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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1997
COMMISSION FILE NUMBER 0-15520
INDUSTRIAL IMAGING CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 05-0396504
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(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
847 ROGERS STREET, LOWELL, MASSACHUSETTS 01852
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(Address of principal executive offices) (Zip code)
(978) 937-5400
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
TITLE OF CLASS
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Common Stock, $.01 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the issuer
was required to file such reports), and (2) has been subject to such filing
requirements for the past 60 days.
Yes No X .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
The issuer's revenue for the fiscal year ending March 31, 1997 was
$1,823,576.
The aggregate market value of the voting stock held by non-affiliates of
the Issuer, based upon the average of the bid and ask prices of the Common Stock
as reported by the OTC Bulletin Board on January 21, 1998 was approximately
$11,570,000 for the Common Stock. As of January 21, 1998, 10,890,201 shares of
Common Stock, $.01 par value per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None
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PART I
ITEM 1. BUSINESS
This report contains forward-looking statements regarding anticipated
increases in revenues, marketing of products and proposed products and other
matters. These statements, in addition to statements made in conjunction with
the words "anticipate", "expect", "believe", "seek", "estimate", and similar
expressions are forward-looking statements that involve a number of risks and
uncertainties. The following is a list of factors, among others, that would
cause actual results to differ materially from the forward-looking statements:
business conditions and growth in certain market segments and in the general
economy, an increase in competition, increased or continued market acceptance of
the Company's products and proposed products, and other risks and uncertainties
indicated from time to time in the Company's filings with the Securities and
Exchange Commission.
GENERAL
Industrial Imaging Corporation designs, manufactures and markets
automated optical, vision and industrial imaging systems for inspection and
identification of defects in printed circuit boards ("PCB") and distributes
Laser Plotters and Helios(TM) Film for creation of PCB artwork and phototools.
Members of the Company's management were pioneers in the field of automated
optical inspection of PCBs. These individuals developed the product line while
working at Itek Corporation ("Itek") now a part of Hughes Corporation, through
close cooperation between Itek and Digital Equipment Corporation ("DEC"). The
prototype and initial production models developed by Itek and DEC were later
completed and marketed by AOI Systems, Inc., which sold its assets and product
base to the Company's subsidiary, Triple I Corporation ("Triple I").
Virtually all electronic equipment use PCBs, which contain conductors
that interconnect electronic components. As such, PCBs are essential parts to
consumer electronic and automotive products, telecommunications and computer
components, industrial and medical equipment and military and aerospace
applications. However, PCBs are susceptible to conductor defects, such as
electrical shorts, open circuits and insufficient or excessive conductor widths,
which interfere with the interconnections between electronic components attached
to the finished boards. Moreover, the trend is towards the placement of more
complex miniaturized components in greater surface density and having decreased
conducting line widths. To avoid and cure defects, PCB manufacturers have sought
the use of automated optical inspection and remote sensing to satisfy industry
demands for the precise quality of finished PCBs and assemblies. The Company has
already developed an installed base of customers in the United States, Europe
and Asia, which include some of the largest PCB manufacturers in Sweden, France,
Germany and Japan.
Since 1994, the Company has accomplished a number of major strategic
goals, including the following:
*.........INTRODUCTION OF A NEW GENERATION OF INSPECTION SYSTEMS. In May
1996, the Company commenced production of its new AOI-2500 Series
of modular
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advanced automated inspection systems. Management believes that
this new generation of products accurately detects defects in PCB
production at speeds greater than conventional optical inspection
systems with a detection capability that permits inspection of
fine lines and difficult geometric patterns. Management believes
that the unique modular design of the AOI-2500 Series offers
customers optimum flexibility and ease of upgrading their
systems. Because the mechanical portions of each model in the
series are identical, a customer can purchase the lowest priced
model and upgrade at an appropriate time based on its needs and
inspection requirements.
*.........IMPRIMUS INVESTORS LLC EQUITY INVESTMENT. In November 1997,
Imprimus Investors LLC ("Imprimus"), and the Company executed a
Securities Purchase Agreement whereby Imprimus invested $3
million into the Company in exchange for three million shares of
Common Stock at $1.00 per share. In accordance with the
agreement, the Company also issued warrants to purchase one
million shares of Common Stock at $2.00 per share through
November 12, 2002, and issued warrants to purchase one million
shares of Common Stock at $1.00 per share through November 12,
2002. (SEE "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS").
*.........POLAROID LICENSE AND EQUITY INVESTMENT. In November 1994, the
Company entered into the Polaroid Agreement. The Polaroid
Agreement gives both companies royalty free access to each
others' patents, technology and know-how for use in their
respective fields of business. In addition, the Polaroid
Agreement seeks to promote the development, marketing and sales
of an photo plotter system in the field of PCB manufacturing
consisting of equipment designed by the Company and other
Polaroid partners using Polaroid's new Helios(TM) Film. As part
of the Polaroid Agreement, the Company has been granted the
exclusive right to market Polaroid's Helios(TM) Film and laser
plotters within the PCB industry, subject to the Company
satisfying certain ongoing sales and performance milestones. The
Company is aggressively seeking sales opportunities for the
Helios(TM) Film and the laser plotters that utilize the
Helios(TM) Film. The Company estimates the current annual market
for inspection systems for the PCB manufacturing industry alone
to be in the range of $100 to $150 million. This market consists
of approximately 2,500 PCB manufacturers domestically and
internationally. The Company and Polaroid are currently
negotiating to resolve a dispute regarding contract milestones
and exclusivity. (See "Polaroid Agreement" and "LEGAL
PROCEEDINGS").
*.........AWARD OF ARPA CONTRACT. In August 1994, the Company received a
grant of up to $462,000 from the United States Department of
Energy Advanced Research Project Agency ("ARPA"), as part of
ARPA's technology reinvestment project (the "ARPA Contract"). The
Company is obligated to share in the costs of the project for
approximately an additional $462,000. Through March 31, 1997, the
Company had incurred $320,000 in project expenses and had
received $320,000 in matching funds from ARPA. Under the terms of
the ARPA Contract, the Company is developing new automated
optical inspection techniques to enable
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inspection systems to measure the position and movement speed of
the product being inspected. The results of this project and the
development of the new automated optical inspection system, if
successful, may significantly improve the performance of
inspection systems for PCBs and other manufactured components.
The Company's strategy is to continue to enhance its existing systems
and products, to develop new systems for further automation of the PCB field and
to develop its existing technologies and capabilities for additional
applications. The Company believes it has leveraged its management expertise and
technology to expand industrial imaging technologies into a number of
electronics markets where high quality industrial inspection and reproduction
capabilities are required. The Company markets its products under the name AOI
International.
HISTORY
The Company's asset and product base was acquired in 1992 from AOI
Systems, Inc. by the Company's subsidiary, Triple I. Certain members of the
Company's management were pioneers in the automated optical inspection field.
These individuals developed the Company's product line while working at Itek,
which is now part of Hughes Corporation. The product line was developed through
close cooperation between Itek and DEC. DEC was a knowledgeable user who funded
part of the development and acted as an advisor, customer and beta site for the
prototype and initial production models, which were later marketed by AOI
Systems.
In February 1997, the Company acquired Triple I, a privately held
Delaware corporation, in a transaction whereby the shareholders of Triple I
exchanged 100% of the outstanding Triple I Common Stock, $.01 par value, for
approximately 90% ownership of the Company (the "Exchange"). As part of the
Exchange, all Triple I outstanding warrants and options were transferred to the
Company.
Prior to the Exchange, the Company was a publicly held Rhode Island
corporation known as Orbis, Inc. Orbis initially designed and manufactured
software for use by health maintenance organizations, but had not had revenues
from operations since 1992. Orbis's Common Stock, $.01 par value per share, was
listed on NASDAQ after its initial public offering in 1987, but was delisted in
October 1992 when operating revenues diminished. Since that date, the stock has
been quoted on the OTC Bulletin Board, where limited trading of the shares has
occurred. Immediately prior to the Triple I Transaction, Orbis reincorporated
under the laws of Delaware, completed an 18:1 reverse split of its Common Stock
and changed its name to Industrial Imaging Corporation. Unless otherwise
indicated, all per share data relating to the number of shares of Common Stock
outstanding has been adjusted to give effect to such reverse stock split.
THE PCB INDUSTRY
PCBs are the basic interconnecting platforms for the electronic
components that comprise most electronic equipment. PCBs contain the electronic
circuitry required to interconnect those components which, when operating
together, perform a specified function. An assembly of one or more
interconnected PCBs working together form an essential part of most electronic
products. The design of conductor patterns is developed with the help of a
Computer-Aided Design ("CAD") package, and later optimized for manufacturing at
the PCB manufacturing plant
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by using a Computer-Aided Manufacturing ("CAM") system.
PCBs are manufactured through a series of complex steps. Generally, a
board is made of one or more layers of fiberglass (or other material with
insulating qualities) laminated with a conducting material. Holes are then
drilled into the board in a specific pattern and the inner part of each hole is
plated with conducting metal. The board or layer is then coated with a thin
layer of light-sensitive material ("photoresist"). A transparent film containing
the desired circuitry pattern corresponding to the drilled pattern on the board
("production phototool"), which has been either copied from an artwork master or
produced directly by a photoplotter connected to a CAD/CAM data base, is then
laid on the photoresist. The board or layer is then exposed to light, which
transfers the conductor pattern from the production phototool to the
photoresist. Subsequent development of the photoresist and a chemical etching
process leave the desired conductor pattern printed on the board after excess
conducting material is removed. PCBs may be single-sided or double-sided, and
more complex PCBs may be multilayered.
PCBs are susceptible to conductor defects, such as electrical shorts,
open circuits and insufficient or off-measure conductor widths, which may impair
or interfere with the electrical interconnections between electronic components
mounted on the finished boards. The trend towards more complex and compact
electronic products that utilize large-scale integrated circuits requires the
production of high-density PCBs with finer conductor lines, reduced spacing
between those lines and multiple layers. For such complex multilayer boards,
production yield drops dramatically as the number of likely defects increases,
unless in-process inspection is used. Inspection is required throughout PCB
production to identify such defects, which are then repaired, if possible, or
discarded. Early detection of these defects increases the possibility of
successful repair and reduces the number and cost of unusable boards.
PRODUCTS
The Company's current products are automated vision systems sold to the
PCB manufacturing industry. The Company's products were developed by the current
Company management team while employed by Itek (now a part of Hughes
Corporation) in the 1980's through close collaboration with DEC. The Company's
systems are quality control and yield enhancement tools used for automated
optical inspection of PCBs to determine the presence of flaws such as conductor
breaks, short circuits, missing features and conductor width violations at
various stages of the PCB manufacturing process. In addition, the Company's
systems can generate statistical reports of defects in real-time to assist in
the control of the PCB manufacturing process, which can result in substantially
improved yields. These improved yields, in conjunction with the advantages in
quality control offered by the Company's systems, provide a major economic
incentive for companies in the PCB industry to purchase and use the Company's
products. The Company estimates that the market size of the PCB industry
approached $30 billion in 1997.
The Company presently offers 'in-line" systems capable of inspecting
almost any product at speeds ranging from three square feet per minute to over
sixty square feet per minute, with current prices that range from $185,000 for
the Company's AOI-190A model to approximately $600,000 for some of the models
from the Company's new AOI-2500 Series.
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PCB AUTOMATED OPTICAL INSPECTION SYSTEMS
Each of the Company's AOI systems consists of an optomechanical/scanning
and a processing unit. The optomechanical unit includes a moving platform that
carries the PCB or artwork being inspected, and a scanning unit which acquires
an image of the board, digitizes it and transmits it to the electronic
processing unit. The electronic unit processes and enhances the image to allow
efficient analysis and interpretation of the acquired images. The proprietary
structure of the electronic logic unit enables real time parallel processing, a
requirement for performing each defect detection at very high speeds.
The Company's AOI systems incorporate both the "design rule check" and
"reference comparison" methods of inspection. The design rule check method
involves inspecting the circuitry of PCBs pursuant to a pre-programmed algorithm
and detecting defects by applying prescribed rules to find flaws in the pattern
of the circuitry. The reference comparison method involves an intelligent
comparison of the subject PCB to a perfect "golden" board or to circuit pattern
representations stored in a CAD or CAM database.
The Company's systems can easily be integrated into the production
processes of most PCB manufacturing facilities and can be employed at several
stages during PCB manufacturing to inspect the artwork design master, the
production phototools, the photoresist before the etching, the etched inner
layers before lamination and the outer layers before attachment of electronic
components. The systems are designed for operational simplicity and require no
special skills or experience to operate. The design of each system permits easy
maintenance and service. As a result, the Company believes that the use of its
AOI systems significantly reduces the overall production costs of PCBs.
AOI-190 SERIES
The AOI-190 Series is the Company's basic optical inspection system.
This system provides manufacturers of PCBs with a means to inspect PCB products
for quality and analyze the information to achieve higher yields at an
economical price. The AOI-190 inspection system provides a number of special
features that clearly distinguish it from its competitors, including but not
limited to the following:
* The in-line conveyorized transport provides automated operation
when linked to commercially available handling equipment.
Communication is maintained between the host computer and the
multi-functional evaluation/repair station (described below).
Part identification is achieved through a bar code labeling
device so that critical information moves throughout the system
with reduced possibility of error, and tracking of parts and
information throughout the manufacturing facility can be
automated;
* The linking of the AOI-190 inspector to the evaluation/repair
station enables the customer to set-up or repair products while
inspection is being conducted on the inspector with no
interruptions or waiting periods. This feature significantly
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enhances throughput. In addition, management believes the AOI-190
is the only system on the market in which throughput can be
increased and features added by software and hardware upgrades
that are not expensive, and which do not require major design
changes, such as those offered by the competition. This is due to
the open architecture and modularity inherent in the Company's
AOI-190; and
* AOI-190 can be interfaced to most-available CAM systems to permit
direct "downloading" of set-up data.
The Company presently manufactures and markets three models of the
AOI-190 that currently range in price from $150,000 to $230,000, although
various options can reduce or increase the cost of a specific system.
AOI-2500 SERIES
The AOI-2500 Series is a new generation of automatic optical inspectors
designed to maximize productivity in demanding PCB operations. Prototypes were
field tested in 1995, and full production of the series began in May 1996. The
series includes four models, the AOI-1900, the AOI-1900X, the AOI-2500, and the
AOI-3200 depending on the width of the PCB's being inspected. Each model has the
option of a standard or a high speed version. These models currently range in
price from $320,000 to $600,000.
As with the AOI-190, the AOI-2500 has a mechanical transport which
enables it to be placed in-line in the manufacturing process. The Company's
systems continue to be the only ones with this capability. The AOI-2500 Series
inspectors have the same overall functionality as the AOI-190 Series inspectors,
but with a significantly enhanced level of both performance and modularity. In
particular:
* The AOI-2500 systems have an improved illumination system and
higher resolution cameras, which permit it to inspect product
with smaller features than can be inspected with the AOI-190, and
it can find much smaller defects.
* The AOI-2500 systems have a wider range of speeds than the
AOI-190, with much higher speeds available for inspecting the
more standard PCB designs.
* The AOI-2500 systems have enhanced image processing electronics
and more general purpose processing power, which enable it to
detect a wider range of defects.
Due to the modularity of the design and the fact that the mechanical
portions of the machines in this series are identical, the customer can choose
the lowest price model that can meet its requirements without risking
obsolescence as either the width of their product changes, or the factory
throughput increases. This is a further extension of the Company's philosophy of
obsolescence-proof machines through the ability to continuously upgrade.
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AOI ER 35-36 EVALUATION AND REPAIR (E/R STATION)
The AOI E/R Station enables the user to view, classify and repair
defects as well as create inspection set-up files without interrupting ongoing
inspection at the inspection station. Ergonomically designed, the user may
position the E/R Station's display monitors for optimum viewing comfort and
easily access the defective PCB for repair. Convenient bar code labeling
facilitates defect evaluation and eliminates inspection data confusion.
Automated camera positioning precisely displays a magnified, crisp image of
artwork and PCBs and of each reported defect on a high-resolution color monitor,
significantly reducing operator fatigue.
A computer generated reticle offers very precise measurement of defects.
Defects requiring repair or additional evaluation may be marked or optionally
photographed with a Polaroid freeze-frame camera for further review. Video
recording of complete inspection data is also available. The inspection station
defect report for the PCB under evaluation is simultaneously displayed on a
separate screen. This report includes defect number, location and type of
defect. To maximize throughput, defects are automatically sorted by user defined
levels of severity. Additionally, defects may be further classified for yield
analysis and process control using the included SPC software package, which can
produce numerous reports. The Company's Evaluation/Repair Station and series of
inspection stations combine to provide a complete automated optical inspection
system for real-time process control and yield improvement.
ARTWORK/PHOTOTOOL IMAGING SYSTEMS
In PCB manufacturing, the design of the conductor patterns are developed
with the help of a CAD software package, and later optimized for manufacturing
at the PCB manufacturing plant by using a CAM system. The CAM system then drives
a laser plotter that first generates the pattern on silver halide film. This
silver halide film often becomes the photo tool (mask) to expose the photoresist
that defines the conductor pattern on the PCB surface.
The image manipulation that is done in the CAM system ensures that the
final design meets all of the design rule criteria and makes optimum use of the
base material. The digital image generated in the CAM system contains all of the
information which is required both for generating the artwork and also for
establishing the criteria for inspection of the artwork and completed PCB
product. Because of this, it is customary now to treat the optical inspector,
the CAM and the laser plotter as an integrated "front-end" system.
POLAROID AGREEMENT
On November 28, 1994, the Company and Polaroid entered into the Polaroid
Agreement. Under the Polaroid Agreement, Polaroid and the Company are granted
royalty free access to each others' patents, technology and know-how for use in
their respective fields of business for a period of eight (8) years. The Company
is also granted the exclusive right to market and sell Helios(TM) Film to the
PCB market. To maintain this exclusive right, the Company is required to achieve
certain performance milestones, which include sales requirements for the
Helios(TM) Film and for the sale of laser plotters. On January 7, 1997, the
Company and Polaroid agreed that Polaroid will not act with respect to the
quarterly performance milestones under the Polaroid Agreement until May 31,
1997, the date by which the annual performance milestones had to have
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been met. No such performance milestones apply to Triple I's agreement with
Polaroid granting it access to Polaroid's other technology. The consequence of
failing to achieve the annual performance milestones by May 31, 1997 would that
the Company's exclusive right to sell and market the Helios(TM) Film to the PCB
market could at Polaroid's option be converted to a nonexclusive right. The
Company and Polaroid are involved in a dispute relating to whether the company
did in fact meet its milestones under the Polaroid Agreement. The Company is
currently negotiating to resolve the dispute and believes the ultimate
resolution of this dispute will not have a material adverse effect on the
results of operations.(SEE "LEGAL PROCEEDINGS").
The strategic partnership between the Company and Polaroid provides the
Company with significant complementary technological, marketing and product
advantages, including, but not limited to, the following:
* Polaroid's Helios(TM) Film technology has been market tested and
is presently in production; and
* Polaroid's recording technology and devices have been developed
through research and cooperation by Polaroid and other partners
(and which will be enhanced by the Company through the
state-of-the-art advanced optical concepts being developed by the
Company under ARPA sponsorship).
These advantages, combined with the strengths and features of the
Company's AOI systems, enable the Company to provide its customers with the
system and the Helios(TM) Film necessary for production of defect free artwork
and phototools.
POLAROID's HELIOS(TM) FILM AND PLOTTERS
Polaroid has developed the Helios(TM) Film, a dry process film with many
superior performance characteristics compared to the imaging films currently
being used in the manufacture of PCBs. The Polaroid product is expected to be
less prone to deterioration with use than silver halide and diazo. This permits
repeated use of the Helios(TM) Film as both master and phototool, eliminating
the current practice that often requires both tools. This should also eliminate
most defects introduced by the relatively poor quality of diazo. The Helios(TM)
Film also shows promise for imaging PCB designs with very small features,
performance difficult to achieve with present technology.
As the Helios(TM) Film is a dry process product, potential customers
will benefit from elimination of chemicals and their effluent, a major concern
in an industry that is closely scrutinized by environmental agencies. The dry
process film also eliminates the need for "dark room" facilities for creating
the phototools. The film will be marketed under private label. The Company will
be distributing laser plotters under a private label. The plotter for recording
on Helios Film was developed in cooperation between Polaroid and Heidelberg for
the graphic arts industry, and later modified by the Company, for use in the PCB
industry. Both products were introduced in the quarter ending December 31, 1996.
PRODUCTS UNDER DEVELOPMENT
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The Company intends to further develop and enhance its own proprietary
technology to better serve the industrial imaging and inspection markets and
exploit the synergy between its own technology in the field of image
acquisition, processing and reconstruction and the technology of Polaroid. The
Company currently has an engineering and product development staff of five
individuals, and a group of customer support engineers, who assist the Company's
customers in integrating the Company's products into the customer's work
environment. This engineering work provides the Company an opportunity to keep
abreast of new market opportunities for the Company's technologies. During the
fiscal year ended March 31, 1997, and the six-month period ended March 31, 1996,
the Company's expenditures on research and development amounted to $440,207 and
$427,778 respectively.
The Company's management believes that the major technological
innovations that the Company has access to, through its previous work and its
strategic partnership with Polaroid, will permit the Company to make major
improvements in its PCB product line as well as create opportunities for
expansion into other market areas, such as optical velocity tracking, optical Z
dimension (three dimensional) gauging and advanced imaging devices. Management
believes that the addition of depth and color will permit broadening the
applicability of this product to types of PCBs that presently cannot be
inspected and significantly increase the performance of the equipment in regard
to defect detection, and improve the ability to discriminate between real
defects and oxidation or discoloration flaws which are often flagged as defects,
but judged not to be of consequence. As a result, the Company believes it will
be able to increase the features of its present models and simplify its
software. Although no assurance can be given, the Company also intends to expand
into other inspection and industrial imaging markets, such as flat-panel
displays and other products requiring precise high-resolution optical
measurements to monitor quality control within the manufacturing process.
The Company's success in developing and selling new and enhanced
products depends upon a variety of factors, including accurate prediction of
future customer requirements, introduction of new products on schedule,
cost-effective manufacturing, product performance in the field, and raising
additional funds. The Company's new product decisions and development
commitments must anticipate the equipment needed to satisfy the requirements for
inspection processes one or more years in advance of sales. Any failure to
accurately predict customer requirements and to develop new generations of
products to meet those requirements would have a substantial material adverse
effect on the Company's business, financial condition and results of operations.
New product transitions could adversely affect sales of existing systems, and
product introductions could contribute to quarterly fluctuations in operating
results as orders for new products commence and orders for existing products or
enhancements of existing products fluctuate. The costs to the Company of
complying with environmental laws are minimal have not had a material effect on
the results of operations.
CUSTOMERS
The Company's customers include manufacturers of PCBs both domestically
and internationally. The Company sells to a limited number of customers as the
Company's market is dominated by a few major companies. As a result, any delay
in the recognition of revenue could have a material adverse effect on the
Company's results of operations in any given
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accounting period. For the year ended March 31, 1997 ("Fiscal 1997"), the
Company had sales to four customers that accounted for 28%, 25%, 15% and 12% of
revenues. For the six months ending March 31, 1996 ("Six Months 1996"), the
Company had sales to two customers that accounted for 39% and 31% of revenues.
For the year ended September 30, 1995 ("Fiscal 1995"), the Company had sales to
four customers that accounted for 18%, 17% 16% and 15% of total revenues. For
the year ended September 30, 1994 ("Fiscal 1994"), the Company had four
customers that accounted for 26%, 22%, 15% and 12% of revenues. The failure to
replace these sales with sales to other customers in succeeding periods would
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company expects that sales to relatively few
customers will continue to account for a high percentage of the Company's
revenues in any accounting period in the foreseeable future and therefore,
quarterly and annual results could vary greatly. A reduction in orders from any
such customer or the cancellation of any significant order could have a material
adverse effect on the Company's business, financial condition and results of
operations. None of the Company's customers has entered into a long-term
agreement requiring it to purchase the Company's products.
During Fiscal 1997, Six Months 1996 and Fiscal 1995, the Company's
foreign revenues accounted for 80%, 94% and 91%, respectively, of the Company's
revenues. These sales were made primarily in Europe. The high percentage of
foreign revenues is due to the existence of an established network of
distributors in Europe and Asia, along with a market representative in Europe
for the Company's products, and the limited resources available to the Company
to market its products in the United States. Although the Company generally
requires advance deposits or letters of credit from customers, the Company
sometimes extends credit to its foreign customers and collection may be more
difficult in the event of a default. To help expand into the United States
market, the Company hired a new Vice President of Marketing in January 1997.
Management expects that revenues from foreign customers will continue to
account for a significant portion of future revenues. The Company has been and
will continue to be subject to risks associated with foreign customers in
general, including political instability, embargoes, shipping delays, custom
duties, import and export quotas and other trade restrictions, all of which
could have a material adverse effect on the Company's operations, or could have
a significant adverse impact on the Company's ability to deliver products on a
competitive and timely basis. Recent events in the Asian markets, specifically
the recent devaluation of some Asian currencies, the current banking crises, and
a general economic downturn, could have an adverse effect on the Company's
ability to effectively market its products in this market. Although the Company
generally sells products to large, well-funded corporations or requests letters
of credit from less creditworthy customers, the Company could experience
difficulties in obtaining or enforcing judgments with respect to receivables
outside the United States. The Company's foreign sales have been and are
expected to be made in U.S. dollars. A strengthening in the dollar relative to
the currencies of those countries where the Company does business would increase
the prices of its products as stated in those currencies, and may adversely
affect the Company's sales in those countries. To the extent the Company lowers
its prices to reflect a change in exchange rates, the profitability of the
Company's business in those markets may be adversely affected. In the past,
there have been significant fluctuations in the exchange rates between the
dollar and the currencies in those countries in which the Company does business.
SALES AND MARKETING STRATEGY
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The Company's strategy is to emphasize the broad range of competitive
performance and cost advantages of its products and the ability to upgrade
systems because of their modular designs. The AOI-190 Series is expected to be
marketed to the customers that to date have not purchased any vendor's system,
and to those accounts replacing outdated medium performance equipment. The
AOI-2500 Series product is expected to be promoted to larger PCB manufacturers
that require high productivity and higher technology requirements. Key elements
of the Company's marketing strategy include:
* emphasizing product performance advantages such as in-line
conveyorized material handling, ease-of-use, high throughput,
high reliability, flexible, affordable service policies and
upgrade paths and a more cost-effective solution;
* expanding the Company's direct sales force in the United States,
particularly on the west coast; and
* increasing international sales through additional support of the
Company's existing representative and distributor network,
including joint seminars, sales calls and product showings and
the addition of distributors in other parts of the world.
The Company currently employs two full-time, in-house, employees
dedicated to sales and marketing. In addition, the Company relies upon the
efforts of eight distributors and/or sales representatives located in Europe and
Asia. The Company promotes its products through institutional advertising,
distribution of product literature and promotional videotapes throughout the
industries its products service, and exhibits and product presentations at
industry and trade shows, such as Productronica, The Institute for
Interconnecting and Packaging Electronic Circuits (IPC) and the Japan Printed
Circuit Association (JPCA).
Pending the outcome of current negotiations, the Company intends to
introduce new products that are developed from its strategic alliance with
Polaroid both domestically and in Japan through beta site testing (installed at
a customer's site) and field trials. Subsequently, it intends to launch an
advertising campaign designed to inform potential customers of the economic and
performance benefits offered by these products, emphasizing both Polaroid's
corporate image for creative technology and the Company's reputation for a high
level of service and quality assurance. These products are expected to then be
marketed throughout the United States, Europe and Asia through the Company's
sales and marketing staff and its international network of agents and
distributors.
The Company also plans to utilize the benefits of the Polaroid Agreement
to address the customer's preference to purchase an integrated "front-end"
system, which includes an AOI system, a CAM and a laser plotter. Customers
prefer to buy these components from one supplier to ensure the compatibility of
interfaces and the efficiency of the most sophisticated aspect in PCB
manufacturing. Through the Polaroid Agreement, the Company gains access to
critical advanced technology for its base business, inspection systems, as well
as an exclusive license to sell Polaroid's proprietary Helios(TM) Film in the
PCB artwork and phototool markets. Using these benefits, the Company is working
to increase volume sales per customer and to establish new
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<PAGE> 13
OEM agreements and strategic alliances with suppliers of CAM and laser plotter
products.
COMPETITION
The optical inspection systems industry is intensely competitive. The
Company competes with many companies in the United States and Europe, several of
which have substantially greater financial, technical, sales and managerial
resources than the Company and may be able to adapt more quickly to new or
emerging technologies and changes in customer requirements or to devote greater
resources to the promotion and sale of their products than the Company. The
Company believes that in the future the principal competitive factors will be
product functionality and performance (e.g., speed, ease of use, accuracy and
reliability), the development of improved products through research and
development, customer support services, customer relations and price. No
assurance can be given that the Company will compete successfully with existing
or potential future competitors.
The Company believes that its products enjoy significant technical
advantages over those of its competition for the following reasons:
* RELIABILITY AND LIMITED DOWN-TIME. The Company believes that its
products enjoy significantly higher reliability and less down-time than
those of its competition. These benefits can be attributed to the more
advanced in-line design of the Company's products, which employ few moving
parts, and are therefore less prone to equipment failures, and the
availability of direct diagnostic links, via modem, whereby the Company's
in-house service technicians can diagnose and troubleshoot the Company's
products in the field directly from the Company's facilities.
* VERSATILE PRODUCTS THAT CAN BE EASILY UPGRADED. The Company's products
are designed to be significantly less prone to obsolescence than those of
its competition. Unlike those of the Company's competition, the Company's
products are designed to be more highly dependent upon software with a very
modular hardware design that may be easily upgraded to add more features.
* INCREASED ACCURACY AND HIGHER THROUGHPUT. The Company believes that
its products, as a result of its unique in-line system with multiple
stationary cameras, achieve a higher throughput at most levels of
resolution, resulting in enhanced productivity and overall performance.
* COMPLETE INTEGRATION OF DESIGN, INSPECTION AND REPAIR SYSTEMS. The
Company's products together allow for the integrated implementation of a
complete automated inspection system for real-time process control and
yield improvement through inspection, evaluation and repair. When combined
with the laser plotters and advanced Helios(TM) Film currently being tested
by the Company, the Company's product line will have the added advantage of
offering a complete integrated solution to the "front needs" of PCB
manufacturers.
The Company believes that the quality of its products, its ability to
quickly and adequately respond to the needs of its customers, its early
recognition of trends in the
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<PAGE> 14
development of AOI related products, and its increasing product and brand name
recognition are important competitive factors in achieving market penetration
for its products. In addition, the Company believes that it will be able to
distinguish itself from its competition as a result of the Company's broad
selection of inspection products, proprietary technology and access to other
advanced technology and products by virtue of the Company's relationship with
Polaroid as well as funded development through ARPA and similar programs.
BACKLOG
The Company's backlog for products and services was approximately $1.5
million at March 31, 1997 (of which $390,000 represented plotters), compared to
$675,000 at March 31, 1996. At December 31, 1997, the Company's backlog for
products and services was approximately $1.3 million (of which approximately
$500,000 represented plotters). The Company defines backlog to include only
those systems, accessories, upgrades and service agreements with respect to
which firm purchase orders have been received. Cancellations of product purchase
orders are sometimes subject to penalties, depending upon the time of
cancellation. Although a significant indicator of business levels, backlog is
not necessarily representative of future sales. The Company believes its backlog
at December 31, 1997 will be recognized in revenue in the next six to twelve
months.
MANUFACTURING
The Company's manufacturing work force consists of a small group of
individuals who are each trained to cover several areas of production. Emphasis
is on performing final assembly, test and integration while maintaining critical
skills in each aspect of production: machining, PCB assembly and rework, cable
fabrication, electric-mechanical subassembly, optical alignment and electrical
test. The Company believes that production lead time, product quality and
customer response are key elements to its success.
The Company's systems have a number of highly complex components.
Although the Company manufactures some of the subassemblies used in its systems,
most are purchased from unaffiliated subcontractors, typically to the Company's
specifications. None of the Company's suppliers is obligated to provide the
Company with any specific quantity of components or subassemblies over any
specific period. Certain of the components and subassemblies included in the
Company's products are obtained from a limited group of suppliers. In addition,
because the Company believes that subsystem vendors have increased their
manufacturing expertise, the Company expects to continue to obtain virtually all
of its components and subassemblies from third parties in order to devote its
resources toward systems design, software development and systems integration,
its primary areas of competence.
From March 1996 through December 1996, the Company utilized an agreement
("Purchasing Agreement") with Centennial Technologies, Inc. ("Centennial"),
under which Centennial would purchase raw materials and certain components on
its own account and sell them to the Company at the same price. During this
time, the Company was able to obtain adequate and timely delivery of critical
subassemblies and components through the Purchasing Agreement, although it has
experienced occasional delays. The Company did not make any purchases through
Centennial after December 31, 1996, which significantly limited the
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<PAGE> 15
Company's ability to purchase such materials. It experienced more significant
delays after December 1996 because of payment terms that required cash in
advance or cash on delivery. The Company was never a customer of Centennial nor
was Centennial ever a customer of the Company. (SEE "MANAGEMEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS")
In November 1997, the Company received a major equity investment from
Imprimus and is using some of these funds to purchase materials to restabilize
its supply of raw materials. In addition, the Company is presently negotiating
with its major suppliers to reestablish credit terms for the purchase of
materials, components and subassemblies. No assurance can be given that the
Company will be successful in its negotiations or that it will obtain favorable
financing terms, if at all. Further, because the manufacture of these components
and subassemblies is very complex and requires long lead times, and although
alternative sources are available, such sources may not be readily available. As
a result, no assurance can be given that delays or shortages caused by suppliers
will not occur in the future. Any disruption of the Company's supply of critical
components and subassemblies could prevent the Company from meeting its
manufacturing schedules, which could damage relationships with customers and
would have a material adverse effect on the Company's business, financial
condition and results of operations.
Due to recent increases in demand, the average time between order and
shipment of the Company's systems has increased over the last fiscal year. The
Company's ability to increase its manufacturing capacity in response to an
increase in demand is limited given the complexity of the manufacturing process,
the lengthy lead times necessary to obtain critical components and the need for
highly skilled personnel. The failure of the Company to keep pace with customer
demand would lead to further extensions of delivery times, which could deter
customers from placing additional orders, and could adversely affect product
quality. There can be no assurance that the Company will be successful in
increasing or be able to fund increasing its manufacturing capacity.
Rapid growth of the Company's business, of which no assurance can be
given, may significantly strain the Company's management, operational and
technical resources. If the Company is successful in obtaining rapid market
penetration of its products, the Company will be required to deliver increasing
volumes of highly complex products and components to its customers on a timely
basis at a reasonable cost to the Company. No assurance can be given that the
Company's efforts to expand its manufacturing and quality assurance activities
will be successful or that the Company will be able to satisfy increased
commercial scale production on a timely and cost-effective basis. In addition to
the levels of support currently provided, including the ability to modify its
technology and products to meet end-user requirements, the Company will also be
required to continue to improve its operational, management and financial
systems and controls. Failure to effectively manage such growth could have a
material adverse effect on the business of the Company.
GOVERNMENTAL REGULATIONS AND INDUSTRY STANDARDS
The Company's products and worldwide operations are subject to numerous
governmental regulations designed to protect the health and safety of operators
of manufacturing
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<PAGE> 16
equipment. In particular, the EU has recently issued regulations relating to
electromagnetic fields, electrical power and human exposure to laser radiation.
The Company believes that its products currently comply with all applicable
material governmental health and safety regulations, including those of the EU,
and with any voluntary industry standards currently in effect.
PATENTS AND PROPRIETARY INFORMATION
The Company holds five United States patents expiring between August
2003 and October 2005. The Company also holds two patents issued in Israel and
England expiring in June 2004.
The Company's products require technical know-how to engineer and
manufacture and are based, in part, upon proprietary technology. To the extent
proprietary technology is involved, the Company relies on patents, copyrighted
software and trade secrets that it seeks to protect, in part, through
confidentiality agreements. There can be no assurance that such agreements will
not be breached, that the Company will have adequate remedies for any breach, or
that the Company's trade secrets will not otherwise become known to, or
independently developed by, existing or potential competitors of the Company.
The Company may be involved from time to time in litigation to determine the
enforceability, scope and validity of its rights. In addition, no assurance can
be given that the Company's products will not infringe any patents of others.
Litigation could result in substantial cost to the Company and diversion of
effort by the Company's management and technical personnel.
EMPLOYEES
As of December 31, 1997, the Company had 25 full-time employees and one
part-time employee along with six independent contractors, of which eight were
in sales, marketing and service, six were in engineering and product
development, six were in administration and finance, and 12 were in
manufacturing.
None of the Company's employees are represented by a labor union. The
Company considers its relationships with its employees to be satisfactory. The
Company's financial performance will depend significantly upon the continued
contributions of its officers and key management, technical, sales and support
personnel, many of whom would be difficult to replace. In addition, the Company
believes that certain of its former employees currently provide services or
technical support to the Company's customers or competitors. No assurance can be
given that the Company will be successful in attracting or retaining qualified
personnel.
ITEM 2. PROPERTIES
The Company maintains its corporate headquarters, executive offices and
principal research, developing, engineering and manufacturing facilities in
approximately 14,000 square feet in Lowell, Massachusetts pursuant to a renewed
lease as of December 1, 1995, which expires on November 30, 1998. The Company's
manufacturing operations in this facility occupy 6,000 square feet of space. The
Company estimates that the current space is sufficient for shipment of up to
three systems per month. The minimum annual rental for these premises is
approximately
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<PAGE> 17
$119,000. The Company is responsible for payment of real estate taxes, which are
approximately $13,000 per year, and maintenance. The Company believes that these
facilities are adequate to meet its current needs. If additional space is
required, the Company believes that adequate facilities are available at
competitive prices.
ITEM 3. LEGAL PROCEEDINGS
The Company is currently involved in litigation with Polaroid. On August
5, 1997 (after the May 31, 1997 end of the contract year), Polaroid filed a
complaint in Middlesex County (Massachusetts) Superior Court, in which Polaroid
sought to declare the Company in default of its milestone obligations and to
convert the arrangement to a non-exclusive relationship. The Company disputed
this action and, when Polaroid refused to negotiate, a Superior Court judge
entered a temporary restraining order prohibiting Polaroid from converting the
agreement to a non-exclusive relationship. Polaroid subsequently sought to have
the order overturned and the judge again found in favor of the Company,
extending the temporary restraining order. This order was subsequently converted
to a preliminary injunction. Polaroid has brought counterclaims, alleging breach
of conflict and breach of the duty of good faith and fair dealing. The Company
disputed those counterclaims and served a Motion to Dismiss causing Polaroid to
amend its counterclaims. The Company has answered the amended counterclaims and
disputes their validity. Currently, the Company is in negotiations with Polaroid
to resolve the dispute. The outcome cannot be predicted, although the Company
believes the ultimate resolution of this disupte will not have a material
adverse effect on the Company's results of operations. The Company is not
involved in any other litigation of a material nature.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters during the fourth quarter of the
fiscal year covered by this report to a vote of security holders through the
solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's stock is traded on the OTC Bulletin Board. Until January
1997, the Company traded with the symbol ORBS. As part of its acquisition of
Triple I Corporation, the Company completed an 18:1 reverse stock split and
changed its trading symbol to INIM.
