Exhibit 4.1 (b)
FORM OF
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of May 13, 1998, by
and between Xxxxxxx & Yale, 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 350,000 shares (the
"Shares") of its Common Stock (as defined below) at the price of $3.50 per share
(the "Per Share Purchase Price"), pursuant to a Private Placement Memorandum
dated May 1, 1998 (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" means 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" means the Common Stock, par value $0.001 per share, of the
Company.
"Investor Shares" shall mean the shares of Common Stock subscribed for
hereunder by the Investor, together with any shares of Common Stock issued in
respect of such shares pursuant to a dividend or distribution, stock split,
recapitalization, or similar transaction.
"Person" means 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.
"Placement Agent" means X.X. Xxxxxxx & Co.
2. PURCHASE OF COMMON STOCK; SUBSEQUENT SALE.
(a) PURCHASE.
(1) 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 the
Per Share Purchase Price, __________ Shares (the "Investor Shares") for an
aggregate purchase price of $_______ (the "Aggregate Purchase Price"). The
Shares are being offered pursuant to the Memorandum.
(2) The Company proposes to enter into a similar form of Stock
Purchase Agreement with other investors (the "Other Investors"). The Investor
and the Other Investors are hereinafter referred to collectively as the
"Investors."
(3) The Investor understands that the Company will notify it
whether this subscription has been accepted or rejected. The Investor further
understands and agrees that the Company reserves the right to accept or reject
subscriptions (in whole or in part), and that this subscription may be accepted
or rejected by the Company (in whole or in part) at any time for any reason
whatsoever, as it shall deem necessary or appropriate.
(b) The Investor acknowledges and agrees that the Aggregate Purchase
Price delivered herewith shall be held in escrow by Xxxxxxx, Procter & Xxxx LLP,
as escrow agent (the "Escrow Agent"), until the consummation of the Pending
Lasiris Acquisition (as defined in the Memorandum). If the Pending Lasiris
Acquisition is not consummated for any reason, the offering contemplated by the
Memorandum and the issuance and sale of Shares contemplated hereby shall be
terminated and the Company shall cause the Escrow Agent to return to the
Investor the entire Aggregate Purchase Price paid hereunder, together with any
interest thereon.
(c) SUBSEQUENT SALE. During the period beginning on the date
hereof and continuing until the Closing, the Investor will not offer, sell,
contract to sell or otherwise dispose of, or bid for, purchase, contract to
purchase or otherwise acquire, any shares of Common Stock or interests therein
without the prior written consent of the Company.
3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
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
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opportunity to ask questions and receive answers as deemed necessary in respect
of the decision to purchase the Shares, and has consulted with advisors
concerning the proposed investment in the Company. The Investor understands
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 made an investigation as to whether or not
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 a sophisticated investor or 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 pursuant to 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 any exemptions from the
registration requirements of the Securities Act and Applicable State Law are
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 NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, TRANSFERRED OR HYPOTHECATED OR OTHERWISE ASSIGNED
EXCEPT PURSUANT TO (1) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT OR (2)
RULE 144 OR 144A UNDER SUCH ACT OR ANY OTHER AVAILABLE
EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO
DISPOSITION OF SECURITIES."
(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
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connection with, the resale or distribution thereof or in any arrangement or
understanding with any other persons regarding the distribution of such Shares
in violation of the Securities Act.
(7) 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 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 (1) 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 7 and (B) the
requirement of delivering a current prospectus has been satisfied; or (2) an
opinion of counsel reasonably satisfactory to the Company stating that
registration is not required 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 and during
such period pending negotiations relating to, or consummation of, a transaction
or the occurrence of any other event that would require additional disclosure of
material information by the Company in the registration statement (as to which
the Company has a BONA FIDE business purpose for preserving confidentiality)
that would make it impractical or inadvisable to cause the registration
statement to be filed or to become effective or to amend or supplement the
registration statement or which otherwise renders the Company unable to comply
with the Securities and Exchange Commission (the "Commission") requirements. In
such event, 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 Securities
Exchange Act of 1934, as amended (the "Exchange Act"); PROVIDED, HOWEVER, that
such suspension shall not be for a period of more than 30 consecutive trading
days during any one (1) suspension period or more than 60 trading days in any
one (1) year period. 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 earlier of 30
consecutive trading days after such notice or the date on which the Company
gives the Investor written notice that the Investor may thereafter effect sales
pursuant to said prospectus.
