EXHIBIT 99.2
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STOCK PURCHASE AGREEMENT
Spire Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies & Gentlemen:
The undersigned, American Skandia Trust, Federated Aggressive Growth
Portfolio (the "Investor"), hereby confirms its agreement with you as follows:
1. This Stock Purchase Agreement (the "Agreement") is made as of April 26, 2006
between Spire Corporation, a Massachusetts corporation (the "Company"), and the
Investor.
2. The Company has authorized the sale and issuance of an aggregate 941,176
shares (the "Shares") of common stock of the Company, $0.01 par value per share
(the "Common Stock"), to certain investors in a private placement (the
"Offering").
3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor 369,756 Shares, for
a purchase price of $8.50 per Share, or an aggregate purchase price of
$3,142,926, pursuant to the Terms and Conditions for Purchase of Shares attached
hereto as Annex I and incorporated herein by reference as if fully set forth
herein (the "Terms and Conditions"). This Stock Purchase Agreement, together
with the Terms and Conditions which are incorporated herein by reference as if
fully set forth herein, may hereinafter be referred to as the "Agreement."
Unless otherwise requested by the Investor, certificates representing the Shares
purchased by the Investor will be registered in the Investor's name and address
as set forth below.
4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or persons known to it to be affiliates of the Company, (b) neither
it, nor any group of which it is a member or to which it is related,
beneficially owns (including the right to acquire or vote) any securities of the
Company and (c) it has no direct or indirect affiliation or association with any
NASD member as of the date hereof. Exceptions:
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(If no exceptions, write "none." If left blank,
response will be deemed to be "none.")
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose. By executing
this Agreement, the Investor acknowledges that the Company may use the
information in paragraph 3 above and the name and address information below in
preparation of the Registration Statement (as defined in Annex I). This
Agreement may be executed in separate counterparts, each of which shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument.
AGREED AND ACCEPTED:
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SPIRE CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
AMERICAN SKANDIA TRUST, FEDERATED AGGRESSIVE
GROWTH PORTFOLIO:
By: /s/ ▇▇▇▇ ▇▇▇▇
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Print Name: ▇▇▇▇ ▇▇▇▇
Title: Vice President, Federated Global Investment
Mgmt Corp, as attorney-in-fact for American
Skandia Trust, Federated Aggressive Growth
Portfolio
Address:
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Send duplicate
copy of all Notices to:
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Tax ID No.:
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Contact name:
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Telephone:
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Address where Shares should be sent (if different
from above):
NUMBER OF SHARES SUBSCRIBED FOR:
369,756 Shares
AGGREGATE PURCHASE PRICE:
$3,142,926
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ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES
1. Agreement to Sell and Purchase the Shares.
1.1 At the Closing (as defined in Section 2), the Company will sell to
the Investor, and the Investor will purchase from the Company, upon the terms
and conditions hereinafter set forth, the number of Shares set forth in Section
2 of the Stock Purchase Agreement to which these Terms and Conditions are
attached at the purchase price set forth thereon.
1.2 The Company may enter into the same form of Stock Purchase
Agreement, including these Terms and Conditions, with other investors (the
"Other Investors") and expects to complete sales of Shares to them. (The
Investor and the Other Investors are hereinafter sometimes collectively referred
to as the "Investors," and the Stock Purchase Agreement to which these Terms and
Conditions are attached and the Stock Purchase Agreements (including attached
Terms and Conditions) executed by the Other Investors are hereinafter sometimes
collectively referred to as the "Agreements.").
1.3 The obligations of each Investor under any Agreement are several
and not joint with the obligations of any Other Investor, and no Investor shall
be responsible in any way for the performance of the obligations of any other
Investor under any Agreement. Nothing contained herein, and no action taken by
any Investor hereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated hereby,
provided that such obligations or the transactions contemplated hereby may be
modified, amended or waived in accordance with Section 8 below. Each Investor
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement (provided, that such
rights may be modified, amended or waived in accordance with Section 8 below),
and it shall not be necessary for any Other Investor to be joined as an
additional party in any proceeding for such purpose.
2. Delivery of the Shares at Closing. The completion of the purchase and
sale of the Shares (the "Closing") shall occur on April 28, 2006 (the "Closing
Date"), at the offices of the Company's counsel. Since the Investor is a
registered investment company under the Investment Company Act of 1940, as
amended, at the Closing, the Company shall deliver to the Investor's custodian
(the "Custodian") against payment, in accordance with the procedures outlined on
Exhibit C attached hereto, one or more stock certificates representing the
number of Shares set forth pursuant to Section 2 of the Stock Purchase
Agreement, each such certificate to be registered in the name of the Investor
or, if so indicated on the signature page of the Stock Purchase Agreement, in
the name of a nominee designated by the Investor. The following are additional
conditions to Closing:
(a) the Company shall have delivered to the Investor certified copies of
certificates evidencing the incorporation and good standing of the Company and
each subsidiary of the Company ("Subsidiary") in each such entity's state or
jurisdiction of incorporation or organization as of a date within ten (10) days
of the Closing Date;
(b) since the date hereof, no event or series of events shall have occurred
that reasonably would be expected to have or result in a (i) an adverse effect
on the legality, validity or enforceability of this Agreement, or (ii) a
material adverse effect on the financial condition or business, operations,
assets or prospects of the Company and its Subsidiaries taken as a whole;
(c) from the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended by the Securities and Exchange Commission ("SEC")
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg Financial Markets shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported
by such service, or on any trading market, nor shall a banking moratorium have
been declared either by the United States or New York State authorities, nor
shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or
any material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Investor, makes it impracticable or inadvisable to
purchase the Shares at the Closing; and
(d) receipt by the Investor of such other documents or certificates
relating to the offering as the Investor may reasonably request.
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Upon the acceptance of the Agreement, the Company's obligation to issue the
Shares in the name of the Investor and deliver the Shares to the Custodian shall
be subject to the following condition which may be waived by the Company by
providing the Investor with prior written notice: the accuracy of the
representations and warranties made by the Investor and the fulfillment of those
undertakings of the Investor to be fulfilled prior to the Closing. If the
Company has not received funds in the full amount of the purchase price for the
Shares being purchased hereunder within 10 days of delivery of the Shares to the
Custodian, then, upon the Company's written request, the Investor will promptly
cause the certificate representing the Shares to be returned to the Company.
The Investor's obligation to purchase the Shares shall be subject to the
following conditions any one or more of which may be waived by the Investor:
(a) Opinion of Counsel. Receipt by the Investor of an opinion letter of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, counsel to the Company, dated the Closing Date, in the
form attached hereto as Exhibit D;
(b) Representations and Warranties; Covenants. The representations and
warranties of the Company set forth in Section 3 hereof shall be true and
correct in all material respects as of the date hereof and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date (which shall be true and correct in all material
respects as of such date)), and the Company shall have performed, satisfied and
complied with in all material respects the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company on or prior to the Closing Date;
(c) Officer's Certificate. The Company shall have delivered a certificate,
dated the Closing Date, duly executed on behalf of the Company by its Chief
Executive Officer to the effect set forth in clause (b) above;
(d) Secretary's Certificate. The Company shall have delivered a
certificate, dated the Closing Date, duly executed by its Secretary or Assistant
Secretary or other appropriate officer, certifying that the attached copies of
the Company's organizational documents, by-laws and the resolutions of the Board
of Directors approving this Agreement and the transactions contemplated hereby,
are all true, complete and correct and remain unamended and in full force and
effect;
(e) No Litigation. On the Closing Date, no legal action, suit or proceeding
shall be pending or overtly threatened which seeks to restrain or prohibit the
transactions contemplated by this Agreement.
3. Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to, and covenants with, the Investor, as follows:
3.1 Organization. The Company and its Subsidiaries are duly organized
and validly existing in good standing under the jurisdiction of its
incorporation or organization (as applicable). Each of the Company and its
Subsidiaries (as defined in Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act")) has full power and authority to own, operate and
occupy its properties and to conduct its business as presently conducted and as
described in the documents filed by the Company under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act"), since the end of its most recently completed fiscal year
through the date hereof, including, without limitation, its most recent report
on Form 10-KSB (the "Exchange Act Documents") and is registered or qualified to
do business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the location of the properties owned or leased by it
requires such qualification and where the failure to be so qualified would have
a material adverse effect upon the condition (financial or otherwise), earnings,
business or business prospects, properties or operations of the Company and its
Subsidiaries, considered as one enterprise (a "Material Adverse Effect"), and no
proceeding has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification; provided, however, that the Company is currently applying for
foreign qualification in Connecticut.