As of January 21, 1998, the Company had 255 holders of record of its
Common Stock. Management believes that there are approximately 500 beneficial
owners of the Company's Common Stock.
For the fiscal quarters reported below, the following table sets forth
the range of high and low bid quotations for the Common Stock for the relevant
periods as reported by the OTC Bulletin Board. Such quotations represent
inter-dealer quotations without adjustment for retail
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<PAGE> 18
markups, markdowns or commissions and may not represent actual transactions. The
quotations have been adjusted to reflect the 18:1 reverse stock split. The
quotations represent interdealer quotations, do not include retail mark-ups or
commissions and do not necessarily represent actual transactions.
<TABLE>
<CAPTION>
HIGH BID LOW BID
-------- -------
COMMON STOCK
Fiscal Year 1996
<S> <C> <C>
First Quarter................................... $ 5 1/16 $ 1 11/16
Second Quarter ................................. $ 5 1/16 $ 1 11/16
Third Quarter .................................. $ 5 1/16 $ 1 11/16
Fourth Quarter ................................. $ 5 1/16 $ 1 11/16
Fiscal Year 1997
First Quarter ................................... $ 2 13/16 $ 2 13/16
Second Quarter................................... $ 2 13/16 $ 2 13/16
Third Quarter.................................... $ 2 13/16 $ 2 1/4
Fourth Quarter................................... $ 4 1/4 $ 2 3/4
Fiscal Year 1998
First Quarter.................................... $ 3 1/4 $ 1 1/8
Second Quarter................................... $ 1 3/8 $ 1 1/8
Third Quarter.................................... $ 1 1/8 $ 7/8
Fourth Quarter (Through January 21, 1998)........ $ 1 $ 7/8
</TABLE>
DIVIDENDS
The Company has not paid any cash dividends on its Common Stock since
inception and does not anticipate the payment of cash dividends on its Common
Stock in the foreseeable future. It is expected that any earnings which may be
generated from operations will be used to finance the growth of the Company.
ITEM 6. SELECTED FINANCIAL DATA
The following summary financial information of the Company is qualified
in its entirety by, and should be read in conjunction with, the Company's
audited Financial Statements and notes thereto. This data represents the
financial information of Triple I for the year ended March 31, 1997 and includes
Orbis Inc., for the period from the effective date of the exchange of February
1, 1997, through March 31, 1997. Prior to the Exchange, Triple I had a September
30 year end. As part of the Exchange, Triple I adopted a March 31 year end,
which is evidenced by the six month period from September 30, 1995 to March 31,
1996, which includes financial information for Triple I only. Financial
information for the years ended September 30, 1995, 1994 and 1993 includes only
Triple I.
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<PAGE> 19
STATEMENTS OF OPERATIONS DATA:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fiscal Years Ended
September 30, Six Months Year
------------------------------------------ Ended Ended
1993 1994 1995 March 31,1996 March 31, 1997
---- ---- ---- ------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues $ 353,520 $ 1,310,148 $ 1,225,023 $ 580,366 $ 1,823,876
Cost of revenues 710,511 1,197,065 1,142,582 551,449 1,609,987
----------- ----------- ----------- ----------- -----------
Gross profit (loss) (356,991) 113,083 82,441 28,917 213,589
Operating expenses:
Research and development 448,875 468,075 505,147 427,778 440,207
Sales and marketing 275,323 370,859 218,704 125,370 361,392
Merger expenses 179,787
General and administrative 668,625 680,824 814,094 541,285 857,948
----------- ----------- ----------- ----------- -----------
Total operating expenses 1,392,823 1,519,758 1,537,945 1,094,433 1,839,334
----------- ----------- ----------- ----------- -----------
Loss from operations (1,749,814) (1,406,675) (1,455,504) (1,065,516) (1,625,745)
Other income (expense) (80,291) (99,888) (119,622) (94,305) (268,809)
----------- ----------- ----------- ----------- -----------
Net loss $(1,830,105) $(1,506,563) $(1,575,126) $(1,159,821) $(1,894,554)
Net loss per common share $(3.99) $(1.45) $(1.05) $(.55) $(.44)
Weighted average number of
common shares outstanding 458,405 1,039,025 1,507,099 2,105,823 4,257,727
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA:
Fiscal Years Ended
September 30, Six Months Year
---------------------------------------- Ended Ended
1993 1994 1995 March 31, 1996 March 31, 1997
---- ---- ---- -------------- --------------
<S> <C> <C> <C> <C> <C>
Total current assets $ 678,705 $ 744,803 $ 860,682 $ 807,559 $ 2,487,258
Working capital deficit 349,083 777,346 1,748,891 1,566,430 1,691,927
Total assets 1,231,906 1,167,675 1,143,002 1,019,444 2,594,279
Total liabilities 1,192,788 2,117,120 3,267,573 2,373,989 4,629,185
Accumulated deficit (1,830,105) (3,336,668) (4,911,794) (6,071,615) (7,861,380)
Stockholders' equity (deficit) 39,118 (949,445) (2,124,571) (1,354,545) (2,034,906)
</TABLE>
- --------------------------------------------------------------------------------
ITEM 7. MANAGEMENT's DISCUSSION AND ANALYSIS OF FINANCIAL
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<PAGE> 20
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Industrial Imaging Corporation designs, manufactures and markets
automated optical, vision and industrial imaging systems for inspection and
identification of defects in PCBs and laser plotters for creation of PCB artwork
and phototools. Members of the Company's management were pioneers in the field
of automated optical inspection of PCBs. These individuals developed the
Company's product line while working at Itek, now a part of Hughes Corporation,
through close cooperation between Itek and DEC. The prototype and initial
production models developed by Itek and DEC were later completed and marketed by
AOI Systems, Inc., a predecessor to the Company's subsidiary, Triple I.
The Company acquired Triple I as part of the Exchange, whereby the
shareholders of Triple I received 90% ownership of the Company in exchange for
100% of Triple I's outstanding Common Stock (the "Exchange"). The Exchange was
effective on February 1, 1997. Prior to the Exchange, Orbis had not had revenues
from operations since 1992, and therefore, the impact of Orbis on the financial
statements of Industrial Imaging is immaterial. The information provided below
represents the financial information of Triple I for the year ended March 31,
1997 and includes Orbis for the period from the effective date of the Exchange
of February 1, 1997 through March 31, 1997. Prior to the Exchange, Triple I had
a September 30 year end. As part of the Exchange, Triple I adopted a March 31
year end, which is evidenced by the six-month period from September 30, 1995 to
March 31, 1996, which includes financial information for Triple I only.
Financial information for the years ended September 30, 1995, and 1994 includes
only Triple I.
The following discussion and analysis should be read in conjunction with
the Financial Statements of the Company (including the Notes thereto) commencing
on page F-1 of this report.
RESULTS OF OPERATIONS
YEAR ENDED MARCH 31, 1997 ("FISCAL 1997") COMPARED TO THE SIX MONTHS ENDED
MARCH 31, 1996 ("SIX MONTHS 1996")
As explained above, the periods being compared are the year ended March
31, 1997 as compared to the Six Months 1996. Thus, the comparison shows wide
variation in absolute dollar amounts as well as the relationships due to volume
differences. Revenues for the year ended March 31, 1997 were $1,823,576 as
compared to $580,366 for the Six Months 1996, an increase of $1,243,210. Product
revenues were $1,525,625 in Fiscal 1997 as compared to $419,782 in the Six
Months 1996. This increase was due primarily to an increase in the number of
units sold, which amounted to approximately $863,000 in revenues, and an
increase in prices, which amounted to approximately $380,000 in revenues.
Service revenues were $297,951 in Fiscal 1997 as compared to $160,584 in the Six
Months 1996. This increase was due in part to increased levels of business
during the one year period as opposed to the six month period. Due to the level
of technical and marketing expertise necessary to support its existing and new
customers, the Company must attract highly qualified and well-trained personnel.
There can be only a limited number of persons with the requisite skills to serve
in these positions and it may become increasingly
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<PAGE> 21
difficult for the Company to hire such personnel. The Company's planned
expansion may also significantly strain the Company's management, manufacturing,
financial and other resources. There can be no assurance that the Company's
systems, procedures, controls and existing space will be adequate to support the
Company's operations. Failure to manage the Company's growth properly could have
a material adverse effect on the Company's future financial condition, revenues
and operating results.
Cost of revenues for Fiscal 1997 was $1,609,987 as compared to $551,449
for the Six Months 1996, an increase of $1,058,538, resulting from an increase
in sales volume. Gross profit increased to $213,589 or approximately 11.7% in
Fiscal 1997 as compared to $28,917 or approximately 4.9% in the Six Months 1996,
due to fixed manufacturing costs being a lesser percentage of revenue for 1997
as compared to 1996.
Operating expenses are less sensitive to volume changes at this level of
sales than cost of sales. Operating expenses for Fiscal 1997 were $1,839,334 as
compared to $1,094,433 in 1996, an increase of $744,901. Research and
development expenses were $440,207 in Fiscal 1997 as compared to $427,778 in the
Six Months 1996, which appears to remain the same for the Six Months 1996 and
Fiscal 1997 primarily due to significant expenditures in research and
development expenses relating to the development of the Company's AOI-2500
Series in 1996 and the recording of approximately $120,000 of cost
reimbursements from the Department of Energy relating to the contract with the
Company to research optics as an offset to and decrease of research and
development expense in Fiscal 1997. Sales and marketing expenses were $361,392
in Fiscal 1997 as compared to $125,370 in the Six Months 1996. The more than
doubling of these expenses was primarily due to the hiring of a Vice President
of Sales and Marketing, the hiring of a marketing administrator, the Company's
attendence in trade shows and increased travel costs for sales and marketing in
Fiscal 1997. General and administrative expenses were $857,948 in Fiscal 1997 as
compared to $541,285 in the Six Months 1996. The Six Months 1996 expense
included a $200,000 one time fee paid to Centennial for the Centennial
Agreement. In addition, 1997 expenses included Orbis expenses for the the period
February 1, 1997, to March 31, 1997, compensation expense relating to stock
options, merger expenses of $179,787,and increased legal, audit and travel
costs.
Interest expenses were $89,257 in Fiscal 1997 as compared to $94,305 in
the Six Months 1996. The less than doubling of interest was due to the reduction
in debt, primarily related to the conversion of $1,270,637 of debt to equity in
February 1996, partially offset by the 1997 bridge financing. Other expense was
$179,552 in Fiscal 1997 and primarily consisted of an expense recorded for the
market value of shares granted in conjunction with the 1997 bridge financing.
The net loss increased to $1,894,554 in Fiscal 1997 as compared to
$1,159,821 in the Six Months 1996. This increase is primarily due to the
aforementioned increase in sales, an increase in gross margins which was more
than offset by the increase in operating expenses as well as other expenses
explained above.
SIX MONTHS ENDED MARCH 31, 1996 ("SIX MONTHS 1996") AND SIX MONTHS ENDED
MARCH 31, 1995 UNAUDITED ("INTERIM 1995")
Revenues for Six Months 1996 were $580,366 as compared to $584,828 for
Interim 1995. Product revenues were $419,782 for Six Months 1996 as compared to
$474,600 for
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<PAGE> 22
Interim 1995. This decrease was due to fewer systems being sold during the Six
Months 1996 period. Service revenues were $160,584 in Six Months 1996 as
compared to $110,228 in Interim 1995, due to an increase in customer service
provided by the Company.
Cost of revenues was $551,449 for Six Months 1996 as compared to
$559,133 for Interim 1995. Gross margin increased to $28,917 or approximately 5%
for Six Months 1996 from $25,695 or approximately 4% for Interim 1995.
Operating expenses were $1,094,433 for Six Months 1996 as compared to
$805,988 in Interim 1995, an increase of $288,445. Research and development
expenses were $427,778 in Six Months 1996 as compared to $279,266 in Interim
1995, primarily due to increased research and development expenses associated
with the development of the Company's AOI-2500 Series. Sales and marketing
expenses were $125,370 in Six Months 1996 as compared to $106,584 in Interim
1995, resulting from an increase in expenditures for trade shows and
advertising. General and administrative expenses were $541,285 in Six Months
1996 as compared to $420,138 in Interim 1995, primarily due to a one-time
non-refundable fee of $200,000 paid by the Company to Centennial pursuant to the
terms of the Purchasing Agreement.
Interest expense increased to $94,305 in Six Months 1996 from $58,748 in
Interim 1995 as a result of increased borrowings and increased use of factoring
of accounts receivable.
The net loss increased to $1,159,821 in Six Months 1996 as compared to
$841,412 in Interim 1995. This change is primarily due to the aforementioned
increase in operating expenses as well as an increase in interest expense from
borrowings.
YEAR ENDED SEPTEMBER 30, 1995 ("FISCAL 1995") COMPARED TO THE YEAR ENDED
SEPTEMBER 30, 1994 ("FISCAL 1994")
Revenues were $1,225,023 in Fiscal 1995 as compared to $1,310,148 in
Fiscal 1994, a decrease of 7%. Product revenues were $986,660 in Fiscal 1995 as
compared to $936,783 in Fiscal 1994. This increase was due to a price increase
of $136,000 partially offset by decreases of units shipped of $86,000. Service
revenues were $238,363 in Fiscal 1995 as compared to $373,365 in Fiscal 1994 as
a result of a decrease in contract services provided to customers.
Cost of revenues was $1,142,582 or 93% of revenues for Fiscal 1995 as
compared to $1,197,065 or 91% of revenues for Fiscal 1994. Gross margin was
$82,441 or 7% in Fiscal 1995 as compared to $113,083 or 9% in Fiscal 1994. Since
fixed overhead costs accounted for a significant portion of the Company's cost
of sales, if and when revenues increase, gross margins are expected to improve
as fixed costs become a decreasing percentage of revenues.
Operating expenses for Fiscal 1995 were $1,537,945 as compared to
$1,519,758 for Fiscal 1994. Research and development expenses increased to
$505,147 in Fiscal 1995 from $468,075 in Fiscal 1994. Sales and marketing
expenses were $218,704 in Fiscal 1995 as compared to $370,859 in Fiscal 1994.
This decrease was primarily due to a reduction in expenditures for trade shows,
advertising and travel expenses. General and administrative expenses were
$814,094 in Fiscal 1995 as compared to $680,824 in Fiscal 1994 to, primarily due
to hiring a chief financial officer and increased use of technical consultants.
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<PAGE> 23
Interest expense was $126,189 in Fiscal 1995 as compared to $83,311 in
Fiscal 1994 as a result of increased borrowings and the use of factoring of
accounts receivable.
Due to the uncertainty of realizing the tax benefits of net loss
carryforwards, no provision for income tax benefit was made for either Fiscal
1995 or Fiscal 1994.
Net loss was $1,575,126 for Fiscal 1995 as compared to $1,506,563 for
Fiscal 1994, due to the consistency of revenues, cost of sales and operating
expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company has incurred operating losses since inception that have
continued through December 31, 1997. In addition, the financial statements of
the Company for Fiscal 1994, Fiscal 1995, Six Months 1996, and Fiscal 1997 were
prepared on the assumption that the Company will continue as a going concern and
do not include any adjustments that would result if the Company would cease as a
going concern. The report of the independent accountants contain an explanatory
paragraph as to the Company's ability to continue as a going concern. Among the
factors cited by the auditors as raising substantial doubt as to the Company's
ability to continue as a going concern is that the Company has suffered
recurring losses from operations, has a net working capital deficiency and has
an accumulated deficit of $7,966,169 as of March 31, 1997. The auditors note
that the Company's capital requirements may change depending upon numerous
factors, including the demand for the Company's product. Management believes
that the investment by Imprimus of $3 million in November 1997 will provide the
additional capital funding that the Company needs to aggressively pursue market
penetration. In view of the Company's current financial condition, the Company
plans to continue to aggressively manage its working capital and expenses while
pursuing product sales opportunities as well as strategic or other business
relationships. (See Note B to the Financial Statements)
The Company's operations to date have been funded by equity investments,
borrowing from banks, investors and stockholders, factoring of accounts
receivable, and to a limited extent, cash flow from operations. In addition, the
Company raised $3 million of new equity in November, 1997. At March 31, 1997,
the Company had cash of $62,103, and a working capital deficit of $1,691,927.
During 1997, Six Months 1996, Fiscal 1995 and Fiscal 1994 cash used in operating
activities was $1,376,031, $662,535, $775,226 and $1,169,231 respectively.
Capital expenditures were $23,603, $0, $0 and $14,996 for 1997, Six Months 1996,
Fiscal 1995 and Fiscal 1994, respectively. The Company has no outstanding
material commitments for capital expenditures. During 1997, the Company raised
(i) $816,496 from private equity sales to affiliates and partially from the 1996
Private Placement and (ii) $635,230 (net) from the issuance of debt. During Six
Months 1996, the Company raised $559,210, net, from sales of Common Stock during
the 1996 Private Placement and $107,118 from the net issuance of debt. For
Fiscal 1995, cash provided by financing activities was $781,444, which was
comprised of $400,000 from Common Stock sales and $381,444 from issuances of
debt. Net cash provided by financing activities was $1,134,612 for Fiscal 1994,
consisting of proceeds from sales of Common Stock of $518,000 and from net
issuances of debt of $616,612. The net increases in cash for Fiscal 1994, Fiscal
1995, Six Months 1996 and 1997 were $0, $6,218, $3,793 and $52,092,
respectively.
The Company derives most of its annual revenues from a relatively small
number of sales of products, systems and upgrades, with product prices ranging
from $185,000 to $600,000 per
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<PAGE> 24
system. As a result, accounts receivable is expected to fluctuate based on the
number of systems sold in each period and the timing of the individual sales
within each period. Moreover, any delay in the recognition of revenue for single
products or a delay in shipment to customers, systems or upgrades would have a
material adverse effect on the Company's results of operations for a given
accounting period. In addition, some of the Company's net sales have been
realized near the end of a quarter. Accordingly, a delay in a customer's
acceptance or in a shipment scheduled to occur near the end of a particular
quarter could materially adversely affect the Company's results of operations
for that quarter. The accounts receivable balance increased from $92,586 at
March 31, 1996 to $493,778 at March 31, 1997, due to a sale where the balance
was collected in Fiscal 1998.
Fluctuations in inventory will be caused by changes in production
levels, timing of materials inflows, amount of sales and the timing of shipments
to customers. Inventory was $1,877,979 and $682,886 as of March 31, 1997 and
March 31, 1996, respectively. The increase in inventory of $1,195,093 or 175%
was primarily caused by an increase in raw materials to facilitate anticipated
production increases and an increase in work in process. Finished goods also
increase slightly during the period. Both the increases in raw materials and
work in process were intended to support increased production to fill
anticipated increases in cutomer demand and system sales. In addition, the
Company has increased inventory balances to support increased production levels
in anticipation of increased sales shipments. The increases in inventory
balances in 1997 were for the most part, financed through the Purchasing
Agreement.
When the Company acquired the assets and product base of AOI Systems,
Inc., the Company became responsible for $130,000 of indebtedness to certain
creditors of AOI Systems, Inc. This indebtedness incurs interest at 8.0% per
annum and became due and payable on January 30, 1995. The Company renegotiated
the note in July 1994 to require interest only payments at a rate of 8.0%, due
monthly. The Company recently paid $10,000 towards interest due and is currently
negotiating an extension of the due date. As several installments have not been
paid for a period of thirty days past their due dates, the noteholder, at his
option, may declare the note due and payable upon demand.
In December 1992, the Company received $50,000 from a stockholder in
return for a subordinated promissory note bearing an interest rate of 8.4% per
annum, due on December 31, 1996. The note provides that the Company is in
default if the amount due is not received within 90 days of the maturity date.
Upon an event of default, the noteholder may, upon written notice to the
Company, declare the note immediately due and payable. As of January 29, 1998,
the note has not been repaid. The Company has not received any demand notices
and plans to continue paying the quarterly interest payments as they become due.
(SEE "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS")
From August 1993 through June 1995, various stockholders of the Company,
including Dr. Harry Hsuan Yeh, Mr. Joseph Teves, the Massachusetts Technology
Development Corporation (the "MTDC") and the Massachusetts Community Development
Finance Corporation (the "CDFC"), loaned the Company an aggregate of
approximately $1,200,000 to help fund operations. These loans were made pursuant
to various promissory notes with various due dates through August 22, 1999.
These notes provide for interest at per annum rates ranging from 8.4% to 10%. In
February 1996, these noteholders agreed to convert the principal and interest
due on the notes into 1,270,637 shares of the Company's Common Stock, on the
basis of
24
<PAGE> 25
one share of Common Stock for every one dollar of debt converted. Dr. Yeh and
Mr. Teves did not convert all of their outstanding debt and each received a
promissory note for $100,000 bearing an interest rates of 10% and 8.4% per
annum, respectively, for the amounts due to them from the Company. The maturity
date for the notes to Dr. Yeh and Mr. Teves was October 23, 1996. The notes
provide that the Company is in default if the amount due is not paid within 90
days of the maturity date. Upon an event of default, the noteholder may, upon
written notice to the Company, declare the note immediately due and payable. The
Company has not received any demand notices from the noteholders. Dr. Yeh also
forgave a $100,000 loan to the Company in return for a warrant to purchase
150,000 shares of Common Stock, exercisable until February 6, 1999 at $1.00 per
share which was recorded as paid in capital on the balance sheet.
In November 1995, the Company completed a 1995 Bridge Financing ("1995
Bridge Financing") as part of the 1996 Private Placement, whereby certain
affiliates loaned $255,000 to the Company in return for $255,000 in subordinated
promissory notes bearing an interest rate of 10% per annum, due May 24, 1996,
and warrants to purchase 250,000 shares of Common Stock, exercisable until
November 1998, at an exercise price of $1.00 per share. The following affiliates
participated in the 1995 Bridge Financing: Dr. Juan J. Amodei, Dr. Joseph
Bordogna, Mr. Joseph Teves, Polaroid and Centennial. To date, $150,000 has been
repaid towards the outstanding balance. The notes provide that the Company is in
default if the amount due is not paid within 90 days of the maturity date. Upon
an event of default, the noteholder may, upon written notice to the Company,
declare the note immediately due and payable. The Company has not received any
demand notices from the noteholders.
In February 1996, the Company commenced the 1996 Private Placement,
which involved the sale of the Company's Common Stock for $1.00 per share. When
the 1996 Private Placement was completed in April 1996, the Company had sold
880,000 shares of Common Stock and received net proceeds of $797,036, which
included a purchase of 250,000 shares by Centennial.
In March 1996, the Company entered into the Purchasing Agreement,
whereby Centennial would purchase raw materials and certain components on its
own account and sell them to the Company at the same price. Payment for such
purchases were due upon the receipt of final payment from customers for the
products containing such materials purchased through Centennial. Originally,
Centennial agreed to allow the Company to purchase up to a total of $750,000
worth of materials at any one time, which could be increased to $1,500,000. The
Company paid a one-time nonrefundable fee of $200,000 for this credit facility.
The outstanding balance on this facility on December 31, 1996 was approximately
$1,300,000. In May, 1997, the amount due to Centennial was satisfied through a
cash payment of approximately $132,000 and a conversion of the remaining amount
into 600,000 shares of the Company's Common Stock. The Company did not make any
purchases through Centennial after December 31, 1996, which significantly
limited the Company's ability to purchase such materials. The Company was never
a customer of Centennial nor was Centennial ever a customer of the Company. As
described below, the Company has received a major equity investment from
Imprimus Investors and will use some of these funds to purchase materials. In
addition, the Company is presently negotiating with its major suppliers to
reestablish credit terms for the purchase of materials, components and
subassemblies. No assurance can be given that the Company will be successful in
its negotiations or that it will obtain favorable financing terms, if at all.
(SEE "BUSINESS" AND "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS")
25
<PAGE> 26
In June 1996, MTDC purchased 200,000 shares of Common Stock, at a price
of $1.00 per share. In May 1996, Centennial had loaned $200,000 to the Company
in the form of a convertible note bearing an interest rate of 10% per annum,
which automatically converted to 200,000 shares of Common Stock upon the
purchase of stock by MTDC. Upon MTDC's purchase in June 1996, Centennial
converted the note to shares of Common Stock on the same terms as the MTDC stock
purchase and later purchased another 250,000 shares of Common Stock at $1.00 per
share.
In August 1996, Centennial loaned the Company $100,000, in return for a
three month promissory note for the amount borrowed, bearing a per annum
interest rate equal to the prime rate plus 4%, and warrants to purchase 100,000
shares of Triple I's Common Stock exercisable for a period of five years from
the date of issuance, at an exercise price of $1.00 per share. The warrants were
exercised for the Company's Common Stock in January 1997 and the proceeds were
used to pay the outstanding balance of the $100,000 promissory note.
In November 1996, Centennial loaned Triple I $130,000 in return for a
three month promissory note for the amount borrowed, bearing an interest rate
equal to the prime rate plus 4%, and warrants to purchase 130,000 shares of the
Triple I's Common Stock exercisable for a period of five years from the date of
issuance, at an exercise price of $1.00 per share. The warrants were exercised
to purchase the Company's Common Stock in January 1997 and the proceeds were
used to pay the outstanding balance of the $130,000 promissory note.
In December 1996, Dr. Harry Hsuan Yeh loaned $150,000 to Triple I, in
return for a twelve-month promissory note. On January 15, 1997, this note was
converted to a two year subordinated promissory note, bearing an interest rate
of 10% per annum, which was issued to Dr. Yeh along with 44,100 shares of Common
Stock. On January 22, 1997, Dr. Yeh loaned another $50,000 to the Company in
exchange for a subordinated promissory note and 14,700 shares of Common Stock.
Both subordinated promissory notes contain the same terms as the Bridge Notes
(defined below) and payment is accelerated in the event the Company raises a
certain amount of equity financing.
In February 1997, the Company commenced the 1997 Bridge Financing and
sold five (5) units ("Units"), each Unit consisting of a $50,000 subordinated
promissory note bearing an annual interest rate of 10% ("Bridge Notes") and
10,714 shares of Common Stock. Aggregate gross proceeds to the Company were
$250,000 as of February 14, 1997. The Bridge Notes are payable two years after
the date of the Bridge Notes and payment is accelerated in the event the Company
raises a certain amount of equity financing.
In November 1997, Imprimus executed a Securities Purchase Agreement to
invest $3 million in the Company by purchasing three million shares of the
Company's Common Stock at $1.00 per share. In accordance with the agreement, the
Company also issued warrants to purchase one million shares of Common Stock at
$1.00 per share through November 12, 2002, and issued warrants to purchase one
million shares of Common Stock at $2.00 per share through November 12, 2002. The
investor was granted demand registration rights starting six months from the
closing date for both the Common shares purchased and the warrants granted. In
addition, the investor will hold a seat on the board of directors. The agreement
contains certain covenants which restrict future activities of the company
including, but not limited to, mergers or acquisitions, borrowings, issuance of
securities, payment of dividends, granting a security
26
<PAGE> 27
interest in company assets, and the purchase or sale of assets. The investment
has been funded and closing and issuance costs (including commissions) amounted
to approximately $250,000.
In November, 1997, the Company offered a 50% discount of the exercise
price to all warrantholders of the Company's common stock for a specified period
of time, which has expired. Warrantholders exercised warrants to purchase
1,187,406 shares of Common Stock at prices from $.25 per share to $.60 per
share. The Company received $252,145 in cash, received a promissory note from an
officer of the Company for $125,000, interest and principal is payable in four
years, and accrues interest at an rate of 8.5% per annum. The stock purchased is
pledged as collateral against the note. In addition, a director of the Company
cancelled a promissory note due from the Company for $100,000 in exchange for
the exercise of warrants at a total exercise price of $98,480. The balance of
the note payable plus accrued interest were paid to the noteholder in cash. The
Company also repaid a $15,000 note payable to a director plus accrued interest.
The impact of these transactions will result in the Company taking a charge in
Fiscal 1998.
To fund operations in the future, the Company will rely on proceeds from
the Imprimus equity investment and cash flow from anticipated sales. The
Company's management believes that the funds provided by the equity investment
and cash flow from anticipated future product sales, will be sufficient to fund
continuing operations through the end of fiscal 1998.
INFLATION
To date, inflation has not has a material effect on the Company's business.
CHANGES IN ACCOUNTING STANDARDS
Accounting Pronouncements - In February 1997, the Financial Accounting
Standards Board (the "FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 128. "Earning Per Share" which is effective for fiscal years ending
after December 31, 1997, including interim periods. Earlier adoption is not
permitted. However, the statement permits disclosure of pro forma earnings per
share amounts computed under SFAS 128 in the notes to the financial statements
in periods prior to adoption. The statement requires restatement of all prior
period earnings per share data presented after the effective date. SFAS 128
specifies the computation, presentation and disclosure requirements for earnings
per share and is substantially similar to the standards recently issued by the
International Accounting Standards Committee
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<PAGE> 28
entitled International Accounting Standards, Earnings Per Share. The Company
will adopt SFAS 128 in fiscal 1998 and has not yet determined its impact.
In June 1997, the FASB issued two additional statements. SFAS 130,
"Reporting Comprehensive Income" and SFAS 131, "Disclosures About Segments of an
Enterprise and Related Information" are both effective for years beginning after
December 15, 1997. Adoption of these standards are not expected to impact the
financial results of the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 14 below and the Index therein for a listing of the financial
statements and supplementary data filed as part of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
No change in the Company's independent accountants occurred during the
Company's two most recent fiscal years, nor did any disagreements occur on any
matter of accounting principles or practices or financial statement disclosure
that would be required to be reported on a Form 8-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The current directors and executive officers of the Company, their ages
and their positions held with the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Juan J. Amodei, Ph.D.............. 63 Chief Executive Officer, President,
Secretary and Chairman of the Board of
Directors
Bryan M. Gleason.................. 47 Chief Financial Officer and Treasurer
K. Michael Chase.................. 53 Vice President of Manufacturing and Field
Service of Triple I
Richard J. Royston................ 66 Vice President of Research of Triple I
Richard A. Desrosiers............. 55 Vice President of Sales of Triple I
Joseph Bordogna, Ph.D............. 64 Director
</TABLE>
28
<PAGE> 29
<TABLE>
<CAPTION>
<S> <C> <C>
Charles G. Broming................ 48 Director
Joseph A. Teves................... 49 Director
Harry Hsuan Yeh, Ph.D............. 71 Director
Shaiy Pilpel, Ph.D. .............. 46 Director
</TABLE>
The following is a brief summary of the background of the directors and
executive officers named above:
JUAN J. AMODEI, PH.D., 63, has served as the Chief Executive Officer,
Chairman of the Board of Directors, President and Secretary of Industrial
Imaging since December 1996. Dr. Amodei has served as Chairman of the Board,
Chief Executive Officer, President and Secretary of Triple I since October 1992.
From September 1986 to October 1992, Dr. Amodei served as Chairman of the Board
of AOI Systems, Inc., a spin-off of Itek Optical Systems, where Dr. Amodei
served as President from March 1976 to August 1986. Dr. Amodei holds a Bachelor
of Science degree from Case Institute of Technology and both a Masters in
Electrical Engineering and a Ph.D. in Electrical Engineering from the University
of Pennsylvania. Dr. Amodei is a Trustee of the University of Pennsylvania and
Chairman of the Board of Overseers of the School of Engineering and Applied
Science.
BRYAN M. GLEASON, 47, has served as Chief Financial Officer ("CFO") and
Treasurer of Industrial Imaging since December 1996. Beginning in May 1996, Mr.
Gleason served as the CFO and Treasurer for Triple I. Mr. Gleason was the CFO
and Treasurer of Network Six, a public company specializing in systems
integration from 1993 to 1996. From 1982 to 1993, Mr. Gleason was Vice President
and Corporate Controller of Winthrop Financial Associates, a publicly held
investment and management firm with a portfolio in excess of $6 billion. Mr.
Gleason received a Bachelor of Science Degree with a concentration in Accounting
at Northeastern University. Mr. Gleason is a Certified Public Accountant.
K. MICHAEL CHASE, 52, has served as Triple I's Vice President of
Manufacturing and Field Service since October 1992. From September 1990 to
October 1992, Mr. Chase served as Vice President of Manufacturing for AOI
Systems, Inc. From August 1987 to July 1990, Mr. Chase served as the Vice
President of Operations for Datasec Corporation, a manufacturer of computer
equipment. Mr. Chase holds both a Bachelor of Engineering degree and a Master of
Engineering degree from Rensselaer Polytechnic Institute.
RICHARD J. ROYSTON, 66, has served as Triple I's Vice President of
Research since October 1992. From September 1986 to October 1992, Mr. Royston
served as Vice President of AOI Systems, Inc. in several capacities. Mr. Royston
holds a Masters of Arts degree in Mathematics from Oxford University and a
Bachelor of Science degree in Mathematics from the University of London.
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<PAGE> 30
RICHARD A. DESROSIERS, 55, has served as Triple I's Vice President of
Sales since January 1997. Prior to joining the Company in January 1997, Mr.
Desrosiers served as President of D Squared Associates, a manufacturer's
representative and management consulting firm serving the PCB industry. From
March 1991 to January 1996, Mr. Desrosiers was a general manager and senior
engineer for Hadco Corporation. Prior to that he held various technical
positions at Parlex Corporation, Teledyne Electro Mechanisms and Wang
Laboratories. Mr. Desrosiers holds a Bachelor of Science Degree in engineering
from Western New England College, a Masters Degree in Electrical Engineering
from the Naval Postgraduate School and a Master in Business Administration
degree from New Hampshire College. Mr. Desrosiers is a retired Commander from
the U.S. Navy.
JOSEPH BORDOGNA, PH.D., 64, has served as a member of Industrial
Imaging's Board of Directors since December 1996. He has served as a member of
Triple I's Board of Directors since April 1993. Dr. Bordogna is presently Acting
Deputy Director and Chief Operating Officer of the National Science Foundation
("NSF"), having served at NSF as Director of Engineering from 1991 to 1996. He
is also the International President of the Institute of Electrical and
Electronics Engineers. From 1981 to 1990, Dr. Bordogna was Dean of the School of
Engineering and Applied Science at the University of Pennsylvania, and continues
to hold the position of Dean of Engineering Emeritus and Alfred Fitler Moore
Professor of Engineering . Dr. Bordogna also serves as a Director of University
City Science Center, a regional science and technology transfer park located in
Philadelphia, Pennsylvania, chairs the Board of Directors of Weston, Inc. a
privately held comprehensive environment company located in West Chester,
Pennsylvania, and is President-elect of the Institute of Electrical and
Electronic Engineers. Dr. Bordogna received a Bachelor of Science degree and
Ph.D. in electrical engineering from the University of Pennsylvania and a Master
of Science degree in electrical engineering from the Massachusetts Institute of
Technology.
CHARLES G. BROMING, 48, has served as a member of Industrial Imaging's
Board of Directors since December 1996. He has served as a Director of Triple I
since February 1996. Mr. Broming is presently an Investment Officer for the
Massachusetts Community Development Finance Corporation ("CDFC"), a state owned
corporation that provides financing for businesses in financially distressed
communities within Massachusetts. Prior to joining CDFC in 1994, Mr. Broming was
a business consultant for Recoll Management Corporation, a privately held
company that specializes in the recovery and collection of distressed loans.
From 1990 to 1991, Mr. Broming ran CGB Associates, an independent management
consulting business. Mr. Broming received a Bachelor of Arts degree from
University of California, Riverside and a Master in Business Administration
degree from University of Michigan, Ann Arbor.
JOSEPH A. TEVES, 49, has served as a member of Industrial Imaging's
Board of Directors since December 1996. He has served as a member of Triple I's
Board of Directors since May 1994. In January 1997, Mr. Teves joined Separation
Technologies, Inc. as Chairman and Chief Executive Officer. Separation
Technologies, Inc. is a closely held company which processes minerals. From 1988
through 1996, Mr. Teves was the President of Distrigas Corporation, a
30
<PAGE> 31
privately held company located in Everett, Massachusetts engaged in the import,
export and distribution of liquid natural gas. Mr. Teves has also served as a
Director of the New England Gas Association since 1989 and has served as a
management consultant to companies within the gas industry. Mr. Teves holds a
degree in Business Administration from the Massachusetts State College at Salem.
HARRY HSUAN YEH, PH.D., 71, has served as a member of Industrial
Imaging's Board of Directors since December 1996. Dr. Yeh has served as a member
of Triple I's Board of Directors since 1992. Dr. Yeh is Chairman of Sinonar
Corporation, a Taiwanese company founded by Dr. Yeh in 1982 engaged in the
manufacture of amorphous silicon devices and solar cells. Dr. Yeh is a graduate
of Chai-Tung University in China and holds a Ph.D. in Mechanical Engineering
from the Massachusetts Institute of Technology.
SHAIY PILPEL, PH. D., 46, has served as a member of Industrial Imaging's
Board of Directors since November 1997. Dr. Pilpel curently serves as a Senior
Vice President of Wexford Management LLP, an investment banking firm. From 1995
to 1996, Dr. Pilpel was a managing Director of Canadian Imperial Bank of
Commerce where he headed the Mortgage Arbitrage snd Quantitative Strategies
proprietary trading group and prior to that, was a portfolio manager for
Steinhardt Partners. Dr. Pilpel received a Bachelor of Science degree in
philosophy from the Tel Aviv University, a Masters of Science degree in
Mathematics from the Hebrew University in Jerusalem, a Ph.D. in Statistics from
the University of California at Berkeley and an M.B.A. from Columbia University.
Dr. Pilpel is a retired Lieutenant from the Israel Defense Force.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to Dr. Juan J.
Amodei, the Company's Chief Executive Officer, Chairman of the Board of
Directors, President and Secretary and Triple I's Chief Executive Officer,
Chairman of the Board of Directors, President and Secretary during the year
ended March 31, 1997, six months ended March 31, 1996 and the fiscal years ended
September 30, 1995 and September 30, 1994. No other executive officers of
Industrial Imaging or Triple I received total compensation in excess of $100,000
in any of those periods.
31
<PAGE> 32
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
----------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
-------------------------------------------- -------------------------------------
(a) (b) (c) (d) (e) (g)
Other Annual Securities
Name and Principal Compensation Underlying
Position(1) Year(2) Salary(3) Bonus ($) ($)4 Options (#)
----------------------- ------- --------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Dr. Juan J. Amodei, 1997 $110,500 -- 8,400 --
Chief Executive 1996 $55,250 -- 4,200 40,000
Officer 1995 110,500 -- 8,400 --
1994 110,500 -- 8,400 --
</TABLE>
- ---------------------
1 See "MANAGEMENT -- Employment Agreements."
2 During Fiscal 1994 and 1995, Dr. Amodei's salary was paid by Triple I,
according to the terms of his employment agreement with Triple I. Triple I
assigned this Agreement to Industrial Imaging in connection with the Exchange
with Industrial Imaging. As part of its Exchange, Triple I changed its year
end to March 31. Therefore, the fiscal year for 1996 constitutes the six
month period from September 30, 1995 to March 31, 1996.