(8) 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, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether the issue of enforceability
is considered in a
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proceeding in equity or at law) and except as the indemnification and
contribution agreements of the Investor in Section 7(d) hereof may be legally
unenforceable.
(9) 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. The person executing
this Agreement on behalf of the Investor is authorized to act for the Investor
in subscribing for the Shares.
(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.
(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, 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.
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(10) The Investor agrees to complete and execute and return to
the Company (a) the Investor Questionnaire attached as ANNEX I to this Agreement
if 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 IV, 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 7). 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.
(11) 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) 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 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.
(12) Except as otherwise set forth in ANNEX III: (i) as of the
date hereof, the Investor did not beneficially own any shares of Common Stock;
and (ii) as of the date of this Agreement, the Investor does not beneficially
own any shares of Common Stock.
(13) 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.
(b) The Company hereby represents, warrants and agrees as follows:
(1) The Company and each of its subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, with full power and authority (corporate and
other) to perform its obligations under this Agreement.
(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
this Agreement, 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, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws
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affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law) and except as the
indemnification and contribution agreements of the Company in Section 7(d)
hereof may be legally unenforceable.
(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.
(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 violate the
Articles of Incorporation of the Company, or the By-Laws of the Company, or
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; 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.
(5) The information contained in the following documents, which
the Company has furnished to the Purchaser, taken as a whole, does not contain
any untrue statement of material fact or omit to state any material fact
necessary in order to make the statements therein not misleading as of the
respective final dates of the documents.
(A) the Company's Annual Report to Stockholders on Form 10-KSB
for the fiscal year ended December 31, 1997 (without
exhibits);
(B) Notice to Shareholders and Proxy Statement for its Annual
Meeting of Shareholders held May 5, 1998.
(6) There has been no material adverse change in the financial
condition or business or results of operations of the Company since December 31,
1997.
(7) Except as disclosed in the documents referred to in
paragraph (5) above, 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,
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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 transaction contemplated by this Stock Purchase 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 Stock Purchase Agreement or any of such other documents.
(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 being purchased and the payment therefor.
4. CLOSING CONDITIONS. The respective obligations of the Investor and
the Company, as the case may be, to consummate the purchase and sale of the
Investor Shares shall be subject, in the discretion of the Company or the
Investor, as the case may be, to the following conditions, any or all of which
may be waived, in whole or in part, by the parties hereto, to the extent
permitted by applicable law:
(a) All representations and warranties and other statements of the
other party contained herein are, at and as of the Closing (as defined below),
true and correct in all material respects and the other party shall have
performed all of its obligations theretofore to be performed in all material
respects.
(b) The Pending Lasiris Acquisition shall be consummated
substantially in the manner described in the Memorandum.
5. SUBSCRIPTION AND METHOD OF PAYMENT.
(a) The undersigned shall have delivered or cause to have been
delivered in cash, by certified or bank check or by wire transfer of immediately
available funds to Xxxxxxx, Procter & Xxxx LLP, as the designated escrow agent
(the "Escrow Agent"), US $________________ (the "Escrow Amount") to be held by
the Escrow Agent; PROVIDED, HOWEVER, that the Placement Agent may retain during
the period that the Escrow Amount is held in escrow an amount of cash equal to
its placement commission in an amount equal to 6.0% of the Escrow Amount,
subject to the sentence immediately prior to the last sentence of this
paragraph. The Company shall reimburse the Placement Agent for up to $3,500 of
expenses incurred in connection with the transactions contemplated hereby either
by (i) requesting that the Placement Agent retain such amount out of funds wired
into escrow by the Placement Agent, or (ii) in the event of the termination of
the transactions contemplated hereby, by delivery of such amount to the
Placement Agent by check or by wire transfer of immediately available funds.