3.2 Due Authorization and Valid Issuance. The Company has all
requisite power and authority to execute, deliver and perform its obligations
under the Agreements, and the Agreements have been duly authorized and validly
executed and delivered by the Company and constitute legal, valid and binding
agreements of the Company enforceable against the Company in accordance with
their terms, except as rights to indemnity and contribution may be limited by
state or federal securities laws or the public policy underlying such laws,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The
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Shares being purchased by the Investor hereunder will, upon issuance and payment
therefor pursuant to the terms hereof, be duly authorized, validly issued,
fully-paid and nonassessable.
3.3 Non-Contravention. The execution and delivery of the Agreements,
the issuance and sale of the Shares under the Agreements, the performance by the
Company of its obligations under this Agreements and the consummation of the
transactions contemplated hereby will not (A) conflict with or constitute a
violation of, or default (with or without the giving of notice or with the
passage of time or otherwise) under, (i) any material bond, debenture, note or
other evidence of indebtedness, lease, contract, indenture, mortgage, deed of
trust, loan agreement, joint venture or other agreement or instrument to which
the Company or any Subsidiary is a party or by which the Company or any of its
Subsidiaries or their respective properties are bound, (ii) the charter, by-laws
or other organizational documents of the Company or any Subsidiary, or (iii) any
law, administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or any
Subsidiary or their respective properties, except in the case of clauses (i) and
(iii) for any such conflicts, violations or defaults which are not reasonably
likely to have a Material Adverse Effect or (B) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company or any
Subsidiary or an acceleration of indebtedness pursuant to any obligation,
agreement or condition contained in any material bond, debenture, note or any
other evidence of indebtedness or any material indenture, mortgage, deed of
trust or any other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or its Subsidiaries is bound or to
which any of the property or assets of the Company or any Subsidiary is subject.
No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or
other governmental body in the United States or any other person is required for
the execution and delivery of the Agreements and the valid issuance and sale of
the Shares to be sold pursuant to the Agreements, other than such as have been
made or obtained, and except for any post-closing securities filings or
notifications required to be made under federal or state securities laws.
3.4 Capitalization. The capitalization of the Company as of December
31, 2005 is as set forth in the most recent applicable Exchange Act Documents,
increased as set forth in the next sentence. The Company has not issued any
capital stock since that date other than pursuant to (i) employee benefit plans
disclosed in the Exchange Act Documents, or (ii) outstanding warrants, options
or other securities disclosed in the Exchange Act Documents. The Shares to be
sold pursuant to the Agreements have been duly authorized, and when issued and
paid for in accordance with the terms of the Agreements, will be duly and
validly issued, fully paid and nonassessable. The outstanding shares of capital
stock of the Company have been duly and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. Except as set forth in
or contemplated by the Exchange Act Documents, there are no outstanding rights
(including, without limitation, preemptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any unissued
shares of capital stock or other equity interest in the Company or any
Subsidiary, or any contract, commitment, agreement, understanding or arrangement
of any kind to which the Company is a party or of which the Company has
knowledge and relating to the issuance or sale of any capital stock of the
Company or any Subsidiary, any such convertible or exchangeable securities or
any such rights, warrants or options. Without limiting the foregoing, no
preemptive right, co-sale right, right of first refusal, registration right, or
other similar right exists with respect to the Shares or the issuance and sale
thereof. No further approval or authorization of any stockholder, the Board of
Directors of the Company or others is required for the issuance and sale of the
Shares, including under the rules of the Nasdaq National Market. The Company
owns the entire equity interest in each of its Subsidiaries, free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable interest,
other than as described in the Exchange Act Documents. Except as disclosed in
the Exchange Act Documents, there are no stockholders agreements, voting
agreements or other similar agreements with respect to the Common Stock to which
the Company is a party or, to the knowledge of the Company, between or among any
of the Company's stockholders.
3.5 Legal Proceedings. There is no legal or governmental action, suit
or proceeding before any court, governmental
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body, domestic or foreign, now pending or, to the knowledge of the Company, or
its Subsidiaries threatened to which the Company or any Subsidiary is or may be
a party or of which the business or property of the Company or any Subsidiary is
subject that is required to be disclosed in the Exchange Act Documents but is
not disclosed in the Exchange Act Documents. There are no disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise,
between the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its
accountants and lawyers, except that the Company in currently in dispute with
its former accountants with respect to approximately $40,000 in fees claimed by
such accountants.
3.6 No Violations. Neither the Company nor any Subsidiary is in
violation of its charter, bylaws, or other organizational document, or in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority, self-regulatory
organization or trading market applicable to the Company or any Subsidiary,
which violation, individually or in the aggregate, would be reasonably likely to
have a Material Adverse Effect, or is in default (and there exists no condition
which, with the passage of time or otherwise, would constitute a default) in any
material respect in the performance of any bond, debenture, note or any other
evidence of indebtedness in any indenture, mortgage, deed of trust or any other
material agreement or instrument to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary is bound or by which the
properties of the Company or any Subsidiary are bound, which would be reasonably
likely to have a Material Adverse Effect. The Company is in material compliance
with all provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended, and the rules
and regulations thereunder, that are currently applicable to it and is actively
taking steps to ensure that it will be in compliance with other provisions of
such Act not currently applicable to it when such provisions become applicable
to it, except where such noncompliance would not have or reasonably be expected
to result in a Material Adverse Effect.
3.7 Governmental Permits, Etc. Except as specified in Section 3.1, the
Company and its Subsidiaries possess all necessary franchises, licenses,
certificates and other authorizations from any foreign, federal, state or local
government or governmental agency, department, or body that are currently
necessary for the operation of the business of the Company and its Subsidiaries
as currently conducted and as described in the Exchange Act Documents, except
where the failure to currently possess could not reasonably be expected to have
a Material Adverse Effect.
3.8 Intellectual Property. Except as specifically disclosed in the
Exchange Act Documents (i) each of the Company and its Subsidiaries owns or
possesses sufficient rights to conduct its business in the ordinary course,
including, without limitation, rights to use all material patents, patent
rights, industry standards, trademarks, copyrights, licenses, inventions, trade
secrets, trade names and know-how (collectively, "Intellectual Property")
described or referred to in the Exchange Act Documents as owned or possessed by
it or that are necessary for the conduct of its business as now conducted or as
proposed to be conducted except where the failure to currently own or possess
would not have a Material Adverse Effect, (ii) neither the Company nor any of
its Subsidiaries is infringing, or has received any notice of, or has any
knowledge of, any asserted infringement by the Company or any of its
Subsidiaries of, any rights of a third party with respect to any Intellectual
Property that, individually or in the aggregate, would have a Material Adverse
Effect and (iii) neither the Company nor any of its Subsidiaries has received
any notice of, or has any knowledge of, infringement by a third party with
respect to any Intellectual Property rights of the Company or of any Subsidiary
that, individually or in the aggregate, would have a Material Adverse Effect.
3.9 Financial Statements. The financial statements of the Company and
the related notes contained in the Exchange Act Documents present fairly, in
accordance with generally accepted accounting principles, the financial position
of the Company and its Subsidiaries as of the dates indicated, and the results
of its operations and cash flows for the periods therein specified consistent
with the books and records of the Company and its Subsidiaries except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which are not expected to be material in amount.
Such financial statements (including the related notes) have been prepared in
accordance with the generally accepted accounting principles applied on a
consistent basis throughout the periods therein specified, except as may be
disclosed in the notes to such financial statements, or in the case of unaudited
statements, as may be permitted by the Securities and Exchange Commission (the
"SEC") on Form 10-QSB under the Exchange Act and except as disclosed in the
Exchange Act Documents. The other financial information contained in the
Exchange Act Documents has been prepared on a basis consistent with the
financial statements of the Company.