3 Amounts shown indicate cash compensation earned and received by executive
officers. Executive officers participate in group health and other benefits
generally available to all employees of the Company.
4 This amount is comprised entirely of an automobile allowance.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Securities Underlying In-the-Money Options
Unexercised Options at Exercisable/
Shares Acquired Value FY-End Exercisable/ Unexercisable
Name on Exercise Realized Unexercisable(1) ($)(2)(3)
(a) (b) (c) (d) (e)
------------------ ---------------- ---------- ----------------------- --------------------
<S> <C> <C> <C> <C>
Dr. Juan J. Amodei 0 72,000 / 50,000 $144,000/$100,000
</TABLE>
(1) See "Summary Compensation Table."
(2) In-the-Money options are those options for which the fair market value
of the underlying Common Stock is greater than the exercise price of
the option.
(3) The value of unexercised options is determined by multiplying the
number of options held by the difference in the fair market value of
the Common Stock underlying the options at the end of the Fiscal Year
1997 (as determined by the average of the high and low bid price of the
Company as reported by OTC Bulletin Board, which were $3.25 to $2.75
per share, respectively) and the exercise price of the options granted.
COMMITTEES
32
<PAGE> 33
In October, 1997, the Board of Directors established an Audit Committee
and a Compensation Committee.
Messrs. Broming and Teves serve as members of the audit Committee. The
Audit Committee is concerned primarily with recommending the selection of, and
reviewing of the Company's independent auditors and reviewing the effectiveness
of the Company's accounting policies and practices, financial reporting and
internal controls. The audit Committee reviews any transactions which involve a
potential conflict of interest and the scope of independent audit coverages,
fees charged by the independent auditors, and internal control systems. To date,
the Audit Committee has not held any meetings.
Dr. Bordogna and Mr. Teves serve on the Compensation Committee. The
compensation Committee is responsible for setting and administering the policies
which govern annual compensation for the Company's executives. The Compensation
Committee negotiates and proposes to the Board of Directors compensation
arrangements for officers, other key employees, certain consultants and
directors of the Company. Following review and approval by the Compensation
Committee of the compensation policies, all issues pertaining to executive
compensation are submitted to the Board of Directors. To date, the Compensation
Committee has not held any meetings.
COMPENSATION OF DIRECTORS
Currently none of the directors receives fees for their service as
directors. The Company is considering whether to provide a fee to non-employee
directors. In October 1997, the Board of Directors voted to award non-qualified
stock options to non-employee directors. Options will be granted at 5,000 per
year over the next five years. In October 1997, options to purchase 5,000 shares
were awarded to each non-employee director at an exercise price of $1.00 per
share.
EMPLOYMENT AGREEMENTS
Effective as of October 31, 1995, Triple I entered into an employment
and non-competition agreement (the "Agreement") with Dr. Juan J. Amodei. The
Agreement was subsequently assigned to the Company as part of the Exchange with
Triple I. The Agreement provides for an annual base salary of $110,500 through
December 31, 1998, with bonuses and salary increases as the Board of Directors
or Compensation Committee determine. Thereafter, the Agreement shall be
automatically renewed for successive periods of three years, unless the Company
gives Dr. Amodei not less than six months written notice of non-renewal. The
Agreement also provides for vacation, insurance and certain other benefits as
may be determined by the Company. Dr. Amodei is also entitled to receive
severance in the event his employment is terminated by the Company without cause
(the "Severance Benefits"). The Severance Benefits are equal to his
"Compensation Package" for a period of one year following the date of the
termination of his employment. Dr. Amodei's Compensation Package includes his
base salary and all other benefits to which he is entitled, including his most
recent bonus for the prior fiscal year annualized over the remaining term of the
Agreement.
33
<PAGE> 34
In the event of a Change in Control in the Company, Dr. Amodei will
receive certain benefits as provided in the Agreement. A Change in Control is
defined generally as: the acquisition by an individual, entity or group not a
current stockholder of the Company or affiliated with the Company, of fifty
percent (50%) or more of the outstanding shares of Common Stock outstanding
immediately before the Change of Control. A Change of Control does not include
the Company's Exchange with Triple I or any public offering of the Company's
securities as approved by the Board of Directors.
In the event of a Change of Control, Dr. Amodei shall have the option to
terminate his employment with three month's notice. If within nine months of a
Change of Control, (i) Dr. Amodei's duties are reduced, or (ii) he decides to
terminate his employment; or (iii) he is terminated by the Company, then he is
entitled to receive: (a) an amount equal to his Compensation Package for a
period of one year, payable in a lump sum; and (b) the immediate removal of all
loan guarantees and the repayment of all loans placed by him on behalf of or for
the benefit of the Company.
The Agreement also contains non-competition provisions for a period of
one year following termination, a confidentiality provision and an ownership
provision in the Company's favor for techniques, discoveries and inventions
arising during the term of his employment.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
("Section 16(a)") requires executive officers, directors, and persons who
beneficially own more than ten percent (10%) of the Company's stock to file
initial reports of ownership on Form 3 and reports of changes in ownership on
Form 4 with the Securities and Exchange Commission (the "Commission") and any
national securities exchange on which the Company's securities are registered.
Executive officers, directors and greater than ten percent (10%) beneficial
owners are required by the Commission's regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all its executive officers, directors and greater than
ten percent (10%) beneficial owners complied with all applicable Section 16(a)
filing requirements through March 31, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock by (i) each of the Company's directors,
(ii) each person who is known by the Company to beneficially own more than 5% of
its voting securities, and (iii) all directors and executive officers as a
group. Except as otherwise listed, the stockholders listed
34
<PAGE> 35
below have sole voting and investment powers with respect to the shares
indicated.
<TABLE>
<CAPTION>
Number of
Shares Approximate
Beneficially Percentage of
Name of Beneficial Owner(2) Owned Ownership(1)
- --------------------------- ----- ------------
<S> <C> <C>
Shaiy Pilpel, Ph.D. (3) 5,000,000 38.79%
Imprimus Investors, LLC (3)(4) 5,000,000 38.79%
Harry Hsuan Yeh, Ph.D. (5) 1,535,563 14.10%
Centennial Technologies, Inc. (6) 1,625,000 14.79%
Juan J. Amodei, Ph.D. (7) 905,714 8.18%
Massachusetts Technology Development 860,142 6.24%
Corporation (8)
Polaroid Corporation (9) 827,228 7.43%
Massachusetts Community 786,811 7.04%
Development Finance Corporation (10)
Charles Broming (10)(11) 786,811 7.04%
Shirley Hsin-Hui Wang (12) 342,400 4.72%
Joseph A. Teves (13) 263,896 2.42%
Joseph Bordogna, Ph.D. (14) 85,013 *
All Officers and Directors as a group
(9 persons) (1)(2)(3)(5)(8)(9)(11)(12)
(13) 13,414,920 64.41%
</TABLE>
- --------------
* Indicates less than 1%.
(1) Pursuant to the rules of the Securities and Exchange Commission, shares
of Common Stock which an individual or group has a right to acquire
within 60 days pursuant to the exercise of options and warrants are
deemed to be outstanding for the purpose of computing the percentage
ownership of such individual or group but are not deemed to be
35
<PAGE> 36
outstanding for the purpose of computing the percentage ownership of any
other person shown in the table.
(2) The address for Drs. Amodei, Bordogna and Yeh and Mr. Teves is c/o
Industrial Imaging Corporation, 847 Rogers Street, Lowell, Massachusetts
01852. The address for Massachusetts Technology Development Corporation
is 148 State Street, Boston, Massachusetts 02109. The address for
Centennial Technologies is 7 Lopez Road, Wilmington, Massachusetts
01887. The address for Polaroid Corporation is 549 Technology Square,
Cambridge, Massachusetts 02139. The address for Mr. Broming and
Massachusetts Community Development Corporation is 10 Post Office
Square, Suite 1090, Boston, Massachusetts 02109. The address for Shirley
Wang is c/o Mr. Howard Yao, 2895 North Beverly Glen Boulevard, Los
Angeles, California 90077. The address for Dr. Pilpel and Imprimus
Investors, LLC, is c/o Wexford Management, LLC, 411 West Putnam Avenue,
Greenwich, Connecticut, 06830.
(3) Includes warrants to purchase 2,000,000 shares of Common Stock at
exercise prices ranging from $1.00 to $2.00 per share.
(4) Dr. Pilpel, a director of the Company, is also an investment officer of
Imprimus Investors, LLC. As such, Dr. Pilpel retains voting control over
shares owned by Impimus Investors, LLC.
(5) Excludes warrants to purchase 248,145 shares of Common Stock at an
exercise price of $1.00 per share and options to purchase 5,000 shares
of Common Stock at an exercise price of $1.00 per share.
(6) Includes warrants to purchase 95,000 shares of Common Stock at an
exercise price of $1.00 per share.
(7) Includes (i) warrants to purchase 108,729 shares of Common Stock with an
exercise price of $1.00 (ii) options to purchase 32,000 shares of Common
Stock at an exercise price of $.20 per share; and (iii) options to
purchase 40,000 shares of Common Stock at an exercise price of $1.00.
Excludes warrants to purchase 206,245 shares of Common Stock at an
exercise price of $1.00 per share.
(8) Includes (i) warrants to purchase 180,380 shares of Common Stock at an
exercise price of $1.00. Excludes warrants to purchase 180,380 shares of
Common Stock at an exercise price of $1.00 per share.
(9) Includes warrants to purchase 250,028 shares of Common Stock at an
exercise price of $1.00 per share.
(10) Includes warrants to purchase 280,790 shares of Common Stock with
exercise price of $1.00 per share. Excludes warrants to purchase 32,040
shares of Common Stock at an
36
<PAGE> 37
exercise price of $1.00 per share and options to purchase 5,000 shares
of Common Stock at an exercise price of $1.00 per share.
(11) Mr. Broming, a director of the Company, is also an Investment Officer of
the Massachusetts Community Development Finance Corporation. As such,
Mr. Broming retains voting control over the shares owned by the
Massachusetts Community Development Finance Corporation.
(12) Excludes warrants to purchase 88,100 shares of Common Stock exercisable
at $1.00 per share.
(13) Excludes (i) warrants to purchase 28,470 shares of Common Stock at an
exercise price of $1.00 per share (ii) warrants to purchase 14,675
shares of Common Stock at an exercise price of $1.00 per share (iii)
4,510 shares issuable upon exercise of outstanding warrants granted to
Mr. Teves' adult son, to purchase 4,510 shares of Common Stock at an
exercise price of $1.00 per share and (iv) and options to purchase 5,000
shares of Common Stock at an exercise price of $1.00 per share.
(14) Excludes warrants to purchase 63,135 shares of Common Stock at an
exercise price of $1.00 per share and options to purchase 5,000 shares
of Common Stock at an exercise price of $1.00 per share.
(15) Includes (i) 10,800 shares issuable upon exercise of the vested portion
of options to purchase 12,400 shares of Common Stock at an exercise
price of $.20 per share and 5,600 shares issuable upon exercise of the
vested portion of an option to purchase 34,000 shares of Common Stock at
an exercise price of $1.00 per share held by Michael Chase, the
Company's Vice President of Manufacturing and Field Service; (ii) 15,600
shares issuable upon exercise of the vested portion of an option to
purchase 17,600 shares of Common Stock at an exercise price of $.20 per
share and 11,200 shares issuable upon exercise of the vested portion of
an option to purchase 38,000 shares of Common Stock at an exercise price
of $1.00 per share held by Richard J. Royston, the Company's Vice
President of Research; and (iii) 20,000 shares issuable upon exercise of
the vested portion of an option to purchase 60,000 shares of Common
Stock at an exercise price of $1.00 per share held by Bryan Gleason, the
Company's Chief Financial Officer.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1997, Imprimus, an outside investor, executed a
Securities Purchase Agreement to invest $3 million in the Company by purchasing
3,000,000 shares of the Company's Common Stock at $1.00 per share. In accordance
with the agreement, the Company also issued warrants to purchase 1,000,000
shares of Common Stock at $1.00 per share through November 12, 2002, and issued
warrants to purchase 1,000,000 shares of Common Stock at $2.00 per share through
November 12, 2002. The investor was granted demand registration rights starting
six months from the closing date for both the common shares purchased and the
37
<PAGE> 38
warrants granted. In addition, the investor will hold a seat on the board of
directors. The agreement contains certain covenants which restrict future
activities of the company including mergers or acquisitions, borrowings,
issuance of securities, payment of dividends, granting a security interest in
company assets, and the purchase or sale of assets. The investment has been
funded and closing and issuance costs (including commissions) amounted to
approximately $250,000.
In November, 1997, the Company offered a 50% discount of the
exercise price to all warrantholders of the Company's Common Stock for a
specified period of time, which has expired. Warrantholders exercised warrants
to purchase 1,187,406 shares of Common Stock at prices from $.25 per share to
$.60 per share. The Company received $252,145 in cash. The Company also received
a promissory note from Dr. Amodei, an officer and director of the Company, for
$125,000, interest and principal payable in four years, and which accrues
interest at an rate of 8.5% per annum to purchase 500,000 shares at $.25 per
share. The stock purchased is pledged as collateral against the note. In
addition, Mr. Teves, a director of the Company cancelled a promissory note due
from the Company for $100,000 for the exercise of warrants at a total exercise
price of $98,480 to purchases 196,961 shares at $.50 per share. The balance of
the note payable plus accrued interest were paid to the noteholder in cash. The
Company also repaid a $15,000 note payable to a director plus accrued interest.
Dr. Yeh, a director of the Company exercised warrants to purchase 382,474 shares
of the Company's Common Stock at $.50 per share, paid in cash. Dr. Bordogna, a
director of the Company, exercised warrants to purchase 23,472 shares of the
Company's Common Stock at $.50 per share, paid in cash. In addition, certain
employees of Schneider Securities, Inc., the Placement Agent for the 1997 Bridge
Financing and the 1996 Private Placement exercised warrants to purchase 69,229
shares of the Company's Common Stock for cash at a price of $.60 per share.
In May 1997, the Company and Centennial, a 14.8% stockholder of the
Company, agreed to terminate the Purchasing Agreement. The Company liquidated
amounts owed to Centennial under the agreement by paying approximately $132,000
in cash and issuing 600,000 shares of Common Stock to pay off the remaining
balance of approximately $1.2 million.
In May 1997, MTDC, a 6.2% stockholder of the Company, exercised a
warrant and purchased 100,014 shares of the Company's Common Stock, at a price
of $1.00 per share.
In December 1996, Dr. Harry Hsuan Yeh, a director and 14.1% stockholder
of the Company loaned $150,000 to the Company, in return for a promissory note.
On January 15, 1997, this note was converted to a two year subordinated
promissory note, bearing an interest rate of 10% per annum, which was issued to
Dr. Yeh along with 44,100 shares of Common Stock. On January 22, 1997, Dr. Yeh
loaned another $50,000 to the Company in exchange for a two year subordinated
promissory note and 14,700 shares of Common Stock. Both notes contain the same
terms as the Bridge Notes.
In November 1996, Centennial, a 14.8% stockholder of the Company, loaned
the Company $130,000 in return for a three month promissory note for the amount
borrowed,
38
<PAGE> 39
bearing an interest rate equal to the prime rate plus 4% per annum and warrants
to purchase 130,000 shares of the Company's Common Stock exercisable for a
period of five years from the date of issuance, at an exercise price of $1.00
per share. The warrants were exercised to purchase the Company's Common Stock in
January 1997 and the proceeds were used by the Company to pay the outstanding
balance of the $130,000 promissory note. (SEE "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS")
In August 1996, Centennial loaned the Company $100,000, in return for a
three month promissory note for the amount borrowed, bearing an interest rate
equal to the prime rate plus 4% per annum, and warrants to purchase 100,000
shares of Triple I's Common Stock exercisable for a period of five years from
the date of issuance, at an exercise price of $1.00 per share. The warrants were
exercised for the Company's Common Stock in January 1997 and the proceeds were
used to pay the outstanding balance of the $100,000 promissory note. (SEE
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS")
From March 1996 through December 1996, the Company utilized the
Purchasing Agreement under which Centennial would purchase raw materials and
certain components on its own account and sell them to the Company at the same
price. Payment for such purchases were due upon the receipt of final payment
from customers for the products containing such materials purchased through
Centennial. Originally, Centennial agreed to allow the Company to purchase up to
a total of $750,000 worth of materials at any one time, which could be increased
to $1,500,000. The Company paid a one-time nonrefundable fee of $200,000 for
this credit facility. Centennial used the fee to purchase 200,000 shares of the
Company's Common Stock in May, 1996, at $1.00 per share. The outstanding balance
on December 31, 1996 was approximately $1,300,000. The Company has not made any
purchases through Centennial since December 31, 1996, which significantly
limited the Company's ability to purchase such materials. In May, 1997, the
amount due to Centennial was satisfied through a partial cash payment of the
amount due and a conversion of the remaining amount into 600,000 shares of the
Company's Common Stock. All outstanding balanced due to Centennial were
liquidated at that time. (See Purchase Agreement attached as Exhibit No. 10b).
In June 1996, MTDC, a 13.4% stockholder of the Company, purchased
200,000 shares of Common Stock, at a price of $1.00 per share. In May 1996,
Centennial had loaned $200,000 to the Company in the form of a convertible note
bearing an interest rate of 10% per annum, which automatically converted to
200,000 shares of Common Stock upon the purchase of stock by MTDC. Upon MTDC's
purchase in June 1996, Centennial converted the note to shares of Common Stock
on the same terms as the MTDC stock purchase. (SEE "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS")
In February 1996, in connection with the 1996 Private Placement, certain
affiliates of the Company converted outstanding debt to Common Stock as follows:
39
<PAGE> 40
<TABLE>
<CAPTION>
Outstanding Loan Common Shares
Name Balance ($) Issued (#)
- ---- ----------- -------------
<S> <C> <C>
Massachusetts Community
Development Finance Corporation 506,021 506,021
Juan J. Amodei, Ph.D. 45,985 45,985
Joseph Bordogna, Ph.D. 17,271 17,271
Massachusetts Technology
Development Corporation 379,728 379,728
Joseph A. Teves 66,935 66,935
Harry Hsuan Yeh, Ph.D. 187,289 187,289
</TABLE>
Dr. Yeh and Mr. Teves did not convert all their debt and each received a
promissory note for $100,000 bearing interest rates of 10% and 8.4% per annum,
respectively, for the remaining amounts due to them from the Company. The
original due date for the notes was October 23, 1996. The notes provide that the
Company is in default if the amount due is not paid within 90 days of the
maturity date. Upon an event of default the noteholder may, upon written notice
to the Company, declare the note immediately due and payable. The Company has
not received any demand notices from the noteholders. Mr. Teves cancelled this
note in exchange for the exercise of warrants. Dr. Yeh also forgave a $100,000
promissory note from the Company in return for a warrant to purchase 150,000
shares of Common Stock, exercisable until February 6, 1999 at $1.00 per share.
(SEE "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS")
In November 1995, the Company completed a 1995 Bridge Financing, whereby
certain affiliates loaned $255,000 to the Company in return for $255,000 in
promissory notes bearing an interest rate of 10% per annum and warrants to
purchase an aggregate of 250,000 shares of Common Stock, execisable until
November 1998, at $1.00 per share. The following affiliates participated in the
1995 Bridge Financing: Dr. Amodei, Dr. Bordogna, Mr. Teves, Polaroid and
Centennial. Approximately $150,000 has been repaid towards the outstanding
balance. The original maturity date for the notes was May 24, 1996. The notes
provide that the Company is in default if amount due is not paid within 90 days
of the maturity date. Upon an event of default, the noteholder may, upon written
notice to the Company, declare the note immediately due and payable. The Company
has not received any demand notices from the noteholders and plans to pay the
total amount due out of the proceeds of the Offering. (SEE "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS")
As part of the 1996 Private Placement, warrants to purchase 958,925
shares of Common Stock were issued pro rata to the stock and optionholders of
Triple I as of September 30, 1995 ("Stockholder Warrants"). The Stockholder
Warrants have an exercise price of $1.00 and are exercisable after the earlier
of (a) February 28, 2001 (five years from the closing of the 1996 Private
Placement), (b) upon the attainment of $12,000,000 in annual revenues or
$1,000,000 in pretax net income in Fiscal 1997 or (c) upon the attainment of
$15,000,000 in annual revenues or
40
<PAGE> 41
$1,500,000 in pretax net income in Fiscal 1998. The following affiliates
received Stockholder Warrants: Dr. Juan J. Amodei (206,245), Dr. Harry Hsuan Yeh
(248,145), Mr. Joseph A. Teves (28,970), CDFC (32,040), Dr. Joseph Bordogna
(14,675), MTDC (63,135), Polaroid (180,380) and Shirley Hsin-Hiu Wang (88,100).
(SEE "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT").
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE
---------
(a) EXHIBITS
<S> <C> <C>
1 -- Not applicable.
2 -- Agreement of Merger, dated December 9, 1996.
3a -- Certificate of Incorporation.
3b -- Bylaws, as amended.
4 -- Sections of Bylaws and Certificate of Incorporation defining the rights of
security-holders (contained in Exhibits 3a and 3b).
5 -- Not applicable.
6 -- Not applicable.
7 -- Not applicable.
8 -- Not applicable.
9 -- Not applicable.
**10a -- License and Collaboration Agreement dated November, 1992 between the
Company and Polaroid Corporation, with amendments.
10b -- Purchase agreement dated March 31, 1996 between the Company and Centennial
Technologies, Inc., and the termination thereof.
10c -- 1996 Stock Option Plan.
10d -- Employment Agreement with Juan J. Amodei, Ph.D.
10e -- Lease Agreement between the Company and John Hancock Mutual Life Insurance
Company, dated October 31, 1995, as amended.
10f -- Form of the Shareholder Exchange Agreement by and between Orbis, Inc., Triple
I Corporation, and the Shareholders of Triple I Corporation.
10g -- Form of Subscription Agreement between the Company and investors in the 1997
Bridge Financing.
10h -- Form of Subscription Agreement between the Company and Dr. Harry Hsuan
Yeh.
10i -- Form of Subscription Agreement between the Company and investors in the 1996
</TABLE>
41
<PAGE> 42
<TABLE>
<CAPTION>
<S> <C> <C>
Private Placement.
10j -- Securities Purchase Agreement between the Company and Imprimus Investors
LLC, dated November 12, 1997
10k Form of Class A and Class B Warrants issued by the Company to Imprimus
Investors LLC
10l Registration Rights Agreement between the Company and Imprimus Investors
LLC, dated November 12, 1997
11 -- Not applicable.
12 -- Not applicable.
13 -- Not applicable.
14 -- Not applicable.
15 -- Not applicable.
16 -- Not applicable.
18 -- Not applicable.
21 -- Subsidiaries of the Company
23 -- Not applicable.
24 -- Not applicable.
25 -- Not applicable.
26 -- Not applicable.
27 -- Financial Data Schedule
</TABLE>
** Certain information is withheld and being filed separately with the
Commission pursuant to a request for confidential treatment.
42
<PAGE> 43
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
INDUSTRIAL IMAGING CORPORATION
Date: January 29, 1998 By: /s/ Juan J. Amodei,Ph.D.
------------------------------------------
Juan J. Amodei, Ph.D.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<S> <C> <C>
/s/ Juan J. Amodei, Ph.D. President, Chief Executive Officer, January 29, 1998
- ------------------------------ and Chairman of the Board of
Juan J. Amodei, Ph.D. Directors (Principal Executive Officer)
/s/ Bryan M. Gleason Chief Financial Officer, Vice January 29, 1998
- ------------------------------ President and Treasurer
Bryan M. Gleason (Principal Financial and Principal
Accounting Officer)
/s/ Joseph Bordogna, Ph.D. Director January 29, 1998
- ------------------------------
Joseph Bordogna, Ph.D.
/s/ Joseph A. Teves Director January 29, 1998
- ------------------------------
Joseph A. Teves
/s/ Charles G. Broming Director January 29, 1998
- ------------------------------
Charles G.Broming
</TABLE>
43
<PAGE> 44
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors and Shareholders of
Industrial Imaging Corporation:
We have audited the accompanying balance sheets of Industrial Imaging
Corporation as of March 31, 1997 and March 31, 1996 and the related statements
of operations and shareholders' equity (deficit) and cash flows for the year
ended March 31, 1997, the period from October 1, 1995 to March 31, 1996 and the
years ended September 30, 1995 and 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Industrial Imaging
Corporation at March 31, 1997 and March 31, 1996, and the results of its
operations and its cash flows for the year ended March 31, 1997, the period from
October 1, 1995 to March 31, 1996 and the years ended September 30, 1995 and
1994 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note B to the
financial statements, the Company has suffered recurring losses from operations
and has a net working capital deficiency and stockholders' deficit that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are described in Note B. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Boston, Massachusetts
January 16, 1998
F-1
<PAGE> 45
INDUSTRIAL IMAGING CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
--------- ---------
ASSETS
Current assets:
<S> <C> <C>
Cash............................................................................... $ 62,103 $ 10,011
Accounts receivable, net of allowance for doubtful accounts of $31,000
and $20,000 at March 31, 1997 and 1996, respectively (Notes C and D)............. 493,778 92,586
Inventory (Notes C and E).......................................................... 1,877,979 682,886
Prepaid expenses................................................................... 53,398 22,076
----------- -----------
Total current assets............................................................. 2,487,258 807,559
Property and equipment, net (Notes C and F)............................................ 34,256 32,870
Patents, net (Notes C and G)........................................................... 61,979 168,229
Other assets........................................................................... 10,786 10,786
----------- -----------
Total assets..................................................................... 2,594,279 $ 1,019,444
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Notes payable (Notes J and K)...................................................... 480,404 495,174
Accounts payable................................................................... 2,497,890 281,094
Deferred revenue (Notes C and H)................................................... 242,938 667,387
Accrued expenses (Note I).......................................................... 957,953 930,334
----------- -----------
Total current liabilities........................................................ 4,179,185 2,373,989
Notes payable B long-term portion (Notes J and K)...................................... 450,000 --
----------- -----------
Total liabilities................................................................ 4,629,185 2,373,989
Commitments and contingencies (Note H)
Shareholders' deficit
(Notes J, K, L, and O):
Common stock, par value $.01 per share, authorized 8,700,000 shares,
5,867,498 and 3,537,037 shares issued and outstanding at March 31, 1997,
and March 31, 1996, respectively................................................. 58,675 35,370
Series A Preferred Stock, par value $.01 per share, authorized 1,000,000
shares, 0 and 633,200 shares issued and outstanding at March 31, 1997, and
March 31, 1996, respectively..................................................... -- 6,332
Series B Preferred Stock, par value $.01 per share, authorized 300,000 shares, 0
shares issued and outstanding at March 31, 1997 and March 31, 1996,
respectively..................................................................... -- --
Additional paid-in capital......................................................... 5,872,588 4,675,368
Accumulated deficit................................................................ (7,966,169) (6,071,615)
----------- -----------
Total shareholders' deficit...................................................... (2,034,906) (1,354,545)
----------- -----------
Total liabilities and shareholders' deficit.................................... $ 2,594,279 $ 1,019,444
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE> 46
'
INDUSTRIAL IMAGING CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
12 Months 6 Months 12 Months 12 Months
Ended Ended Ended Ended
March 31, 1997 March 31, 1996 September 30, 1995 September 30, 1994
-------------- -------------- ------------------ ------------------
Revenues (Note C):
<S> <C> <C> <C> <C>
Product........................................ $ 1,525,625 $ 419,782 $ 986,660 $ 936,783
Service........................................ 297,951 160,584 238,363 373,365
-------------- ------------ ------------ -------------
1,823,576 580,366 1,225,023 1,310,148
-------------- ------------ ------------ -------------
Cost of revenues:
Product........................................ 1,341,919 450,746 730,180 783,213
Service........................................ 268,068 100,703 412,402 413,852
-------------- ------------ ------------ -------------
1,609,987 551,449 1,142,582 1,197,065
-------------- ------------ ------------ -------------
Gross profit....................................... 213,589 28,917 82,441 113,083
-------------- ------------ ------------ -------------
Operating expenses:
Research and development (Notes C and H)....... 440,207 427,778 505,147 468,075
Sales and marketing............................ 361,392 125,370 218,704 370,859
General and administrative..................... 857,948 541,285 814,094 680,824
Merger Expenses (Note R)....................... 179,787
-------------- ------------ ------------ -------------
Total operating expenses................... 1,839,334 1,094,433 1,537,945 1,519,758
-------------- ------------ ------------ -------------
Loss from operations............................... (1,625,745) (1,065,516) (1,455,504) (1,406,675)
Other income (expense):
Interest expense (Notes D and J) (89,257) (94,305) (126,189) (83,311)
Other, net (Note Q)............................ (179,552) -- 6,567 (16,577)
-------------- ------------ ------------ -------------
Other income (expense), net................ (268,809) (94,305) (119,622) (99,888)
Loss before income taxes................... (1,894,554) (1,159,821) (1,575,126) (1,506,563)
Provision for income taxes (Notes C and M)......... -- -- -- --
-------------- ------------ ------------ -------------
Net loss........................................... $ (1,894,554) $ (1,159,821) $ (1,575,126) $ (1,506,563)
============== ============ ============ =============
Net loss per share................................. $ (.44) $ (.55 $ (1.05) $ (1.45)
============== ============ ============ =============
Weighted Average common outstanding................ 4,257,727 2,105,823 1,507,099 1,039,025
============== ============ ============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 47
INDUSTRIAL IMAGING CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
12 Months 6 Months 12 Months 12 Months
Ended Ended Ended Ended
March 31, 1997 March 31, 1996 September 30, 1995 September 30, 1994
-------------- -------------- ------------------ ------------------
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net loss......................................... $(1,894,554) $(1,159,821) $(1,575,126) $(1,506,563)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss on disposal of fixed assets............. -- -- -- 5,554
Depreciation................................. 22,217 17,310 34,612 33,290
Compensation relating to stock options....... 26,400 -- -- --
Shares issued in conjunction with bridge
loan....................................... 171,297 -- -- --
Amortization................................. 106,250 53,125 106,250 106,250
Provision for doubtful accounts.............. -- -- (14,707) 9,704
Changes in assets and liabilities:
Accounts receivable.......................... (401,192) (38,058) 201,843 (193,219)
Inventory.................................... (1,195,093) 111,935 (302,483) 70,493
Prepaid expenses............................. (31,322) (16,961) 5,686 (1,384)
Other assets................................. -- -- (310) (1,076)
Accounts payable............................. 2,216,796 (18,279) 113,506 78,350
Deferred revenue............................. (424,449) (12,338) 364,072 45,538
Accrued expenses............................. 27,619 400,552 291,431 183,832
----------- ----------- ----------- -----------
Net cash used in operating activities........ (1,376,031) (662,535) (775,226) (1,169,231)
----------- ----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures............................. (23,603) -- -- (14,996)
Proceeds from sale of fixed assets............... -- -- -- 1,307
----------- ----------- ----------- -----------
Net cash used in investing activities............ (23,603) -- -- (13,689)
----------- ----------- ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of nonconvertible debt.... 719,000 260,702 381,444 648,001
Principal payments on nonconvertible debt........ (283,770) (153,584) -- (31,389)
Proceeds from issuance of convertible debt....... 200,000 -- -- --
Proceeds from issuance of stock (net)............ 816,496 559,210 400,000 518,000
----------- ----------- ----------- -----------
Net cash provided from financing activities.... 1,451,726 666,328 781,444 1,134,612
----------- ----------- ----------- -----------
Net increase (decrease) in cash................ 52,092 3,793 6,218 (48,308)
Cash, beginning of period............................ 10,011 6,218 -- 48,308
----------- ----------- ----------- -----------
Cash, end of period.................................. $ 62,103 $ 10,011 $ 6,218 $ --
=========== =========== =========== ===========
Supplemental cash flows information:
Cash paid during the period for interest......... $ 45,092 $ 6,963 $ 49,500 $ 47,200
Noncash items:
Debt and accrued interest converted to equity
during the period.............................. 200,000 1,270,637
Forgiveness of debt/contributed capital......... 100,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 48
INDUSTRIAL IMAGING CORPORATION
STATEMENT OF SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Series A Convertible
Preferred Stock Common Stock Additional Total
-------------------- ------------------- Paid-in Accumulated Shareholders'
Capital Deficit Equity
---------- ----------- -------------
Shares Amount Shares Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1993.......... 397,200 $ 3,972 753,200 $ 7,532 $1,857,719 $(1,830,105) $ 39,118
Issuance of Series A convertible
preferred stock and common 200,000 2,000 200,000 2,000 96,000 100,000
stock for cash, October 1993.......
Issuance of Series A convertible
preferred stock 20,000 200 20,000 200 9,600 10,000
and common stock for cash,
October 1993....................
Issuance of Series A convertible
preferred stock and common 16,000 160 16,000 160 7,680 8,000
stock for cash, November 1993......
Issuance of common stock for cash, 288,600 2,886 397,114 400,000
July 1994..............................
Net loss (1,506,563) (1,506,563)
-------- --------- ---------- -------- ---------- ----------- -----------
Balance at September 30, 1994.......... 633,200 6,332 1,277,800 12,778 2,368,113 (3,336,668) (949,445)
Issuance of common stock for cash,
December 1994 288,600 2,886 397,114 400,000
Net loss (1,575,126) (1,575,126)
-------- --------- ---------- -------- ---------- ----------- -----------
Balance at September 30, 1995.......... 633,200 6,332 1,566,400 15,664 2,765,227 (4,911,794) (2,124,571)
Issuance of common stock for debt
and interest conversion............ 1,270,637 12,706 1,257,931 1,270,637
Issuance of common stock for cash,
net of issuance costs of $140,790.. 700,000 7,000 552,210 559,210
Issuance of warrants in exchange for
forgiveness of debt................ 100,000 100,000
Net loss (1,159,821) (1,159,821)
-------- --------- ---------- -------- ---------- ----------- -----------
Balance at March 31, 1996.............. 633,200 $ 6,332 3,537,037 $ 35,370 $4,675,368 $(6,071,615) $(1,354,545)
Issuance of common stock for cash,
net of issuance costs of $32,964 .. 830,000 8,300 788,736 797,036
Exercise of warrants for cash.......... 230,000 2,300 227,700 230,000
Shares issued in conjunction with 112,370 1,124 170,173 171,297
bridge loans...........................
Compensation expense relating to 26,400 26,400
stock options..........................
Recapitalization of Orbis, Inc......... 524,891 5,249 (15,789) (10,540)
Conversion of preferred shares to (633,200) (6,332) 633,200 6,332 --
common stock......
Net loss (1,894,554) (1,894,554)
-------- --------- ---------- -------- ---------- ----------- -----------
-- -- $5,867,498 $58,675 $5,872,588 $(7,966,169) $(2,034,906)
======== ========= ========== ======== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 49
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS
A. ORGANIZATION AND DESCRIPTION OF BUSINESS
Nature of Business
Triple I Corporation (the "Company" or "Triple I"), a Delaware
corporation, was organized as a successor to AOI Systems, Inc., whose assets and
technologies it purchased in October 1992, for the purpose of manufacturing and
selling optical inspection systems in the printed circuit board industry. The
Company operates under the trade name of AOI International and has manufacturing
operations based in Lowell, Massachusetts with customers located in the United
States, Europe, and Asia.
Exchange
On November 16, 1995, the Board of Directors of the Company approved a
transaction with Orbis, Inc. ("Orbis"), a publicly held corporation, whose only
activity had been expenses during the fiscal year relating to filing fees and
minimal overhead costs. Orbis has had no significant revenue for the last four
fiscal years. On December 5, 1996, the Orbis stockholders approved the
transaction between Triple I and Orbis, whereby the stockholders of Triple I
exchanged 100% of the outstanding Common Stock of Triple I for 90% of the
outstanding common stock of Orbis (the "Exchange"). On February 1, 1997, the
Exchange was completed as the Company obtained approval from 100% of its
shareholders. The Exchange will be accounted for as a capital stock transaction
and will be treated as a recapitalization of Triple I with Triple I as the
acquiror (reverse acquisition). The costs of the Exchange will be charged to
other expense and no goodwill will be recorded.
In connection with the Exchange, Orbis reincorporated from a Rhode
Island corporation to a Delaware corporation and changed its name to Industrial
Imaging Corporation via a merger of Orbis into Industrial Imaging Corporation.
As a result, Triple I became a wholly owned subsidiary of Industrial Imaging
Corporation.
Change in Year-End
In anticipation of the Exchange, the Company changed its year-end from a
twelve-month period ending September 30 to a twelve-month period ending March
31. The financial statements include presentation of the transition period
beginning October 1, 1995 and ending on March 31, 1996.
F-6
<PAGE> 50
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
B. MANAGEMENT'S FINANCING AND CAPITAL FORMATION PLANS
Since its inception, the Company has suffered recurring losses from
operations resulting in a net shareholders' deficit at March 31, 1997 and has
been unable to pay certain debt obligations. The remedies available to the debt
holders include immediate demand of payment and foreclosure. These conditions
raise substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. The ultimate success of the Company is dependent
upon its ability to continue to raise financing and significantly increase
contract revenue or product sales. However, the Company's capital requirements
may change depending upon numerous factors, including the demand for the
Company's product. In November 1997, the Company raised $3 million in a private
equity transaction. Management believes that with this additional capital, it
will have adequate funds to aggressively pursue market penetration. In view of
the Company's current financial condition, the Company plans to continue to
aggressively manage its working capital and expenses while pursuing product
sales opportunities as well as strategic or other business relationships.
C. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. Intercompany transactions and balances have
been eliminated in consolidation.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined on a first-in, first-out (FIFO) basis.
Property And Equipment
Property and equipment are recorded at cost. Depreciation and
amortization are computed using the straight-line method over the lesser of the
estimated useful lives of the assets, 3 to 5 years, or lease term. Maintenance
and repair costs are expensed as incurred; renewals and betterments are
capitalized. Upon the sale or retirement of fixed assets, the accounts are
relieved of the cost and the related accumulated depreciation with any resulting
gain or loss included in income.
Patents
Purchased patents are valued at cost and amortized on a straight-line
basis over five years.
Revenue Recognition
F-7
<PAGE> 51
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Sales of inspection systems and evaluation units are recorded when
customer acceptance requirements are met. Revenue from service maintenance
contracts is deferred and is recognized over the term of the contract, generally
one year. Revenue from government grants is recognized when specific contract
requirements have been met and no significant contingencies remain under the
contract. The Company generally requires payment from customers in U.S. dollars
as part of its normal payment terms. Fluctuations in foreign exchange rates to
date have not had a material effect on the Company's financial statements.