Subject to the terms and conditions of this Agreement, if the Company delivers
an Officer's Certificate executed by the President of the Company certifying as
to the satisfaction of the conditions in Section 4 hereof (a "Closing
Certificate") on or prior
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to 5:00 p.m., Eastern time, on the Termination Date (as defined in Section 6
below), the Escrow Agent, within five business days after such delivery, shall
release to the Company the Escrow Amount, less any amounts distributed to the
Placement Agent, together with any interest earned on the Escrow Amount during
the period held by the Escrow Agent, against delivery of the Investor Shares to
the Investors by the Company. The effective date of the purchase and sale of
the Investor Shares shall be immediately before the effective time of the
Pending Lasiris Acquisition (the "Closing" or "Closing Date"). If the Escrow
Agent does not receive a Closing Certificate on or prior to 5:00 p.m., Eastern
time, on the Termination Date, (i) the Escrow Agent, within two business days
following the Termination Date, shall deliver to the Investor the Escrow Amount
(less amounts retained by the Placement Agent) and, provided the applicable tax
and withholding information in the next sentence has been delivered, any
interest earned on the Escrow Amount during the period held by the Escrow Agent,
and (ii) the Placement Agent shall deliver to the Investor an amount in cash
equal to its placement commission to the extent necessary to ensure that each
Investor receives the refund of the full purchase price paid by such Investor in
respect of the Investor Shares. Prior to the receipt of any accrued interest,
the Investor agrees to provide all applicable tax and withholding information
reasonably requested by the Company.
(b) At the Closing, the Investor Shares to be purchased by the
Investor hereunder, registered in the name of the Investor or its nominees, as
the Investor may specify at least three Business Days prior to the Closing,
shall be delivered by or on behalf of the Company to the Investor, for the
Investor's account, against release by the Escrow Agent of the Aggregate
Purchase Price therefor in immediately available funds in the form of one or
more federal funds checks or a wire transfer to an account designated by the
Company.
6. TERMINATION.
(a). The respective obligations of the Investor and the Company to
consummate the purchase and sale of the Shares shall terminate on the earlier of
(i) the date on which the Company notifies the Investor in writing that the
Company has made a good faith determination that the conditions in Section 4
cannot be satisfied by the Termination Date (as defined below) or (ii) May 30,
1998 (the "Termination Date").
(b) The Company and Investor hereby agree that any termination of
this Agreement pursuant to clause (a) hereof (other than termination in the
event of a breach of this Agreement or as a result of a misrepresentation
contained in any of the statements made herein by the Investor) shall be without
liability of the Company or the Investor.
7. 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 for
sale under the Securities Act (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
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"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:
(i) Promptly give written notice thereof to each of the
Investors.
(ii) Use 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 20 days after such Investors' receipt of the notice referred to above,
subject to subparagraph (iii) below.
(iii) In the case of the registration of shares of Common
Stock by the Company in connection with an underwritten public offering, (i) 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 (ii) 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 7(a)(1) shall be borne by
the Company, except that the Investors shall bear underwriting and selling
commissions attributable to their Investor Shares being registered and any
transfer taxes on shares being sold by such Investors.
(2) The Company shall:
(a) Prepare and file with the Commission within sixty (60)
days of the Closing a registration statement (the "Registration Statement") to
enable the sale of the Investor Shares by the Investor from time to time through
the automated quotation system of the Nasdaq SmallCap Market or in
privately-negotiated transactions or otherwise.
(b) Use reasonable efforts, subject to receipt of
necessary information from the Investor, to cause the Registration Statement to
become effective as soon as possible after filing thereof.
(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
effective for a
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period not exceeding the third 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 and such other documents as the Investor may reasonably
request, in order to keep the Investor apprised of the progress of the
registration process and to facilitate the public sale or other disposition of
all or any of the Investor Shares by the Investor.
(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 its
best efforts to promptly cause such stop order to be withdrawn.
(g) Bear all expenses in connection with the procedures in
subparagraphs (a) through (i) of this Section 7(a)(2) and the registration of
the Investor Shares pursuant to the Registration Statement, other than fees and
expenses, if any, of counsel or other advisors to the Investor, PROVIDED that
the Company shall pay the reasonable fees and expenses of one counsel to the
Investors purchasing Shares in the Private Placement.
(h) 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.
(i) 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 1933 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 (b) any
similar rule or regulation hereafter adopted by the Commission; PROVIDED,
HOWEVER, that 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
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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.
A questionnaire related to the Registration Statement to be completed by the
Investor is attached hereto as ANNEX IV.
(b) INTENTIONALLY OMITTED.
(c) TRANSFER OF SHARES. The Investor agrees not to effect any
disposition of the Shares or the right to purchase the Shares that would
constitute a sale within the meaning of the Securities Act except as
contemplated in Sections 7(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.