3.10 No Material Adverse Change. Except as disclosed in the Exchange
Act Documents, since December 31, 2005, there has not been (i) any material
adverse change in the business, assets, results of operations or financial
condition or earnings of the Company and its Subsidiaries considered as one
enterprise, (ii) any material adverse event affecting the Company or its
Subsidiaries, (iii) any obligation, direct or contingent, that is material to
the Company and its Subsidiaries considered as one enterprise, incurred by the
Company, except obligations incurred in the ordinary course of business, (iv)
any dividend or distribution of any kind declared, paid or made on the capital
stock of the Company or any of its Subsidiaries, or (v) any loss or damage
(whether or not insured) to the physical property of the Company or any of its
Subsidiaries which has been sustained which has a Material Adverse Effect.
Except as publicly disclosed in the Exchange Act Documents, other SEC filings,
press releases or in other "public disclosures" as such term is defined in
Section 101(e) of Regulation FD of the Exchange Act, since January 1, 2005,
neither the Company nor any of its Subsidiaries has (i) sold, assigned,
transferred, abandoned, mortgaged, pledged or subjected to lien any of its
material properties, tangible or intangible, or rights under any material
contract, permit, license, franchise or other agreement or (ii) waived or
cancelled any material indebtedness or other obligations owed to the Company or
any of its Subsidiaries.
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3.11 Disclosure. The Company understands and confirms that the
Investors will rely on the foregoing representations and warranties of the
Company in this Section 3 as of the date hereof and as of the Closing Date. All
disclosure provided to the Investors regarding the Company, its business and the
transactions contemplated hereby furnished by or on behalf of the Company are
true and correct and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
3.12 Nasdaq Compliance. The Company's Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is listed on the Nasdaq
National Market, and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act or de-listing the Common Stock from the Nasdaq National Market, nor
has the Company received any notification that the SEC or the Nasdaq National
Market is contemplating terminating such registration or listing (other than
prior notifications described in the Exchange Act Documents which have been
resolved). The issuance by the Company of the Shares shall not have the effect
of terminating the registration of the Common Stock or delisting the Common
Stock from the Nasdaq National Market.
3.13 Reporting Status. The Company has filed in a timely manner all
documents that the Company was required to file under the Exchange Act since
January 1, 2005. The Company is eligible to use Form S-3 to register the Shares
to be offered for the account of the Investors. The Exchange Act Documents
complied as to form in all material respects with the SEC's requirements as of
their respective filing dates, and the information contained therein as of the
date thereof did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except to the extent that information contained in any such
document has been revised or superseded by a later filed SEC document.
3.14 Listing. The Company shall comply with all requirements of the
Nasdaq National Market and SEC with respect to the issuance of the Shares and
the listing of the Shares on the Nasdaq National Market. The Company further
agrees, if the Company applies to have the Common Stock traded on any other
trading market, it will include in such application the Shares, and will take
such other action as is necessary or desirable in the opinion of the Investors
to cause the Shares to be listed on such other trading market as promptly as
possible. The Company will take all action reasonably necessary to continue the
listing and trading of its Common Stock on a trading market and will comply in
all material respects with the Company's reporting, filing and other obligations
under the bylaws or rules of the trading market.
3.15 No Manipulation of Stock. The Company has not taken and will not,
in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Shares.
3.16 Company not an "Investment Company". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and immediately
after receipt of payment for the Shares will not be, an "investment company" or
an entity "controlled" by an "investment company" within the meaning of the
Investment Company Act and shall conduct its business in a manner so that it
will not become subject to the Investment Company Act.
3.17 Foreign Corrupt Practices. Neither the Company, nor to the best
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any corrupt funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
3.18 Accountants. To the Company's knowledge, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
Company, Ltd., who the Company expects will consent to the incorporation by
reference of its report dated February 21, 2006 with respect to the consolidated
financial statements of the Company included in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 2005 into the Registration Statement
(as defined below) and the prospectus which forms a part thereof, are and,
during the periods covered by their report, were independent accountants as
required by the Securities Act and the rules and regulations promulgated
thereunder.
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3.19 Contracts. The contracts described in the Exchange Act Documents
that are material to the Company are in full force and effect on the date
hereof, and neither the Company nor, to the Company's knowledge, any other party
to such contracts is in breach of or default under any of such contracts which
would have a Material Adverse Effect. The Company has filed with the SEC all
contracts and agreements required to be filed by the Exchange Act as of the date
hereof.
3.20 Taxes. Except for matters that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect, the
Company and each of its Subsidiaries has timely filed all necessary federal,
state and foreign income, franchise and other tax returns required to be filed
in any jurisdiction to which it is subject and has paid or accrued all taxes
shown as due thereon and the Company has no knowledge of a tax deficiency which
has been or might be asserted or threatened against it.
3.21 Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares to be sold to the Investors hereunder will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.
3.22 Insurance. The Company maintains and will continue to maintain
insurance against loss or damage by fire or other casualty and such other
insurance, including, but not limited to, product liability insurance, in such
amounts and covering such risks as is believed to be prudent and customary,
consistent with industry practice for the conduct of its and its Subsidiaries'
respective businesses and the value of their respective properties. Neither the
Company nor any Subsidiary has any present reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
3.23 No Registration Rights. No person has the right, which right has
not been waived, to require the Company or any Subsidiary to register any
securities for sale under the Securities Act by reason of the filing of the
Registration Statement with the SEC or the issuance and sale of the Shares.
3.24 No Registration, Integration, etc. Assuming the accuracy of the
representations and warranties made by the Investors in Article 4 of the
Agreements, no registration of the offer and sale of the Shares under the
Securities Act is required in connection with the offer and sale of the Shares
by the Company to the Investors as contemplated by this Agreements. Neither the
Company nor any person acting on behalf of the Company has offered or sold any
of the Shares by any form of general solicitation or general advertising. The
Company has not sold and will not sell, offer to sell, solicit offers to buy or
otherwise negotiate in respect of any "security" (as defined in the Securities
Act) that is or could be integrated with the sale of the Shares in a manner that
would require the registration of the sale of the Shares under the Securities
Act.
3.25 Transactions with Affiliates and Employees. Except as disclosed
in the Exchange Act Documents, none of the officers or directors of the Company
and, to the knowledge of the Company, none of the employees of the Company is
presently a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $60,000 other than (i) for payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any stock option plan of the Company.
3.26 Internal Accounting Controls; Disclosure Controls and Procedures.
Except with respect to material weaknesses in internal controls identified in
the Company's most recently filed Form 10-KSB, the Company and each of its
Subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of consolidated financial statements
in conformity with generally accepted accounting principles and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the SEC's rules and forms. The Company's Chief Executive Officer
8
and Chief Financial Officer (the "Certifying Officers") have evaluated the
effectiveness of the Company's controls and procedures as of the end of the
period covered by the Company's most recently filed periodic report under the
Exchange Act (such date, the "Evaluation Date"). The Company presented in its
most recently filed Form 10-KSB the conclusions of the Certifying Officers about
the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no changes in the Company's internal control over financial reporting (as
such term is defined in the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
3.27 Use of Investor Name. Except as may be required by applicable law
or regulation, the Company shall not use the Investor's name or the name of any
of its affiliates in any advertisement, announcement, press release or other
similar public communication unless it has received the prior written consent of
the Investor for the specific use contemplated or as otherwise required by
applicable law or regulation.
3.28 Off Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company and an unconsolidated or
other off balance sheet entity that is required to be disclosed by the Company
in its Exchange Act filings and is not so disclosed.
4. Representations, Warranties and Covenants of the Investor.
4.1 The Investor represents and warrants to, and covenants with, the
Company that: (i) the Investor is an "accredited investor" as defined in
Regulation D under the Securities Act and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to investments in shares presenting an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Shares; (ii) the Investor is
acquiring the number of Shares set forth in Section 2 of the Stock Purchase
Agreement in the ordinary course of its business and for its own account for
investment only and with no present intention of distributing any of such Shares
or any arrangement or understanding with any other persons regarding the
distribution of such Shares; (iii) the Investor will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Shares except in compliance with the Securities Act, applicable state securities
laws and the respective rules and regulations promulgated thereunder; (iv) the
Investor has answered all questions on the Investor Questionnaire attached
hereto as Exhibit A (the "Investor Questionnaire") for use in preparation of the
Registration Statement and the answers thereto are true, correct and complete as
of the date hereof and will be true, correct and complete as of the Closing
Date; (v) the Investor will notify the Company immediately of any change in any
of such information until such time as the Investor has sold all of its Shares
or until the Company is no longer required to keep the Registration Statement
effective; and (vi) the Investor has, in connection with its decision to
purchase the number of Shares set forth in Section 2 of the Stock Purchase
Agreement, relied only upon the Exchange Act Documents and the representations
and warranties of the Company contained herein. The Investor understands that
its acquisition of the Shares has not been registered under the Securities Act
or registered or qualified under any state securities law in reliance on
specific exemptions therefrom, which exemptions may depend upon, among other
things, the bona fide nature of the Investor's investment intent as expressed
herein. Subject to compliance with the Securities Act, applicable securities
laws and the respective rules and regulations promulgated thereunder, nothing
contained herein shall be deemed a representation or warranty by such Investor
to hold the Shares for any period of time. The Investor has completed or caused
to be completed and delivered to the Company the Investor Questionnaire, which
questionnaire is true, correct and complete in all material respects.