Income Taxes
The Company accounts for income taxes under the provisions of Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which requires the use of an asset and liability approach for financial
accounting and reporting for income taxes. Under this method, deferred tax
assets and liabilities are recognized for the expected future tax consequences
of temporary differences between the carrying amount and the tax bases of assets
and liabilities using the current statutory tax rates. If it is more likely than
not that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.
Net Loss Per Common Share
Net loss per common share is computed based upon the weighted average number
of common shares and common equivalent shares (using the treasury method)
outstanding after certain adjustments described below. Common equivalent shares
are not included in the per-share calculations where the effect of their
inclusion would be antidilutive.
Research And Development
Expenditures for research, development and engineering of products and
manufacturing processes are expensed as incurred. Cost reimbursement under
collaborative research agreements are recorded as offsets to research and
development expenses.
Use Of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
F-8
<PAGE> 52
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128. "Earning
Per Share" which is effective for fiscal years ending after December 31, 1997,
including interim periods. Earlier adoption is not permitted. However, the
statement permits disclosure of pro forma earnings per share amounts computed
under SFAS 128 in the notes to the financial statements in periods prior to
adoption. The statement requires restatement of all prior period earnings per
share data presented after the effective date. SFAS 128 specifies the
computation, presentation and disclosure requirements for earnings per share and
is substantially similar to the standards recently issued by the International
Accounting Standards Committee entitled International Accounting Standards,
Earnings Per Share. The Company will adopt SFAS 128 in fiscal 1998 and has not
yet determined its impact.
In June 1997, the FASB issued two additional statements. SFAS 130,
"Reporting Comprehensive Income" and SFAS 131, "Disclosures About Segments of an
Enterprise and Related Information" are both effective for years beginning after
December 15, 1997. Adoption of these standards are not expected to impact the
financial results of the Company.
Concentrations of Credit Risk
A significant portion of the Company's sales are to customers whose
principal activities relate to the printed circuit board industry, included a
heavy concentration of sales to customers in foreign countries. (See note P).
Although the Company generally requires advance deposits or letters of credit
from customers, the Company sometimes extends credit to its foreign customers
and collection may be more difficult in the event of a default.
D. ACCOUNTS RECEIVABLE
In the normal course of business, the Company extends credit terms on a
customer-by-customer basis based on its evaluation of collectibility exposure.
Management's estimates of losses in this area are recorded through an evaluation
of the adequacy of the allowance for doubtful accounts. The risk of loss from
any concentrations of credit risk with respect to trade receivables is mitigated
by management's evaluation and provision, the policy of securing larger dollar
sales with substantial deposits at order and ship dates, and the incentive for
customers to maintain their credit standing in order to receive ongoing
technical service.
During the year ended March 31, 1997 and the six months ended March 31,
1996, accounts receivable in the amounts of $347,500 and $261,400, respectively,
were factored, without recourse, to a related party. Specific invoices were sold
under individual purchase and
F-9
<PAGE> 53
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
sale agreements. The Company receives a portion of the value of a receivable at
the date of the sale. Subsequent receipts of sold receivables are forwarded in
full to the factor. Interest is calculated at Prime + 4% over the time the money
owed the factor is outstanding. The transaction is completed when the Company
receives the remaining balance of the receivable, net of interest charges, from
the factor. Interest on these contracts totaled $21,257, $16,201, $7,642 and
$3,415 during the year ended March 31, 1997, the six months ended March 31,
1996, and the years ended September 30, 1995 and 1994, respectively.
E. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
Raw materials................................ $949,895 $356,805
Work in process.............................. 596,277 28,049
Finished goods............................... 331,807 298,032
---------- --------
$1,877,979 $682,886
========== ========
</TABLE>
F. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
Machinery and equipment.................................. $ 55,613 $ 55,613
Computer equipment, including $10,001 in capital
leases in 1997 and 1996 respectively.................. 61,837 38,234
Computer software........................................ 14,949 14,949
Furniture and fixtures................................... 24,837 24,837
-------- --------
157,236 133,633
Less: accumulated depreciation and amortization.......... 122,980 100,763
-------- --------
$ 34,256 $ 32,870
======== ========
</TABLE>
Depreciation expense for the year ended March 31, 1997, six months ended
March 31, 1996, and the years ended September 30, 1995 and 1994, was $22, 217,
$17,310, $34,612 and $33,290, respectively.
G. INTANGIBLE ASSETS
F-10
<PAGE> 54
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Company holds several patents that were purchased. These patents are
stated at the acquisition cost of $531,250 and are amortized using the
straight-line method over 5 years. Amortization expense was $106,250, $53,125,
$106,250, and $106,250 for the year ended March 31, 1997, the six months ended
March 31, 1996, and the years ended September 30, 1995, and 1994, respectively.
The Company periodically reviews the propriety of carrying amounts of its
intangible assets as well as the amortization periods to determine whether
current events and circumstances warrant adjustment to the carrying value or
estimates useful lives. At each balance sheet date, management evaluates whether
there has been a permanent impairment in the value of goodwill by assessing the
carrying value of goodwill against anticipated future cash flows from related
operating activities. Factors which management considers in performing this
assessment include current operating results, trends, and prospects and, in
addition, demand, competition and other economic factors.
H. COMMITMENTS AND CONTINGENCIES
The Company is obligated under a lease agreement for an office and
manufacturing facility in Lowell, Massachusetts, expiring on November 30, 1998.
Under the terms of the lease, the Company must pay base rent of $9,970
per month plus the Company's pro rata share of certain costs paid by the
landlord. Total rent expense was $133,639, $66,084, $93,233, and $76,179 for the
year ended March 31, 1997, the six months ended March 31, 1996, and the years
ended September 30, 1995 and 1994, respectively.
The amount of future minimum lease payments under the operating lease is as
follows:
<TABLE>
<CAPTION>
<S> <C>
1998.............................................. $119,638
1999.............................................. 79,760
--------
Total minimum lease payments...................... $199,398
========
</TABLE>
On August 1, 1994 the Company entered into a cooperative agreement with
the U.S. Department of Energy Advanced Research Project Agency ("ARPA") to
research optics. The Company is finalizing its obligation under the contract. As
of March 31, 1997, the Company had incurred $320,000 in project expenses and had
received $320,000 in matching funds from ARPA which have been recorded as cost
reimbursement against research and development expense to the extent of costs
incurred.
On November 28, 1994 the Company entered into an eight-year license and
collaboration agreement with Polaroid Corporation ("Polaroid") to promote the
development, marketing, and sales in the field of printed circuit board
production, and to collaborate in the fields of Automatic Inspection and PCB
PhotoTool generation.
F-11
<PAGE> 55
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Under the Polaroid Agreement, the Company is required to meet certain
sales and performance milestones to maintain the Company's exclusivity
concerning the technology. The Company and Polaroid are in the process of
resolving a dispute regarding exclusivity. Management believes that the ultimate
resolution of this dispute will not have a material effect on the Company=s
financial statements.
In March 1996, the Company entered into a purchase agreement with
Centennial Technologies, Inc. ("Centennial") whereby Centennial had agreed to
purchase components and materials up to $3 million on behalf of the Company and
resell them to the Company. The Company has agreed to pay Centennial upon full
payment from the Company's customers as systems are sold. The agreement is
effective until June 30, 1997 and purchases must be specifically authorized by
Centennial. As of March 31, 1996, Centennial had authorized purchases for the
first $750,000. In accordance with the agreement, the Company incurred a one
time non-refundable fee of $200,000, which is included in General and
Administrative expenses for the six months ended March 31, 1996. In May 1997,
the Company and Centennial agreed to terminate the purchase agreement. The
Company liquidated amounts owed to Centennial under the agreement by paying
approximately $132,000 in cash and agreeing to issue 600,000 shares of common
stock to pay off the remaining balance of approximately $1.2 million.
I. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
--------- ---------
<S> <C> <C>
Accrued vacation $106,343 $ 88,999
Accrued professional fees 131,546 161,803
Accrued payroll and related expenses 356,890 297,317
Accrued warranty 115,885 79,611
Accrued Centennial fee -- 200,000
Accrued interest and other 247,289 102,604
-------- --------
$957,953 $930,334
======== ========
</TABLE>
J. DEBT
The following is a summary of the Company's debt obligations:
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
--------- ---------
<S> <C> <C>
Collateralized demand note with assignee for the benefit of creditors for
the former AOI Systems, Inc., due January 30, 1995. The note was
renegotiated in July 1994 to require interest
only payments at a rate of 8.0%, due monthly..................................... $130,000 $130,000
Uncollateralized subordinated note with a related party, principal due December 31,
1996, interest rate of 8.4%, interest only payments due quarterly............... 50,000 50,000
</TABLE>
F-12
<PAGE> 56
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C>
Uncollateralized note with a related party, principal due October 23, 1996, interest
rate of 10% payable at maturity................................................. 100,000 100,000
Uncollateralized note with a related party, principal due October 23, 1996, interest
rate of 8.4% payable at maturity................................................ 100,000 100,000
Uncollateralized note with a related party, principal due June 6, 1996, interest
rate of 10% payable at maturity................................................. 15,000 25,000
Uncollateralized note with a related party, principal due June 6, 1996, interest
rate of 10% payable at maturity................................................. 15,000 15,000
Uncollateralized note with a related party, principal due June 6, 1996, interest
rate of 10% payable at maturity................................................. 5,000 5,000
Uncollateralized note with a related party, principal due June 6, 1996, interest
rate of 10% payable at maturity................................................. -- 10,000
Uncollateralized note with a related party, principal due June 6, 1996, interest
rate of 10% payable at maturity................................................. 50,000 50,000
Uncollateralized note with a related party, principal due January 15, 1999, interest
rate of 10% payable at maturity................................................. 150,000
Uncollateralized note with a related party, principal due January 21, 1999, interest
rate of 10% payable at maturity................................................. 50,000
Uncollateralized note with a related party, principal due February 6, 1999, interest
rate of 10% payable at maturity................................................. 50,000
Uncollateralized note with a related party, principal due February 6, 1999, interest
rate of 10% payable at maturity................................................. 50,000
Uncollateralized note with a related party, principal due February 6, 1999, interest
rate of 10% payable at maturity................................................. 50,000
Uncollateralized note with a related party, principal due February 6, 1999, interest
rate of 10% payable at maturity................................................. 25,000
Uncollateralized note with a related party, principal due February 6, 1999, interest
rate of 10% payable at maturity................................................. 25,000
Uncollateralized note with a related party, principal due February 11, 1999,
interest rate of 10% payable at maturity........................................ 50,000
Uncollateralized note, principal due in nine monthly payments of $3,467 plus
interest at 8.1%................................................................ 13,866 5,702
Capital lease obligations............................................................ 1,538 4,472
-------- --------
930,404 495,174
Less amounts due within one year..................................................... 480,404 495,174
-------- --------
$450,000 $ --
======== ========
</TABLE>
In February 1996, the Company and various debt holders entered into an
agreement to convert $1,270,637 in unpaid debt and interest into 1,270,637
shares of the Company's common stock and warrants to purchase 150,000 shares of
common stock at $1.00 per share through February 6, 1999. In addition, the
Company and certain debt holders agreed to extend the maturity on $200,000 in
notes until October 23, 1996, however, a portion of this debt is still
outstanding.
F-13
<PAGE> 57
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
In May 1996, the Company issued a note to a related party for $200,000,
bearing interest of 10% per annum, due May 1997. In June 1996, the related party
converted this $200,000 unpaid debt into 200,000 shares of common stock, and
purchased 250,000 shares of common stock at $1.00 per share. In August 1996, the
Company issued a note to a related party for $100,000 bearing interest of 12.25%
per annum, due September 1996. This note was repaid in January 1997 plus accrued
interest. In November 1996, the Company issued a note to a related party for
$130,000 bearing interest of 12.25% per annum, due 90 days from the date of
issuance. This note was repaid in January 1996 plus accrued interest. In
December 1996, the Company issued a note to a related party for $150,000 due in
December 1999, bearing interest of 10% per annum.
In January 1997, a shareholder of the Company converted a loan in the
amount of $150,000 to a subordinated note which bears interest at 10% per annum
and is payable in January 1999. The Company issued 44,100 shares of common stock
to the noteholder in conjunction with this transaction. The common stock was
recorded in equity at $1.00 per share or a total of $44,100 which the Company
deemed to be fair market value with the offset to other expense. Payment of this
note is accelerated in the event the Company raises a certain amount of equity
financing. In addition, a shareholder of the Company loaned the Company $50,000
in January 1997. The Company issued a subordinated promissory note which bears
interest at 10% per annum and is due in two years. Payment of this note is
accelerated in the event the Company raises a certain amount of equity
financing. In addition, the Company issued 14,700 shares of common stock to the
noteholder in conjunction with this transaction. The common stock was recorded
in equity at $1.00 per share or a total of $14,700 which the Company deemed to
be fair market value with the offset to other expense.
In January 1997, the Company through Schneider Securities, Inc. (the
"Placement Agent"), commenced the 1997 bridge financing through the sale of 5
units, each of which consists of a $50,000 subordinated promissory note bearing
interest at an annual rate of 10% and 10,714 shares of the Company's common
stock. The promissory notes are due two years after issue and payment is
accelerated in the event the Company raises a certain amount of equity
financing. In February 1997, the Company raised $250,000 through the sale of 5
units and issued 53,570 shares of common stock. The common stock was recorded in
equity at $2.10 per share or a total of $112,497 which the Company deemed to be
fair market value, based upon the recent exchange, with the offset to other
expense.
The above debt instruments contain numerous covenants and remedies upon
default including immediate demand of payment and foreclosure. As of March 31,
1997, the Company had not repaid various borrowings that had become due and
therefore is in default. In addition, the collateralized note is secured by all
assets of the Company.
F-14
<PAGE> 58
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
K. SHAREHOLDERS' EQUITY
The Company's Board of Directors approved a 20-for-1 stock split of the
common and preferred stock in February 1996. Accordingly, share information for
all periods has been adjusted to reflect the split.
Through Schneider Securities, Inc. (the "Placement Agent"), the Company
raised $559,210 (net of issuance costs of $140,790) from February 1996 through
March 1996. In April 1996, the Company raised $147,036 (net of issuance costs of
$32,964) for the Private Placement (the "Private Placement"). The Company also
issued warrants as part of the Private Placement, which were issued with an
exercise price equal to the price of the common stock issued during the Private
Placement. In accordance with the Private Placement, the Company issued to the
Placement Agent warrants for the purchase of 88,000 shares of common stock
exercisable on April 27, 1997 at an exercise price of $1.20 per share. In
addition, the Company issued warrants to purchase 44,000 shares of the Company's
common stock at an exercise price of $1.20 per share, to legal counsel in
conjunction with the Private Placement. The Company accounts for the warrants at
fair value. At the date of issuance, the value of the warrants was not material.
In June 1996, a related party purchased 200,000 shares of common stock
at $1.00 per share. In January 1997, a shareholder exercised warrants to
purchase 230,000 shares of common stock at $1.00 per share.
As of March 31, 1997, the Company had not repaid various borrowings that
had become due and therefore was in default. In February 1996, the Company and
various debt holders entered into an agreement to convert $1,270,637 of unpaid
debt and interest into 1,270,637 shares of the Company's common stock. In
addition, one debt holder agreed to exchange $100,000 of debt for warrants to
purchase 150,000 shares of the Company's common stock at $1.00 per share through
February 6, 1999.
The Company has 5,867,498 and 3,537,037 shares of voting common stock
issued and outstanding at March 31, 1997 and March 31, 1996, respectively.
Holders of common stock are entitled to receive dividends only when declared by,
and at the discretion of, the Board of Directors. An aggregate of 800,000 shares
of voting common stock are reserved as follows: 200,000 shares for options under
the 1992 Stock Option Plan; and 600,000 share for options under the 1995 Stock
Option Plan.
The Company has authorized 1,000,000 shares of preferred stock, with a
par value of $.01 per share. At March 31, 1997 and March 31, 1996, 0 and 633,000
shares were issued and outstanding. In February, 1997, 633,000 preferred shares
were converted to common shares on a one for one basis. The holders of the
shares of preferred stock vote in certain circumstances and receive dividends in
parity with holders of the common stock. Dividends are noncumulative for the
Series A stock, while annual dividends are cumulative for the Series B Stock at
10% of the
F-15
<PAGE> 59
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
redemption value of $1.39.
The Series A and Series B Stock are convertible at the option of the
holder into shares of the Company=s common stock at a conversion rate using a
conversion price that will be adjusted in certain instances such as dilutive
issuances of equity securities, as defined. At March 31, 1996 and September 30,
1995, the per share conversion rate for the Series A Stock was $4.80 divided by
the initial conversion price of $4.80, or one for one. At March 31, 1996 and
September 30, 1995, the per share conversion rate for the Series B Stock was
$1.39 divided by the initial conversion price of $1.39, also one for one.
Upon liquidation, dissolution or winding up of the Company, holders of
the Series A and Series B Stock, in parity with one another, are entitled to
receive, prior and in preference to the holders of shares of stock ranking
junior to the Series A and Series B stock, an amount equal to $4.80 and $1.39
per share, respectively. In addition, Series B stockholders are entitled to any
accrued dividends at the date of liquidation.
As of March 31, 1997 and March 31, 1996, no Series B stock was
outstanding and no dividends were declared or accrued by the Company.
In November 1997, an outside investor executed a Securities Purchase
Agreement to invest $3 million in the Company by purchasing 3,000,000 shares of
the Company's common stock at $1.00 per share. In accordance with the agreement,
the Company also issued warrants to purchase 1,000,000 shares of common stock at
$1.00 per share through November 12, 2002, and issued warrants to purchase
1,000,000 shares of common stock at $2.00 per share through November 12, 2002.
The investor was granted demand registration rights starting six months from the
closing date for both the common shares purchased and the warrants granted. In
addition, the investor holds a seat on the board of directors. The agreement
contains certain covenants which restrict future activities of the company
including mergers or acquisitions, borrowings, issuance of securities, payment
of dividends, granting a security interest in company assets, and the purchase
or sale of assets. The investment has been funded and closing and issuance costs
(including commissions) amounted to approximately $250,000.
L. STOCK WARRANTS
The Company has issued stock warrants as part of certain debt and equity
transactions and accounts for warrants when issued at fair value. At date of
issuance the value of these warrants was not material. The following summarizes
the warrant issuances for the three classes of stock authorized by the Company.
F-16
<PAGE> 60
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Common Stock Warrants
In December 1993 the Company issued to an officer, who personally
guaranteed corporate indebtedness, warrants to purchase 500,000 shares of common
stock at $.50 per share through December 22, 1998. Also in December 1993 the
Company issued in connection with debt, warrants to purchase 20,000 shares of
common stock at $.20 per share through December 22, 2003. In August 1994 the
Company issued to several directors and stockholders, warrants to purchase
160,000 and 180,340 shares of common stock at $1.25 and $1.39 per share,
respectively, through August 22, 2004 and August 22, 2002, respectively. In
October 1994, the Company issued in connection with debt, warrants to purchase
72,140 shares of common stock at $1.39 per share through October 5, 2002. In
December 1994, in connection with certain equity financing, the Company issued
warrants to purchase 72,160 shares of common stock at $1.39 per share through
December 15, 2002. In June 1995, the Company issued in connection with debt,
warrants to purchase 203,480 shares of common stock at $1.39 per share through
April 6, 2003.
In October 1995, in connection with debt, the Company issued warrants to
purchase 250,000 shares of common stock at $1.00 per share through October 1998.
The Company, in February 1996, also issued warrants to purchase 150,000 shares
of common stock at $1.00 per share through February 1999, in conjunction with
the debt conversion and forgiveness of debt.
In November 1997, the Company offered a 50% discount of the exercise
price to all warrantholders of the Company's common stock for a specified period
of time, which has expired. Warrantholders exercised warrants to purchase
1,187,406 shares of common stock at prices from $.25 per share to $.60 per
share. The Company received $252,145 in cash, and received a promissory note
from an officer of the Company for $125,000, interest and principal is payable
in four years, and accrues interest at an rate of 8.5% per annum. The stock
purchased is pledged as collateral against the note. In addition, a director of
the Company cancelled a promissory note due from the Company for $100,000 in
exchange for the exercise of warrants at a total exercise price of $98,480. The
balance of the note payable plus accrued interest were paid to the noteholder in
cash. The Company also repaid a $15,000 note payable to a director plus accrued
interest. The impact of these transactions will result in the Company taking a
charge in Fiscal 1998.
Series B Preferred Stock Warrants
In 1994 the Company issued warrants for the purchase of 180,380 and
20,000 shares of Series B Preferred Stock at $1.39 per share through August 22,
2004 and December 22, 2003, respectively. In September 1994 the Company issued
warrants for the purchase of 16,000 shares of Series B Preferred Stock at $1.39
per share through September 15, 2004. All of these warrants were converted to
common stock warrants in February 1997.
F-17
<PAGE> 61
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
M. INCOME TAXES
At March 31, 1997, the Company had net operating loss ("NOL")
carryforwards of approximately $6,800,000 for federal and Massachusetts income
tax purposes. These carryforwards expire through 2012. In addition, the Company
had Research and Experimentation ("R&E") credit carryforwards of approximately
$60,000 and $25,000 for federal and Massachusetts income tax purposes,
respectively. Utilization of these NOL and R&E credit carryforwards may be
limited pursuant to the provisions of Section 382 of the Internal Revenue Code.
The components of the deferred tax assets and liabilities are as follows
(dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1997 1996
--------- ---------
<S> <C> <C>
Deferred Tax Assets/(Liabilities):
Accrued expenses and other ............................... $ 451 $ 280
Patents .................................................. 133 104
R&E credits .............................................. 85 85
NOL carryforwards ........................................ 2,762 2,202
-------- ---------
Total deferred tax asset ................................. 3,431 2,671
Valuation allowance ...................................... (3,431) (2,671)
-------- ---------
Net deferred tax asset ................................... -- --
======== =========
</TABLE>
Due to the uncertainty surrounding the realization of the deferred tax
assets in future income tax returns, the Company has recorded a full valuation
allowance against its otherwise recognizable deferred tax assets.
N. EMPLOYEE BENEFIT PLAN
Effective October 26, 1992, the Company implemented a deferred
compensation plan (the "Plan") under Section 401(k) of the Internal Revenue
Code. Under the Plan, employees are permitted to contribute, subject to certain
limitations. The Company's contribution to the Plan is discretionary and the
Company has not contributed to the Plan since its inception.
O. EMPLOYEE STOCK OPTION PLAN
During 1993, the Company adopted, subject to shareholder approval, a
stock award and incentive plan which permits the issuance of options or stock
appreciation rights (SARs) to selected employees and independent contractors of
the Company. The plan reserves 200,000 shares of common stock for grant and
provides that the term of each award be determined by the Board of Directors
charged with administering the plan.
F-18
<PAGE> 62
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Under the terms of the plan, options granted may be either nonqualified
or incentive stock options and the exercise price, determined by the Board of
Directors, may not be less than the fair market value of a share on the date of
grant. SARs and limited SARs granted in tandem with an option shall be
exercisable only to the extent the underlying option is exercisable and the
grant price shall be equal to the exercise price of the underlying option. All
options granted in 1993 and 1994 had an exercise price of $.20 per share. 42,140
options were granted in October of 1992 to employees who transferred to Triple I
from AOI Systems; these options were immediately exercisable. All other options
granted during 1993 and 1994 vest over a five-year period. In September 1995,
the Company granted to certain employees, 34,060 options with an exercise price
of $1.00 per share, vesting over a five-year period. Also during September 1995,
the Company granted to an officer of the Company, 40,000 options with an
exercise price of $1.00 per share, vesting over a two-year period. In May 1996
and January 1997 the Company granted 100,000 options and 50,000 options
respectively, at $1.00 per share to officers of the Company. Also, in November
1996, 130,600 options were granted to employees at $1.00 per share. During the
year ended March 31, 1997, the Company, in connection with certain stock option
grants, recognized $26,400 in compensation expense, due to extending the
exercise period which resulted in a remeasurement date.
Details of stock options are as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
-------- --------------
<S> <C> <C>
Year ended September 30, 1993
Granted................................................... 62,940 $ .20
Exercised................................................. 0
Canceled.................................................. 0
--------- ---------
Outstanding at end of year................................ 62,940 .20
--------- ---------
Exercisable at end of year................................ 42,140 .20
========= =========
Year ended September 30, 1994
Granted................................................... 63,000 .20
Exercised................................................. 0
Canceled.................................................. 1,600 .20
--------- ---------
Outstanding at end of year................................ 124,340 .20
--------- ---------
Exercisable at end of year................................ 45,700 .20
========= =========
Year ended September 30, 1995
Granted................................................... 74,060 1.00
Exercised................................................. 0
Canceled.................................................. 0
--------- ---------
Outstanding at end of year................................ 198,400 .50
--------- ---------
Exercisable at end of year................................ 62,220 .20
========= =========
Six months ended March 31, 1996
Granted................................................... 0
</TABLE>
F-19
<PAGE> 63
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C>
Exercised................................................. 0
Canceled.................................................. 2,000 1.00
--------- ---------
Outstanding at end of year................................ 196,400 .49
--------- ---------
Exercisable at end of year................................ 71,940 $ .20
========= =========
Year ended March 31, 1997
Granted................................................... 280,600 1.00
Exercised................................................. 0
Canceled.................................................. 0
Outstanding at end of year................................ 477,000 .79
--------- ---------
Exercisable at end of year................................ 114,872 .38
========= =========
</TABLE>
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," ("SFAS 123"). SFAS 123 is effective for periods beginning after
December 15, 1995, and requires that companies either recognize compensation
expense for grants of stock, stock options, and other equity instruments based
on fair value, or provide pro forma disclosure of net income and earnings per
share in the notes to the financial statements. The Company adopted the
disclosure provisions of SFAS 123 for the year ended March 31, 1997 and has
applied APB Opinion 25 and related Interpretations in accounting for its plans.
Accordingly, no compensation cost has been recognized.
Had compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates as calculated in
accordance with SFAS 123, the Company's net income and earnings per share for
the years ended March 31, 1997 and March 31, 1996 would have been reduced to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
MARCH 31, 1997 MARCH 31, 1996
------------------------- ---------------------------
Loss Per Loss Per
Net Income Share Net Income Share
------------ --------- ------------ --------
<S> <C> <C> <C> <C>
As reported $(1,894,554) $ (.44) $(1,159,821) $ (.55)
Pro Forma $(1,916,682) $ (.45) $(1,164,526) $ (.55)
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 does not apply to awards prior to Fiscal
1996 and additional awards in the future years are anticipated.
The fair value of each stock option is estimated on the date of grant
using the Minimum
F-20
<PAGE> 64
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Value option-pricing model with the following assumptions: an expected life of
six years, no dividends, and risk free interest rates of 6.2% and 6.1% for the
years ended March 31, 1997 and March 31, 1996, respectively. The fair value of
options granted in the year ended March 31, 1997 and the six months ended March
31, 1996 was $280,600 and $0.
The following table summarizes information about stock options at March 31,
1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------------------- -----------------------------
Weighted Average
Range of Number Contractual Weighted Average Number Weighted Average
Exercise Prices Outstanding Life Exercise Price Exercisable Exercise Price
- --------------- ----------- ---- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$0.20 124,140 6.20 $0.20 88,460 $0.20
$1.00 302,860 9.17 $1.00 26,412 $1.00
$4.00 50,000 9.77 $4.00 0
------- -------
$0.20-4.00 477,000 8.46 $1.11 114,872 $0.38
======= =======
</TABLE>
P. SIGNIFICANT CUSTOMERS AND DOMESTIC AND EXPORT SALES
Significant Customers
Sales to significant customers were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIGNIFICANT PERCENTAGE OF
MARCH 31, 1997 CUSTOMERS AMOUNT REVENUES
----------------------------- ----------- ------ -------------
<S> <C> <C> <C>
1997......................... Customer A $515,272 28%
1997......................... Customer B 460,000 25%
1997......................... Customer C 274,781 15%
1997......................... Customer D 227,230 12%
FOR THE SIX
MONTHS ENDED SIGNIFICANT PERCENTAGE OF
MARCH 31, 1996 CUSTOMERS AMOUNT REVENUES
----------------------------- ----------- ------ -------------
1996......................... Customer A $226,059 39%
1996......................... Customer B 180,000 31%
YEAR ENDED SIGNIFICANT PERCENTAGE OF
SEPTEMBER 30, 1995 CUSTOMERS AMOUNT REVENUES
----------------------------- ----------- ------ -------------
1995......................... Customer A $225,000 18%
1995......................... Customer B 209,248 17%
</TABLE>
F-21
<PAGE> 65
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995......................... Customer C 197,000 16%
1995......................... Customer D 178,066 15%
1994......................... Customer A 341,052 26%
1994......................... Customer B 291,572 22%
1994......................... Customer C 198,000 15%
1994......................... Customer D 150,000 12%
</TABLE>
Domestic and Export Sales
Domestic and export sales as a percentage of revenues were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1997
--------------------------
AMOUNT %
----------- --------
<S> <C> <C>
Domestic........................................ $ 377,835 20%
Europe.......................................... 990,808 54%
Asia............................................ 484,933 26%
SIX MONTHS ENDED
MARCH 31, 1996
--------------------------
AMOUNT %
----------- --------
Domestic........................................ $ 37,328 6%
Europe.......................................... 532,112 92%
Asia............................................ 10,926 2%
YEAR ENDED
SEPTEMBER 30, 1995
--------------------------
AMOUNT %
----------- --------
Domestic........................................ $ 114,701 9%
Europe.......................................... 1,095,642 90%
Asia............................................ 14,680 1%
YEAR ENDED
SEPTEMBER 30, 1994
--------------------------
AMOUNT %
----------- --------
Domestic........................................ $ 500,545 38%
Europe.......................................... 664,965 51%
Asia............................................ 144,638 11%
</TABLE>
F-22
<PAGE> 66
INDUSTRIAL IMAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Q. OTHER EXPENSE
Included in other expense is $171,297, which represents the cost of shares
of the Company's common stock issued in conjunction with loans made to the
Company in January and February, 1997. (See Note J).
R. MERGER EXPENSES
The costs of the Exchange with Orbis, consisting of legal costs,
printing costs, and accounting costs amounted to $179,787, and have been
included in operating expenses. (See Note A).
F-23
<PAGE> 1
EXHIBIT 2
AGREEMENT OF MERGER
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Merger Agreement"), dated as of December___,
1996 is between Orbis, Inc., a Rhode Island corporation ("Orbis") and Industrial
Imaging Corporation, Delaware corporation ("Industrial Imaging"). Orbis and
Industrial Imaging are hereafter sometimes collectively referred to as the
"Constituent Corporation."
WHEREAS, Orbis is a corporation duly organized and existing under the
laws of the State of Rhode Island;
WHEREAS, Industrial Imaging is a corporation duly organized and
existing under the laws of the State of Delaware;
WHEREAS, on the date of this Merger Agreement, Orbis, Inc. has
authority to issue 10,000,000 shares of Common Stock, $.01 par value per share
("Orbis Common Stock"), 9,450,000 shares of which are issued and outstanding;
WHEREAS, on the date of this Merger Agreement, Industrial Imaging has
authority to issue twenty million (20,000,000) shares of Common Stock, $.01 par
value per share ("Industrial Imaging Common Stock"), of which one (1) share is
issued and outstanding, one million (1,000,000) shares of Preferred Stock, $.01
par value per share, of which no shares are issued and outstanding;
WHEREAS, the respective Boards of Directors of Orbis and Industrial
Imaging have determined that it is advisable and in the best interests of each
of such corporations to merge in a tax-free reorganization with and into
Industrial Imaging upon the terms and subject to the conditions of this Merger
Agreement; and
WHEREAS, the respective Boards of Directors of Orbis and Industrial
Imaging have, by resolutions duly adopted, approved this Merger Agreement, and
the shareholders of Orbis have duly approved this Merger Agreement, by majority
of the shareholders voting at a Special Meeting of Stockholders on December 5,
1996 and the sole shareholder of Industrial Imaging has, by unanimous written
consent dated __________, 1996, duly approved this Merger Agreement;
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, Orbis and Industrial Imaging hereby agree as follows:
1. Merger. Orbis will be merged with and into Industrial Imaging (the
"Merger"), and Industrial Imaging shall be the surviving corporation
(hereinafter sometimes referred to as the "Surviving Corporation"). The merger
shall become effective upon the time and date of filing of such documents as may
be required under applicable law ("Effective Time").
2. Governing Documents. The Certificate of Incorporation and the Bylaws
of Industrial Imaging as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation without
change or amendment until thereafter amended in accordance with the provisions
thereof and applicable laws.
3. Succession. At the Effective Time, the separate corporate existence
of Orbis shall cease, and Industrial Imaging shall possess all the rights,
privileges, powers and franchises of a public and private nature and be subject
to all the restrictions, disabilities and duties of Orbis; and all and singular,
the rights, privileges, powers and franchises of Orbis and all property, real,
personal and mixed, and all debts due to Orbis on whatever account, as well as
for share subscriptions and all other things in action or belonging to Orbis
shall be vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of Orbis, and the title to any real estate vested by deed or otherwise, under
the laws of the State of Delaware, in Orbis shall not revert or be in any way
impaired by reason of the General Corporation Law of the State of Delaware; but
all rights of creditors and all liens upon any property of Orbis shall be
preserved unimpaired; and all debts, liabilities and duties of Orbis shall
thenceforth attach to the Surviving Corporation and may be enforced against it
to the same extent as if such debts, liabilities and duties had been incurred or
contracted by it. All corporate acts, plans, policies, agreements, arrangements,
approvals and authorizations of Orbis, its shareholders, Board of Directors and
committees thereof, officers and agents which were valid and effective
immediately prior to the Effective Time, shall be taken for all purposes as the
acts, plans, policies, agreements, arrangements, approvals and authorizations of
Industrial Imaging and shall be as effective and binding thereon as the same
were with respect to Orbis.
4. Further Assurances. From time to time, as and when required by
Industrial Imaging or by its successors and assigns, there shall be executed and
delivered on behalf of Orbis such deeds and other instruments, and there shall
be taken or caused to be taken by it all such further and other action, as shall
be appropriate or necessary in order to vest, perfect or confirm, of record or
otherwise, in Industrial Imaging the title to and possession of all property,
interest, assets, rights, privileges, immunities, powers, franchises and
authority of Orbis and otherwise to carry out the purposes of this Merger
Agreement, and the officers and directors of Industrial Imaging are fully
authorized in the name and on behalf of Orbis to take any and all such action
and to execute and deliver any and all deeds and other instruments.
5. Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof:
(a) Every eighteen (18) shares of Orbis Common Stock issued and
outstanding immediately prior to the Effective Time shall be changed
and converted into one (1) fully-paid and non-assessable share of
Common Stock of Industrial Imaging.
(b) The one (1) share of Industrial Imaging Common Stock presently
issued and outstanding shall be given to Industrial Imaging as a
capital contribution and shall be cancelled and resume the status of
authorized and unissued shares of Industrial Imaging Common Stock, and
no shares of Industrial Imaging Common Stock or other securities shall
be issued in respect thereof.
6. Conversion of Warrants and Options. At the Effective Time, by virtue
of the Merger
2
<PAGE> 3
and without any action on the part of the holder thereof, unless the Board of
Directors determines otherwise, each option and/or warrant to purchase Orbis
Common Stock outstanding immediately prior to the Effective Time shall be
changed and converted into an option and/or warrant to purchase Industrial
Imaging Common Stock on the basis of the following ratio:
(a) Options to purchase eighteen (18) shares of Orbis Common Stock
shall be converted into an option to purchase one (1) share of
Industrial Imaging Common Stock.
(b) Warrants to purchase eighteen (18) shares of Orbis Common
Stock shall be converted into a warrant to purchase one (1) share of
Industrial Imaging Common Stock.
7. Stock Certificates. At and after the Effective Time, all of the
outstanding certificates which immediately prior to the Effective Time
represented shares of Orbis Common Stock shall be presented to Industrial
Imaging to be exchanged for certificates representing shares of Industrial
Imaging Common Stock as converted as herein provided. The registered owner of
any such outstanding certificate shall, until such certificate shall have been
surrendered for transfer or otherwise accounted for to Industrial Imaging or its
transfer agents, have and be entitled to exercise any voting and other rights
with respect to and to receive any dividends and other distributions upon the
shares of Industrial Imaging Common Stock evidenced by such outstanding
certificate as above provided. All certificates representing shares of
Industrial Imaging outstanding immediately prior to the Effective Time shall be
surrendered to Industrial Imaging for cancellation; at and after the Effective
Time, the shares represented by such certificates shall be deemed to be
cancelled whether or not the certificates have been surrendered or otherwise
accounted for.
8. Employee Benefit Plans. As of the Effective Time, Industrial Imaging
hereby assumes all obligations of Orbis under all employee benefit plans in
effect, if any, as of the Effective Time or with respect to which employee
rights or accrued benefits are outstanding, if any, as of the Effective Time.
9. Amendment. Subject to applicable law, this Merger Agreement may be
amended, modified or supplemented by written agreement of the parties hereto at
any time prior to the Effective Time with respect to any of the terms contained
herein.
10. Abandonment. At any time prior to the Effective Time, this Merger
Agreement may be terminated and the Merger may be abandoned by the Board of
Directors of either Orbis or Industrial Imaging, or either of them,
notwithstanding approval of this Merger Agreement by the stockholders of any of
said corporations if circumstances arise which, in the opinion of the Board of
Directors of Orbis or Industrial Imaging make the Merger inadvisable.
11. Counterparts. In order to facilitate the filing and recording of
this Merger Agreement, the same may be executed in two or more counterparts,
each of which shall be deemed to be an original and the same agreement.
3
<PAGE> 4
IN WITNESS WHEREOF, Orbis and Industrial Imaging have caused this
Merger Agreement to be signed by their respective duly authorized officers as of
the date first above written.
Orbis, Inc.
a Rhode Island corporation
By:
--------------------------------
Pasquale Ruggieri, President
WITNESS:
Arthur G. Jenkins, Secretary
Industrial Imaging Corporation
a Delaware corporation
By:
--------------------------------
Juan J. Amodei, Ph.D., President
WITNESS:
- --------------------------------
Juan J. Amodei, Ph.D., Secretary
<PAGE> 1
EXHIBIT 3a
CERTIFICATE OF INCORPORATION
OF
INDUSTRIAL IMAGING CORPORATION
*****
1. The name of the corporation is Industrial Imaging Corporation.
2. The address of its registered office in the State of Delaware is 1209 Orange
Street, in the City of Wilmington, County of New Castle. The name of its
registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the Corporation shall have
authority to issue is Twenty-one Million (21,000,000) shares; of which twenty
million (20,000,000) will be Common Stock, of the par value $.01 per share; and
one million (1,000,000) will be Preferred Stock, of the par value $.01 per
share, amounting in the aggregate to Two Hundred Ten Thousand and 00/100 Dollars
($210,000.00).
