purchaser:
Xxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Fax No. (___) ___-____
or to such other address as the addressee shall have furnished to the other
parties hereto in the manner prescribed by this section.
c. Entire Agreement. This Agreement,
together with any related documents referred to in this Agreement, constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings between them or any of
them as to such subject matter. No amendment, change or modification of this
Agreement be valid unless in writing and signed by all of the parties hereto.
d. Waiver. No reliance upon or waiver of one
or more provisions of this Agreement shall constitute a waiver of any other
provisions hereof.
e. Severability. In case any one or more of
the provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall
7
not affect any other provision of this Agreement and such invalid, illegal and
unenforceable provision shall be reformed and construed so that it will be
valid, legal and enforceable to the maximum extent permitted by law.
f. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
g. Section Headings. The headings contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement. Should there be any
conflict between any such heading and the section at the head of which it
appears, the section and not such heading shall control.
h. Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of California. The parties hereby consent to the exclusive jurisdiction of the
state or federal courts located in the State of California for the resolution of
any disputes arising out of this Agreement.
i. Successors and Assigns. All of the terms
and provisions contained herein shall inure to the benefit of and shall be
binding upon the parties hereto and their respective heirs, legal or personal
representatives, successors and assigns.
j. Further Assurances. Each of the parties
hereto shall execute and deliver any and all additional papers, documents, and
other assurances, and shall do any and all acts and things reasonably necessary
in connection with the performance of their obligations hereunder and to carry
out the intent of the parties hereto.
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IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the day and year first set forth above.
AMERICAN FILM TECHNOLOGIES, INC.
By:
--------------------------------
Xxxxxx X. Xxxxxxx
Chief Executive Officer
-----------------------------------
Xxxxx X. Xxxxxx
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PURCHASER QUESTIONNAIRE
You are being requested to answer questions in connection with
the proposed offer and sale, pursuant to an exemption from the registration
provisions of the Securities Act of 1933, as amended (the "Act") and in
particular, Rule 505 of Regulation D, of shares of the Common Stock, $.002 par
value per share (the "Shares') of American Film Technologies, Inc, a Delaware
corporation (the "Company"). The availability of the exemption depends, in part,
on a determination that each purchaser is an "accredited investor" as defined in
Rule 501(a) of Regulation D.
The information supplied will be used in determining whether
the sale of the Shares meets such criteria. The information will be kept
confidential and will not be disclosed except to the Company, its counsel, and
if required, to governmental and regulatory authorities.
Please PRINT your response to each question; and, where the
answer to any question if "None" or "Not Applicable" please so state.
I, (we), __________________________________, understand the
Shares are being issued WITHOUT registration under the Act in reliance upon the
private offering exemption contained in Rule 505 of Regulation D promulgated
under Section 4(2) of the Securities Act, and that such reliance is based in
part on the information herein supplied. For the foregoing reasons, and to
induce the Company to issue and deliver the Shares to me, I represent and
warrant that the information stated herein is true, accurate and complete to the
best of my knowledge and belief, and I agree to notify and supply corrective
information promptly if, prior to the consummation of my purchase of the Shares,
any of such information becomes inaccurate and incomplete.
INDIVIDUAL AND JOINT PURCHASERS SHOULD COMPLETE SECTION A
CORPORATIONS, BUSINESS TRUSTS AND PARTNERSHIPS SHOULD COMPLETE
SECTION B
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A. INDIVIDUAL AND JOINT PURCHASERS
1. Personal
a. Full Name: ___________________________
b. Social Security No.: ___________________________
c. Residence Address: ___________________________
---------------------------
d. Occupation: ___________________________
e. Employer: ___________________________
f. Business Address: ___________________________
---------------------------
g. Telephone: Business: ___________ Home: _________
h. Position or Title: ___________________________
i. Are You (Check One):
Married ______ Single _______
j. Do You File Joint
Tax Returns(Check One):
Yes __________ No ___________
2. Bank References
a. Bank: ___________________________
b. Bank Address: ___________________________
---------------------------
c. Bank Telephone No.: ___________________________
d. Name of Bank
Representative: ___________________________
3. Income, Net Worth and Financial Standing
a. Did your annual income during each of 1994 and 1995 exceed $200,000,
or, did your joint income together with your spouse exceed $300,000 during each
of 1994 and 1995, and do you reasonably expect your annual income during 1996 to
exceed $200,000, or your joint income together with your spouse to exceed
$300,000?
Yes _____________ No _______________
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b. Does your individual net worth, or your joint net worth
together with your spouse, exceed $1,000,000?
Yes _______ No _________ Not Applicable __________
x. Xxxxx income for the most recently
ended tax year: $___________
d. Anticipated gross income for
the year 1996: $___________
e. Do you anticipate that your income over the next five
years will:
Increase _______ Decrease _______ Remain Same ________
f. Is your net worth, excluding home, furnishings and
automobiles (Check One):
Over $200,000 ___ Over $300,000 ___ Over $400,000 ___
Over $________ (State Amount)
g. What percentage of your net worth are liquid assets
(cash or assets readily convertible to cash) (Check One:)
over 15% _____ over 25% _____ over 35% _____ over 50% ____
h. Do you have any debts or other obligations, or are
there any reasonably foreseeable circumstances likely in the
future to require you to dispose of the Shares?
Yes ________ No ________ (If yes, please describe
briefly below)
---------------------------------------------------------
----------------------------------------------------------
4. Investment Experience
Describe briefly your prior investment experience in both marketable
and unmarketable securities. If none, please so state.