4.2 The Investor acknowledges, represents and agrees that no action
has been or will be taken in any jurisdiction outside the United States by the
Company that would permit an offering of the Shares, or possession or
distribution of offering materials in connection with the issue of the Shares,
in any jurisdiction outside the United States where legal action by the Company
for that purpose is required.
4.3 The Investor hereby covenants with the Company not to make any
sale of the Shares without complying with the provisions of this Agreement and
without complying with any prospectus delivery requirement then applicable to
it, and the Investor acknowledges that the certificates evidencing the Shares
will be imprinted with a legend that prohibits their transfer except in
accordance therewith. The Investor acknowledges that there may occasionally be
times when the Company determines that it must suspend the use of the Prospectus
forming a part of the Registration Statement, as set forth in Section 6.2(c).
9
4.4 The Investor further represents and warrants to, and covenants
with, the Company that (i) the Investor has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investor
herein may be legally unenforceable.
4.5 Neither the Investor nor any person acting on its behalf or at its
direction has engaged in any purchase or sale of Common Stock (including without
limitation any short sale), pledge, transfer, establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act) during the
20 trading days immediately preceding the date of this Agreement or otherwise
has engaged or will engage, directly or indirectly, in any action designed to,
or which might be reasonably expected to, cause or result in any manipulation of
the price of the Common Stock. The Investor will not use any of the restricted
Shares acquired pursuant to this Agreement to cover any short position in the
Common Stock of the Company if doing so would be in violation of applicable
securities laws and otherwise will comply with federal securities laws in the
holding and sale of the Shares.
4.6 The Investor understands that nothing in the Exchange Act
Documents, this Agreement or any other materials presented to the Investor in
connection with the purchase and sale of the Shares constitutes legal, tax or
investment advice. The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of Shares.
4.7 The Company acknowledges and agrees that Investor does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Sections 4 and
15(a) of this Agreement, or in the Investor Questionnaire.
5. 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 shall survive the execution of this Agreement, the delivery to the
Investor of the Shares being purchased and the payment therefor.
6. Registration of the Shares; Compliance with the Securities Act.
6.1 Registration Procedures and Other Matters. The Company shall:
(a) subject to receipt of necessary information from the
Investors after prompt request from the Company to the Investors to provide such
information, prepare and file with the SEC, within 30 days after the Closing
Date, a registration statement on Form S-3 (the "Registration Statement") to
enable the resale of the Shares by the Investors from time to time through the
facilities of the Nasdaq National Market or in privately-negotiated
transactions;
(b) subject to receipt of necessary information from the
Investors after prompt request from the Company to the Investors to provide such
information, use its best efforts to cause the Registration Statement to become
effective within 90 days after the Closing Date. The term "best efforts" shall
mean that the Company shall submit to the SEC, within two business days after
the day the Company learns that no review of the Registration Statement will be
made by the staff of the SEC or that the staff has no further comments on the
Registration Statement , as the case may be (the "Notice Day"), a request for
acceleration of effectiveness of the Registration Statement to a time and date
not later than the close of business on the second full business day after the
submission of such request; provided, however, that if the Company has an
outstanding confidential treatment request ("CTR") application on file with the
SEC on the Notice Day, then the Company shall use its best efforts to clear the
CTR with the SEC and shall submit a request for acceleration of effectiveness of
the Registration Statement within one business day following clearance of the
CTR by the SEC.
(c) use best efforts to prepare and file with the SEC such
amendments and supplements to the Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep the Registration Statement
current, effective and free from any material misstatement or omission to state
a material fact for a period not exceeding, with respect to each Investor's
Shares, the earlier of (i) the second anniversary of the Closing Date, (ii) the
date on which the Investor may sell all Shares then held by the Investor without
restriction by the volume limitations of Rule 144(e) of the Securities Act, or
10
(iii) such time as all Shares purchased by such Investor pursuant to this
Agreement have been sold pursuant to a registration statement;
(d) comply with any prospectus publication requirement then
applicable to it and furnish to each Investor with respect to the Shares
registered under the Registration Statement such number of copies of the
Registration Statement, Prospectuses and Preliminary Prospectuses in conformity
with the requirements of the Securities Act and such other documents as such
Investor may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Shares by such Investor; provided, however,
that the obligation of the Company to deliver copies of Prospectuses or
Preliminary Prospectuses to the Investor shall be subject to the receipt by the
Company of reasonable assurances from the Investor that the Investor will comply
with the applicable provisions of the Securities Act and of such other
securities or blue sky laws as may be applicable in connection with any use of
such Prospectuses or Preliminary Prospectuses;
(e) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Investor and use its best
efforts to maintain such blue sky qualifications during the period the Company
is required to maintain the effectiveness of the Registration Statement pursuant
to Section 6.1(c); 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) bear all expenses in connection with the procedures in
paragraph (a) through (e) of this Section 6.1 (other than underwriting discounts
or commissions, brokers' fees and similar selling expenses, and any other fees
or expenses incurred by the Investor, including attorneys' fees of the Investor)
and the registration of the Shares pursuant to the Registration Statement;
(g) advise the Investor, promptly after it shall receive notice
or obtain knowledge of the issuance of any stop order by the SEC delaying or
suspending the effectiveness of the Registration Statement or of the initiation
or threat of any proceeding for that purpose; and it will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal at
the earliest possible moment if such stop order should be issued; and
(h) provide a "Plan of Distribution" section of the Registration
Statement in the form attached hereto as Exhibit B.
The Company understands that the Investor disclaims being an
underwriter, but if the SEC deems the Investor to be an underwriter the Company
shall not be relieved of any obligations it has hereunder; provided, however
that if the Company receives notification from the SEC that the Investor is
deemed an underwriter, then the period by which the Company is obligated to
submit an acceleration request to the SEC shall be extended to the earlier of
(i) the 45th day after such SEC notification, or (ii) 120 days after the initial
filing of the Registration Statement with the SEC.
6.2 Transfer of Shares After Registration; Suspension.
(a) The Investor agrees that it will not effect any disposition
of the Shares that would constitute a sale within the meaning of the Securities
Act except as contemplated in the Registration Statement referred to in Section
6.1 and as described below or as otherwise permitted by law, and that it will
promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding the Investor or its plan of distribution.
(b) Except in the event that paragraph (c) below applies, the
Company shall (i) if deemed necessary by the Company, prepare and file from time
to time with the SEC a post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that such Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and so that, as
thereafter delivered to purchasers of the Shares being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) provide the Investor copies of any documents filed pursuant
to Section 6.2(b)(i) as the Investor may reasonably request; and (iii) inform
each Investor that the Company has complied with its obligations in Section
6.2(b)(i) (or that, if the Company has filed a post-effective amendment to the
Registration Statement which has not yet been declared effective, the Company
will notify the Investor to that effect, will use its best efforts to secure the
11
effectiveness of such post-effective amendment as promptly as possible and will
promptly notify the Investor pursuant to Section 6.2(b)(i) hereof when the
amendment has become effective).