Additional designations and powers, preferences and rights and
qualifications, limitations or restrictions thereof of the shares of each class
shall be determined by the Board of Directors of the Corporation from time to
time.
5. The name and mailing address of the Corporation's incorporator is Juan J.
Amodei, Ph.D., Industrial Imaging Corporation, One Lowell Research Center, 847
Rogers Street, Lowell, Massachusetts 01852.
6. The name and address of the person who is to serve as the sole director of
the Corporation until the first annual meeting of the stockholders or until his
successors are elected and qualified is:
Juan J. Amodei, Ph.D.
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
7. The Corporation is to have perpetual existence.
8. In furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized:
<PAGE> 2
To make, alter or repeal the bylaws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the real and
personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole Board, to designate one or more committees, each
committee to consist of one or more of the Directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. The bylaws may provide that in the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such agent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
or in the bylaws of the Corporation, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease, or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending the
bylaws of the Corporation; and, unless the resolution or bylaws expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute, to
sell, lease or exchange all or substantially all of the property and assets of
the Corporation, including its goodwill and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property, including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the Corporation.
9. To the maximum extent permitted by Section 102(b)(7) of the General
Corporation Law of Delaware, a director of this Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
10. Whenever a compromise or arrangement is proposed between this Corporation
and its
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creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court or equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof, or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement to any reorganization of this Corporation
as consequences of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders of
this Corporation, as the case may be, and also on this Corporation.
11. Meetings of the stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the bylaws of the Corporation. Elections of directors
need not be by written ballot unless the bylaws of the Corporation shall so
provide.
12. The Corporation reserves the right to amend, alter, change, or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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THE UNDERSIGNED, being the incorporator named hereinbefore, for the purposes
of forming a corporation pursuant to the General Corporation Law of the State of
Delaware, does make this certificate, hereby declaring and certifying that this
is his act and deed and the facts herein stated are true, and accordingly, has
hereunto set his hand this day of , 1996.
--------------------------
Juan J. Amodei, Ph.D.
COMMONWEALTH OF MASSACHUSETTS )
) ss.:
COUNTY OF MIDDLESEX )
BE IT REMEMBERED that on this day of , 1996, personally came before me, a
Notary Public for the Commonwealth of Massachusetts, Juan J. Amodei, Ph.D., the
party to the foregoing Certificate of Incorporation, known to me personally to
be such, and acknowledged the said Certificate to be his free act and deed and
that the facts stated therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
--------------------------
Notary Public
My commission expires:
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EXHIBIT 3b
BYLAWS
OF
INDUSTRIAL IMAGING CORPORATION
Article I. Offices.
Section 1. Registered Office. The registered office of the Corporation
shall be at The Corporation Trust Company, 1209 Orange Street, in the City of
Wilmington, County of New Castle, State of Delaware 19801.
Section 2. Additional Offices. The Corporation may also have offices at
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
Article II. Meetings of Stockholders.
Section 1. Time and Place. A meeting of stockholders for any purpose
may be held at such time and place within or without the State of Delaware as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual Meeting. Annual meetings of stockholders, commencing
with the year 1997, shall be held on the first Monday in May at 10:00 a.m., or
at such other date and time as shall, from time to time, be designated by the
Board of Directors and stated in the notice of the meeting. At such annual
meetings, the stockholders shall elect a Board of Directors and transact such
other business as may properly be brought before the meetings.
Section 3. Notice of Annual Meeting. Written notice of the annual
meeting, stating the place, date, and time thereof, shall be given to each
stockholder entitled to vote at such meeting not less than ten (unless a longer
period is required by law) nor more than sixty days prior to the meeting.
Section 4. Special Meetings. Special meetings of the stockholders may
be called for any purpose or purposes, unless otherwise prescribed by statute or
by the Certificate of Incorporation, by the Chairman of the Board, if any, or
the President, and shall be called by the President or Secretary at the request,
in writing, of a majority of the Board of Directors or of the stockholders
owning a majority of the shares of capital stock of the Corporation issued and
outstanding and entitled to vote. Such request shall state the purpose of the
proposed meeting.
Section 5. Notice of Special Meeting. Written notice of a special
meeting, stating the place, date, and time thereof and the purpose or purposes
for which the meeting is called, shall be given to each stockholder entitled to
vote at such meeting not less than ten (unless a longer period is required by
law) nor more than sixty days prior to the meeting.
<PAGE> 2
Section 6. List of Stockholders. The transfer agent or the officer in
charge of the stock ledger of the Corporation shall prepare and make, at least
ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, at a
place within the city where the meeting is to be held, which place, if other
than the place of the meeting, shall be specified in the notice of the meeting.
The list shall also be produced and kept at the place of the meeting during the
whole time thereof and may be inspected by any stockholder who is present in
person thereat.
Section 7. Presiding Officer and Order of Business.
(a) Meetings of stockholders shall be presided over by the Chairman of
the Board. If he is not present or there is none, they shall be presided over by
the President, or, if he is not present or there is none, by a Vice President,
or, if he is not present or there is none, by a person chosen by the Board of
Directors, or, if no such person is present or has been chosen, by a chairman to
be chosen by the stockholders owning a majority of the shares of capital stock
of the Corporation issued and outstanding and entitled to vote at the meeting
and who are present in person or represented by proxy. The Secretary of the
Corporation, or, if he is not present, an Assistant Secretary, or, if he is not
present, a person chosen by the Board of Directors, shall act as Secretary at
meetings of stockholders; if no such person is present or has been chosen, the
stockholders owning a majority of the shares of capital stock of the Corporation
issued and outstanding and entitled to vote at the meeting who are present in
person or represented by proxy shall choose any person present to act as
secretary of the meeting.
(b) The following order of business, unless otherwise determined at the
meeting, shall be observed as far as practicable and consistent with the
purposes of the meeting:
(1) Call of the meeting to order.
(2) Presentation of proof of mailing of the notice of the meeting
and, if the meeting is a special meeting, the call thereof.
(3) Presentation of proxies.
(4) Announcement that a quorum is present.
(5) Reading and approval of the minutes of the previous meeting.
(6) Reports, if any, of officers.
(7) Election of directors, if the meeting is an annual meeting or a
meeting called for that purpose.
(8) Consideration of the specific purpose or purposes, other than the
election of directors, for which the meeting has been called, if
the meeting is a special meeting.
(9) Transaction of such other business as may properly come before
the meeting.
(10) Adjournment.
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Section 8. Quorum and Adjournments. The presence in person or
representation by proxy of the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote
shall be necessary to, and shall constitute a quorum for, the transaction of
business at all meetings of the stockholders, except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, a quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat who are present in person or represented by proxy shall
have the power to adjourn the meeting from time to time until a quorum shall be
present or represented. If the time and place of the adjourned meeting are
announced at the meeting at which the adjournment is taken, no further notice of
the adjourned meeting need be given. Even if a quorum shall be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat who are present in person or represented by proxy shall have the
power to adjourn the meeting from time to time for good cause to a date that is
not more than thirty days after the date of the original meeting. Further notice
of the adjourned meeting need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken. At any adjourned
meeting at which a quorum is present in person or represented by proxy, any
business may be transacted that might have been transacted at the meeting as
originally called. If the adjournment is for more than thirty days, or if, after
the adjournment, a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote thereat.
Section 9. Voting.
(a) At any meeting of the stockholders, every stockholder having the
right to vote shall be entitled to vote in person or by proxy. Except as
otherwise provided by law or the Certificate of Incorporation, each stockholder
of record shall be entitled to one vote for each share of capital stock
registered in his name on the books of the Corporation.
(b) All elections shall be determined by a plurality vote, and, except
as otherwise provided by law or the Certificate of Incorporation, all other
matters shall be determined by a vote of a majority of the shares present in
person or represented by proxy and voting on such other matters.
Section 10. Action by Consent. Any action required or permitted by law
or the Certificate of Incorporation to be taken at any meeting of stockholders
may be taken without a meeting, without prior notice of a written consent,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present or represented by proxy and voted. Such written
consent shall be filed with the minutes of the meetings of stockholders. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing thereto.
Article III. Directors.
Section 1. General Powers, Number, and Tenure. The business of the
Corporation shall
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<PAGE> 4
be managed by its Board of Directors, which may exercise all powers of the
Corporation and perform all lawful acts that are not by law, the Certificate of
Incorporation, or these Bylaws directed or required to be exercised or performed
by the stockholders. The number of directors shall be determined by the Board of
Directors; if no such determination is made, the number of directors shall be
one. The directors shall be elected at the annual meeting of the stockholders,
except as provided in Section 2 of this Article, and each director elected shall
hold office until the next annual meeting and until his successor is elected and
shall qualify. Directors need not be stockholders.
Section 2. Vacancies. If any vacancies occur in the Board of Directors,
or if any new directorships are created, they may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. Each director so chosen shall hold office until the next annual
meeting of stockholders and until his successor is duly elected and shall
qualify. If there are no directors in office, any officer or stockholder may
call a special meeting of stockholders in accordance with the provisions of the
Certificate of Incorporation or these Bylaws, at which meeting such vacancies
shall be filled.
Section 3. Removal or Resignation.
(a) Except as otherwise provided by law or the Certificate of
Incorporation, any director or the entire Board of Directors may be removed,
with or without cause, by the holders of a majority of the shares then entitled
to vote at an election of directors.
(b) Any director may resign at any time by giving written notice to the
Board of Directors, the Chairman of the Board, if any, or the President or
Secretary of the Corporation. Unless otherwise specified in such written notice,
a resignation shall take effect on delivery thereof to the Board of Directors or
the designated officer. It shall not be necessary for a resignation to be
accepted before it becomes effective.
Section 4. Place of Meetings. The Board of Directors may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. Annual Meeting. The annual meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting shall be necessary to the newly
elected directors in order to constitute the meeting legally, provided a quorum
shall be present.
Section 6. Regular Meetings. Additional regular meetings of the Board
of Directors may be held without notice of such time and place as may be
determined from time to time by the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the President, or by two or more
directors on at least two days' notice to each director, if such notice is
delivered personally or sent by telegram, or on at least three days' notice if
sent by mail. Special meetings shall be called by the Chairman of the Board,
President, Secretary, or two or more directors in like manner and on like notice
on the written request of one-half or more of the number of directors then in
office. Any such notice need not state the purpose or purposes of such meeting,
except as provided in Article XI.
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Section 8. Quorum and Adjournments. At all meetings of the Board of
Directors, a majority of the directors then in office shall constitute a quorum
for the transaction of business, and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by law or the
Certificate of Incorporation. If a quorum is not present at any meeting of the
Board of Directors, the directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting at which the
adjournment is taken, until a quorum shall be present.
Section 9. Compensation. Directors shall be entitled to such
compensation for their services as directors and to such reimbursement for any
reasonable expenses incurred in attending directors' meetings as may from time
to time be fixed by the Board of Directors. The compensation of directors may be
on such basis as is determined by the Board of Directors. Any director may waive
compensation for any meeting. Any director receiving compensation under these
provisions shall not be barred from serving the Corporation in any other
capacity and receiving compensation and reimbursement for reasonable expenses
for such other services.
Section 10. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a meeting,
and without prior notice, if a written consent to such action is signed by all
members of the Board of Directors and such written consent is filed with the
minutes of its proceedings.
Section 11. Meetings by Telephone or Similar Communications Equipment.
The Board of Directors may participate in a meeting by conference telephone or
similar communications equipment by means of which all directors participating
in the meeting can hear each other, and participation in such a meeting shall
constitute presence in person by any such director at such meeting.
Article IV. Committees.
Section 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may appoint an Executive Committee
consisting of one or more directors, one of whom shall be designated as Chairman
of the Executive Committee. Each member of the Executive Committee shall
continue as a member thereof until the expiration of his term as a director or
his earlier resignation, unless sooner removed as a member or as a director.
Section 2. Powers. The Executive Committee shall have and may exercise
those rights, powers, and authority of the Board of Directors as may from time
to time be granted to it by the Board of Directors to the extent permitted by
law, and may authorize the seal of the Corporation to be affixed to all papers
that may require it.
Section 3. Procedure and Meetings. The Executive Committee shall fix
its own rules of procedure and shall meet at such times and at such place or
places as may be provided by such rules or as the members of the Executive
Committee shall fix. The Executive Committee shall keep regular minutes of its
meetings, which it shall deliver to the Board of Directors from time to time.
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The Chairman of the Executive Committee or, in his absence, a member of the
Executive Committee chosen by a majority of the members present, shall preside
at meetings of the Executive Committee; and another member chosen by the
Executive Committee shall act as Secretary of the Executive Committee.
Section 4. Quorum. A majority of the Executive Committee shall
constitute a quorum for the transaction of business, and the affirmative vote of
a majority of the members present at any meeting at which there is a quorum
shall be required for any action of the Executive Committee; provided, however,
that when an Executive Committee of one member is authorized under the
provisions of Section 1 of this Article, that one member shall constitute a
quorum.
Section 5. Other Committees. The Board of Directors, by resolutions
adopted by a majority of the whole Board, may appoint such other committee or
committees as it shall deem advisable and with such rights, power, and authority
as it shall prescribe. Each such committee shall consist of one or more
directors.
Section 6. Committee Changes. The Board of Directors shall have the
power at any time to fill vacancies in, to change the membership of, and to
discharge any committee.
Section 7. Compensation. Members of any committee shall be entitled to
such compensation for their services as members of the committee and to such
reimbursement for any reasonable expenses incurred in attending committee
meetings as may from time to time be fixed by the Board of Directors. Any member
may waive compensation for any meeting. Any committee member receiving
compensation under these provisions shall not be barred from serving the
Corporation in any other capacity and from receiving compensation and
reimbursement of reasonable expenses for such other services.
Section 8. Action by Consent. Any action required or permitted to be
taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if a written consent to such action is signed by all members
of the committee and such written consent is filed with the minutes of its
proceedings.
Section 9. Meetings by Telephone or Similar Communications Equipment.
The members of any committee designated by the Board of Directors may
participate in a meeting of such committee by conference telephone or similar
communications equipment by means of which all persons participating in such
meeting can hear each other, and participation in such a meeting shall
constitute presence in person by any such committee member at such meeting.
Article V. Notices.
Section 1. Form and Delivery. Whenever a provision of any law, the
Certificate of Incorporation, or these Bylaws requires that notice be given to
any director or stockholder, it shall not be construed to require personal
notice unless so specifically provided, but such notice may be
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given in writing, by mail addressed to the address of the director or
stockholder as it appears on the records of the Corporation, with postage
prepaid. These notices shall be deemed to be given when they are deposited in
the United States mail. Notice to a director may also be given personally or by
telephone or by telegram sent to his address as it appears on the records of the
Corporation.
Section 2. Waiver. Whenever any notice is required to be given under
the provisions of any law, the Certificate of Incorporation, or these Bylaws, a
written waiver thereof signed by the person entitled to said notice, whether
before or after the time stated therein, shall be deemed to be equivalent to
such notice. In addition, any stockholder who attends a meeting of stockholders
in person or is represented at such meeting by proxy, without protesting at the
commencement of the meeting the lack of notice thereof to him, or any director
who attends a meeting of the Board of Directors without protesting at the
commencement of the meeting of the lack of notice, shall be conclusively deemed
to have waived notice of such meeting.
Article VI. Officers.
Section 1. Designations. The officers of the Corporation shall be
chosen by the Board of Directors. The Board of Directors may choose a Chairman
of the Board, a President, a Vice President or Vice Presidents, a Secretary, a
Treasurer, one or more Assistant Secretaries and/or Assistant Treasurers, and
other officers and agents that it shall deem necessary or appropriate. All
officers of the Corporation shall exercise the powers and perform the duties
that shall from time to time be determined by the Board of Directors. Any number
of offices may be held by the same person, unless the Certificate of
Incorporation or these Bylaws provide otherwise.
Section 2. Term of, and Removal From, Office. At its first regular
meeting after each annual meeting of stockholders, the Board of Directors shall
choose a President, a Secretary, and a Treasurer. It may also choose a Chairman
of the Board, a Vice President or Vice Presidents, one or more Assistant
Secretaries and/or Assistant Treasurers, and such other officers and agents as
it shall deem necessary or appropriate. Each officer of the Corporation shall
hold office until his successor is chosen and shall qualify. Any officer elected
or appointed by the Board of Directors may be removed, with or without cause, at
any time by the affirmative vote of a majority of the directors then in office.
Removal from office, however, shall not prejudice the contract rights, if any,
of the person removed. Any vacancy occurring in any office of the Corporation
may be filled for the unexpired portion of the term by the Board of Directors.
Section 3. Compensation. The salaries of all officers of the
Corporation shall be fixed from time to time by the Board of Directors, and no
officer shall be prevented from receiving a salary because he is also a director
of the Corporation.
Section 4. The Chairman of the Board. The Chairman of the Board, if
any, shall be an officer of the Corporation and, subject to the direction of the
Board of Directors, shall perform such executive, supervisory, and management
functions and duties as may be assigned to him from time to time by the Board of
Directors. He shall, if present, preside at all meetings of stockholders and of
the Board of Directors.
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Section 5. The President.
(a) The President shall be the chief executive officer of the
Corporation and, subject to the direction of the Board of Directors, shall have
general charge of the business, affairs, and property of the Corporation and
general supervision over its other officers and agents. In general, he shall
perform all duties incident to the office of President and shall see that all
orders and resolutions of the Board of Directors are carried into effect.
(b) Unless otherwise prescribed by the Board of Directors, the
President shall have full power and authority to attend, act, and vote on behalf
of the Corporation at any meeting of the security holders of other corporations
in which the Corporation may hold securities. At any such meeting, the President
shall possess and may exercise any and all rights and powers incident to the
ownership of such securities that the Corporation might have possessed and
exercised if it had been present. The Board of Directors may from time to time
confer like powers upon any other person or persons.
Section 6. The Vice President. The Vice President, if any, or in the
event there be more than one, the Vice Presidents in the order designated, or in
the absence of any designation, in the order of their election, shall, in the
absence of the President or in the event of his disability, perform the duties
and exercise the powers of the President and shall generally assist the
President and perform such other duties and have such other powers as may from
time to time be prescribed by the Board of Directors.
Section 7. The Secretary. The Secretary shall attend all meetings of
the Board of Directors and the stockholders and record all votes and the
proceedings of the meetings in a book to be kept for that purpose. He shall
perform like duties for the Executive Committee or other committees, if
required. He shall give, or cause to be given, notice of all meetings of
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may from time to time be prescribed by the Board of
Directors, the Chairman of the Board, or the President, under whose supervision
he shall act. He shall have custody of the seal of the Corporation, and he, or
an Assistant Secretary, shall have authority to affix it to any instrument
requiring it, and, when so affixed, the seal may be attested by his signature or
by the signature of the Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing thereof by his signature.
Section 8. The Assistant Secretary. The Assistant Secretary, if any, or
in the event there be more than one, the Assistant Secretaries in the order
designated, or in the absence of any designation, in the order of their
election, shall, in the absence of the Secretary or in the event of his
disability, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
Section 9. The Treasurer. The Treasurer shall have custody of the
corporate funds and other valuable effects, including securities, and shall keep
full and accurate accounts of receipts and disbursements in books belonging to
the Corporation and shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such depositories as may from time
to time
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be designated by the Board of Directors. He shall disburse the funds of the
Corporation in accord with the orders of the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chairman of the Board,
if any, the President, and the Board of Directors, whenever they may require it
or at regular meetings of the Board, an account of all his transactions as
Treasurer and of the financial condition of the Corporation.
Section 10. The Assistant Treasurer. The Assistant Treasurer, if any,
or in the event there shall be more than one, the Assistant Treasurers in the
order designated, or in the absence of any designation, in the order of their
election, shall, in the absence of the Treasurer or in the event of his
disability, perform such other duties and have such other powers as may from
time to time be prescribed by the Board of Directors.
Article VII. Indemnification.
Reference is made to Section 145 and any other relevant provisions of
the General Corporation Law of the State of Delaware. Particular reference is
made to the class of persons, hereinafter called "Indemnitees", who may be
indemnified by a Delaware corporation pursuant to the provisions of such Section
145, namely, any person, or the heirs, executors, or administrators of such
person, who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact that such
person is or was a director, officer, employee, or agent of such corporation or
is or was serving at the request of such corporation as a director, officer,
employee, or agent of such corporation or is or was serving at the request of
such corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise. The
Corporation shall, and is hereby obligated to, indemnify the Indemnitees, and
each of them, in each and every situation where the Corporation is obligated to
make such indemnification pursuant to the aforesaid statutory provisions. The
Corporation shall indemnify the Indemnitees, and each of them, in each and every
situation where, under the aforesaid statutory provisions, the Corporation is
not obligated, but is nevertheless permitted or empowered, to make such
indemnification, it being understood that, before making such indemnification
with respect to any situation covered under this sentence, (i) the Corporation
shall promptly make or cause to be made, by any of the methods referred to in
Subsection (d) of such Section 145, a determination as to whether each
Indemnitee acted in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the Corporation, and, in the case of
any criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful, and (ii) that no such indemnification shall be made unless
it is determined that such Indemnitee acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, in the case of any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful.
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<PAGE> 10
Article VIII. Affiliated Transactions and Interested Directors.
Section 1. Affiliated Transactions. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or participates
in the meeting of the Board of Directors or committee thereof that authorizes
the contract or transaction or solely because his or their votes are counted for
such purpose if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by the vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved, or ratified by the Board of Directors, a
committee thereof, or the stockholders.
Section 2. Determining Quorum. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorizes the contract or
transaction.
Article IX. Stock Certificates.
Section 1. Form and Signatures.
(a) Every holder of stock of the Corporation shall be entitled to a
certificate stating the number and class, and series, if any, of shares owned by
him, signed by the Chairman of the Board, if any, or the President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the Corporation, and bearing the seal of the Corporation. The signatures and
the seal may be facsimiles. A certificate may be signed, manually or by
facsimile, by a transfer agent or registrar other than the Corporation or its
employee. In case any officer who has signed, or whose facsimile signature was
placed on, a certificate shall have ceased to be such officer before the
certificate is issued, it may nevertheless be issued by the Corporation with the
same effect as if he were such officer at the date of its issue.
(b) All stock certificates representing shares of capital stock that
are subject to restrictions on transfer or to other restrictions may have
imprinted thereon any notation to that effect determined by the Board of
Directors.
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<PAGE> 11
Section 2. Registration of Transfer. Upon surrender to the Corporation
or any transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment, or
authority to transfer, the Corporation or its transfer agent shall issue a new
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction upon the books of the Corporation.
Section 3. Registered Stockholders.
(a) Except as otherwise provided by law, the Corporation shall be
entitled to recognize the exclusive right of a person who is registered on its
books as the owner of shares of its capital stock to receive dividends or other
distributions and to vote or consent as such owner, and to hold liable for calls
and assessments any person who is registered on its books as the owner of shares
of its capital stock. The Corporation shall not be bound to recognize any
equitable or legal claim to, or interest in, such shares on the part of any
other person.
(b) If a stockholder desires that notices and/or dividends shall be
sent to a name or address other than the name or address appearing on the stock
ledger maintained by the Corporation, or its transfer agent or registrar, if
any, the stockholder shall have the duty to notify the Corporation, or its
transfer agent or registrar, if any, in writing of his desire and specify the
alternate name or address to be used.
Section 4. Record Date. In order that the Corporation may determine the
stockholders of record who are entitled to receive notice of, or to vote at, any
meeting of stockholders or any adjournment thereof or to express consent to
corporate action in writing without a meeting, to receive payment of any
dividend or other distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion, or exchange of stock or for the
purpose of any lawful action, the Board of Directors may, in advance, fix a date
as the record date for any such determination. Such date shall not be more than
sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to the date of any other action. A determination of
stockholders of record entitled to notice of, or to vote at, a meeting of
stockholders shall apply to any adjournment of the meeting taken pursuant to
Section 8 of Article II; provided, however, that the Board of Directors may fix
a new record date for the adjourned meeting.
Section 5. Lost, Stolen, or Destroyed Certificates. The Board of
Directors may direct that a new certificate be issued to replace any certificate
theretofore issued by the Corporation that, it is claimed, has been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate to be lost, stolen, or destroyed. When authorizing the
issue of a new certificate, the Board of Directors may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of the lost,
stolen, or destroyed certificate, or his legal representative, to advertise the
same in such manner as it shall require, and/or to give the Corporation a bond
in such sum, or other security in such form, as it may direct as indemnity
against any claims that may be made against the Corporation with respect to the
certificate claimed to have been lost, stolen, or destroyed.
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Article X. General Provisions.
Section 1. Dividends. Subject to the provisions of law and the
Certificate of Incorporation, dividends upon the outstanding capital stock of
the Corporation may be declared by the Board of Directors at any regular or
special meeting, and may be paid in cash, in property, or in shares of the
Corporation`s capital stock.
Section 2. Reserves. The Board of Directors shall have full power,
subject to the provisions of law and the Certificate of Incorporation, to
determine whether any, and, if so, what part, of the funds legally available for
the payment of dividends shall be declared as dividends and paid to the
stockholders of the Corporation. The Board of Directors, in its sole discretion,
may fix a sum that may be set aside or reserved over and above the paid-in
capital of the Corporation as a reserve for any proper purpose, and may, from
time to time, increase, diminish, or vary such amount.
Section 3. Fiscal Year. Except as from time to time otherwise provided
by the Board of Directors, the fiscal year of the Corporation shall end March 31
of each year.
Section 4. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation, and the words "Corporate
Seal" and "Delaware".
Article XI. Amendments.
The Board of Directors shall have the power to alter and repeal these
Bylaws and to adopt new Bylaws by an affirmative vote of a majority of the whole
Board, provided that notice of the proposal to alter or repeal these Bylaws or
to adopt new Bylaws must be included in the notice of the meeting of the Board
of Directors at which such action takes place.
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<PAGE> 1
EXHIBIT 10a
LICENSE AND COLLABORATION AGREEMENT
-----------------------------------
This Agreement (the "Agreement") is made and entered into this 28th day of
November, 1994 by and among Polaroid Corporation, a Delaware corporation having
its principle place of business at 549 Technology Square, Cambridge,
Massachusetts 02139 ("Polaroid"), and Triple I Corporation, a Delaware
corporation having its principle place of business at One Lowell Research
Center, 847 Rogers Street, Lowell, Massachusetts 01852 ("Triple I").
WHEREAS, the parties desire to promote the development, marketing and sales
in the field of printed circuit board production of an image processing system
consisting of a plotter or other image processing device designed by Triple I
and using Polaroid's laser imagable film; and to collaborate in the fields of
Automatic Inspection and PCB PhotoTool generation.
In consideration of the mutual promises, covenants, representations and
warranties contained in this Agreement, the parties agree as follows:
1. DEFINITIONS.
"Automatic Inspection" shall mean the inspection of manufactured mechanical
and electronic products, components and subassemblies, using computer analysis
and processing techniques for image interpretation and control signal
generation.
"Developed Product" shall mean a product, process or service which has been
offered for sale to the general public or as to which development has been
substantially completed and firm plans exist to offer the product, process or
service for sale to the general public within 6 months.
"Triple I Electronic Imaging Intellectual Property" shall mean all
Intellectual Property in electronic imaging devices and components and
subassemblies thereof that incorporate, embody, use or are designed or produced
using Technology developed by Triple I during. the term of this Agreement that
either arises out of a collaboration between the parties or results from
proprietary information provided by Polaroid.
"Exploit" shall mean to utilize, and "Exploitation" shall mean the
utilization of, any Technology in any manner, including without limitation
making, having made, using, selling, leasing, and renting, and in the case of
Technology that is a work of authorship, includes copying or creating derivative
works of such Technology.
"Intellectual Property" shall mean all proprietary rights in Technology,
including all Patents, copyrights, mask works, trade secrets, licenses and
proprietary information, whether existing now or in the future.
"Joint Intellectual Property" shall mean all Intellectual Property in
Technology as to which employees of both Triple I and Polaroid would be
considered joint inventors or joint authors under applicable principles of
patent or copyright law, regardless of whether such
<PAGE> 2
Intellectual Property would be patentable or copyrightable, PROVIDED THAT Joint
Intellectual Property shall not include any Medium Intellectual Property or
Medium Subject Matter Intellectual Property.
"Medium" shall mean a laser imagable film for the production of high
resolution images in dry image-forming substance.
"Medium Subject Matter" shall mean any Medium, method of (or apparatus for)
developing an image from the Medium or method of (or apparatus for) stabilizing,
protecting or otherwise improving or enhancing the image attributes of such an
image.
"Medium Intellectual Property" shall mean all Intellectual Property in
Technology related to any Medium and which arises out of a collaboration between
the parties or is derived from proprietary information provided by Polaroid.
"Medium Subject Matter Intellectual Property" shall mean all Intellectual
Property in Technology related to Medium Subject Matter and which arises out of
a collaboration between the parties or is derived from proprietary information
provided by Polaroid.
"Patent" shall mean any: (i) United States or foreign patent, patent
application, patent disclosure or other patent right; (ii) any division,
continuation, continuation-in-part or similar extension of an application that
is a Patent; and (iii) any patent or other patent right that issues or is based
upon an application that is a Patent.
"PCB" shall mean a printed circuit board device used to interconnect
electrical, optoelectrical or mechanical components and requiring a laser
Plotter in the production thereof.
"PCB Field" shall mean areas of technology and business related to the
production of a printed circuit board (PCB) device.
"Plotter" shall mean a print engine, recorder or other electromechanical
device, including film handling and laser exposure means, for the laser exposure
and processing of a Medium into an image useful, for example, as a PhotoTool in
the production of printed circuit boards.
"PhotoTool" or "Art Work" shall mean an image which is prepared from a
Medium and used in the production of a PCB device.
"Polaroid Imaging Intellectual Property" shall mean all Intellectual
Property in Technology related to apparatus for and methods of acquiring,
processing or recording image information, and susceptible of application in the
fields of Automatic Inspection and PhotoTool generation, now or hereafter owned,
developed, or otherwise acquired by Polaroid, including as a result of this
Agreement.
"Technology" shall mean all inventions, discoveries, innovations, know-how,
information and all other forms of technology, including improvements,
modifications, derivatives or
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<PAGE> 3
changes, whether tangible or intangible, embodied in any form, including
software, hardware and integrated circuit chips (e.g., analog line version),
whether or not protectible or protected by patent, copyright, mask work right,
trade secret law or otherwise.
"Triple I Intellectual Property" shall mean all Intellectual Property in
Technology susceptible of application in the fields of optics and image
acquisition, now or hereafter owned, developed or otherwise acquired by Triple
I, including as a result of this Agreement.
2. RESEARCH & DEVELOPMENT.
a. SYSTEM INTEGRATION. Triple I shall be the overall system integrator of
a system for use in the PCB Field and including a Plotter and Medium.
b. DEVELOPMENT OF MEDIUM. Polaroid shall be responsible for development
of the Medium and; aspects of image quality attributable to the Medium Subject
Matter.
c. PRODUCT REQUIREMENTS. The determination and validation of the product
requirements for the Medium and for the Plotter shall be jointly determined and
validated. Triple I shall lead such joint determination and validation.
3. MANUFACTURING.
a. MEDIUM. Polaroid shall manufacture the Medium. Polaroid shall
manufacture Medium in sufficient quantities to meet Triple I's needs, as set
forth in Triple I's Sales Forecasts. Polaroid shall adhere to the highest
standards of quality in manufacturing the Medium.
b. PLOTTER. Triple I shall manufacture, or have manufactured, the
Plotter. Triple I shall adhere to the highest standards of quality in
manufacturing the Plotter, and shall impose the same requirement upon any third
party that Triple I engages to manufacture the Plotter.
c. INTERFACES. Triple I shall be responsible for providing all interfaces
between the Plotter and other hardware.
4. MARKETING.
a. MARKETING PLANS. Triple I shall develop, with the assistance of
Polaroid, plans for marketing the Medium and the Plotter. Triple I's marketing
plans shall include product positioning, pricing, packaging, promotion and
placement.
b. MARKETING IN THE PCB FIELD. Triple I shall have the right to market
and sell the Medium in the PCB Field. Except as set forth in the following
subparagraphs d. and e., Triple I's right to market and sell the Medium in the
PCB Field shall be exclusive.
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<PAGE> 4
c. MILESTONES. Triple I agrees to use all commercially reasonable efforts
to meet the performance milestones set forth in Exhibit A, which milestones may
be amended from time to time by mutual agreement of the parties.
d. FAILURE OF PERFORMANCE MILESTONES. In respect of any of the
performance milestones set forth in paragraphs 1 through l0 of Exhibit A
("Performance Milestone(s)"), Triple I shall, within thirty (30) days of the end
of any quarter in which it is determined that any such Performance Milestone
will not be realized, provide Polaroid with a written report explaining Triple
I's failure to meet any such Milestone and an undertaking by Triple I of steps
necessary to ensure that it will meet such Milestone for the ensuing period. If
Triple I fails during two consecutive quarters to meet its Performance
Milestones, Polaroid may effective upon written notice from Polaroid to Triple
I, elect at its option to (a) give notice of its willingness to revise any such
Performance Milestone by a written mutual agreement which sets a revised
(extended) date for performance of such Milestone; or (b) convert Triple I's
right to market and sell the Medium in the PCB Field to a non-exclusive right.
In the event that the parties undertake to revise any Performance Milestone by a
written mutual agreement which extends the date for such Performance Milestone,
Polaroid shall have the right, if any such Milestone remains unrealized by the
end of the extended date, to exercise option (b) recited in this paragraph. The
election of Polaroid to pursue revision (extension) of the date for performance
of any Performance Milestone and consequent inability of the parties to reach an
agreement extending the date for performance of such Milestone shall not
preclude Polaroid from electing the option (b) of converting Triple I's right to
market and sell the Medium in the PCB field to a non-exclusive right.
Notwithstanding the foregoing, Triple I shall not be responsible for failing to
meet any Performance Milestone if such failure is the result of a failure by
Polaroid to supply quantities of Medium as required or the failure of Polaroid
to meet a material obligation required by this Agreement.
f. MARKET INFORMATION AND PLANNING. Triple I shall advise Polaroid
promptly concerning any market information that may come to Triple I's attention
regarding Polaroid, Polaroid's market position or the continued competitiveness
of the Medium in the marketplace, including but not limited to charges,
complaints, or claims by customers, or other persons, about Polaroid or its
products, process or services. Triple I shall confer from time to time, at the
request of Polaroid, on matters relating to market conditions, sales forecasting
and product planning. In addition, Polaroid shall have access, via Triple I, to
Triple I's customers for the purposes of obtaining feedback concerning product
quality and customer needs and conducting technical and market testing.
5. SALES BY POLAROID. Polaroid shall sell Polaroid branded Medium to Triple I
in sufficient quantities to meet Triple I's requirements, as set forth in Triple
I's Sales Forecasts. In the event that Polaroid does not have sufficient
inventory to meet Triple I's requirements and Polaroid's other commitments to
supply Medium, Polaroid shall allocate a portion of its production of Medium to
Triple I in the proportion that Triple I's then existing non-cancelable orders
bears to total orders, until Polaroid is again meeting Triple I's requirements.
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<PAGE> 5
6. POLAROID: PRICES AND PAYMENT.
a. PRICES. Medium will be sold to Triple I * , as it may be amended or
modified from time to time by Polaroid, unless otherwise agreed to by formal
price quotation. The amount of the aforesaid * shall be set by the * of product
specifications for the Medium.
b. PRICE INCREASE OR DECREASE. Polaroid may, upon thirty (30) days
written notice, increase the prices for the Medium. Any increase shall apply to
any order received by Polaroid after the date of the written notice, except that
any increased price shall not apply to any firm order received by Polaroid
during the thirty day notice period so long as shipment occurs no later than
forty-five (45) days after the date of notice. Polaroid may decrease its prices
without providing advance notice to Triple I. Price decreases shall apply to all
Medium ordered but not yet shipped on the effective date of the decrease. Triple
I will receive a credit equal to the difference between the net price paid by
Triple I for Medium in Triple I's inventory, less any prior credits granted by
Polaroid as to such Medium, and the new decreased price provided that (i) the
Medium have been in Triple I's inventory less than one hundred twenty days from
date of shipment and in a new and undamaged condition as of the effective date
of the price decrease.
c. TAXES. TARIFFS. FEES. Polaroid's prices do not include any federal,
state or local sales, use, value added or other taxes, customs duties, or
similar tariffs and fees which Polaroid may be required to pay or collect upon
the sale or delivery of Medium or upon collection of the sales price. Should any
tax or levy be made, Triple I agrees to pay such tax or levy and indemnify
Polaroid for any claim for such tax or levy demanded.
d. PAYMENT. All payments shall be made at the address designated by
Polaroid.
e. CREDIT TERMS. Shipments shall be made on credit terms with payment due
forty-five (45) days after shipment.
f. OTHER TERMS OF SALE. Except to the extent inconsistent, with this
Agreement, all sales of Medium by Polaroid to Triple I shall be on Polaroid's
standard terms and conditions of sale.
g. DELIVERY OF TERMS AND CONDITIONS. Within sixty (60) days following
execution of the Agreement, Polaroid shall provide to Triple I its standard
terms. and conditions of sale.
7. RESALE PRICING.
Polaroid may advise Triple I of an established list price for the Medium.
Triple I shall establish the actual end user pricing for the Medium. Polaroid
shall provide information to assist Triple I in establishing the actual end user
pricing, but Triple I shall have the sole right to determine the price actually
charged for the Medium.
- ----------------------------------------------------
*Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
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<PAGE> 6
8. SERVICE.
a. END USER SERVICE. Triple I shall provide end user service to Triple
I's customers.
b. BACK-UP SUPPORT. Polaroid shall provide back-up technical support
concerning the Medium Subject Matter to the Triple I personnel providing end
user support. Polaroid shall designate a technical support contact who shall be
responsible for providing support to Triple I. The technical support contact
shall have at least 9 months experience working with the Medium Subject Matter.
c. TRAINING. Polaroid shall be responsible for providing training
concerning the Medium Subject Matter to end users, Triple I engineers and Triple
I support personnel, as appropriate.
d. PERFORMANCE REPORTS. Triple I shall provide quarterly performance
reports to Polaroid that report any feedback received by Triple I from its
customers concerning the Medium.
9. LICENSES.
a. TRIPLE I LICENSE TO POLAROID IMAGING INTELLECTUAL PROPERTY.
Polaroid grants to Triple I a worldwide, royalty-free, nonexclusive license, to
commercially exploit and otherwise use, within the fields of Automatic
Inspection and PhotoTool generation, Polaroid Imaging Intellectual Property.
b. POLAROID LICENSE TO TRIPLE I INTELLECTUAL PROPERTY. Triple I grants
to Polaroid a worldwide, royalty-free, nonexclusive license to commercially
exploit and otherwise use, within the fields of optics and image acquisition,
recording and processing, Triple I Intellectual Property.
c. POLAROID LICENSE. TO ELECTRONIC IMAGING INTELLECTUAL PROPERTY.