(d) INDEMNIFICATION AND CONTRIBUTION. For the purpose of this
Section 7(d):
(1) 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;
(2) 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 7(a)(i) and any final
prospectus, exhibit, supplement or amendment included in or relating to such
registration statement; and
(3) The term "untrue statement" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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 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
12
and in conformity with written information furnished to the Company by or on
behalf of such Selling Shareholder specifically 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 3(a) and 7(c) 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 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 3(a) and 7(c)
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 and in conformity with written
information furnished by or on behalf of the Investor specifically 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 thereafter, 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 Investor upon the sale of the Shares giving
rise to such indemnification obligation.
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 7(d), 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
13
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.
If the indemnification provided for in this Section 7(d) from the
indemnifying person is 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 7(d), any
reasonable legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) 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 7(d), no Investor shall be
required to contribute any amount in excess of the dollar amount of the proceeds
received by such Investor 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.
(e) TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions
precedent imposed by Section 4 or this Section 7 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 at such time as an opinion of counsel
satisfactory to the Company shall have been rendered to the effect that such
conditions are not reasonably necessary in order to comply with the Securities
Act.
(f) INFORMATION AVAILABLE. So long as a registration statement is
effective covering the resale of the Investor Shares, the Company will furnish
to the Investor:
14
(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);
(2) Upon the reasonable request of the Investor, all exhibits
excluded by the parenthetical to subparagraph (i) of this Section 7(f) and all
other information that is made available to shareholders; and
(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;
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 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.
8. MISCELLANEOUS.
(a) 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.
(b) The Investor agrees that it may not terminate or revoke this
Agreement or any agreement, offer or commitment made hereunder.
(c) 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.
(d) 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
15
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) Time is of the essence with respect to all provisions of this
Agreement.
(f) 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.
(g) 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:
(h) if to the Company, to:
Xxxxxxx & Yale, Inc.
00 Xxxxxxxxx Xxxx
Xxxxx, Xxx Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
with a copy mailed to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Cable, Esq.
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.
(i) The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
(j) 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]
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
XXXXXXX & YALE, 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)
(CONTINUED ON NEXT PAGE)
S-1
Designated Bank
--------------------
Address
----------------------------
ABA No.
----------------------------
Account No.
------------------------
Attention
--------------------------
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.
S-2
ESCROW AGENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Escrow Agent confirms its undertakings under
Section 5 of this Agreement.
XXXXXXX, PROCTER & XXXX LLP
By:
----------------------
S-3
PLACEMENT AGENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Placement Agent confirms its undertakings under
Section 5 of this Agreement.
X.X. XXXXXXX & CO., INCORPORATED
By:
------------------------------
Name:
Title:
S-4
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;
Page 2
_____ x. a private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
_____ 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, 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 1996 and 1997 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 1998;
_____ xvii. an entity in which all of the equity owners are accredited
investors (described in any of (a) - (p) above).
INVESTOR:
By:
--------------------------------------
Name:
Title:
ANNEX II
[Form of Managed Accounts Representation Letter]
Xxxxxxx & Yale, Inc.
00 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Ladies and Gentlemen:
The undersigned has executed or is executing as Investor a Stock Purchase
Agreement (the "Agreement") by and between you and the undersigned relating to
the purchase of Common Stock of Xxxxxxx & Yale, Inc., as indicated in such
executed Agreement. Capitalized terms used herein that are not defined herein
have the meaning set forth in the Agreement.
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 Investor Shares being purchased under the Agreement by or
for an Account are being purchased for the benefit of the Account;
ii. the representations and warranties of the Investor set forth in
Section 3(a)(iii) 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; and
iv. the undersigned is fully authorized by each such Account to
enter into the Agreement and to execute this Managed Accounts Representation
Letter for or on behalf of such Account.
Page 2
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
NUMBER OF SHARES BENEFICIALLY OWNED
730,924 Shares as of March 25, 1998
ANNEX IV
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Pursuant to the "Selling Shareholder" section of the Registration
Statement, please state your or your organization's name exactly as it should
appear in the Registration Statement:
2. Please provide the following information, as of the Closing Date:
(1) (2)
Number of shares
Number of Shares if any, which will
which are being be owned after
included in the completion of sale
Registration of Shares included
Statement (if all in the Registration
purchased, put all) Statement
------------------ ---------
3 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:
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
ANNEX V
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: ____________________________________