(c) Subject to paragraph (d) below, in the event (i) of any
request by the SEC or any other federal or state governmental authority during
the period of effectiveness of the Registration Statement for amendments or
supplements to a Registration Statement or related Prospectus or for additional
information; (ii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; or (iv) of any event or circumstance which, upon
the advice of its counsel, necessitates the making of any changes in the
Registration Statement or Prospectus, or any document incorporated or deemed to
be incorporated therein by reference, so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the case of the
Prospectus, it will not contain any untrue statement of a material fact or any
omission to state 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, then the Company shall deliver a certificate in
writing to the Investor (the "Suspension Notice") to the effect of the foregoing
and, upon receipt of such Suspension Notice, the Investor will refrain from
selling any Shares pursuant to the Registration Statement (a "Suspension") until
the Investor's receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in any such Prospectus. In the event of any Suspension, the Company
will use its best efforts to cause the use of the Prospectus so suspended to be
resumed as soon as reasonably practicable within 20 business days after the
delivery of a Suspension Notice to the Investor. In addition to and without
limiting any other remedies (including, without limitation, at law or at equity)
available to the Investor, the Investor shall be entitled to specific
performance in the event that the Company fails to comply with the provisions of
this Section 6.2(c).
(d) Notwithstanding the foregoing paragraphs of this Section 6.2,
the Investor shall not be prohibited from selling Shares under the Registration
Statement as a result of Suspensions for more than 60 days in any twelve month
period, unless, in the good faith judgment of the Company's Board of Directors,
upon the written opinion of counsel of the Company, the sale of Shares under the
Registration Statement in reliance on this paragraph 6.2(d) would be reasonably
likely to cause a violation of the Securities Act or the Exchange Act and result
in liability to the Company.
(e) Provided that a Suspension is not then in effect, the
Investor may sell Shares under the Registration Statement, provided that it
complies with any prospectus delivery requirement then applicable to it. Upon
receipt of a request therefor, the Company has agreed to provide an adequate
number of current Prospectuses (including documents incorporated by reference
therein) to the Investor and to supply copies to any other parties requiring
such Prospectuses.
6.3 Indemnification. For the purpose of this Section 6.3:
(i) the term "Selling Stockholder" means the Investor and any
affiliate of such Investor;
(ii) the term "Registration Statement" shall include the Prospectus in
the form first filed with the SEC pursuant to Rule 424(b) of the Securities Act
or filed as part of the Registration Statement at the time of effectiveness if
no Rule 424(b) filing is required, and any exhibit, supplement or amendment
included in or relating to the Registration Statement referred to in Section
6.1; and
(iii) the term "Untrue Statement" means 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.
(a) The Company agrees to indemnify and hold harmless each
Selling Stockholder from and against any losses, claims, damages, expenses or
liabilities to which such Selling Stockholder may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages, expenses
or liabilities (or actions or proceedings in respect thereof) arise out of, or
are based upon (i) any breach of the representations or warranties of the
Company contained herein or failure to comply with the covenants and agreements
of the Company contained herein, (ii) any Untrue Statement, or (iii) any failure
by the Company to fulfill any undertaking included in the Registration Statement
as amended or supplemented from time to
12
time, and the Company will reimburse such Selling Stockholder for any reasonable
legal or other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim, 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, an Untrue Statement made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of such Selling Stockholder specifically for use in preparation of the
Registration Statement, as amended or supplemented from time to time (including,
without limitation, information set forth in the Investor Questionnaire), or the
failure of such Selling Stockholder to comply with its covenants and agreements
contained in Section 6.2 hereof respecting sale of the Shares or any statement
or omission in any Prospectus that is corrected in any subsequent Prospectus
that was delivered to the Selling Stockholder prior to the pertinent sale or
sales by the Selling Stockholder. The Company shall reimburse each Selling
Stockholder for the indemnifiable amounts provided for herein on demand as such
expenses are incurred.
(b) The Investor agrees to indemnify (severally and not jointly
with any Other Investor) 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, (i) any failure to comply with
the covenants and agreements contained in Section 6.2 hereof respecting sale of
the Shares, or (ii) any Untrue Statement 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, as amended or supplemented from time to time (including, without
limitation, information set forth in the Investor Questionnaire), and 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. The Investor shall reimburse the Company or such officer, director or
controlling person, as the case may be, for the indemnifiable amounts provided
for herein on demand as such expenses are incurred. Notwithstanding the
foregoing, the Investor's aggregate obligation to indemnify the Company and such
officers, directors and controlling persons shall be limited to the net amount
received by the Investor from the sale of the Shares.
(c) 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 6.3, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, but the omission to so notify the
indemnifying person will not relieve it from any liability which it may have to
any indemnified person under this Section 6.3 (except to the extent that such
omission materially and adversely affects the indemnifying person's ability to
defend such action) or from any liability otherwise than under this Section 6.3.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified person promptly after receiving the aforesaid
notice from such indemnified person, shall be entitled to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified person. After
notice from the indemnifying person to such indemnified person of its election
to assume the defense thereof, such indemnifying person shall not be liable to
such indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person and such indemnifying person or
any affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any indemnifying person
be liable in respect of any amounts paid in settlement of any action unless the
indemnifying person shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld or delayed. No indemnifying
person shall, without the prior written consent of the indemnified person,
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified person is or could have been a party and indemnification
could have been sought hereunder by such indemnified person, unless such
settlement includes an unconditional release of such indemnified person from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in this Section 6.3 is
unavailable to or insufficient to hold harmless an indemnified person under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying person shall contribute to the amount paid or payable by
such indemnified person as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Investor,
as well as any other Selling Shareholders under such Registration Statement on
the other in connection with the statements or omissions or other matters which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, in the case of an
Untrue Statement, whether the Untrue Statement relates to information supplied
by the Company on the one hand or an Investor or other Selling Shareholder on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such Untrue Statement. The Company and the
Investor agree that it would not be just and equitable if contribution pursuant
to this subsection (d) were determined by pro rata allocation (even if the
Investor and other
13
Selling Shareholders were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified person as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified person in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this subsection (d), the
Investor shall not be required to contribute any amount in excess of the amount
by which the net amount received by the Investor from the sale of the Shares to
which such loss relates exceeds the amount of any damages which such Investor
has otherwise been required to pay by reason of such Untrue Statement. 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. The Investor's obligations in
this subsection to contribute shall be in proportion to its Investor sale of
Shares to which such loss relates and shall not be joint with any other Selling
Shareholders.
(e) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 6.3, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 6.3
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Securities Act and the Exchange
Act. The parties are advised that federal or state public policy as interpreted
by the courts in certain jurisdictions may be contrary to certain of the
provisions of this Section 6.3, and the parties hereto hereby expressly waive
and relinquish any right or ability to assert such public policy as a defense to
a claim under this Section 6.3 and further agree not to attempt to assert any
such defense.
(f) For avoidance of confusion, in the event the Company is the
indemnifying person, each control person, director, or officer of the Company
referred to in subsection (b) of this Section 6.3 is not an indemnifying person
for purposes of subsection (c) or (d) thereof.
6.4 Termination of Conditions and Obligations. The conditions
precedent imposed by Section 4 or this Section 6 upon the transferability of the
Shares shall cease and terminate as to any particular number of the Shares when
such 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 Shares or at
such time as an opinion of counsel reasonably satisfactory to the Company shall
have been rendered to the effect that such conditions are not necessary in order
to comply with the Securities Act.
6.5 Information Available. So long as the Registration Statement is
effective covering the resale of Shares owned by the Investor, the Company will
furnish to the Investor:
(a) as soon as practicable after it is available, one copy of (i)
its Annual Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted accounting principles
by a national firm of certified public accountants), (ii) its Annual Report on
Form 10-KSB unless available on the SEC's ▇▇▇▇▇ website (▇▇▇.▇▇▇.▇▇▇), and (iii)
its Quarterly Reports on Form 10-QSB (the foregoing, in each case, excluding
exhibits) unless available on the SEC's ▇▇▇▇▇ website;
(b) upon the request of the Investor, all exhibits excluded by
the parenthetical to subparagraph (a) of this Section 6.5 as filed with the SEC
and all other information that is made available to shareholders; and
(c) 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 upon the reasonable request of the Investor, the President or
the Chief Financial Officer of the Company (or an appropriate designee thereof)
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 Shares and will otherwise cooperate with any
Investor conducting an investigation for the purpose of reducing or eliminating
such Investor's
14
exposure to liability under the Securities Act, including the reasonable
production of information at the Company's headquarters; provided, that the
Company shall not be required to disclose any confidential information to or
meet at its headquarters with any Investor until and unless the Investor shall
have entered into a confidentiality agreement in form and substance reasonably
satisfactory to the Company with the Company with respect thereto.