Triple I grants to Polaroid a worldwide, royalty-free, nonexclusive license to
commercially exploit and otherwise use Triple I Electronic Imaging Intellectual
Property.
d. NO NEW BUSINESS. In the event that either party desires to market a
new product, process or service incorporating any Intellectual Property licensed
from the other under this section: the party shall inform the other party in
writing, describing the product, process or service and the manner in which the
Intellectual Property is to be used. The commercialization of any such new
product, process or service that substantially embodies or is substantially
based upon or derived from Intellectual Property licensed from the other party
shall require a new agreement which the parties shall negotiate in good faith.
For the purposes of the requirements of this section, a product, process or
service shall not be considered "new" if the licensed Intellectual Property is
(i) used in a product, process or service offered on the effective date of this
Agreement; (ii) used in a product, process or service within the scope of a
business, research
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<PAGE> 7
or strategic plan existing at the time of this Agreement; (iii) used for minor
improvement or evolutionary enhancement of a product, process or service offered
on the date of this Agreement or (iv) used for a minor improvement or
evolutionary enhancement of a product, process or service within the scope of a
business, research, or strategic plan existing at the time of this Agreement but
offered subsequent to the effective date of this Agreement.
10. OWNERSHIP OF INTELLECTUAL PROPERTY.
a. INTELLECTUAL PROPERTY RELATED TO MEDIUM AND MEDIUM SUBJECT MATTER.
Triple I hereby assigns and agrees to assign to Polaroid all Medium Intellectual
Property and Medium Subject Matter Intellectual Property.
b. JOINT INTELLECTUAL PROPERTY. Joint Intellectual Property will be
owned jointly by Triple I and Polaroid. To the extent necessary to accomplish
this result, Triple I hereby assigns and agrees to assign an undivided 50%
interest in all Joint Intellectual Property to Polaroid, and Polaroid hereby
assigns and agrees to assign an undivided 50% interest in all Joint Intellectual
Property to Triple I.
c. NO NEW BUSINESS In the event that either party desires to market a
new product, process or service incorporating, embodying or substantially based
upon Joint Intellectual Property, the party shall inform the other party in
writing, describing the product, process or service and the manner in which the
Joint Intellectual Property is to be used. The commercialization of any such
new product, process or service that incorporates, substantially embodies or is
substantially based upon such Joint Intellectual Property shall require a new
agreement which the parties will negotiate in good faith. For purposes of the
requirements of this section, a product, process or service shall not be
considered "new" if the licensed Intellectual Property is (i) used in a product,
process or service offered on the effective date of this Agreement; (ii) used in
a product, process or service within the scope of a business, research or
strategic plan existing at the time of the Agreement; (iii) used for minor
improvement or evolutionary enhancement of a product, process or service offered
on the date of this Agreement or (iv) used for a minor improvement or
evolutionary enhancement of a product, process or service within the scope of a
business, research, or strategic plan existing at the time of this Agreement but
offered subsequent to the effective date of this Agreement.
d. LICENSE OR SALE OF JOINT INTELLECTUAL PROPERTY. Neither Triple I
nor Polaroid shall, without the prior written permission of the other, sell,
license or otherwise transfer the whole or any part of its interest in Joint
Intellectual Property, except to (i) a successor by merger, business combination
or reorganization involving ownership of all or substantially all of the
transferor's assets; or (ii) a purchaser of all or substantially all of the
transferor's assets.
11. REPRESENTATIONS AND WARRANTIES.
a. REPRESENTATIONS AND WARRANTIES OF POLAROID. Polaroid represents and
warrants that:
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i. no impediment exists to its entering into this Agreement, and that
no other Agreement has been or shall be made with any third party which
will interfere with its performance under this Agreement.
ii. it is a corporation duly organized and validly existing under the
laws of Delaware, and has all requisite power and authority to execute,
deliver and perform this Agreement and any other agreements contemplated
hereby and to consummate the transactions contemplated hereby.
The warranties expressed above shall survive any termination or
nonrenewal of this Agreement. Polaroid shall defend, at its expense, and
shall pay all costs and damages awarded for any claim against Triple I to
the extent that such claim is based upon a breach by Polaroid of its
warranties hereunder.
THE WARRANTIES SET FORTH IN THIS SECTION ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
b. REPRESENTATIONS AND WARRANTIES OF TRIPLE I. Triple I represents and
warrants that:
i. no impediment exists to its entering into this Agreement, and that
no other Agreement has been or shall be made with any third party which
will interfere with its performance under this Agreement.
ii. it is a corporation duly organized and validly existing under the
laws of Delaware, and has all requisite power and authority to execute,
deliver and perform this Agreement and any other agreements contemplated
hereby and to consummate the transactions contemplated hereby.
The warranties expressed above shall survive any termination or
nonrenewal of this Agreement. Triple I shall defend, at its expense, and
shall pay all costs and damages awarded for any claim against Polaroid to
the extent that such claim is based upon a breach by Triple I of its
warranties hereunder.
THE WARRANTIES SET FORTH IN THIS SECTION ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
12. TRADEMARKS, TRADE NAMES AND COPYRIGHTS. During the term of this Agreement,
Triple I is authorized to use the trademark "Polaroid" and all other trademarks
or tradenames directly associated with the Medium in connection with Triple I's
advertisement, promotion and distribution of the Medium, only in such form and
manner as is specifically approved by Polaroid. Before any such use of
trademarks, Triple I shall submit to Polaroid, for its written
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approval, finished art work for all advertising material, publicity and
promotional material, sales and trade literature, and any other material bearing
or making reference to Polaroid trademarks. Any such material submitted to
Polaroid and not disapproved within fifteen (15) days after receipt shall be
deemed to have been approved. Upon expiration or termination of this Agreement,
Triple I will cease all display, advertising and use of all Polaroid names,
marks, logos and designations. Triple I will not alter, erase or overprint any
notice of proprietary rights on anything provided by Polaroid and will not
attach any additional trademarks, logos or designations to the Medium or affix
any Polaroid trademark, logo or designation to any non-Polaroid product.
13. TERM OF AGREEMENT This Agreement (i) shall be effective from the date first
written above; (ii) shall, unless earlier terminated pursuant to the terms
hereof, remain in effect for a term of eight (8) years from such date; (iii)
shall be reviewed by the parties at least ninety (90) days before expiration of
the original eight-year term and (iv) shall be renewable or extendable for such
additional term and under such terms and conditions as are mutually agreed upon
in writing by the parties. The phrase "term of this Agreement" and any
substantially similar phrases shall mean collectively the original eight year
term and any renewal period(s).
14. CONFIDENTIALITY. Polaroid and Triple I will from time-to-time to transmit
and exchange technical and business information that is proprietary to the owner
thereof. With respect to such proprietary information of the other party: (a)
each party shall maintain the confidentiality of the information and prevent the
disclosure of the information to third parties; (b) each party shall use at
least the same degree of care to maintain the confidentiality of the information
and avoid disclosure of the information as each party employs with respect to
its own most important, confidential, proprietary information; and (c) neither
party shall, except as required to perform the tasks contemplated in this
Agreement and as otherwise permitted by the terms of this Agreement, directly or
indirectly use such proprietary information without the prior written consent of
the other party.
The provisions of this section shall not apply to any information which:
(a) was already known to the receiving party before receipt or development of
the information under an agreement between the parties, or (b) is or becomes
publicly known through no wrongful act of the receiving party, or (c) is
independently developed or acquired by employees or agents of the receiving
party without access to the work performed hereunder, or (d) is required by law
to be disclosed. The provisions of this section shall survive the term of this
Agreement for a period of three (3) years.
15. RESOLUTION OF DISPUTES. Any disputes or controversies arising out of this
Agreement or any breach thereof which cannot be resolved by the project
management personnel for each party will be submitted for resolution to the
President of Triple I and the Chief Executive Office (or designee thereof) of
Polaroid, who shall endeavour to resolve the dispute. In the case of all
disputes that cannot be so resolved, the parties shall be entitled to avail
themselves of all legal remedies available to them. Neither party shall be
entitled to consequential damages for violation of any of the provisions of this
agreement.
9
<PAGE> 10
16. TERMINATION. Either party shall have the right to terminate this Agreement
for Cause upon written notice to the other party. "Cause" shall mean (i)
Financial Distress or Collapse; or (ii) Default.
FINANCIAL DISTRESS OR COLLAPSE. With respect to any party, "Financial
Distress or Collapse" shall mean financial difficulties as evidenced by its
making an assignment for the benefit of creditors, filing a petition in
bankruptcy, petitioning or applying to any tribunal for the appointment of
a custodian, receiver or any trustee for it or a substantial part of its
assets, or commencing any proceeding under any law or statute of any
jurisdiction, whether now or hereafter in effect, relating to bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, liquidation
or the modification or alteration of the rights of creditors; or by there
being filed against it any such petition or application, or having any such
proceeding commenced against it, in which an order for relief is entered or
which remains undismissed for a period of 30 days or more; or indicating
its consent to, approval of or acquiescence in, any such petition,
application, proceeding or order; or suffering any such custodianship,
receivership or trusteeship to continue undischarged for a period of 30
days or more.
DEFAULT. "Default" shall mean the failure, in any material respect,
continued for the applicable period of grace as specified in the next
sentence, by a party to comply with its obligations under the Agreement,
including but not limited to paragraphs 11 and 12 of Exhibit A, but
excluding paragraphs 1 through 10 of Exhibit A. Any such failure shall be a
Default if it shall have continued, after written notice by the
non-defaulting party, for thirty days if the failure relates to payment of
money and for sixty days if it relates to any other undertaking.
17. EFFECT OF NONRENEWAL OR TERMINATION.
a. CONTINUATION OF RIGHTS PENDING RESOLUTION OF DISPUTES. Notwithstanding
any other provision of this Agreement, pending the final resolution of any good
faith dispute between Polaroid and Triple I, the resolution of which shall be
attempted by the parties pursuant to the provisions of section 15 of this
Agreement, all of the rights of the parties under this Agreement shall continue
in full force and effect, and neither party shall terminate this Agreement or
the licenses hereunder.
b. EFFECT OF NONRENEWAL OR TERMINATION. If this Agreement is not renewed
or is terminated:
i. except as set forth in Section 17(c), all licenses granted under
this Agreement shall cease to be of further force and effect; and
ii. except as is necessary to implement any licenses that continue in
effect pursuant to Section 17(c), each party shall return to the other
party or destroy all copies of all materials provided by the other party,
and will certify to other party that such materials have been returned or
destroyed.
10
<PAGE> 11
c. PRESERVATION OF RIGHTS OF THE PARTIES WITH RESPECT TO DEVELOPED
PRODUCTS. The rights, including any licenses, of any party under this Agreement
with respect to any Developed Product shall not be subject to termination except
for Default with respect to material obligations in relation to that particular
Developed Product.
18. INDEMNIFICATION. The parties agree to indemnify and hold each other
harmless from and against any and all claims, damages and liabilities
whatsoever, asserted by any person or entity, resulting directly from any breach
of this Agreement by the indemnifying party or any of its employees or agents.
Such indemnification shall include the payment of all reasonable attorneys' fees
and other costs incurred by the indemnified party in defending any such claims.
19. GENERAL.
a. PUBLICITY AND PUBLIC INFORMATION. The parties agree that neither of
them will make any public statement referencing the collaboration between the
parties or the existence or terms of this Agreement without prior consultation
with and approval by the other party, except as required by law or any court
order.
b. SURVIVAL OF REPRESENTATIONS. The representations and warranties made
herein shall survive any investigation made by the parties and the execution of
this Agreement.
c. NONASSIGNMENT. This Agreement, as well as any right obtained under
this Agreement, shall not be sublicensed, except as otherwise provided in this
Agreement, or assigned to any third Party, except to a successor by merger,
business combination or reorganization involving of ownership of all or
Substantially all of the transferor's assets, or to a purchaser of all or
Substantially all of the transferor's assets.
d. INCORPORATION BY REFERENCE. All Exhibits appended to this Agreement
are herein incorporated by reference and made a part hereof
e. PARTIES IN INTEREST. All covenants, agreements, representations,
warranties and undertakings in this Agreement made by and on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and permitted assigns of the parties hereto whether so expressed or
not.
f. AMENDMENTS AND WAIVERS. No changes in or additions to this Agreement
may be made or compliance with any term, covenant, agreement, condition or
provision set forth herein may be omitted or waived (either generally or in a
particular instance and either retroactively or prospectively), except upon
mutual written agreement of the parties.
g. GOVERNING LAW. This Agreement shall be construed and enforced
according to and all actions related to the subject matter hereof shall be
governed by the internal laws of the Commonwealth of Massachusetts, without
regard to its conflict of laws rules.
11
<PAGE> 12
h. NOTICES. All notices or payments required to be sent to either party
shall be in writing addressed to the party at the address set forth in the
preamble or such other address as a party may from time to time furnish in
writing to the other party. All notices shall be effective upon receipt by the
intended recipient.
i. RELATIONSHIP OF THE PARTIES. This Agreement does not create a
Partnership or joint venture between the parties and neither party shall have
power to obligate or bind the other in any manner whatsoever.
j. COUNTERPARTS. This Agreement may be executed in counterparts, all of
which together shall constitute one and the same instrument.
k. EFFECT OF HEADINGS. The headings and titles used herein are for
convenience only and shall not affect the construction hereof.
1. ENTIRE AGREEMENT. This Agreement Constitutes the entire agreement
among the parties with respect to the subject matter hereof. There are no
representations, warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth herein. This
Agreement supersedes all prior agreements between the parties with respect to
the exchanges hereunder and the subject matter hereof.
m. SEVERABILITY. If any term or provision of this Agreement shall become
or be declared illegal, invalid or unenforceable, such term or provision shall
be divisible from this Agreement and shall be deemed to be deleted from this
Agreement, provided that if such deletion substantially affects or alters the
commercial basis of this Agreement the parties shall negotiate in good faith to
amend and modify the terms and provisions of this Agreement to give effect to
the original intent of the parties.
n. WARRANT OF AUTHORITY. The persons signing this Agreement as agents or
representatives of the parties warrant that they have authority to bind to this
Agreement each party for which such signature is made.
IN WITNESS WHEREOF, the parties to this Agreement have duly authorized and
executed this Agreement as of the date first written above.
POLAROID CORPORATION
By: /s/ Bruce B. Henry
----------------------------
Name: Bruce B. Henry
Title: Executive Vice President
TRIPLE I CORPORATION
By: /s/ Juan J. Amodei
----------------------------
Name: Juan J. Amodei
Title: President
12
<PAGE> 13
Exhibit A
Exhibit-A Attachment to:
LICENSE AND COLLABORATION AGREEMENT
-----------------------------------
Performance Milestones
1. By * Triple I shall have commercial access to a *.
2. By * Triple I shall have modified * to the extent necessary, *.
3. "Fiscal year" under this agreement shall mean Triple I's fiscal year
beginning on October 1 and ending September 30. Year One under this agreement
shall mean the twelve month period ending September 30, 1995.
4. * sales shall meet or exceed the following for each fiscal year specified
under the Agreement as follows: *. Quarterly milestones for * sales shall be
determined by dividing any Year's sales performance number into four
approximately equal portions.
5. * sales shall meet or exceed the following * for each Year specified under
the Agreement as follows: *. Quarterly milestones for * sales shall be
determined by apportioning any Year's sales performance number into four
approximately equal portions.
6. Without regard to the requirements of item 5 above, Triple I also agrees
that sales of * must represent at least the following respective percentages of
*.
7. Triple I agrees to launch the * no later than the *. Triple I further
agrees that it will launch the *in either * no later than the * under the
Agreement.
8. Triple I agrees that sales of * beginning with the fiscal year following
the launch date specified in item 7, must represent at least the following *.
9. "Sales" for Years 2 through 8 shall exclude from consideration any *.
"Sales" for Year 1 may include such conditional sales.
10. "Sales", for the purpose of satisfying requirements under items 4 and 5
only, may include * as sales for Year 2. Otherwise, annual * sales and * sales
requirements for purposes of satisfying these performance milestones will not be
cumulative from year to year.
- -------------------------------------------------
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
<PAGE> 14
11. Triple I must make prompt payment to Polaroid of all amounts due to
Polaroid for MEDIUM or any other amounts due for other invoices. Terms of
commercial payments between the parties shall be agreed to in writing and
modified in writing when and if necessary.
12. Triple I's Financial books and records shall be subject to audit by
Polaroid at Polaroid's expense. The audits may be undertaken by Polaroid
employees; or Polaroid may engage nationally recognized firm of Certified Public
Accountants to undertake the audits.
2
<PAGE> 15
POLAROID CORPORATION
549 Technology Square
Cambridge, Massachusetts 02139
June 17, 1996
Dr. Juan J. Amodei
TRIPLE I CORPORATION
One Lowell Research Center
847 Rogers Street
Lowell, MA 01852
Dear Juan:
As you are aware, Polaroid Corporation has made an equity investment of
$800,000 and owns in excess of 20% of Triple I Corporation's outstanding common
stock. Polaroid made that investment in anticipation of significant appreciation
and continues to encourage Triple I's success in its various endeavors, and in
particular those endeavors which maximize use of Polaroid's film products.
Due to the fact that Triple I failed to meet certain milestones specified
in the License And Collaboration agreement between Polaroid and Triple I dated
November 28, 1994, as amended by fax from you dated April 26, 1996, a copy of
which is enclosed (the "Agreement"), Polaroid, by letter of May 23, 1996, gave
notice to Triple I of the conversion of its exclusive right to market and sell
Medium in the PCB Field to a non-exclusive right in accordance with Section 4d
of the Agreement.
You have requested that Polaroid reconsider and withdraw its notice of
conversion of exclusive Medium marketing rights to non-exclusive rights and make
certain other amendments to the Agreement. Polaroid agrees with the essence of
your proposal and offers by this letter to make the modifications that you
requested. To avoid confusion concerning expectations, I have set forth below
the amendments to the Agreement that we discussed and ask for your prompt review
and consideration.
The Agreement is hereby amended as follows:
1. Add as the last sentence to paragraph 4d:
"In no event will the quality of Medium provided by Polaroid to Triple
I be considered the failure of Polaroid to meet a material obligation
required by this
<PAGE> 16
Agreement if Medium of like quality is commercially sold by Polaroid
for use in commercially available plotters used in the graphics field.
2. Delete Performance Milestone 3 and substitute the following:
3. Year One under this agreement shall mean the twelve month period
ending May 31, 1996.
3. Delete Performance Milestone 4 and substitute the following:
4. * sales shall meet or exceed the following for each year
specified under the Agreement as follows: *. Quarterly milestones
for * sales shall be determined by dividing any year's sales
performance number into four approximately equal portions.
4. Delete Performance Milestone 5 and substitute the following:
5. * sales shall meet or exceed the following * for each year
specified under the Agreement as follows: *. Quarterly milestones
for * sales shall be determined by apportioning any year's sales
performance number into four approximately equal portions.
5. Delete Performance Milestone 7 and substitute the following:
7. Triple I agrees to launch the * no later than the * . Triple I
further agrees that it will launch the * in either * no later
than the * under the Agreement
6. In Performance Milestone 8, line 1, delete "fiscal".
In addition, before August 1, 1996, Triple I will either pay to Polaroid
$90,000, in which event Polaroid will transfer title to its plotter now resident
at Triple I's facility to Triple I, or Triple I will return the plotter to
Polaroid at Polaroid's expense. Also, as of the date of execution of this
amendatory letter by Triple I, Triple I represents that there is no outstanding
failure of Polaroid to meet any material obligation required by the Agreement.
- ------------------------------------------------------
*Confidential treatment requested as to certain portions, which
portions are omitted and filed separately with the Commission.
2
<PAGE> 17
Juan, I believe we continue to have the basis for a mutually beneficial
relationship. As a consequence of your acceptance of these amendments to the
Agreement, the letter of May 23, 1996 from Polaroid to Triple I, which converted
Triple I's Medium marketing rights from exclusive to non-exclusive, will be
automatically withdrawn and of no legal effect. Polaroid's offer to amend the
Agreement and withdraw the May 23, 1996 letter will expire at 5:00 p.m. on June
26, 1996 if not accepted by Triple I before that time. Acceptance may be
communicated by signing one copy of this letter where indicated below and
returning it to me.
Sincerely yours,
/s/ Robert M. Delahunt
-----------------------------------
Robert M. Delahunt
Senior Vice President
Accepted and Agreed:
/s/ Juan J. Amodei
By: Juan J. Amodei
Date: June 25, 1996
3
<PAGE> 18
AOI INTERNATIONAL
Juan J. Amodei
President
January 10, 1997
Mr. Robert Delahunt
Senior Vice President
Polaroid Corporation
549 Technology Square
Cambridge, Massachusetts 02139
Re: License And Collaboration Agreement
-----------------------------------
Dear Bob:
On November 23, 1994, Triple I Corporation ("Triple I") and Polaroid
Corporation ("Polaroid") entered into a License and Collaboration Agreement,
which was amended on June 17, 1996 (the agreement and all amendments are hereby
referred to as the "Agreement"). This letter is intended to state the parties'
understanding as to certain performance milestones, listed in Sections 4 and 5
of EXHIBIT A under the Agreement ("Performance Milestones"), that Triple I must
achieve as part of the Agreement.
Polaroid and Triple I acknowledge their differences in respect of any right
of Polaroid to convert Triple I's exclusive rights to market MEDIUM in the PCB
field from exclusive to non-exclusive rights. Nonetheless, Polaroid and Triple I
hereby agree that Polaroid will not act in respect to the Year-2 quarterly
Performance Milestones until May 31, 1997, at which time Triple I is required to
meet the annual Performance Milestones due on that date. If Triple I fails to
meet these annual requirements, Polaroid, at its discretion, may proceed in
accordance with Section 4(d) of the Agreement.
Polaroid and Triple I also agree that Industrial Imaging Corporation
("Industrial Imaging"), the parent corporation of Triple I, shall include
certain disclosures, in the form attached as EXHIBIT A, in Industrial Imaging's
Form 8-K to be timely filed in accordance with the rules of the Securities and
Exchange Commission following the completion of the exchange of shares between
Triple I and Industrial Imaging. Simultaneously with the agreement by the
parties to the above terms of this letter, Polaroid, a shareholder of Triple I,
agrees to execute its Shareholder Exchange Agreement, which will enable Triple I
to proceed with the transaction involving Industrial Imaging.
Triple I also acknowledges that, as of the date of this letter, there is no
outstanding failure of Polaroid to meet any material obligation required by the
Agreement. In no event will the
<PAGE> 19
quality of the MEDIUM provided by Polaroid to Triple I be considered the failure
of Polaroid to meet a material obligation required by this Agreement if MEDIUM
of like quality is commercially sold by Polaroid for use in commercially
available plotters used in the graphics field.
Triple I agrees that it will not, in the event it fails to meet the full
Year-2 Performance Milestones by the end of May 1997, invoke in justification
thereof any alleged failure of or responsibility in Polaroid, as of the date of
this letter.
For the purpose of testing the full Year-2 Performance Milestones set for
performance by May 31, 1997, * sales, shall only be considered sales upon the
receipt of Triple I of *.
All of the provisions of the Agreement, as amended June 17,1996, remain in
full force and effect to the extent not inconsistent with the provisions of this
letter.
Triple I acknowledges that the Agreement does not prohibit Polaroid from
accepting inquiries from any person, partnership, corporation or other third
party in respect of possible mutual business opportunities involving any plotter
and MEDIUM for use in the PCB field (including opportunities based upon sales of
MEDIUM by any such third party); and the Agreement shall not be construed in any
manner to preclude or inhibit any such discussions. Polaroid agrees, however,
that it will not, except with Triple I's prior written approval, enter into any
agreement with any such third party authorizing the marketing of MEDIUM by such
party in the PCB field unless Triple I shall have failed to meet its full Year-2
Performance Milestones and Polaroid shall have served notice upon Triple I of
the conversion of its exclusive marketing rights to non-exclusive rights.
If you agree with the above terms, kindly acknowledge your agreement by
signing this letter below where indicated and returning it to me, along with a
copy of the Shareholder Agreement signature page containing Polaroid's
signature.
- --------------------
* Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
2
<PAGE> 20
Please contact me with questions.
Very truly yours,
/s/ Juan J. Amodei
-----------------------------------
Juan J. Amodei, Ph.D.
Enclosures
c: Neil H. Aronson, Esquire
ACKNOWLEDGED AND AGREED:
POLAROID CORPORATION
By: /s/ Robert M. Delahunt
-------------------------------
Duly authorized
Date: January 10, 1997
-------------------------------
3
<PAGE> 1
EXHIBIT 10b
TRIPLE I CORPORATION
ONE LOWELL RESEARCH CENTER
847 ROGERS STREET
LOWELL, MASSACHUSETTS 01852
March 31, 1996
Emanuel Pinez, Chief Executive Officer
Centennial Technologies
37 Manning Road
Billerica, Massachusetts 01821
Re: Purchase Agreement
Dear Mr. Pinez:
This letter serves as written expression of the agreement between
Triple I Corporation ("Triple I") and Centennial Technologies, Inc.
("Centennial"), whereby Centennial agrees to assist Triple I with purchases of
components used in the manufacture of Triple I products, subject to full
reimbursement from Triple I (the "Agreement "). This Agreement shall run for a
period of one (1) year and three months, from March 31, 1996 until June 30,
1997, and is renewable upon the mutual written consent of the parties prior to
the termination of this Agreement.
Upon receipt of a written purchase order from Triple I (the "Triple I
Purchase Order"), Centennial agrees to use its reasonable efforts to purchase
the requested components from the stated vendor on Centennial's account using
Centennial's purchasing system. Triple I shall negotiate the terms, prices and
delivery dates with the vendor prior to forwarding the Triple I Purchase Order
to Centennial, and reflect such terms in the Triple I Purchase Order. Centennial
agrees to use its reasonable efforts to place orders with the vendor in a timely
manner, according to the terms and conditions stated in the Triple I Purchase
Order, and forward copies of the documents evidencing the orders to Triple I.
Centennial shall receive the components at its place of business and
notify Triple I of the receipt within one (1) business day of receipt. Triple I
shall be required to transport the components to its place of business from
Centennial at the sole expense of Triple I.
Centennial shall pay the vendor the cost of the components in a timely
manner. Triple I shall pay Centennial for the components within ten (10) days of
receipt of full payment to Triple I for the sale of the Triple I product within
which the components were installed (the "Due Date"). Centennial agrees to
reduce Triple I's outstanding balance with Centennial accordingly as payment for
the components is received from Triple I. At the times Triple I pays Centennial
for the components, Triple I shall provide Centennial with evidence of the dates
on which Triple I received full payment for the sale of the Triple I product
within which the components were installed.
<PAGE> 2
Emanuel Pinez, President
Re: Purchase Agreement
March 31, 1996
Page 2
If any payment for components due Centennial hereunder is not received
by Centennial from Triple I within three (3) business days after the Due Date,
then Centennial at any time thereafter may attempt to collect said overdue
payment, through legal proceedings or otherwise, and Triple I will pay all of
Centennial's reasonable legal fees and costs and expenses of collection incurred
in connection with Centennial's attempts to collect said overdue payment. In the
event that any such payment for components is not received by Centennial within
five (5) business days of the Due Date, Centennial, at its option, may assess to
Triple I a late payment fee equal to five percent (5%) of the overdue payment,
payable to Centennial with the overdue payment.
The parties have agreed that Centennial will use its reasonable efforts
to purchase for Triple I, subject to full reimbursement from Triple I,
components necessary to manufacture twenty (20) systems, estimated at
$3,000,000. Centennial hereby agrees to assist Triple I with the purchases of
components on Centennial's account up to a total of $750,000 due at any one
time. The $750,000 limit may be increased upon the prior written consent of
Centennial.
In consideration of Centennial's purchasing services to be provided to
Triple I hereunder, Triple I shall pay to Centennial a one-time fee of $200,000.
No other fees or interest shall be due. Triple I will pay the $200,000 fee in
full in cash on or before May 31, 1996. Centennial acknowledges that Triple I
has granted a prior security interest to its principal lender and that
Centennial has not requested or received any security interest under this
Agreement.
The parties agree that Centennial may terminate this Agreement, in its
sole discretion, if Triple I shall take any voluntary action or be the subject
of any involuntary action seeking bankruptcy, insolvency administration,
receivership or any such similar action without obtaining dismissal of such
action within sixty (60) days after the taking thereof.
No delay or failure by Centennial to exercise any right hereunder, and
no partial or single exercise of any such right, shall constitute a waiver of
that or any other right, unless otherwise expressly provided herein.
This Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors and assigns.
The parties have requested that the law firm of O'Connor, Broude &
Aronson prepare this Agreement. The parties acknowledge that they have been
advised to review this Agreement with their own legal counsel and other advisors
of their choosing and that prior to entering into this Agreement, they have had
the opportunity to review this Agreement with their attorney and other advisors
and have not asked (or relied upon) O'Connor, Broude & Aronson to represent them
in this matter.
<PAGE> 3
Emanuel Pinez, President
Re: Purchase Agreement
March 31, 1996
Page 3
By the signatures below, the undersigned agree that this Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof, that it may be changed only by a written agreement signed by the
parties, and agree to abide by the terms herein.
TRIPLE I CORPORATION
By:
--------------------------------
Juan Amodei, Ph.D.
President
CENTENNIAL TECHNOLOGIES, INC.
By:
--------------------------------
Emanuel Pinez
President
<PAGE> 1
EXHIBIT 10c
INDUSTRIAL IMAGING CORPORATION
1996 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF THE PLAN
The purpose of this Plan is to encourage and enable employees,
consultants, directors and others who are in a position to make significant
contributions to the success of INDUSTRIAL IMAGING CORPORATION and of its
Affiliated Corporations upon whose judgment, initiative and efforts the
Corporation depends for the successful conduct of its business, to acquire a
closer identification of their interests with those of the Corporation by
providing them with opportunities to purchase stock in the Corporation pursuant
to options granted hereunder, thereby stimulating their efforts on behalf of the
Corporation and strengthening their desire to remain involved with the
Corporation. Any person designated to participate in the Plan is referred to as
a "Participant."
ARTICLE II
DEFINITIONS
2.1 "Affiliated Corporation" means any stock corporation of which a
majority of the voting common or capital stock is owned directly or indirectly
by the Corporation.
2.2 "Award" means an Option granted under Article V.
2.3 "Board" means the Board of Directors of the Corporation or, if one
or more has been appointed, a Committee of the Board of Directors of the
Corporation.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
<PAGE> 2
2.5 "Committee" means a Committee composed solely of two or more
Non-Employee Directors appointed by the Board to administer the Plan.
2.6 "Corporation" means INDUSTRIAL IMAGING CORPORATION, a Delaware
corporation, or its successor.
2.7 "Employee" means any person who is a regular full-time or part-time
employee of the Corporation or an Affiliated Corporation on or after the
effective date of the Plan.
2.8 "Incentive Stock Option" ("ISO") means an option that qualifies as
an incentive stock option as defined in Section 422 of the Code, as amended.
2.9 "Non-Employee Director" means (unless otherwise provided under Rule
16b-3 of the Securities Exchange Act of 1934) a member of the Board who (i) is
not currently an officer or Employee of the Corporation; (ii) does not receive
direct or indirect compensation from the Corporation or a parent or subsidiary
of the Corporation as a consultant or in any other capacity (except as a
Director) in an amount of more than $60,000 per year; (iii) does not possess an
interest in any other transaction for which proxy statement disclosure would be
required under Regulation S-K Item 404(a) (generally, transactions with the
Corporation involving an amount in excess of $60,000); and (iv) who is not
engaged in a business relationship with the Corporation for which disclosure
would be required pursuant to Regulation S-K Item 404(b) (generally involving,
among others, payments or indebtedness in excess of five percent of the
Corporation's or another entity's gross revenues or total assets, depending on
the transaction at issue).
- 2 -
<PAGE> 3
2.10 "Non-Qualified Option" means any option not intended to qualify as
an Incentive Stock Option.
2.11 "Option" means an Incentive Stock Option or Non-Qualified Option
granted by the Board under Article V of this Plan in the form of a right to
purchase Stock evidenced by an instrument containing such provisions as the
Board may establish. Except as otherwise expressly provided with respect to an
Option grant, no Option granted pursuant to the Plan shall be an Incentive Stock
Option.
2.12 "Participant" means a person selected by the Board or by the
Committee to receive an award under the Plan.
2.13 "Plan" means this 1996 Stock Option Plan.
2.14 "Restricted Period" means the period of time selected by the
Committee during which an award may be forfeited by the Participant.
2.15 "Stock" means the Common Stock, $.01 par value, of the Corporation
or any successor, including any adjustments in the event of changes in capital
structure of the type described in Article X.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 Administration by Board. This Plan shall be administered by the
Board of Directors of the Corporation. The Board may, from time to time, in its
discretion delegate any of its functions under this Plan to one or more
Committees. All references in this Plan to the Board shall also
- 3 -
<PAGE> 4
include the Committee or Committees, if one or more have been appointed by the
Board. From time to time the Board may increase the size of the Committee or
committees and appoint additional Non- Employee Directors as members thereto,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies however caused, or remove all members of the Committee
or committees and thereafter directly administer the Plan. No member of the
Board or a Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any options granted under it.
If a Committee is appointed by the Board, a majority of the members of
the Committee shall constitute a quorum, and all determinations of the Committee
under the Plan shall be made by a majority of its members and may be made
without notice or meeting of the Committee by a writing signed by a majority of
Committee members.
3.2 Powers. The Board of Directors and/or any Committee appointed by
the Board shall have full and final authority to operate, manage and administer
the Plan on behalf of the Corporation. This authority includes, but is not
limited to:
(a) The power to grant Awards conditionally or unconditionally,
(b) The power to prescribe the form or forms of any instruments
evidencing Awards granted under this Plan,
(c) The power to interpret the Plan,
- 4 -
<PAGE> 5
(d) The power to provide regulations for the operation of the incentive
features of the Plan, and otherwise to prescribe and rescind
regulations for interpretation, management and administration of
the Plan,
(e) The power to delegate responsibility for Plan operation, management
and administration on such terms, consistent with the Plan, as the
Board may establish,
(f) The power to delegate to other persons the responsibility of
performing ministerial acts in furtherance of the Plan's purpose,
and
(g) The power to engage the services of persons, companies, or
organizations in furtherance of the Plan's purpose, including but
not limited to, banks, insurance companies, brokerage firms and
consultants.
3.3 Additional Powers. In addition, as to each Option to buy Stock of
the Corporation, the Board or any Committee appointed by it shall have full and
final authority in its discretion: (a) to determine the number of shares of
Stock subject to each Option; (b) to determine the time or times at which
Options will be granted; (c) to determine the option price of the shares of
Stock subject to each Option, which price shall be not less than the minimum
price specified in Article V of this Plan; (d) to determine the time or times
when each Option shall become exercisable and the duration of the exercise
period (including the acceleration of any exercise period), which shall not
exceed the maximum period specified in Article V; (e) to determine whether each
Option granted shall be an Incentive Stock Option or a Non-Qualified Option; and
(f) to waive, generally and in particular instances, compliance by a Participant
with any obligation to be performed by him under an Option,
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<PAGE> 6
to waive any condition or provision of an Option, and to amend or cancel any
Option (and if an Option is canceled, to grant a new Option on such terms as the
Board may specify), except that the Board may not take any action with respect
to an outstanding option that would adversely affect the rights of the
Participant under such Option without such Participant's consent. Nothing in the
preceding sentence shall be construed as limiting the power of the Board to make
adjustments required by Article X.
In no event may the Corporation grant an Employee any Incentive Stock
Option that is first exercisable during any one calendar year to the extent the
aggregate fair market value of the Stock (determined at the time the options are
granted) exceeds $100,000 (under all stock option plans of the Corporation and
any Affiliated Corporation); provided, however, that this paragraph shall have
no force and effect if its inclusion in the Plan is not necessary for Incentive
Stock Options issued under the Plan to qualify as such pursuant to Section
422(d)(1) of the Code.
ARTICLE IV
ELIGIBILITY
4.1 Eligible Employees. All Employees (including Directors who are
Employees) are eligible to be granted Incentive Stock Option and Non-Qualified
Option Awards under this Plan. Incentive Stock Options shall be granted only to
Employees.
4.2 Consultants, Directors and other Non-Employees. Any consultant,
Director (whether or not an Employee) and any other non-employee is eligible to
be granted Non-Qualified Option
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<PAGE> 7
Awards under the Plan, provided the person has not irrevocably elected to be
ineligible to participate in the Plan.
4.3 Relevant Factors. In selecting individual Employees, consultants,
Directors and other non-employees to whom Awards shall be granted, the Board
shall weigh such factors as are relevant to accomplish the purpose of the Plan
as stated in Article I. An individual who has been granted an Award may be
granted one or more additional Awards, if the Board so determines. The granting
of an Award to any individual shall neither entitle that individual to, nor
disqualify him from, participation in any other grant of Awards.
ARTICLE V
STOCK OPTION AWARDS
5.1 Number of Shares. Subject to the provisions of Article X of this
Plan, the aggregate number of shares of Stock for which Options may be granted
under this Plan shall not exceed 450,000 shares. The shares to be delivered upon
exercise of Options under this Plan shall be made available, at the discretion
of the Board, either from authorized but unissued shares or from previously
issued and reacquired shares of Stock held by the Corporation as treasury
shares, including shares purchased in the open market.
Stock issuable upon exercise of an Option granted under the Plan may be
subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
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<PAGE> 8
5.2 Effect of Expiration, Termination or Surrender. If an Option under
this Plan shall expire or terminate unexercised as to any shares covered
thereby, or shall cease for any reason to be exercisable in whole or in part, or
if the Corporation shall reacquire any unvested shares issued pursuant to
Options under the Plan, such shares shall thereafter be available for the
granting of other Options under this Plan, subject to the limits set forth in
Section 5.1 hereof.
5.3 Term of Options. The full term of each Option granted hereunder
shall be for such period as the Board shall determine. In the case of Incentive
Stock Options granted hereunder, the term shall not exceed ten (10) years from
the date of granting thereof. Each Option shall be subject to earlier
termination as provided in Sections 6.3 and 6.4. Notwithstanding the foregoing,
the term of Options intended to qualify as Incentive Stock Options shall not
exceed five (5) years from the date of granting thereof if such Option is
granted to any Employee who at the time such Option is granted owns, directly or
indirectly, or is deemed to own by reason of the attribution rules set forth in
Section 425(d) of the Code, more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation and its Affiliated
Corporations (a "Ten-Percent Shareholder").
5.4 Option Price. The Option price shall be determined by the Board at
the time any Option is granted. In the case of Incentive Stock Options, the
exercise price shall not be less than l00% of the fair market value of the
shares covered thereby at the time the Incentive Stock Option is granted (but in
no event less than par value), provided that no Incentive Stock Option shall be
granted hereunder to any Employee who is a Ten-Percent Shareholder unless the
Incentive Stock Option price equals not less than 110% of the fair market value
of the shares covered thereby at the time the Incentive Stock Option is granted.