---------------------------------------------------------
---------------------------------------------------------
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5. Education
Describe your educational background (schools attended and degrees
obtained):
---------------------------------------------------------
---------------------------------------------------------
6. What is your profession, if any? _______________________
7. Investment Advice
a. In connection with your proposed purchase of Shares, will you or did
you seek advice from any lawyer, accountant, investment advisor or other person
or persons?
Yes _________ No ___________
If Yes, please set forth the name, profession or occupation
and business address of each such advisor or prospective advisor and, if more
than one, explain briefly the division of responsibilities between them:
---------------------------------------------------------
---------------------------------------------------------
b. Do you or any of your advisors, or any of your or their respective
affiliates, now have or contemplate having, or have they had, during the past
two years, any relationship with the Company and/or any of its officers,
directors, or their affiliates; or, any of your advisors or affiliates the
beneficial owner of 10% or more of any class of equity securities or 10% or more
of the equity interest in the Company or affiliates of the Company;
Yes ____________ No _____________
If Yes, please describe such relationship and/or ownership.
---------------------------------------------------------
B. CORPORATE PURCHASERS, BUSINESS TRUST OR PARTNERSHIP
PURCHASERS
1. Name of Corporation, Business Trust or Partnership:
------------------------------------------------------------
2. Name and Title of Executive Officer Executing Questionnaire:
------------------------------------------------------------
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3. Business Address: ________________________________________
________________________________________
4. Telephone Number: ________________________________________
5. Representations and Warranties
The undersigned represents and warrants as follows:
a. The corporation, business trust or partnership, as the case
may be, has been duly incorporated if a corporation, formed if a business trust
or partnership, and is validly existing as a corporation, business trust or
partnership, in good standing under the laws of the jurisdiction of its
incorporation or formation, with full power and authority to enter into the
transactions contemplated by the offering documents.
b. (i) The officers or partners of the undersigned who, on
behalf of the undersigned, have considered the purchase of the Shares and the
advisors, if any, of the corporation, business trust or partnership, as the case
may be, in connection with such consideration are named below and such officers
and advisors or partners were duly authorized to act for the corporation,
business trust or the partnership in reviewing such investment;
(ii) The names and positions of the officers or
partners of the undersigned who, on its behalf, have reviewed the
purchase of the Shares are as follows:
---------------------------------------------------------
(iii) In evaluating the merits and risks of the
purchase of the Shares, the corporation, business trust or the partnership, as
the case may be, intends to rely upon, or has relied upon, the advice of, or
will consult with, or has consulted with, the following persons:
---------------------------------------------------------
c. The officers of the corporation, business trust or the partners of
the partnership who, on its behalf, have considered the purchase of the Shares,
and the advisors, if any, of the corporation or the corporation, business trust
or partnership in connection with such consideration, together have such
knowledge and experience in financial and business matters that such officer(s),
partner(s) and such advisor(s), if any, together are capable of evaluating the
merits and risks of purchase of the Shares and of making an informed investment
decision;
d. Together with any corporation or group of corporations with which it
files a consolidated federal income tax return, the undersigned (i) expects to
have adequate taxable income to
14
realize the economic and potential tax benefits from ownership of the Shares,
and (ii) has reserves and/or net worth adequate to permit it to satisfy any tax
or other liabilities arising from its personal liability with respect to the
investment and operation thereof;
e. The total assets of the corporation, business trust or
partnership are in excess of $_______________.
f. The net worth of the corporation, business trust or the
partnership is in excess of $_____________.
g. The corporation, business trust or the partnership has had, during
each of the past two tax years, gross income from all sources of $_____________
and $_______________, respectively.
h. The undersigned expects the corporation, business trust
or the partnership to have during the current and next tax year,
gross income from all sources of at least $____________; and
i. The undersigned knows of no pending or threatened
litigation the outcome of which could adversely affect the answer
to any question hereunder.
j. Indicate the following if a partnership purchaser:
(i) The date the partnership was formed:
(ii) The names of each partner in the partnership. Please have
each individual partner execute a separate questionnaire or forward to the
Company a letter indicating whether or not each partner is sophisticated and has
a sufficient net worth or salary level to be deemed an "accredited investor"
under Rule __________ promulgated under the Securities Act.
---------------------------------------------------------
---------------------------------------------------------
The undersigned warrants and represents that the foregoing statements
are true and accurate to the best of the information and belief of the
undersigned and the undersigned will promptly notify the Company of any changes
in the foregoing answers.
FOR INDIVIDUALS
Purchaser
Dated: __________, 1996 ______________________________
Signature
------------------------------
Signature (If Joint)
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FOR CORPORATIONS
Dated: ___________, 1996 ______________________________
Name of Company
------------------------------
Executive Officer
------------------------------
Signature of Officer
FOR BUSINESS TRUSTS
Dated: _____________, 1996 ______________________________
Name of Business Trust
------------------------------
Name of Trustee Executing
Questionnaire
------------------------------
Signature of Trustee
FOR PARTNERSHIPS
Dated: _______________, 1996 ______________________________
Name of Partnership
------------------------------
Name of Partner Executing
Questionnaire
------------------------------
Signature of Partner
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FOR PENNSYLVANIA RESIDENTS:
The undersigned hereby agrees not to sell any of the
securities acquired hereunder for a period of 12 months from the date he
acquires such securities.
By:____________________________
Signature
-------------------------------
Printed Name
--------------------------------
Date
--------------------------------
Xxxxxx
--------------------------------
Xxxx, Xxxxx Zip
---------------------------------
Social Security Number or Federal
ID No.
---------------------------------
Telephone No. of Subscriber
AGREED AND ACCEPTED BY:
AMERICAN FILM TECHNOLOGIES, INC.
By:______________________________
Duly Authorized
Date:____________________________
Xxxxxx X. Xxxxxxx
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