6.6 Legend; Restrictions on Transfer. The certificate or certificates
for the Shares (and any securities issued in respect of or exchange for the
Shares) shall be subject to a legend or legends restricting transfer under the
Securities Act and referring to restrictions on transfer herein, such legend to
be substantially as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT OR, IN THE OPINION OF COUNSEL, IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
The Company and the Investor acknowledge and agree that the Investor may, as
permitted by law, from time to time pledge pursuant to a bona fide margin
agreement or grant a security interest in some or all of the Shares and, if
required under the terms of such arrangement, Investor may, as permitted by law,
transfer pledged or secured Shares to the pledgees or secured parties. So long
as Investor is not an affiliate of the Company, such a pledge or transfer would
not be subject to approval or consent of the Company, provided that, upon the
request of the Company, a legal opinion of legal counsel to the pledgee, secured
party or pledgor shall be obtained. At the Investor's expense, so long as the
Shares are subject to the legend required by this Section 6.6, the Company will
use its best efforts to execute and deliver such reasonable documentation as a
pledgee or secured party of Shares may reasonably request in connection with a
pledge or transfer of the Shares, including such amendments or supplements to
the Registration Statement and Prospectus as may be reasonably required. The
foregoing does not affect Investor's obligations pursuant to Section 6.2(a).
The Investor expressly agrees that any sale by the Investor of Shares pursuant
to the Registration Statement shall be sold in a manner described under the
caption "Plan of Distribution" in such Registration Statement and the Investor
will deliver a copy of the Prospectus contained in the Registration Statement to
the purchaser or purchasers, directly or through the Investor's broker, in
connection with such sale, in each case in compliance with the requirements of
the Securities Act and Exchange Act applicable to such sale. The Investor
further agrees that the Shares will only be sold while the Registration
Statement is effective, unless another exemption from registration is available.
On the basis of, and subject to, compliance by the Investor with the foregoing
covenants, upon effectiveness of the Registration Statement, the Company shall
as soon as practicable (but not later than five business days after surrender of
the legended certificates to the Company's transfer agent and notice of such
surrender has been provided pursuant to Section 7(b) below) cause certificates
evidencing the Shares previously issued to be replaced with certificates which
do not bear the restrictive legends specified above in this Section 6.6. The
Investor acknowledges that the removal of the restrictive legends from
certificates representing Shares as provided in this Section 6.6 is predicated
upon the Company's reliance on the Investor's compliance with its covenants in
this Section 6.6.
6.7 Liquidated Damages. The Company and Investor agree that Investor
will suffer damages if the Company fails to fulfill its obligations pursuant to
Section 6.1 and 6.2 hereof and that it would not be possible to ascertain the
extent of such damages with precision. Accordingly, the Company hereby agrees to
pay liquidated damages ("Liquidated Damages") to Investor under the following
circumstances: (a) if the Registration Statement is not filed by the Company on
or prior to 30 days after the Closing Date (such an event, a "Filing Default");
(b) if the Registration Statement is not declared effective by the SEC on or
prior to 90 days after the Closing Date (such an event, an "Effectiveness
Default"); or (c) if the Registration Statement (after its effectiveness date)
ceases to be effective and available to Investor (other than by reason of the
Company no longer being obligated to keep the Registration Statement effective
under Section 6.1(c)) for one or more periods that exceeds in the aggregate 30
days in any 12-month period (such an event, a "Suspension Default" and together
with a Filing Default and an Effectiveness Default, a "Registration Default").
In the event of a Registration Default, the Company shall pay in cash to
Investor Liquidated Damages, for each 30-day period of a Registration Default,
an amount equal to 1% of the aggregate purchase price paid by Investor pursuant
to this Agreement thereafter, provided that Liquidation Damages in respect of a
Registration Default shall not be payable in relation to any Shares not owned by
the Investor at the time of the Registration Default or Shares that are
tradeable under Rule 144(k). The Company shall pay the Liquidated Damages as
follows: (i) in connection with a Filing Default, on the 61st day after the
Closing Date, and each 30th day thereafter until the Registration Statement is
filed with the SEC; (ii) in connection with an Effectiveness Default, on the
91st day after the Closing Date and each 30th day thereafter until the
Registration Statement is declared effective by
15
the SEC; or (iii) in connection with a Suspension Default, on the 61st day (in
the aggregate) of any Suspensions in any 12-month period, and each 30th day
thereafter until the Suspension is terminated in accordance with Section 6.2.
Notwithstanding the foregoing, all periods shall be tolled during delays
directly caused by the action or inaction of any Investor, and the Company shall
have no liability to any Investor in respect of any such delay. The Liquidated
Damages payable herein shall apply on a pro rata basis for any portion of a
30-day period of a Registration Default.
6.8 Form D. The Company agrees to file one or more Forms D and
applicable filings, if any under state securities laws with respect to the
Shares on a timely basis as required under Regulation D under the Securities Act
to claim the exemption provided by Rule 506 of Regulation D or to claim
exemption under such securities laws.
7. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage
prepaid, or by facsimile, and shall be deemed given (i) if delivered by
first-class registered or certified mail, three business days after so mailed,
(ii) if delivered by nationally recognized overnight carrier, one business day
after so mailed, and (iii) if delivered by facsimile, upon electronic
confirmation of receipt and shall be delivered as addressed as follows:
(a) if to the Company, to:
Spire Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) with a copy to:
▇▇▇▇▇▇▇▇▇ Traurig, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Investor, at its address on the signature page
hereto, or at such other address or addresses as may have
been furnished to the Company in writing.
8. Changes. This Agreement may be modified, amended or waived only pursuant
to a written instrument signed by the Company and the Investor.
9. Headings. 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.
10. Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the Commonwealth of Massachusetts, without
giving effect to the principles of conflicts of law.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior understandings or agreements
concerning the purchase and sale of the Shares and the resale registration of
the Shares.
16
14. Rule 144. The Company covenants that it will timely file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Investor holding
Shares purchased hereunder make publicly available such information as necessary
to permit sales pursuant to Rule 144 under the Securities Act), and it will take
such further action as any such Investor may reasonably request, all to the
extent required from time to time to enable such Investor to sell Shares without
registration under the Securities Act within the limitation of the exemptions
provided by (a) 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 SEC. Upon the request of the Investor, the Company will deliver to such
holder a written statement as to whether it has complied with such information
and requirements.
15. Confidential Information.
(a) The Investor represents to the Company that, at all times
during the Company's offering of the Shares, the Investor has maintained in
confidence all non-public information regarding the Company received by the
Investor from the Company or its agents, and covenants that it will continue to
maintain in confidence such information until such information (a) becomes
generally publicly available other than through a violation of this provision by
the Investor or its agents or (b) is required to be disclosed in legal
proceedings (such as by deposition, interrogatory, request for documents,
subpoena, civil investigation demand, filing with any governmental authority or
similar process), provided, however, that before making any use or disclosure in
reliance on this subparagraph (b) the Investor shall give the Company at least
fifteen (15) days prior written notice (or such shorter period as required by
law) specifying the circumstances giving rise thereto and will furnish only that
portion of the non-public information which is legally required and will
exercise its best efforts to obtain reliable assurance that confidential
treatment will be accorded any non-public information so furnished.
(b) The Company shall on the Closing Date issue a press release,
and within four business days following the Closing Date, file with the SEC a
Form 8-K, in each case, disclosing the material terms of the transactions
contemplated hereby (including at least the number of Shares sold and proceeds
therefrom). The Company shall not publicly disclose the name of Investor or any
beneficial owner of Shares held by the Investor, or include the name of Investor
or such beneficial owner in any filing with the SEC or any state and federal
regulatory agency or the Nasdaq National Market (other than the filing of the
Agreements with the SEC pursuant to the Exchange Act), without the prior written
consent of Investor, except to the extent such disclosure is required by law,
regulation or Nasdaq National Market regulations.
16. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
17. Knowledge. The term "knowledge" in this Agreement shall mean the
knowledge of the Chief Executive Officer, the Chief Financial Officer and the
Vice President - Corporate Planning of the Company after due inquiry.