In the case of Non-Qualified Stock Options, the exercise price shall not be less
than par value.
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<PAGE> 9
5.5 Fair Market Value. If, at the time an Option is granted under the
Plan, the Corporation's Stock is publicly traded, then "fair market value" shall
be determined as of the last business day for which the prices or quotes
discussed in this sentence are available prior to the date such Option is
granted and shall mean (i) the average (on that date) of the high and low prices
of the Stock on the principal national securities exchange on which the Stock is
traded, if the Stock is then traded on a national securities exchange; or (ii)
the last reported sale price (on that date) of the Stock on the NASDAQ National
Market List, if the Stock is not then traded on a national securities exchange;
or (iii) the closing bid price (or average of bid prices) last quoted (on that
date) by an established quotation service for over-the-counter securities, if
the Stock is not reported on the NASDAQ National Market List. However, if the
Stock is not publicly traded at the time an Option is granted under the Plan,
"fair market value" shall be deemed to be the fair value of the Stock as
determined in good faith by the Board after taking into consideration all
factors that it deems appropriate, including without limitation, recent sale and
offer prices of the Stock in private transactions negotiated at arm's length.
5.6 Non-Transferability of Options. No Option granted under this Plan
shall be transferable by the grantee otherwise than by will or the laws of
descent and distribution, and such Option may be exercised during the grantee's
lifetime only by the grantee.
5.7 Foreign Nationals. Awards may be granted to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or comply with
applicable laws.
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<PAGE> 10
ARTICLE VI
EXERCISE OF OPTION
6.1 Exercise. Each Option granted under this Plan shall be exercisable
on such date or dates and during such period and for such number of shares as
shall be determined pursuant to the provisions of the instrument evidencing such
Option. The Board shall have the right to accelerate the date of exercise of any
option, provided that the Board shall not accelerate the exercise date of any
Incentive Stock Option granted if such acceleration would violate the annual
vesting limitation contained in Section 422(d)(1) of the Code.
6.2 Notice of Exercise. A person electing to exercise an Option shall
give written notice to the Corporation of such election and of the number of
shares he or she has elected to purchase and shall at the time of exercise
tender the full purchase price of the shares he or she has elected to purchase.
The purchase price can be paid partly or completely in shares of the
Corporation's stock valued at Fair Market Value as defined in Section 5.5
hereof, or by any such other lawful consideration as the Board may determine.
Until such person has been issued a certificate or certificates for the shares
so purchased, he or she shall possess no rights of a record holder with respect
to any of such shares.
6.3 Option Unaffected by Change in Duties. No Incentive Stock Option
(and, unless otherwise determined by the Board of Directors, no Non-Qualified
Option granted to a person who is, on the date of the grant, an Employee of the
Corporation or an Affiliated Corporation) shall be affected by any change of
duties or position of the optionee (including transfer to or from an Affiliated
Corporation), so long as he or she continues to be an Employee. Employment shall
be considered as continuing uninterrupted during any bona fide leave of absence
(such as those
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<PAGE> 11
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute. A
bona fide leave of absence with the written approval of the Board shall not be
considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Corporation or any Affiliated
Corporation to continue the employment of the optionee after the approved period
of absence.
If the optionee shall cease to be an Employee for any reason other than
death, such Option shall thereafter be exercisable only to the extent of the
purchase rights, if any, which have accrued as of the date of such cessation;
provided that (i) the Board may provide in the instrument evidencing any Option
that the Board may in its absolute discretion, upon any such cessation of
employment, determine (but be under no obligation to determine) that such
accrued purchase rights shall be deemed to include additional shares covered by
such Option; and (ii) unless the Board shall otherwise provide in the instrument
evidencing any Option, upon any such cessation of employment, such remaining
rights to purchase shall in any event terminate upon the earlier of (A) the
expiration of the original term of the Option; or (B) where such cessation of
employment is on account of disability, the expiration of one year from the date
of such cessation of employment and, otherwise, the expiration of three months
from such date. For purposes of the Plan, the term "disability" shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code.
In the case of a Participant who is not an employee, provisions
relating to the exercisability of an Option following termination of service
shall be specified in the award. If not so specified, all Options held by such
Participant shall terminate on termination of service to the Corporation.
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<PAGE> 12
6.4 Death of Optionee. Should an optionee die while in possession of
the legal right to exercise an Option or Options under this Plan, such persons
as shall have acquired, by will or by the laws of descent and distribution, the
right to exercise any Options theretofore granted, may, unless otherwise
provided by the Board in any instrument evidencing any Option, exercise such
Options at any time prior to one year from the date of death; provided, that
such Option or Options shall expire in all events no later than the last day of
the original term of such Option; provided, further, that any such exercise
shall be limited to the purchase rights which have accrued as of the date when
the optionee ceased to be an Employee, whether by death or otherwise, unless the
Board provides in the instrument evidencing such Option that, in the discretion
of the Board, additional shares covered by such Option may become subject to
purchase immediately upon the death of the optionee.
ARTICLE VII
TERMS AND CONDITIONS OF OPTIONS
Options shall be evidenced by instruments (which need not be identical)
in such forms as the Board may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in Articles V and VI hereof and
may contain such other provisions as the Board deems advisable which are not
inconsistent with the Plan, including restrictions applicable to shares of Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Board may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to Incentive Stock Options, or to
such other termination and cancellation provisions as the Board may determine.
The Board may from time to time confer authority and responsibility on one or
more of its own members and/or one or more officers of the Corporation to
execute and deliver such
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<PAGE> 13
instruments. The proper officers of the Corporation are authorized and directed
to take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
ARTICLE VIII
BENEFIT PLANS
Awards under the Plan are discretionary and are not a part of regular
salary. Awards may not be used in determining the amount of compensation for any
purpose under the benefit plans of the Corporation, or an Affiliated
Corporation, except as the Board may from time to time expressly provide.
Neither the Plan, an Option or any instrument evidencing an Option confers upon
any Participant any right to continue as an Employee of, or consultant or
advisor to, the Corporation or an Affiliated Corporation or affect the right of
the Corporation or any Affiliated Corporation to terminate them at any time.
Except as specifically provided by the Board in any particular case, the loss of
existing or potential profits granted under this Plan shall not constitute an
element of damages in the event of termination of the relationship of a
Participant even if the termination is in violation of an obligation of the
Corporation to the Participant by contract or otherwise.
ARTICLE IX
AMENDMENT, SUSPENSION OR TERMINATION
OF THE PLAN
The Board may suspend the Plan or any part thereof at any time or may
terminate the Plan in its entirety. Awards shall not be granted after Plan
termination. The Board may also amend the Plan from time to time, except that
amendments which affect the following subjects must be approved by stockholders
of the Corporation:
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<PAGE> 14
(a) Except as provided in Article X relative to capital changes, the
number of shares as to which Options may be granted pursuant to
Article V; and
(b) The requirements as to eligibility for participation in the Plan.
Awards granted prior to suspension or termination of the Plan may not
be canceled solely because of such suspension or termination, except with the
consent of the grantee of the Award.
ARTICLE X
CHANGES IN CAPITAL STRUCTURE
The instruments evidencing Options granted hereunder shall be subject
to adjustment in the event of changes in the outstanding Stock of the
Corporation by reason of stock dividends, stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other
relevant changes in capitalization occurring after the date of an Award to the
same extent as would affect an actual share of Stock issued and outstanding on
the effective date of such change. Such adjustment to outstanding Options shall
be made without change in the total price applicable to the unexercised portion
of such options, and a corresponding adjustment in the applicable option price
per share shall be made. In the event of any such change, the aggregate number
and classes of shares for which Options may thereafter be granted under Section
5.1 of this Plan may be appropriately adjusted as determined by the Board so as
to reflect such change.
Notwithstanding the foregoing, any adjustments made pursuant to this
Article X with respect to Incentive Stock Options shall be made only after the
Board, after consulting with counsel for the Corporation, determines whether
such adjustments would constitute a "modification" of such Incentive Stock
Options (as that term is defined in Section 424 of the Code) or would cause any
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<PAGE> 15
adverse tax consequences for the holders of such Incentive Stock Options. If the
Board determines that such adjustments made with respect to Incentive Stock
Options would constitute a modification of such Incentive Stock Options, it may
refrain from making such adjustments.
In the event of the proposed dissolution or liquidation of the
Corporation, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as shall be determined by the Board.
Except as expressly provided herein, no issuance by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities of
the Corporation.
No fractional shares shall be issued under the Plan and the optionee
shall receive from the Corporation cash in lieu of such fractional shares.
ARTICLE XI
EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective on June 17, 1992. The Plan shall
continue until such time as it may be terminated by action of the Board or the
Committee; provided, however, that no Options may be granted under this Plan on
or after the tenth anniversary of the date on which the Plan was adopted by the
Board or the date on which the Plan was approved by the stockholders of the
Corporation, whichever is earlier. This Plan must be approved by the
stockholders of the Corporation within twelve (12) months of June 17, 1992.
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<PAGE> 16
ARTICLE XII
CONVERSION OF ISOS INTO NON-QUALIFIED
OPTIONS; TERMINATION OF ISOS
The Board, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's
Incentive Stock Options, that have not been exercised on the date of conversion,
into Non-Qualified Options at any time prior to the expiration of such Incentive
Stock Options, regardless of whether the optionee is an employee of the
Corporation or an Affiliated Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of such Options. At the time of such conversion, the
Board or the Committee (with the consent of the optionee) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the Board
or the Committee in its discretion may determine, provided that such conditions
shall not be inconsistent with the Plan. Nothing in the Plan shall be deemed to
give any optionee the right to have such optionee's Incentive Stock Options
converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Board or the Committee takes appropriate action. The Board, with
the consent of the optionee, may also terminate any portion of any Incentive
Stock Option that has not been exercised at the time of such termination.
ARTICLE XIII
APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of shares
pursuant to Options granted under the Plan shall be used for general corporate
purposes.
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<PAGE> 17
ARTICLE XIV
GOVERNMENTAL REGULATION
The Corporation's obligation to sell and deliver shares of Stock under
this Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.
ARTICLE XV
WITHHOLDING OF ADDITIONAL INCOME TAXES
Upon the exercise of a Non-Qualified Option or the making of a
Disqualifying Disposition (as defined in Article XVI) the Corporation, in
accordance with Section 3402(a) of the Code, may require the optionee to pay
additional withholding taxes in respect of the amount that is considered
compensation includible in such person's gross income. The Board in its
discretion may condition the exercise of an Option on the payment of such
additional withholding taxes.
ARTICLE XVI
NOTICE TO CORPORATION OF DISQUALIFYING DISPOSITION
Each Employee who receives an Incentive Stock Option must agree to
notify the Corporation in writing immediately after the employee makes a
Disqualifying Disposition of any Stock acquired pursuant to the exercise of an
Incentive Stock Option. A Disqualifying Disposition is any disposition
(including any sale) of such Stock before the later of (a) two years after the
date the employee was granted the Incentive Stock Option or (b) one year after
the date the Employee acquired Stock by exercising the Incentive Stock Option.
If the Employee has died before such Stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.
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<PAGE> 18
ARTICLE XVII
GOVERNING LAW; CONSTRUCTION
The validity and construction of the Plan and the instruments
evidencing Options shall be governed by the laws of the State of Delaware
(without regard to the conflict of law principles thereof). In construing this
Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise requires.
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<PAGE> 1
EXHIBIT 10d
----------------------
KEY EMPLOYEE AGREEMENT
----------------------
To: Juan J. Amodei, Ph.D. As of October 13, 1995
Triple I Corporation
847 Rogers Street
Lowell, Massachusetts 01852
The undersigned, Triple I Corporation, a Delaware corporation (the
"Company"), in consideration of the salary and benefits provided you herein, and
for other good and valuable consideration, the sufficiency and receipt whereof
are hereby acknowledged, hereby agrees with you as follows:
l. Position and Responsibilities.
1.1 You shall serve as Chief Executive Officer of the Company, and
shall perform the duties customarily associated with such capacity from time to
time and at such executive offices of the Company (provided that such offices
are within a thirty (30) mile radius of Lowell, Massachusetts) as the Company
shall designate are appropriate and necessary in connection with such
employment.
1.2 You will, to the best of your ability, devote your full time
and best efforts to the performance of your duties hereunder and the business
and affairs of the Company. You agree to perform such executive duties as may be
assigned to you by or on authority of the Company's Board of Directors from time
to time.
1.3 You will duly, punctually and faithfully perform and observe
any and all rules and regulations which the Company may now or shall hereafter
establish governing the conduct of its business.
2. Term of Employment; Change in Control.
2.1 The initial term of this Agreement shall be from the date
hereof until December 31, 1998. Thereafter, this Agreement shall be
automatically renewed for successive periods of three (3) years, unless the
Company shall give you not less than six (6) months written notice of
non-renewal. You may terminate your employment pursuant to this Agreement at any
time after giving the Company three (3) months' notice. Your employment with the
Company may be terminated at any time as provided in Section 2.2.
2.2 The Company shall have the right, on written notice to you, to
terminate your employment:
<PAGE> 2
(a) immediately at any time for "cause" as defined herein; or
(b) at any time without cause, provided the Company shall be
obligated to pay to you as severance pay an amount equal to your
"Compensation Package" for a period of three (3) years following the
date of termination of your employment (which Compensation Package
shall include your Base Salary and all other benefits as set forth on
Exhibit A hereto, including but not limited to your most recent bonus
for the prior fiscal year annualized over the remaining term of this
Agreement). Such sums shall be reduced by applicable taxes and other
required withholdings and any amounts you may owe to the Company.
2.3 For purposes of Section 2.2, the term "cause" shall include
(i) the falseness of any warranty or representation by you herein, or (ii) the
willful breach of your obligations under this Agreement or your duties as an
employee of the Company, or (iii) fraud or embezzlement involving the Company,
their employees, suppliers or customers, or (iv) conviction on a felony charge.
2.4 In the event of a "Change of Control" in the Company, you will
have the option to terminate your employment subject to the provisions of
Section 2.1 herein. If, within nine (9) months of a Change in Control, (i) your
duties are reduced, or (ii) you decide to terminate your employment, or (iii)
you are terminated by the Company, then you shall be entitled to receive: (x) an
amount equal to your Compensation Package (as described in Exhibit "A") for a
period of one (1) year, payable in a lump sum; and (y) the immediate removal of
all loan guarantees and the repayment of all loans placed by you on behalf of or
for the benefit of the Company. For purposes of this Agreement, a "Change in
Control" shall be defined as the acquisition (in or as a result of a single
transaction or an integrated series of transactions) by any person or entity not
a current stockholder of the Company or affiliated with the Company, fifty
percent (50%) or more of the Common Stock of the Company outstanding immediately
before the Change of Control. a Change of Control shall not include a merger or
the exchange of shares between the Company and the shareholders of Orbis, Inc.,
a Rhode Island corporation, or any public offering of the Company's securities
as approved by the Company's Board of Directors.
3. Compensation. You shall receive the compensation and benefits set
forth on Exhibit A hereto ("Compensation") for all services to be rendered by
you hereunder and for your transfer of property rights pursuant to an agreement
relating to proprietary information and inventions of even date herewith
attached hereto as Exhibit C between you and the Company (the "Proprietary
Information and Inventions Agreement").
4. Other Activities During Employment. You hereby agree that, except
as disclosed on Exhibit B hereto, during your employment hereunder, you will
not, directly or indirectly, engage (a) individually, (b) as an officer, (c) as
a director, (d) as an employee, (e) as a consultant, (f) as an advisor, (g) as
an agent (whether a salesperson or otherwise), (h) as a broker, or (i) as a
partner, coventurer, stockholder or other proprietor owning directly or
indirectly more than five percent (5%)
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<PAGE> 3
interest, in any firm, corporation, partnership, trust, association, or other
organization which is engaged in any line of business engaged in or under
demonstrable development by the Company (such firm, corporation, partnership,
trust, association, or other organization being hereinafter referred to as a
"Prohibited Enterprise"). Except as may be shown on Exhibit B hereto, you hereby
represent that you are not engaged in any of the foregoing capacities (a)
through (i) in any Prohibited Enterprise.
5. Former Employers.
5.1 You represent and warrant that your employment by the Company
will not conflict with and will not be constrained by any prior or current
employment, consulting agreement or relationship whether oral or written. You
represent and warrant that you do not possess confidential information arising
out of any such employment, consulting agreement or relationship which, in your
best judgment, would be utilized in connection with your employment by the
Company in the absence of Section 5.2.
5.2 If, in spite of the second sentence of Section 5.1, you should
find that confidential information belonging to any other person or entity might
be usable in connection with the Company's business, you will not intentionally
disclose to the Company or use on behalf of the Company any confidential
information belonging to any of your former employers; but during your
employment by the Company you will use in the performance of your duties all
information which is generally known and used by persons with training and
experience comparable to your own all information which is common knowledge in
the industry or otherwise legally in the public domain.
6. Proprietary Information and Inventions. You agree to execute,
deliver and be bound by the provisions of the Proprietary Information and
Inventions Agreement attached hereto as Exhibit C and incorporated herein.
7. Post-Employment Activities.
7.1 For a period of one (1) year after the termination or
expiration, for any reason, of your employment with the Company hereunder,
absent the Company's prior written approval, you will not directly or indirectly
engage in activities similar or reasonably related to those in which you shall
have engaged hereunder during the two years immediately preceding termination or
expiration, nor render services similar or reasonably related to those which you
shall have rendered hereunder during such two years, to any person or entity
whether now existing or hereafter established which directly competes with (or
proposes or plans to directly compete with) the Company ("Direct Competitor") in
any line of business engaged in or under development by the Company. Nor shall
you entice, induce or encourage any of the Company's other employees to engage
in any activity which, were it done by you, would violate any provision of the
Proprietary Information and Inventions Agreement or this Section 7. As used in
this Section 7.1, the term "any line of business engaged in or under development
by the Company" shall be applied as at the date of termination of
3
<PAGE> 4
your employment, or, if later, as at the date of termination of any
post-employment consulting arrangement.
7.2 No provision of this Agreement shall be construed to preclude
you from performing the same services which the Company hereby retains you to
perform for any person or entity which is not a Direct Competitor of the Company
upon the expiration or termination of your employment (or any post-employment
consulting arrangement) so long as you do not thereby violate any term of the
Proprietary Information and Inventions Agreement.
8. Remedies. Your obligations under the Proprietary Information and
Inventions Agreement and the provisions of Sections 6, 7, 8 and 9 of this
Agreement (as modified by Section 10, if applicable) shall survive the
expiration or termination of your employment (whether through your resignation
or otherwise) with the Company. You acknowledge that a remedy at law for any
breach or threatened breach by you of the provisions of the Proprietary
Information and Inventions Agreement or Section 7 would be inadequate and you
therefore agree that the Company shall be entitled to such injunctive relief in
case of any such breach or threatened breach.
9. Assignment. This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of any successor or
successors of the Company by reorganization, merger or consolidation and any
assignee of all or substantially all of its business and properties, but, except
as to any such successor or assignee of the Company, neither this Agreement nor
any rights or benefits hereunder may be assigned by the Company or by you,
except by operation of law.
10. Interpretation. IT IS THE INTENT OF THE PARTIES THAT in case any
one or more of the provisions contained in this Agreement shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect the other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. MOREOVER, IT IS THE
INTENT OF THE PARTIES THAT in case any one or more of the provisions contained
in this Agreement shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, such provision shall be
construed by limiting and reducing it as determined by a court of competent
jurisdiction, so as to be enforceable to the maximum extent compatible with
applicable law.
11. Notices. Any notice which the Company is required to or may desire
to give you shall be given by personal delivery or registered or certified mail,
return receipt requested, addressed to you at your address of record with the
Company, or at such other place as you may from time to time designate in
writing. Any notice which you are required or may desire to give to the Company
hereunder shall be given by personal delivery or by registered or certified
mail, return receipt requested, addressed to the Company at its principal
office, or at such other office as the Company may from time to time designate
in writing. The date of personal delivery or the date of mailing any notice
under this Section 11 shall be deemed to be the date of delivery thereof.
4
<PAGE> 5
12. Waivers. If either party should waive any breach of any provision
of this Agreement, such party shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
13. Complete Agreement; Amendments. The foregoing including
Exhibits A, B and C hereto, is the entire agreement of the parties with respect
to the subject matter hereof, superseding any previous oral or written
communications, representations, understandings, or agreements with the Company
or any officer or representative thereof. Any amendment to this Agreement or
waiver by the Company of any right hereunder shall be effective only if
evidenced by a written instrument executed by the parties hereto, upon
authorization of the Company's Board of Directors.
14. Headings. The headings of the Sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning of this Agreement.
15. Counterparts. This Agreement may be signed in two counterparts,
each of which shall be deemed an original and both of which shall together
constitute one agreement.
16. Governing Law. This Agreement shall be governed by and construed
under Massachusetts law, without regard to the conflict of laws principles
thereof.
If you are in agreement with the foregoing, please sign your name below
and also at the bottom of the Proprietary Information and Inventions Agreement,
whereupon this Agreement shall become binding in accordance with its terms.
Please then return this Agreement to the Company. (You may retain for your
records the accompanying counterpart of this Agreement enclosed herewith).
Very truly yours,
TRIPLE I CORPORATION
By: ____________________________
(Duly Authorized)
Accepted and Agreed:
- -----------------------------
Juan J. Amodei
5
<PAGE> 6
EXHIBIT A
EMPLOYMENT TERM, COMPENSATION AND BENEFITS
OF JUAN J. AMODEI
l. Term. The term of the Agreement to which this Exhibit A is annexed and
incorporated shall be until December 31, 1998.
2. Compensation.
(a) Base Salary. Your base salary shall be $110,500 per year.
(b) Car Allowance: Monthly car allowance of $700.00.
(c) Bonuses. You shall be entitled to such bonuses and salary increases
as the Board of Directors, or Compensation Committee, as the case
may be, may determine.
(d) Annual Review. Your compensation package shall be reviewed annually
by the Board of Directors, or Compensation Committee, as the case
may be, of the Company.
3. Vacation. You shall be entitled to all legal and religious holidays, and
four (4) weeks paid vacation in accordance with Company policy.
4. Insurance and Benefits. You shall be eligible for participation in any
health or other group insurance plan which may be established by the
Company or which the Company is required to maintain by law.
5. Sick Days and Personal Days. You shall be entitled to compensation for
sick days and personal days in accordance with Company policy.
6. Expenses. The Company shall reimburse you for all reasonable and ordinary
business expenses incurred by you in the scope of your employment
hereunder.
A-1
<PAGE> 7
EXHIBIT B
OUTSIDE EMPLOYMENTS AND DIRECTORSHIPS OF
JUAN J. AMODEI
B-1
<PAGE> 8
EXHIBIT C
------------------------------------------------
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
------------------------------------------------
To: Triple I Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852 As of October 13, 1995
The undersigned, in consideration of and as a condition of my
employment or continued employment by you and/or by companies which you own,
control, or are affiliated with or their successors in business (collectively,
the "Company"), hereby agrees as follows:
1. Confidentiality. I agree to keep confidential, except as the
Company may otherwise consent in writing, and, except for the Company's benefit,
not to disclose or make any use of at any time either during or subsequent to my
employment, any Inventions (as hereinafter defined), trade secrets, confidential
information, knowledge, data or other information of the Company relating to
products, processes, know-how, designs, formulas, test data, customer lists,
business plans, marketing plans and strategies, pricing strategies, or other
subject matter pertaining to any business of the Company or any of its
affiliates, which I may produce, obtain, or otherwise acquire during the course
of my employment, except as herein provided. I further agree not to deliver,
reproduce or in any way allow any such trade secrets, confidential information,
knowledge, data or other information, or any documentation relating thereto, to
be delivered to or used by any third parties without specific direction or
consent of a duly authorized representative of the Company.
2. Conflicting Employment; Return of Confidential Material. I agree
that during my employment with the Company I will not engage in any other
employment, occupation, consulting or other activity relating to the business in
which the Company is now or may hereafter become engaged, or which would
otherwise conflict with my obligations to the Company. In the event my
employment with the Company terminates for any reason whatsoever, I agree to
promptly surrender and deliver to the Company all records, materials, equipment,
drawings, documents and data which I may obtain or produce during the course of
my employment, and I will not take with me any description containing or
pertaining to any confidential information, knowledge or data of the Company
which I may produce or obtain during the course of my employment.
C-1
<PAGE> 9
3. Assignment of Inventions.
3.1 I hereby acknowledge and agree that the Company is the owner
of all Inventions. In order to protect the Company's rights to such Inventions,
by executing this Agreement I hereby irrevocably assign to the Company all my
right, title and interest in and to all Inventions to the Company.
3.2 For purposes of this Agreement, "Inventions" shall mean all
discoveries, processes, designs, technologies, devices, or improvements in any
of the foregoing or other ideas, whether or not patentable and whether or not
reduced to practice, made or conceived by me (whether solely or jointly with
others) during the period of my employment with the Company which relate in any
manner to the actual or demonstrably anticipated business, work, or research and
development of the Company, or result from or are suggested by any task assigned
to me or any work performed by me for or on behalf of the Company.
3.3 Any discovery, process, design, technology, device, or
improvement in any of the foregoing or other ideas, whether or not patentable
and whether or not reduced to practice, made or conceived by me (whether solely
or jointly with others) which I develop entirely on my own time not using any of
the Company's equipment, supplies, facilities, or trade secret information
("Personal Invention") is excluded from this Agreement provided such Personal
Invention (a) does not relate to the actual or demonstrably anticipated
business, research and development of the Company, and (b) does not result,
directly or indirectly, from any work performed by me for the Company.
4. Disclosure of Inventions. I agree that in connection with any
Invention, I will promptly disclose such Invention to my immediate superior at
the Company in order to permit the Company to enforce its property rights to
such Invention in accordance with this Agreement. My disclosure shall be
received in confidence by the Company.
5. Patents and Copyrights; Execution of Documents.
5.1 Upon request, I agree to assist the Company or its nominee (at
its expense) during and at any time subsequent to my employment in every
reasonable way to obtain for its own benefit patents and copyrights for
Inventions in any and all countries. Such patents and copyrights shall be and
remain the sole and exclusive property of the Company or its nominee. I agree to
perform such lawful acts as the Company deems to be necessary to allow it to
exercise all right, title and interest in and to such patents and copyrights.
5.2 In connection with this Agreement, I agree to execute,
acknowledge and deliver to the Company or its nominee upon request and at its
expense all documents, including assignments of title, patent or copyright
applications, assignments of such applications, assignments of patents or
copyrights upon issuance, as the Company may determine necessary or desirable to
protect the Company's or its nominee's interest in Inventions, and/or to use in
obtaining patents or
C-2
<PAGE> 10
copyrights in any and all countries and to vest title thereto in the Company or
its nominee to any of the foregoing.
6. Maintenance of Records. I agree to keep and maintain adequate and
current written records of all Inventions made by me (in the form of notes,
sketches, drawings and other records as may be specified by the Company), which
records shall be available to and remain the sole property of the Company at all
times.
7. Prior Inventions. It is understood that all Personal Inventions,
if any, whether patented or unpatented, which I made prior to my employment by
the Company, are excluded from this Agreement. To preclude any possible
uncertainty, I have set forth on Schedule A attached hereto a complete list of
all of my prior Personal Inventions, including numbers of all patents and patent
applications and a brief description of all unpatented Personal Inventions which
are not the property of a previous employer. I represent and covenant that the
list is complete and that, if no items are on the list, I have no such prior
Personal Inventions. I agree to notify the Company in writing before I make any
disclosure or perform any work on behalf of the Company which appears to
threaten or conflict with proprietary rights I claim in any Personal Invention.
In the event of my failure to give such notice, I agree that I will make no
claim against the Company with respect to any such Personal Invention.
8. Other Obligations. I acknowledge that the Company from time to
time may have agreements with other persons or with the U.S. Government or
agencies thereof, which impose obligations or restrictions on the Company
regarding Inventions made during the course of work thereunder or regarding the
confidential nature of such work. I agree to be bound by all such obligations
and restrictions and to take all action necessary to discharge the Company's
obligations.
9. Trade Secrets of Others. I represent that my performance of all
the terms of this Agreement and my position as an employee of the Company do not
and will not breach any agreement to keep confidential proprietary information,
knowledge or data acquired by me in confidence or in trust prior to my
employment with the Company, and I will not disclose to the Company, or induce
the Company to use, any confidential or proprietary information or material
belonging to any previous employer or others. I agree not to enter into any
agreement either written or oral in conflict herewith.
10. Modification. I agree that any subsequent change or changes in my
employment duties, salary or compensation or, if applicable, in any Employment
Agreement between the Company and me, shall not affect the validity or scope of
this Agreement.
11. Successors and Assigns. This Agreement shall be binding upon my
heirs, executors, administrators or other legal representatives and is for the
benefit of the Company, its successors and assigns.
C-3
<PAGE> 11
12. Interpretation. IT IS THE INTENT OF THE PARTIES THAT in case any
one or more of the provisions contained in this Agreement shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect the other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. MOREOVER, IT IS THE
INTENT OF THE PARTIES THAT in case any one or more of the provisions contained
in this Agreement shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, such provision shall be
construed by limiting and reducing it in accordance with a judgment of a court
of competent jurisdiction, so as to be enforceable to the extent compatible with
applicable law.
13. Waivers. If either party should waive any breach of any provision
of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
14. Complete Agreement, Amendments. I acknowledge receipt of this
Agreement, and agree that with respect to the subject matter thereof it is my
entire agreement with the Company, superseding any previous oral or written
communications, representations, understandings, or agreements with the Company
or any officer or representative thereof. Any amendment to this Agreement or
waiver by either party of any right hereunder shall be effective only if
evidenced by a written instrument executed by the parties hereto, and, in the
case of the Company, upon written authorization of the Company's Board of
Directors.
15. Headings. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
16. Counterparts. This Agreement may be signed in two counterparts,
each of which shall be deemed an original and both of which shall together
constitute one agreement.
17. Governing Law. This Agreement shall be governed and construed
under Massachusetts law, without regard to the conflict of law principles
thereof.
Very truly yours,
----------------------------------
Juan J. Amodei
Accepted and Agreed:
Triple I Corporation
By: ________________________________
(Duly Authorized)
C-4
<PAGE> 12
SCHEDULE A
LIST OF PRIOR INVENTIONS
Identifying Number or
Title Date Brief Description
- ----- ---- ---------------------
<PAGE> 1
EXHIBIT 10e
LEASE
DATED: NOVEMBER 5, 1992
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
AND
TRIPLE I CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I SUMMARY OF BASIC LEASE PROVISIONS ................................ 1
1.1 BASIC DATA ............................................................ 1
1.2 DEFINITIONS ........................................................... 2
ARTICLE II DESCRIPTIONS OF PREMISES AND APPURTENANT RIGHTS; ................ 3
2.1 LOCATION OF PREMISES .................................................. 3
2.2 APPURTENANT RIGHTS AND RESERVATIONS ................................... 3
ARTICLE III TERM OF LEASE; CONSTRUCTION .................................... 4
3.1 COMMENCEMENT DATE ..................................................... 4
3.2 DELIVERY OF PREMISES .................................................. 4
3.4 CONSTRUCTION OF IMPROVEMENTS .......................................... 4
ARTICLE IV RENT ............................................................ 6
4.1 RENT .................................................................. 6
4.2 BASE RENT ............................................................. 6
ARTICLE V USE OF PREMISES .................................................. 7
5.1 PERMITTED USE ......................................................... 7
5.2 ALTERATIONS ........................................................... 8
ARTICLE VI ASSIGNMENT AND SUBLETTING ....................................... 9
6.1 PROHIBITION ........................................................... 9
6.2 ACCEPTANCE OF RENT FROM TRANSFEREE .................................... 10
ARTICLE VII RESPONSIBILITY FOR REPAIRS ..................................... 11
7.1 REPAIRS ............................................................... 11
ARTICLE VIII SERVICES TO BE FURNISHED BY LANDLORD .......................... 12
8.1 CLEANING SERVICES ..................................................... 12
8.2 OTHER SERVICES ........................................................ 13
ARTICLE IX REAL ESTATE AND OTHER TAXES; OTHER EXPENSES ..................... 13
9.1 LANDLORD TO PAY REAL ESTATE TAXES ..................................... 13
9.2 TENANT'S SHARE OF REAL ESTATE TAXES ................................... 13
ARTICLE X OPERATING COSTS .................................................. 14
10.1 TENANT'S SHARE OF OPERATING COSTS ..................................... 14
ARTICLE XI INDEMNITY ....................................................... 16
11.1 THE TENANTS INDEMNITY ................................................. 16
11.2 THE TENANT'S RISK ..................................................... 17
11.3 INJURY CAUSED BY THIRD PARTIES ........................................ 17
ARTICLE XII THE LANDLORD'S ACCESS TO PREMISES .............................. 18
12.1 THE LANDLORD'S RIGHT OF ACCESS ........................................ 18
12.2 ACCESS DURING THE LAST MONTH OF TERM .................................. 18
</TABLE>
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<TABLE>
<S> <C>
ARTICLE XIII CASUALTY ...................................................... 18
13.1 DEFINITIONS OF "SUBSTANTIAL DAMAGE" & "PARTIAL DAMAGE" ............... 18
13.2 PARTIAL DAMAGE TO THE BUILDING ....................................... 18
13.3 SUBSTANTIAL DAMAGE TO THE BUILDING ................................... 19
13.4 ABATEMENT OF RENT .................................................... 19
13.5 MISCELLANEOUS ........................................................ 19
ARTICLE XIV EMINENT DOMAIN ................................................. 20
14.1 RIGHTS OF TERMINATION FOR TAKING ..................................... 20
14.2 PAYMENT OF AWARD ..................................................... 20
14.3 ABATEMENT OF RENT .................................................... 21
14.4 MISCELLANEOUS ........................................................ 21
ARTICLE XV INSURANCE ....................................................... 21
15.1 PUBLIC LIABILITY AND PROPERTY INSURANCE .............................. 21
15.2 NON-SUBROATION ....................................................... 22
15.3 EXTRA HAZARDOUS USE .................................................. 22
ARTICLE XVI DEFAULT ........................................................ 24
16.1 TENANT'S DEFAULT ..................................................... 24
16.2 REMEDIES UPON DEFAULT ................................................ 25
16.3 DAMAGES UPON TERMINATION ............................................. 25
16.4 COMPUTATION OF RENT FOR PURPOSES OF DEFAULT .......................... 26
16.5 RIGHTS OF LANDLORD IN BANKRUPTCY ..................................... 26
ARTICLE XVII MISCELLANEOUS PROVISIONS ...................................... 27
17.1 WAIVER ............................................................... 27
17.2 COVENANT OF QUIET ENJOYMENT .......................................... 27
17.3 NO PERSONAL LIABILITY OF THE LANDLORD ................................ 27
17.4 NOTICE TO MORTGAGE AND GROUND LESSOR; OPPORTUNITY TO CURE ............ 28
17.5 NO BROKERAGE ......................................................... 28
17.6 INVALIDITY OF PARTICULAR PROVISIONS .................................. 28
17.7 PROVISIONS BINDING, ETC .............................................. 28
17.8 RECORDING ............................................................ 29
17.9 NOTICES .............................................................. 29
17.10 WHEN LEASE BECOMES BINDING ........................................... 29
17.11 PARAGRAPH HEADINGS ................................................... 30
17.12 RIGHTS OF MORTGAGEE .................................................. 30
17.13 STATUS REPORT; MODIFICATION .......................................... 31
17.14 SECURITY DEPOSIT ..................................................... 31
17.15 SELF-HELP ............................................................ 32
17.16 RELIEF LIMITED ....................................................... 32
17.17 HOLDING OVER ......................................................... 32
17.18 CERTIFICATE .......................................................... 32
EXHIBIT A PLAN SHOWING THE PREMISES ....................................... 34
EXHIBIT B DESCRIPTION OF LOT .............................................. 35
EXHIBIT C RULES AND REGULATIONS ........................................... 38
</TABLE>
ii
<PAGE> 4
LEASE
This instrument is an Indenture of Lease between John Hancock Mutual
Life Insurance Company (the "Landlord") and Triple I Corporation (the "Tenant").
The parties to this instrument hereby agree with each other as follows:
ARTICLE I
SUMMARY OF BASIC LEASE PROVISIONS
1.1 BASIC DATA
<TABLE>
<S> <C>
Date: November 5, 1992
Landlord: John Hancock Mutual Life Insurance Company
Present Mailing Address of Landlord: Hancock Realty Investors, Inc.
200 Berkeley Street, P.O. Box 111
Boston, MA 02118
Tenant: Triple I Corporation
Present Mailing Address of Tenant: 650 Suffolk Street
Lowell, MA 01853
Lease Premises: Premises on the first floor of the
building known as 847 Rogers Street,
Lowell, MA 01853, shown on Exhibit A.
Rentable Area: 11,118 rentable square feet
Lease Term: Thirty six (36) calendar months (plus
the partial month, if any, immediately
following the Commencement Date).
Commencement Date: November 6, 1992
Rental Commencement Date: November 6, 1992
Base Rent: See Section 4.2
Security Deposit: One (1) months rent ($6,400.00).
Tenant's Parking Spaces: Non-exclusive right to thirty nine (39)
parking space.
Tenant's Proportionate Share: 19.8%
</TABLE>
<PAGE> 5
1.2 DEFINITIONS
As used in this Lease, the terms defined in this Section 1.2 shall have
the following meanings:
BROKER: Meredith & Grew, Incorporated, 160 Federal Street, Boston, MA
02110-1701; Palladins, 100 Corporate Place, Suite 106, Peabody, MA
01960.
BUILDING: as defined in Section 2.1.
BUILDING MANAGER: Meredith & Grew, or such other managing agent as may
be designated by the Landlord.
LEASE: this lease agreement including all of its Exhibits as executed
and delivered, as amended from time to time, pursuant to the terms
hereof.
LEASE YEAR: as defined in Section 10.1 (c).
LOT: the land area described in Exhibit B, subject to minor adjustments
by the Landlord from time to time during the Lease Term.
OPERATING COSTS: as defined in Section 10.1 (c).
OPERATION: as defined in Section 10.1 (c) (1).
PARTIAL LEASE YEAR: as defined in Section 10.1 (c).
PARTIAL DAMAGE: as defined in Section 13.1.
PERMITTED USE: General office, light manufacturing, research and
development, and uses accessory thereto (as permitted by applicable
law).
PREMISES: as defined in Section 2.1.
PROPERTY: as defined in Section 10.1 (c) (1).
RULES & REGULATIONS: as set forth in Exhibit F and as the same may be
amended by the Landlord from time to time.
SUBSTANTIAL DAMAGE: as defined in Section 13.1.
TAXES: as defined in Section 9.1.