17
EXHIBIT A
---------
SPIRE CORPORATION
INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
To: Spire Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
This Investor Questionnaire ("Questionnaire") must be completed by each
potential investor in connection with the offer and sale of the shares of the
common stock, par value $0.01 per share, (the "Common Stock"), of Spire
Corporation (the "Securities"). The Securities are being offered and sold by
Spire Corporation (the "Corporation") without registration under the Securities
Act of 1933, as amended (the "Act"), and the securities laws of certain states,
in reliance on the exemptions contained in Section 4(2) of the Act and on
Regulation D promulgated thereunder and in reliance on similar exemptions under
applicable state laws. The Corporation must determine that a potential investor
meets certain suitability requirements before offering or selling Securities to
such investor. The purpose of this Questionnaire is to assure the Corporation
that each investor will meet the applicable suitability requirements. The
information supplied by you will be used in determining whether you meet such
criteria, and reliance upon the private offering exemption from registration is
based in part on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a solicitation
of an offer to buy any security. Your answers will be kept strictly
confidential. However, by signing this Questionnaire you will be authorizing the
Corporation to provide a completed copy of this Questionnaire to such parties as
the Corporation deems appropriate in order to ensure that the offer and sale of
the Securities will not result in a violation of the Act or the securities laws
of any state and that you otherwise satisfy the suitability standards applicable
to purchasers of the Securities. All potential investors must answer all
applicable questions and complete, date and sign this Questionnaire. Please
print or type your responses and attach additional sheets of paper if necessary
to complete your answers to any item.
IMPORTANT: FAILURE TO COMPLETELY AND ACCURATELY ANSWER ALL OF THESE QUESTIONS
WILL DELAY THE ISSUANCE OR REGISTRATION OF YOUR SHARES OR MAKE SUCH
ISSUANCE OR REGISTRATION IMPOSSIBLE.
A. BACKGROUND INFORMATION
Name [EXACT NAME AS IT WILL APPEAR ON THE STOCK CERTIFICATE; IF MULTIPLE
CERTIFICATES ARE TO BE PROVIDED, PLEASE SPECIFY]:
------------------------------
Name:
--------------------------------------------------------------------------
Business Address:
--------------------------------------------------------------
(Number and Street)
(City) (State) (Zip Code)
Telephone Number: (___)
-------------------------------------------------------
Residence Address:
-------------------------------------------------------------
(Number and Street)
(City) (State) (Zip Code)
Telephone Number: (___)
-------------------------------------------------------
If an individual:
Age: Citizenship: Where registered to vote:
----- ------------ -----------
18
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity:
-------------------------------------------
State of formation: Date of formation:
---------------------- ------------
Social Security or Taxpayer Identification No.
---------------------------------
Send all correspondence to (check one): __ Residence Address __ Business Address
Email address of contact person: ___________________________
Current ownership of securities of the Corporation:
__________ shares of Common Stock
options/warrants to purchase __________ shares of Common Stock.
Please identify the number of shares that you or your organization will
beneficially own immediately after Closing, identifying the Shares purchased by
you or your organization pursuant to the Stock Purchase Agreement and those
shares and/or warrants purchased by you or your organization through other
transactions:
Shares purchased pursuant to the Stock Purchase Agreement: _____________
Shares purchased by you or your organization through other
transactions: _______________
Options/warrants purchased by you or your organization through other
transactions: _______________
Total: ________________
BENEFICIAL OWNERSHIP INFORMATION: PLEASE DESCRIBE THE BENEFICIAL OWNERSHIP OF
THE SHARES OWNED BY YOU OR YOUR ORGANIZATION. IF THE INVESTOR IS A PARTNERSHIP,
LIMITED LIABILITY COMPANY OR SIMILAR ENTITY, PLEASE IDENTIFY THE INDIVIDUAL OR
INDIVIDUALS WITH ULTIMATE VOTING AND DISPOSITIVE POWER OVER SUCH SHARES,
TYPICALLY THE INVESTMENT MANAGER OR INVESTMENT ADVISOR WITH PRIMARY
RESPONSIBILITY FOR THIS INVESTMENT. THIS INFORMATION IS AVAILABLE FROM YOUR
COMPLIANCE OFFICER OR GENERAL COUNSEL. THE COMPANY WILL NOT BE ABLE TO REGISTER
YOUR SHARES WITHOUT THIS IMPORTANT INFORMATION.
EXCEPTION: THIS INFORMATION NEED NOT BE PROVIDED IF THE INVESTOR IS A PUBLICLY
TRADED COMPANY.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Have you or your organization had any position, office or other material
relationship within the past three years with the Company or its affiliates?
[ ] Yes [ ] No
If yes, please indicate the nature of any such relationships below:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Are you (i) an NASD Member (see definition), (ii) a Controlling (see definition)
shareholder of an NASD Member, (iii) a Person Associated with a Member of the
NASD (see definition), or (iv) an Underwriter or a Related Person (see
definition) with respect to
19
the proposed offering; or (b) do you own any shares or other securities of any
NASD Member not purchased in the open market; or (c) have you made any
outstanding subordinated loans to any NASD Member?
[ ] Yes [ ] No
If "yes," please describe below
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NASD Member. The term "NASD MEMBER" means either any broker or dealer admitted
to membership in the National Association of Securities Dealers, Inc. ("NASD").
(NASD Manual, By-laws Article I, Definitions) Control. The term "CONTROL"
(including the terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") means the possession, direct or indirect, of the power, either
individually or with others, to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities, by
contract, or otherwise. (Rule 405 under the Securities Act of 1933, as amended)
Person Associated with a member of the NASD. The term "PERSON ASSOCIATED WITH A
MEMBER OF THE NASD" means every sole proprietor, partner, officer, director,
branch manager or executive representative of any NASD Member, or any natural
person occupying a similar status or performing similar functions, or any
natural person engaged in the investment banking or securities business who is
directly or indirectly controlling or controlled by a NASD Member, whether or
not such person is registered or exempt from registration with the NASD pursuant
to its bylaws. (NASD Manual, By-laws Article I, Definitions) Underwriter or a
Related Person. The term "UNDERWRITER OR A RELATED PERSON" means, with respect
to a proposed offering, underwriters, underwriters' counsel, financial
consultants and advisors, finders, members of the selling or distribution group,
and any and all other persons associated with or related to any of such persons.
(NASD Interpretation) B. STATUS AS ACCREDITED INVESTOR
THE UNDERSIGNED IS AN "ACCREDITED INVESTOR" AS SUCH TERM IS DEFINED IN
REGULATION D UNDER THE ACT, AS AT THE TIME OF THE SALE OF THE SECURITIES THE
UNDERSIGNED FALLS WITHIN ONE OR MORE OF THE FOLLOWING CATEGORIES (PLEASE INITIAL
ONE OR MORE, AS APPLICABLE):(1)
(1) a bank as defined in Section 3(a)(2) of the Act, or 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; a broker or
dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934;
an insurance company as defined in Section 2(13) of the Act; an investment
company registered under the Investment Corporation Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; a Small Business
Investment Corporation licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; an
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets
----------------------
(1) As used in this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In computing net worth for the purpose of
subsection (4), the principal residence of the investor must be valued at cost,
including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
income, the investor should add to the investor's adjusted gross income any
amounts attributable to tax exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for depiction,
contributions to an ▇▇▇ or ▇▇▇▇▇ retirement plan, alimony payments, and any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income.
20
in excess of $5,000,000 or, if a self-directed plan, with the investment
decisions made solely by persons that are accredited investors;
(2) a private business development company as defined in Section
202(a)(22) of the Investment Adviser Act of 1940;
(3) an organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of acquiring
the Securities offered, with total assets in excess of $5,000,000;
(4) a natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of such person's purchase of the
Securities exceeds $1,000,000;
(5) a natural person who had an individual income in excess of
$200,000 in each of the two most recent years 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 the current year;
(6) a trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D; and
(7) an entity in which all of the equity owners are accredited
investors (as defined above).
C. REPRESENTATIONS
The undersigned hereby represents and warrants to the Corporation as
follows:
1. Any purchase of the Securities would be solely for the account of the
undersigned and not for the account of any other person or with a view to
any resale, fractionalization, division, or distribution thereof.
2. The information contained herein is complete and accurate and may be relied
upon by the Corporation, and the undersigned will notify the Corporation
immediately of any material change in any of such information occurring
prior to the closing, if any, with respect to the purchase of Securities by
the undersigned or any co-purchaser.
3. There are no suits, pending litigation, or claims against the undersigned
that could materially affect the net worth of the undersigned as reported
in this Questionnaire.
4. The undersigned acknowledges that there may occasionally be times when the
Corporation determines that it must suspend the use of the Prospectus
forming a part of the Registration Statement (as such terms are defined in
the Stock Purchase Agreement to which this Questionnaire is attached), as
set forth in Section 6.2(c) of the Stock Purchase Agreement. The
undersigned is aware that, in such event, the Securities will not be
subject to ready liquidation, and that any Securities purchased by the
undersigned would have to be held during such suspension. The overall
commitment of the undersigned to investments which are not readily
marketable is not excessive in view of the undersigned's net worth and
financial circumstances, and any purchase of the Securities will not cause
such commitment to become excessive. The undersigned is able to bear the
economic risk of an investment in the Securities.
5. The undersigned has carefully considered the potential risks relating to
the Corporation and a purchase of the Securities, and fully understands
that the Securities are speculative investments which involve a high degree
of risk of loss of the undersigned's entire investment. Among others, the
undersigned has carefully considered each of the risks identified in the
Exchange Act Documents.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire
this ____ day of April, 2006, and declares under oath that it is truthful
and correct.
21
Print Name
By:
----------------------------------
Signature
Title:
-------------------------------
(required for any purchaser that
is a corporation, partnership,
trust or other entity)
22
EXHIBIT B
---------
PLAN OF DISTRIBUTION
The shares of our common stock covered by the registration statement, of
which this prospectus is a part, are being offered on behalf of the selling
stockholders, which as used herein includes donees, pledgees, transferees or
other successors-in-interest disposing of shares of our common stock or
interests therein received after the date of this prospectus from a selling
stockholder as a gift, pledge, partnership distribution or other transfer. We
will not receive any proceeds from the sale of shares of our common stock
covered by the registration statement, of which this prospectus is a part, or
interests therein. The shares of our common stock or interests therein may be
sold from time to time by the selling stockholders directly to one or more
purchasers (including pledgees) or through brokers, dealers or underwriters who
may act solely as agents or who may acquire shares as principals, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices, or at fixed prices, which may be changed.
The shares of our common stock may be sold by one or more of, or a combination
of, the following methods, to the extent permitted by applicable law:
o a block trade in which the selling stockholder's broker or dealer will
attempt to sell the shares as agent, but may position and resell all
or a portion of the block as a principal to facilitate the
transaction;
o a broker or dealer may purchase the common stock as a principal and
then resell the common stock for its own account pursuant to this
prospectus;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o privately negotiated transactions;
o by pledge to secure debts or other obligations;
o put or call transactions;
o to cover hedging transactions;
o underwritten offerings; or
o any other legally available means.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. If the plan of
distribution involves an arrangement with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, the supplement will disclose:
o the name of the selling stockholder and of the participating
broker-dealer(s);
o the number of shares involved;
o the price at which the shares were sold;
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus; and
o other facts material to the transaction.
In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
these transactions, broker-dealers may engage in short sales of the shares in
the course of hedging the
23
positions they assume with the selling stockholders. The selling stockholders
may also sell shares short and redeliver the shares to close out such short
positions. The selling stockholders may enter into options or other transactions
with broker-dealers that require the delivery to the broker-dealer of the
shares. The broker-dealer may then resell or otherwise transfer such shares
pursuant to this prospectus. The selling stockholders also may loan or pledge
the shares to a broker-dealer. The broker-dealer may sell the shares so loaned,
or upon default, the broker-dealer may sell the pledged shares pursuant to this
prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholder.
Broker-dealers or agents may also receive compensation from the purchasers of
the shares for whom they act as agents or to whom they sell as principal, or
both. Compensation as to a particular broker-dealer might be in excess of
customary commissions and will be in amounts to be negotiated in connection with
the sale. Broker-dealers or agents and any other participating broker-dealers or
the selling stockholders may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act of 1933 (the "Securities Act") in
connection with sales of the shares. Accordingly, any such commission, discount
or concession received by them and any profit on the resale of the shares
purchased by them may be deemed to be underwriting discounts or concessions
under the Securities Act.
The selling stockholders and any broker-dealers, agents or underwriters
that participate with the selling stockholders in the distribution of the issued
and outstanding shares of common stock may be deemed to be "underwriters" within
the meaning of the Securities Act, in which event any commissions received by
these broker-dealers, agents or underwriters and any profits realized by the
selling stockholders on the resales of the securities may be deemed to be
underwriting commissions or discounts under the Securities Act. If the selling
stockholders are deemed to be underwriters, the selling stockholders may be
subject to certain statutory and regulatory liabilities, including liabilities
imposed pursuant to Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Securities Exchange Act of 1934. In addition, because the selling
stockholders may be deemed an "underwriter" within the meaning of Section 2(11)
of the Securities Act, the selling stockholders may be subject to the prospectus
delivery requirements of the Securities Act.
Any shares covered by the registration statement, of which this prospectus
is a part, that qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than pursuant to this prospectus. The shares
will be sold only through registered or licensed brokers or dealers if required
under applicable state securities laws. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
We will bear all costs, expenses and fees in connection with the
registration of the shares, including registration and filing fees, printing and
duplication expenses, administrative expenses, legal fees and accounting fees.
If the shares are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts, underwriting
commissions and agent commissions. The selling stockholders may agree to
indemnify any broker-dealer or agent that participates in transactions involving
sales of the shares against certain liabilities, including liabilities arising
under the Securities Act. We have agreed to indemnify the selling stockholders
against specified liabilities, including specified liabilities under the
Securities Act, and such selling stockholders agreed to indemnify us against
certain liabilities, including liabilities under the Securities Act. The selling
stockholders may sell all, some or none of the shares offered by this prospectus
or interests therein.
24
EXHIBIT C
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AMERICAN SKANDIA TRUST
CLOSING PROCEDURES
STEP 1
Prior to the closing of the investment transaction and delivery of funds by
American Skandia Trust, the Company shall issue certificates r/n/o HARE & CO.
for such number of shares of stock or other securities being purchased by
American Skandia Trust and FAX a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at the fax number set
forth below.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
FEDERATED ▇▇▇▇▇▇▇▇ FUND
(PH) 212.922.2999
(FAX) ▇▇▇.▇▇▇.▇▇▇▇
STEP 2
Send the original certificate via overnight mail to:
STEP 3
Upon Bank of New York's receipt of the original stock certificate, they
will notify the Treasury contact at Federated Investors of their possession of
the certificate.
STEP 4
Upon receiving the approval from ▇▇▇▇ ▇▇▇▇▇ LLP, the investment funds will
be wired to the Company. A copy of the wire confirmation tracking number will be
forwarded to the Company.
25
EXHIBIT D
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Form of Opinion of Company Counsel
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1. The Company is a corporation organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and has all
requisite corporate power and authority to carry on its business and to own,
lease and operate its properties and assets as described in the Company's
Exchange Act Documents.
2. The authorized capital stock of the Company on the date hereof consists
of 20,000,000 shares of Common Stock.
3. The Company has the requisite corporate power and authority to execute,
deliver and perform its obligations under the Agreements. The Agreements have
been duly authorized and validly executed and delivered by the Company and
constitute legal, valid and binding agreements of the Company enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The Shares, when issued, sold and delivered
against payment in full as provided in the Agreements, will be validly issued,
fully paid and nonassessable.
4. The execution, delivery and performance of the Agreements by the Company
and the consummation by the Company of the transactions contemplated thereby,
including, without limitation, the issuance of the Shares under the Agreements,
does not and will not (i) result in a violation of the Company's Restated
Articles of Organization, as amended, or By-Laws; (ii) conflict with, or
constitute a material default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or cause the creation of any lien,
charge or encumbrance upon the properties or assets of the Company pursuant to,
any material agreement, indenture or instrument listed on Schedule A hereto; or
(iii) result in a violation of any U.S. federal law, rule or regulation
applicable to the Company or the Massachusetts Business Corporation Act, except
in the cases of clauses (ii) and (iii) for such violations as would not,
individually or in the aggregate, have a Material Adverse Effect.
5. The issuance of the Shares in accordance with the Agreements will be
exempt from registration under the Securities Act of 1933, as amended.