2
<PAGE> 6
ARTICLE II
DESCRIPTION OF PREMISES AND APPURTENANT RIGHTS;
NET RENTABLE AREA
2.1 LOCATION OF PREMISES
The Landlord hereby leases to the Tenant and the Tenant hereby accepts
from the Landlord, the premises (the "Premises") identified on Exhibit A in the
Landlord's building located on land owned by the Landlord (the "Lot"), known as
847 Rogers Street, Lowell, MA (the "Building"). Nothing in Exhibit A shall be
treated as a representation that the Premises (other than the Rentable Area
thereof described in Section 1.1 shall be precisely of the dimensions or shapes
as shown, it being the intention of the parties only to show diagrammatically,
rather than precisely, on Exhibit A the layout of the Premises.
2.2 APPURTENANT RIGHTS AND RESERVATIONS
Tenant shall have, as appurtenant to the Premises, rights to use in
common with others entitled thereto: (a) the common facilities included in the
Building or Lot, including common walkways, driveways and ramps; (b) the parking
facility (including the visitor's parking area and parking spaces reserved for
the handicapped) to the extent of the number of Tenant's Parking Spaces, at
location which may from time to time be designated by Landlord; and (c) the
pipes, ducts, conduits, wires and appurtenant equipment serving the Premises.
Such rights shall always be subject to the Rules and Regulations set forth in
Exhibit C attached hereto an incorporated herein by reference, as the same maybe
amended by the Landlord from time to time and such other reasonable rules and
regulations from time to time established by the Landlord by suitable notice,
and to the right of the Landlord to designate and change from time to time areas
and facilities so to be used.
Not included in the Premises are the roof and all exterior perimeter
walls of the space identified in Exhibit A, except the inner surfaces thereof
and the interior doors and windows. The Tenant agrees that the Landlord shall
have the right to place in the Premises (but in such a manner as not
unreasonably to interfere with the Tenant's use of the Premises) utility lines,
telecommunication lines, shafts, pipes and the like, for the use and benefit of
Landlord and other tenants in the Building, and re replace and maintain and
repair such lines, shafts, pipes, and the like, shall not be deemed part of the
Premises under this Lease.
ARTICLE III
TERM OF LEASE; CONSTRUCTION
3.1 COMMENCEMENT DATE
The Term of this Lease shall be the period specified in Section 1.1
hereof as the "Lease Term" and the term shall commence on the Commencement Date.
3
<PAGE> 7
Tenant shall, in all events, be treated as having commenced beneficial
use of the Premises when it begins to move into the Premises furniture and
equipment for its regular business operations.
3.2 DELIVERY OF PREMISES
Landlord shall deliver the premises to Tenant on the Commencement Date
broom clean and free of tenants and occupants, but otherwise "AS IS" as to
condition and layout. Tenant, at Tenant's sold risk, may, upon prior notice to
Landlord and in accordance with the terms herein, construct its leasehold
improvement and install its furniture, furnishings and equipment. Tenant shall
construct the leasehold improvements in accordance with the requirements of
Section 3.4 hereof and Tenant and Tenant's agents, contractors, workmen,
mechanics, suppliers and invitees shall work in harmony with Landlord and
contractors working for Landlord and with other tenants and occupants in the
Building.
3.3 CONSTRUCTION OF IMPROVEMENTS
(a) Tenant shall construct all leasehold improvements to the Premises
in accordance with the provisions of this Section. Once installed, all such
leasehold improvements with the exception of a 50 Hz generator shall be part of
the Premises and shall be the sole property of Landlord. Landlord shall have no
obligation to construct any leasehold improvements to the Premises.
(b) All leasehold improvements constructed by Tenant within the
Premises shall be done in accordance with plans and specifications first
approved by Landlord. Tenant shall submit to Landlord for Landlord's approval
all plans and specifications for Tenant's construction of any leasehold
improvements, alterations or additions in or to any part of the Premises.
Landlord shall review such plans and specifications as submitted within thirty
(30) business days after the receipt thereof and shall notify Tenant if Landlord
approves or disapproves such plans and specifications. If Landlord disapproves
such plans, Landlord shall specify the reasons for its disapproval of any aspect
of such plans. Tenant shall prepare any revisions to such plans and
specifications which may be necessary as a result of Landlord's disapproval and
complete and revise the same so that the plans are satisfactory to, and have
been approved by, Landlord within seven (7) business days after Landlord's
request for revisions of the same. Landlord and Tenant shall initial the plans
and specifications after the same have been submitted by Tenant and approved by
Landlord. Tenant agrees that Tenant's construction shall be built in accordance
with such final plans and specifications meet all federal, state and local
governmental requirements, including, without limitation, all applicable zoning
laws, building codes, environmental codes, rules, ordinances or regulations, and
any applicable laws and regulations regarding accommodations for handicapped
persons. Landlord shall not be deemed unreasonable for withholding approval of
any improvements, alternations or additional which (i) adversely affect any
structural, mechanical, plumbing HVAC electrical or exterior elements of the
Building, or (ii) will require unusual expense to re-adapt the Premises to
normal warehouse use on termination of the Lease or (iii) will increase the cost
of construction or of insurance or taxes on the Building or the Premises, unless
Tenant agrees in writing to pay all such costs. Tenant
4
<PAGE> 8
shall provide Landlord with a full set of as-built plans for the Premises so
improved upon completion of such improvements.
(c) All construction work in the Premises shall be done by
contractors and laborers approved by Landlord, in a good and workman like manner
and in compliance with the Lease, all applicable laws and ordinances,
regulations and order of governmental authority and insurers of the Building or
the Premises. Tenant further covenants that it shall 1 not employ or permit the
use of any contractors or laborers or otherwise take any action in connection
with any work to the Premises which might in any was result in a labor dispute
or disharmony with any personnel providing services at the Building. Before
Tenant begins any work, it shall secure all licenses and permits necessary
therefore and cause each contractor to carry (1) workmen's compensation
insurance in statutory amounts covering all the contractor's subcontractor's
employees, (2) comprehensive public liability insurance with such limits as
Landlord may reasonably require, but in no event less than $1,000,000, and (3)
property damage insurance with limits of not less than $1,000,000 (all such
insurance to be written in companies approved by Landlord and insuring Landlord
and Tenant as well as the contractors), and to deliver to Landlord certificates
of all such insurance; and secure casualty insurance against loss or damage to
Tenant's work pending completion and deliver evidence of such insurance to
Landlord. Tenant agrees to pay promptly when due the entire cost of any work
done in the Premises by Tenant, its agents, employees or independent
contractors, and not to cause or permit any liens for labor or materials
performed or furnished in connection with its work to attach the Premises and
immediately discharge any such work liens which may attach. Landlord may inspect
the work at any time. Tenant shall indemnify Landlord and hold it harmless from
and against any cost, claim or liability arising from any work done by or at the
direction of Tenant. All work shall be done so as to minimize interference with
other tenants and with Landlord's operation of the Building or other
construction work being done by Landlord.
ARTICLE IV
RENT
4.1 RENT
The Base Rent (specified in Section 1.1 hereof) and any additional rent
or other charges payable pursuant to this Lease (collectively or individually,
"Rent"), shall be payable by the Tenant to the Landlord at Landlord's mailing
address or such other place as the Landlord may from time to time designate by
notice to the Tenant without prior demand therefore and without any offset or
deduction whatsoever except at otherwise specifically provided for in this
Lease.
(a) The Rent shall be payable in advance on the first day of each and
every calendar month during the term of this Lease, except as
otherwise provided in Subsection (b) of this Section 4.1.
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<PAGE> 9
(b) The Rent for the first calendar month of the Lease Term is due
and payable at the time of execution and delivery of the Lease.
If the Commencement Date occurs on a day other than the first day
of a calendar month, the Tenant shall pay to the Landlord on the
first day of the succeeding calendar month a pro rata payment of
Rent for the Partial month from the Commencement Date to the
first day of the succeeding calendar month. Such payment,
together with the payment made by the Tenant upon execution and
delivery of the Lease, shall constitute payment for the first
full calendar month of the Lease Term plus the partial month, if
any, immediately following the Commencement Date.
(c) Rent for any partial month shall be paid by the Tenant to the
Landlord at such rate on a pro rata basis. Other charges payable
by the Tenant on a monthly basis, as hereinafter provided, shall
likewise be prorated.
(d) Rent, additional rent and any other sums due hereunder not paid
on the date shall bear interest at the rate of 1% per month or
fraction thereof (or at any lesser maximum legally permissible
rate) from 5 days past the due date until paid.
4.2 BASE RENT
Rent for November 6, 1992 through November 30, 1993 shall be at a
monthly rate of $6,717.00 ($7.25 per rentable square foot); Rent for December 1,
1993 through November 30, 1994 shall be at a monthly rate of $7,180.00 ($7.75
per rentable square foot); Rent for December 1, 1994 through November 30, 1995
shall be at a monthly rate of $7,643.62 ($8.25 per rentable square foot).
ARTICLE V
USE OF PREMISES
5.1 PERMITTED USE
Tenant agrees that the Premises shall be used and occupied by Tenant
only for the purpose specified as the Permitted Use thereof in Section 1.2 of
this Lease, and for no other purpose or purposes.
Tenant further agrees to conform to the following provisions during the
entire term of this Lessee:
(a) Tenant will not place on the exterior of exterior walls
(including both interior and exterior surfaces of windows and
doors) or on any part of the Building outside the Premises, any
signs, symbols, advertisement or the like visible to public view
outside of the Premises without the prior consent of Landlord.
Without limitation, lettering on windows is expressly prohibited.
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(b) The Tenant, at its expense, shall comply with all rules,
ordinances, orders, regulations and requirements of any Board of
Fire Underwriters, or any other body hereafter constituted
exercising similar functions and governing insurance rating
bureaus; and shall not do or permit anything to be done in or
upon the Premises, or bring or keep anything therein, except as
now or hereafter permitted by any governmental authority, Board
of Fire Underwriters or any other similar body having
jurisdiction, or insurance rating bureaus; and shall keep the
Premises equipped with all safety appliances or equipment
required by any governmental authority, Board of Fire
Underwriters or other similar body or governing insurance rating
bureau by reason of the Tenant's particular use of the Premises
or the location of partition, trade fixtures or other contents of
the Premises; and shall procure all licenses, permits or other
approvals required because of such use, it being understood that
the foregoing provisions shall not be construed to broaden in any
way the Permitted Use of the Premises;
(c) The Tenant, at its expenses, shall comply with all rules,
ordinances, orders, permit conditions and regulations of
governmental authorities now or hereafter in force and with any
lawful direction of any public officer, in each case to the
extent the same are applicable to the Premises or the use and
maintenance thereof. If the Tenant receives notice of any
violation of law, ordinance, order, permit conditions or
regulation applicable to the Premises or the use and maintenance
thereof, it shall give prompt written notice thereof to the
Landlord;
(d) [The Tenant shall not place a load upon any floor of the Premises
exceeding the load which such floor was designed to carry or that
which is allowed by law, whichever is less. The Landlord reserves
the right to limit the weight of safes and other heavy objects
and to designate their position. The Tenant shall not move any
safes or heavy objects in or out of the Building without the
Landlord's prior consent;]
(e) The Tenant shall not commit or suffer to be committed any waste
upon the Premises or any public or private nuisance or other act
or thing which may disturb the quiet enjoyment of any other
tenant or occupant in the Building, nor, without limiting the
generality of the foregoing, shall the Tenant make any unusual
noises in the Building, cause or permit any offensive odors to be
produced upon the Premises, or use any apparatus, machinery or
device in or about the Premises which shall cause any damage to
the Building or the Premises or any vibration outside of the
Premises;
(ee) The Tenant shall be permitted to utilize the premises for the
manufacturing of its products subject to applicable law.
(f) The electricity furnished to the Premises shall be separately
metered. The tenant shall pay directly to the supplier of
electricity , within thirty (30) days of invoice therefor, the
entire cost of such electricity consumed in the Premises. The
Tenant
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shall not, without the Landlord's written consent in each
instance, connect to the electrical distribution system any
fixtures, appliances or equipment other than lamps, typewriters
and similar small office machines which operate on a voltage not
in excess of 120, or make any alteration or addition to the
electrical system of the Premises; and
(g) The Tenant shall continuously occupy the Premises during the
Lease Term, subject to temporary interruptions for causes beyond
the Tenant's reasonable control. The Tenant shall comply and
shall cause its employees, agents and invitees to comply with the
Rules and Regulations of the Building as set forth in Exhibit E
and such changes therein and other reasonable rules and
regulations as the Landlord shall from time to time establish for
the proper regulation of the Building and the Lot, provided that
such additional rules and regulations shall be of general
application to all the tenants in the Building.
5.2 ALTERATIONS.
The Tenant shall not make alterations, additions or improvements to the
Premises, except with the prior written consent of the Landlord.
All alterations, additions and improvements made by the Tenant to the
Premises shall remain therein and, at the termination of the Lease, shall be
surrendered as a part thereof, except for trade fixtures and equipment (as
distinguished from leasehold improvement) installed prior to or during the term
of this Lease at the Tenant's sole cost. Such trade fixtures and equipment may
be removed by the Tenant if the Tenant is not then in default hereunder and if
such removal shall not result in permanent damage to the Premises or the
Building. The Tenant shall remove such trade fixtures and equipment at the
termination of the Lease if requested to do so by the Landlord. The Tenant shall
at its expense promptly repair any and all damage to the Premises or the
Building resulting from any removal of such fixtures and equipment.
Any personal property which shall remain in the Building or on the
Premises after the expiration of earlier termination of the Lease shall
conclusively be deemed to have been abandoned by the Tenant, and either may be
retained by the Landlord as its own property or may be disposed of by sale,
storage or otherwise as the Landlord shall see fit, all at the Tenant's expense.
Notwithstanding the foregoing, the Tenant will, upon request of the Landlord
after the expiration or termination of the Term hereof, promptly remove from the
Building any such personal property, or if any part of such personal property
shall be sold, the Landlord may receive and retain the proceeds of such sale and
apply the same, at its option, against the expenses of sale, the costs of moving
and storage, and arrears of Rent, additional rent or other charges payable
hereunder or any damages in which the Landlord may be entitled.
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ARTICLE VI
ASSIGNMENT AND SUBLETTING
6.1 PROHIBITION
Notwithstanding any other provisions of this Lease, the Tenant shall
not assign or otherwise transfer, voluntarily or involuntarily, this Lease or
any interest herein or sublet (which term, without limitation, shall include
granting of concessions, licenses and the like) or allow any other person to
occupy the whole or any part of the Premises, without, in each instance, the
prior written consent of the Landlord. This prohibition does not include any
assignment, subletting or other transfer which would occur by merger,
consolidation, reorganization, acquisition, transfer or other change of the
Tenant's corporate or proprietary structure, including a change in the partners
of any partnership, and the sale, pledge or other transfer of any of the issued
and outstanding capital stock of any corporate Tenant (unless such stock is
publicly traded on a recognized security exchange or over-the-counter market),
provided however, that the Tenant's business continues to operate in the
Premises prior to said merger, assignment or other transaction.
Notwithstanding the above, any request by Tenant for Landlord's consent
to an assignment or a sublease of the premises ("Transfer", and the party to
whom the Transfer shall be directed shall hereinafter be referred to as
"Transferee") shall include (i) the name and address of the proposed Transferee;
(ii) the nature of the proposed Transferee's business and proposed use of the
Premises; (iii) complete information as to the financial condition and standing
of the proposed Transferee, including a copy of the proposed Transferee's most
recent quarterly and annual financial statements; (iv) the terms and conditions
of the proposed Transfer; and (v) such other information as Landlord shall
reasonably request. Landlord shall have the right to meet and interview the
proposed Transferee or its managing officers.
Landlord shall not unreasonably withhold consent to a proposed
Transfer, provided, however, a refusal based on any of the following factors
shall be deemed a reasonable refusal of consent to a Transfer: (i) the proposed
Transferee's expected use of the Premises is not consistent with the use, image
and character which the Landlord desires to promote for the Building; or (ii)
the proposed Transferee's balance sheet for the previous 8 months does not
reflect a cash flow which would cover the rental obligations set forth herein,
when added to the Transferee's other obligations of its operation. In no event
shall a failure by Landlord to approve a proposed Transferee cause a termination
of this Lease.
Tenant may, without prior consent of the Landlord, but with prior
written notice, assign this Lease, or sublet all or any portion of the Premises,
to a wholly-owned subsidiary of the Tenant or an affiliate of the Tenant. For
the purposes of this Lease, the term "affiliate" shall mean any corporation that
controls, is controlled by, or is under common control with, the Tenant; as used
in the preceding clause, the term "control" shall mean the right to exercise
more than 50% of the voting rights attributable to the shares of the controlled
corporation.
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In any case, where the Landlord shall consent to such assignment, other
transfer or subletting, the Tenant originally named herein shall remain fully
liable for Tenant obligations hereunder, including, without limitation , the
obligation to pay the rent and other amounts provided under this Lease, and the
Tenant also hereby agrees to pay to the Landlord, within fifteen (15) days of
billing therefor, all legal and other fees incurred by the Landlord in
connection with reviewing and approving any such assignment, other transfer or
subletting. The Tenant shall give written notice to the Landlord of the terms of
any such proposed assignment or sublease and the Landlord shall be entitled to
50% net profits from any such sublease or assignment. Net profit shall be
calculated by first allowing Tenant to recover any actual construction
inducement and other related costs including brokerage fees, given to the
subtenant or assignee. It shall be a condition to the validity of any permitted
assignment or other transfer or subletting that the assignee or transferee or
sublessee agree directly with the Landlord, in form satisfactory to the
Landlord, to be bound by all Tenant obligations hereunder, including, without
limitation, the obligation to pay rent and other amounts provided for under this
Lease and the covenant against further assignment or other transfer or
subletting.
6.2 ACCEPTANCE OF RENT FROM TRANSFEREE.
The acceptance by the Landlord of the payment of Rent, additional rent
or other charges following an assignment, subletting or other transfer
prohibited by this Article VI shall not be deemed to be a consent by the
Landlord to any such assignment, subletting or other transfer, nor shall the
same constitute a waiver of any right or remedy of the Landlord.
ARTICLE VII
RESPONSIBILITY FOR REPAIRS
7.1 REPAIRS.
From and after the date that possession of the Premises is delivered to
the Tenant and until the end of the Lease Term, the Tenant shall keep the
Premises and every part thereof in good order, condition and repair, reasonable
wear and tear and damage by unavoidable casualty only excepted; and the Tenant
shall surrender the Premises at the end of the Lease Term in such condition.
Except as may be provided in Articles XIII and XIV, the Landlord agrees to keep
in good order, condition and repair the structural and exterior portions of the
Building and the common areas and facilities and common equipment in the
Building, except any condition caused by any act, omission or neglect of the
Tenant or any contractor of the Tenant or any party for whose conduct the Tenant
is responsible. Without limitation, the Landlord shall not be responsible to
make any improvements or repairs other than as expressly provided in this
Section, and the Landlord shall not be liable for any failure to make such
repairs unless the Tenant has given notice to the Landlord of the need to make
such repairs and the Landlord has failed to commence to make such repairs within
a reasonable time thereafter.
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In addition to the requirements of Section 3.4 herein, whenever the
Tenant shall make repairs, alterations, decorations, additions, removals, or
improvements (including the installation of any equipment other than normal
light business office equipment) in or to the Premises:
(a) No material or equipment shall be incorporated in or added to the
Premises in connection with any such repair, alteration,
decoration, addition, removal or improvement which is subject to
or claimed to be subject to any lien, charge, mortgage, or other
encumbrance of any kind whatsoever or is subject to any security
interest or any form of title retention agreement. Any mechanic's
or materialmen's lien filed against the Premises or the Building
for work claimed to have been done for, or materials claimed to
have been furnished to the Tenant, shall be immediately
discharged by the Tenant, at the Tenant's expense, by filing the
bond required by law or otherwise. If the Tenant fails so to
discharge any lien, the Landlord may do so at the Tenant's
expense and the Tenant shall reimburse the Landlord for all
expenses and costs incurred by the Landlord in so doing
immediately after rendition of a bill therefor by the Landlord to
the Tenant.
(b) All installations or work done by or for the Tenant shall be at
its own expense and shall at all times comply with (i) laws,
rules, orders and regulations of governmental authorities having
jurisdiction thereof; (ii) orders and regulations of any
Board of Fire Underwriters, or any other body hereafter
constituted exercising similar functions, and governing insurance
rating bureaus; (iii) plans and specifications (which shall be
prepared by and at the expense of the Tenant) theretofore
submitted to and approved in writing by the Landlord.
(c) The Tenant shall procure all necessary permits before undertaking
any work in the Premises and shall do all such work in a good and
workmanlike manner, employing new materials of first class
quality and shall defend, save harmless, exonerate and indemnify
the Landlord from all injury, loss or damage to any person or
property occasioned by such work. The Tenant shall cause
contractors employed by the Tenant to carry and maintain in force
during the continuance of any work being performed for the Tenant
Worker's Compensation Insurance in accordance with statutory
requirements and Comprehensive Public Liability Insurance and
Automobile Liability Insurance covering such contractors on or
about the Premises in amounts reasonably acceptable to the
Landlord and to submit certificates evidencing such coverage to
the Landlord prior to the commencement of such work.
(d) The Tenant shall not, at any time prior to or during the Term of
this Lease, directly or indirectly employ, or permit the
employment of, any contractor, mechanic or laborer in the
Premises, whether in connection with any repair work or the
making of any alteration, improvements or additions or otherwise,
if such employment will interfere or cause any conflict with
other contractors, mechanics or laborers engaged in the
construction, maintenance or operation of the Building by the
Landlord, Tenant or others. In the event of any such interference
or
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conflict, the Tenant, upon demand of the Landlord, shall cause
all contractors, mechanics or laborers causing such interference
or conflict to leave the Building immediately.
ARTICLE VIII
SERVICES TO BE FURNISHED BY LANDLORD
8.1 LANDLORD SERVICES.
The Landlord shall maintain the Building and the access roadways and
drives and the parking areas and landscaping immediately adjacent to the
Building in which the demised premises are located. The Landlord shall provide
heating, ventilating and air conditioning as normal seasonal changes may require
during normal building operating hours. Landlord shall also provide cleaning.
The Landlord shall furnish water at City temperature for ordinary
cleaning, toilet, lavatory and drinking purposes. If the Tenant uses or consumes
water for any other purpose, it shall reimburse the Landlord therefor, and for
any related sewer charge, as reasonably estimated by the Landlord or, at its
election, metered. In the latter event, the Tenant shall pay the cost of the
meter and its installation and maintenance. Such reimbursement shall be made as
and when bills are rendered. All water piping and equipment shall be installed
and maintained by the Landlord at the Tenant's expense.
8.2 CAUSES BEYOND CONTROL OF THE LANDLORD.
The Landlord shall in no event be liable for failure to perform any of
its obligations under this Lease when prevented from doing so by causes beyond
its control, including, without limitation, labor dispute, breakdown, accident,
order or regulation of or by any governmental authority, or failure of supply,
or inability by the exercise of reasonable diligence to obtain supplies, parts
or employees necessary to furnish services required under this Lease or because
of war or other emergency, or for any cause due to any act, neglect or default
of the Tenant or the Tenant's servants, contractors, agents, employees,
licensees or any person claiming by, through or under the Tenant, and in no
event shall the Landlord ever be liable to the Tenant for any indirect or
consequential damages under the provisions of this Section 8.2 or any other
provision of this Lease.
ARTICLE IX
REAL ESTATE AND OTHER TAXES; OTHER EXPENSES
9.1 LANDLORD TO PAY REAL ESTATE TAXES.
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Landlord shall be responsible for the payment, before the same becomes
delinquent, of all general and special taxes, including assessments for local
improvements, and other governmental charges which may be lawfully charged,
assessed or imposed (herein collectively called the "Taxes") upon the Building
and the Lot. However, if authorities having jurisdiction assess real estate
taxes, assessments or other charges which Landlord considers excessive, Landlord
may defer compliance therewith to the same extent permitted by the laws of the
jurisdiction in which the same are located, so long as the validity or amount
thereof is contested by Landlord in good faith, and so long as Tenant's
occupancy of the Premises is not disturbed.
9.2 TENANT'S SHARE OF REAL ESTATE TAXES.
With reference to the Taxes described in Section 9.1, it is agreed as
follows:
(a) Tenant shall pay to Landlord Tenant's Proportionate Share of an
increase in Taxes assessed against the Building and the Lot over
the fiscal year 1993 Taxes during the term of this Lease. The
Tenant shall pay to the Landlord pro rated monthly installments
on account of projected increased Taxes for the Lease Year,
calculated by the Landlord on the basis of the most recent Tax
data or budget available, with an adjustment made to account for
actual increase in Taxes for such Lease Year. If the total of
such monthly installments in any Lease Year is greater than the
actual increase in Taxes for such Lease Year, the Tenant shall be
entitled to a credit against the Tenant's base rental obligations
hereunder in the amount of such difference. If the total of such
monthly installments is less than the actual Taxes for such Lease
Year, the Tenant shall pay to the Landlord the amount of such
difference promptly upon billing therefor.
(c) If some method or type of taxation or assessment shall replace in
whole or in part, the current method of assessment of real estate
taxes, or the type thereof, Tenant agrees that Tenant shall pay
Tenant's equitable share of the same computed in a fashion
consistent with the method of computation herein provided, to the
end that Tenant's cost on account thereof shall be, to the
maximum extent practicable, the same as Tenant would bear under
the foregoing paragraphs.
(d) If a tax (other than a net income tax) is assessed on account of
the rents or other charges payable by Tenant Landlord under this
Lease, Tenant agrees to pay the same within ten (10) days after
billing therefor, unless applicable law prohibits the payment of
such tax by the Tenant. Tenant's obligation to make payment of
the same shall be applicable irrespective of the party to which
the tax is assessed.
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ARTICLE X
OPERATING COSTS
10.1 TENANT'S SHARE OF OPERATING COSTS.
(b) Tenant shall pay, as additional rent, the Tenant's Proportionate
Share of increases in Operating Costs over the calendar year 1993
actual expenses. The Tenant shall pay to the Landlord pro rata
monthly installments on account of projected Operating Costs for
the Lease Year, calculated by the Landlord on the basis of the
most recent Operating Costs data or budget available, with an
adjustment made to account for actual increased Operating Costs
for such Lease Year. If the total of such monthly installments in
any Lease Year is greater than the actual Operating Costs for
such Lease Year, the Tenant shall be entitled to a credit against
the Tenant's base rental obligations hereunder in the amount of
such difference. If the total of such monthly installments is
less than the actual Operating Costs for such Lease Year, the
Tenant shall pay to the Landlord the amount of such difference
promptly upon billing therefor.
(c) For the purposes of this Article "Lease Year" shall mean any
fiscal year from January 1 to December 31, except that the first
Lease Year during the term of this Lease shall commence on the
Commencement Date and end on the next following December 31 and
the last Lease Year during the term of this Lease shall end on
the date this Lease terminates (each of such first and last Lease
Years are referred to in the immediately preceding paragraph (b)
as a "Partial Lease Year"); and "Operating Costs" shall include:
(1) All expense incurred by the Landlord or its agents which
shall be directly related to employment of day and night
supervisors, janitors, handymen, carpenters, engineers,
firemen, mechanics, electricians, plumbers, guards,
cleaners, secretaries and other personnel (including
amounts incurred for wages, salaries and other compensation
for services, payroll, social security, unemployment and
similar taxes, workmen's compensation insurance, disability
benefits, pensions, hospitalization, retirement plans and
group insurance, uniforms and working clothes and the
cleaning thereof, and expenses imposed on the Landlord or
its agents pursuant to any collective bargaining
agreement), for services in connection with the operation,
management, minor repair, maintenance, cleaning and
protection (collectively, "the Operation") of the Building,
the Building heating, ventilating, air conditioning,
electrical, plumbing, fire protection and other systems and
the Lot (collectively, "the Property"), and personnel
engaged in supervision of any of the persons mentioned
above;
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(2) The cost of services, materials and supplies furnished or
used in the Operation of the Property;
(3) The cost of replacements for tools and equipment used in
the Operation of the Property;
(4) The amounts paid to managing agents and for legal,
accounting and other professional fees relating to the
Operation of the Property, but excluding such fees paid in
connection with negotiations for leases;
(5) Insurance premiums;
(6) Costs for electricity, steam and other utilities required
in the Operation of the Property;
(7) Water and sewer use charges;
(8) The costs of snow-plowing and removal and landscaping;
(9) Amounts paid to independent contractors for services,
materials and supplies furnished for the Operation of the
Property;
(10) All other expenses incurred in connection with the
Operation of the Property;
(11) Any replacement of capital equipment will be amortized over
the useful life of the capital item.
Operating Costs shall be computed on all accrual basis and shall
be determined in accordance with generally accepted accounting
principles consistently applied. They may be incurred directly or
by way of reimbursement, and shall include taxes applicable
thereto. The following shall be excluded from Operating Costs:
(1) Salaries of officers and executives of the Landlord not
connected with the Operations of the Property;
(2) Depreciation;
(3) Expenses relating to tenants' alterations;
(4) Interest on indebtedness;
(5) Expenses for which the Landlord, by the terms of this Lease
or any other lease, makes a separate charge;
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(6) Real estate taxes; and
(7) Leasing fees or commissions.
All Operating Costs shall be reduced by the amount (net of
collection costs) of any insurance reimbursement, discount or
allowance received by the Landlord in connection with such costs.
ARTICLE XI
INDEMNITY
11.1 THE TENANT'S INDEMNITY.
To the maximum extent permitted by law, the Tenant shall indemnify and
save harmless the Landlord, the directors, officers, agents and employees of the
Landlord and those in privity of estate with the Landlord, from and against all
claims, expenses or liability of whatever nature (a) arising from any default,
act, omission or negligence of the Tenant, or the Tenant's contractors,
licensees, agents, servants or employees or the failure o the Tenant or such
persons to comply with any rule, order, regulation or lawful direction now or
hereafter in force of any public authority, in each case to the extent the same
are related, directly or indirectly, in the Premises or the Building, or the
Tenant's use thereof; or (b) arising directly or indirectly from any accident,
injury or damage, however caused, to any person or property on or about the
Premises; or (c) arising, directly or indirectly, out of default or breach by
the Tenant under any of the terms or covenants of this Lease or in connection
with any equipment or installations to be maintained or repaired by the Tenant;
or (d) arising directly or indirectly, from any accident, injury or damage to
any person or property occurring outside the Premises but within the Building,
or on the Lot where such accident, injury or damage results, or is claimed to
have resulted from, any act, omission or negligence on the part of the Tenant,
or the Tenant's contractors, licensees, agents, servants, employees or customers
of anyone claiming by or through the Tenant; provided, however, that in no event
shall the Tenant be obligated under this Section 11.1 to indemnify the Landlord,
the directors, officers, agents and employees of the Landlord, or those in
privity of estate with the Landlord, where such claim, expense or liability
results solely from any omission, fault, negligence or other misconduct of the
landlord or the officers, agents or employees of the Landlord on or about the
Premises or the Building.
This indemnify and hold harmless agreement shall include indemnity
against all expenses and liabilities incurred in or in connection with any such
claim of proceeding brought thereon, and the defense thereof with counsel
acceptable to the Landlord or counsel selected by an insurance company which has
accepted liability for any such claim.
11.2 THE TENANT'S RISK.
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The Tenant agrees to use and occupy the Premises and to use such other
portions of the Building and the Lot as the Tenant is herein given the right to
use at the Tenant's sole risk; and to the fullest extent permitted by law the
Landlord shall have no responsibility or liability for any loss of or damage to
furnishings, fixtures, equipment or other personal property of the Tenant or of
any persons claiming by, through or under the Tenant.
11.3 INJURY CAUSED BY THIRD PARTIES.
The Tenant agrees that the Landlord shall not be responsible or liable
to the Tenant, or to those claiming by, through or under the Tenant for any loss
or damage resulting to the Tenant or those claiming by, through or under the
Tenant, or its or their property, that may be occasioned by or through the acts
or omissions of persons occupying adjoining premises or any part of the premises
adjacent to or connecting with the Premises or in any part of the Building, or
for any loss or damage from the breaking, bursting, stopping or leaking of
electric cables and wires, and water, gas, sewer or steam pipes or like matters.
ARTICLE XII
THE LANDLORD'S ACCESS TO PREMISES
12.1 THE LANDLORD'S RIGHT OF ACCESS.
The Landlord shall have the right to enter the Premises at all
reasonable hours for the purpose of inspecting or of making repairs, alterations
or additions to the premises or the Building, and the Landlord shall also have
the right to make access available at all reasonable hours to prospective or
existing mortgagees or purchasers of any part of the Building. To assure access
by the Landlord to the Premises, the Tenant shall provide the Landlord with
duplicate copies of all keys to be used in emergencies only used by the Tenant
in providing access to the Premises.
For a period commencing twelve (12) months prior to the expiration of
the term of this Lease, the Landlord may have reasonable access to the Premises
at all reasonable hours for the purpose of exhibiting the same to prospective
tenants.
12.2 ACCESS DURING THE LAST MONTH OF TERM.
If during the last month of the Lease Term, the Tenant shall have
removed all of the Tenant's property therefrom, the Landlord may immediately
enter and alter, renovate and redecorate the Premises without elimination or
abatement of rent, or incurring liability to the Tenant for any compensation,
and such acts shall have no effect upon otherwise applicable terms of this
Lease.
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ARTICLE XIII
CASUALTY
13.1 DEFINITION OF "SUBSTANTIAL DAMAGE" AND "PARTIAL DAMAGE".
The term "substantial damage", as used herein, shall refer to damage
which is of such a character that in the Landlord's reasonable opinion the same
cannot, in ordinary course, be expected to be repaired within 120 calendar days
from the time that such repair work would commence. Any damage which is not
"substantial damage" is "partial damage".
13.2 PARTIAL DAMAGE.
If during the Lease Term there shall be partial damage to the Building
by fire or other casualty and if such damage shall materially interfere with the
Tenant's use of the Premises as contemplated by this Lease, the Landlord shall
promptly proceed to restore the Building to substantially the condition in which
it was immediately prior to the occurrence of such damage.
If during the Lease Term there shall be a partial damage to the
Premises by fire or other casualty, the Landlord shall promptly proceed to
restore the Premises to substantially the condition it was immediately prior to
the occurrence of such damage.
13.3 SUBSTANTIAL DAMAGE.
If during the Lease Term there shall be substantial damage to the
Building by fire or other casualty and if such damage shall materially interfere
with the Tenant's use of the Premises as contemplated by this Lease, or there
shall be substantial damage to the Premises, the Landlord shall promptly restore
the Building or the Premises, as applicable to the extent reasonably necessary
to enable the Tenant's use of the Premises, unless the Landlord, within
forty-five (45) days after the occurrence of such damage, shall give notice to
the Tenant of the Landlord's election to terminate this Lease. The Landlord
shall have the right to make such election in the event of substantial damage to
the Building whether or not such damage materially interferes with the Tenant's
use of the Premises. If the Landlord shall give such notice, then this Lease
shall terminate as of the date of such notice with the same force and effect as
if such date were the date originally established as the expiration date hereof.
Notwithstanding the foregoing, if the damage has not been substantially
completed within nine (9) months of the casualty, Tenant may elect to terminate
the lease.
13.4 ABATEMENT OF RENT.
If during the Lease Term the Building or the Premises shall be damaged
by fire or casualty and if such damage shall materially interfere with the
Tenant's use of the Premises as contemplated by this Lease, a just proportion of
the Rent and other charges payable by the Tenant hereunder shall abate
proportionately for the period in which, by reason of such damage, there is such
interference with the Tenant's use of the Premises.
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13.5 MISCELLANEOUS.
In no event shall the Landlord have any obligation to make any repairs
or perform any restoration work under this Article XIII if prevented from doing
so by reason of any cause beyond its reasonable control, including without
limitation, the requirements of any applicable laws, codes, ordinances, rules or
regulations, or in the event of damage to or destruction of any portion of he
Building which is not fully covered by the insurance proceeds received by
Landlord, or in the event that any portion of the insurance proceeds must be
paid over to or are retained by the holder of any mortgage or deed of trust on
the Building or Lot, and in such events Landlord may terminate this Lease by
written notice to the Tenant, given within thirty (30) days after the date of
notice to Landlord that said damage or destruction is not so covered or that the
proceeds are not available for repair of the damage or destruction. Further, the
Landlord shall not be obligated to make any repairs or perform any restoration
work to any fixtures in or portions of the Premises or the Building which were
constructed or installed by or for some party other than the Landlord or which
are not the property of the Landlord or if the damage arises out of an act or
omission of Tenant.
ARTICLE XIV
EMINENT DOMAIN
14.1 RIGHTS OF TERMINATION FOR TAKING.
If the Premises, or such portion thereof as to render the balance (if
reconstructed to the maximum extent practicable in the circumstances) physically
unsuitable for the Tenant's purposes, shall be taken by condemnation or right of
eminent domain (including a temporary taking in excess of 180 days), the
Landlord or the Tenant shall have the right to terminate this Lease by notice to
the other of its desire to do so, provided that such notice is given not later
than thirty (30) days after the Tenant has been deprived of possession.
Further, if so much of the Building (which may include the Premises) of
the Lot shall be so taken or condemned or shall receive any direct or
consequential damage by reason of anything done pursuant to public or
quasi-public authority such that continued operation of the same would, in the
Landlord's reasonable opinion, be uneconomical, the Landlord shall have the
right to terminate this Lease by giving notice to the Tenant of the Landlord's
desire so to do not later than thirty (30) days after the effective date of such
taking.
Should any part of the Premises be so taken or condemned or receive
such damage and should this Lease be not terminated in accordance with the
foregoing provisions, the Landlord shall promptly after the determination of the
Landlord's award on account thereof, expend so much as may be necessary of the
net amount which may be awarded to the Landlord in such condemnation proceedings
in restoring the Premises to an architectural unit that is reasonably suitable
to the uses of the Tenant permitted hereunder. Should the net amount so awarded
to the Landlord be insufficient to cover the cost of so restoring the Premises,
in the reasonable estimate of the Landlord, the Landlord may, but shall have no
obligation to, supply the amount of such
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insufficiency and restore the premises to such an architectural unit, with
reasonable diligence, or may terminate this Lease by giving notice to the Tenant
not later than a reasonable time after the Landlord has determined the estimated
cost of such restoration.
14.2 PAYMENT OF AWARD.
The Landlord shall have and hereby reserves and excepts, and the Tenant
hereby grants and assigns to the Landlord, all rights to recover for damages to
the Building and the Lot and the leasehold interest hereby created, and to
compensation accrued or hereafter to accrue by reason of such taking or damage,
as aforesaid. The Tenant covenants to deliver such further assignments and
assurances thereof as the Landlord may form time to time request, hereby
irrevocably designating and appointing the Landlord as its attorney-in-fact to
execute and deliver in the Tenant's name and behalf all such further assignments
thereof. Nothing contained herein shall be construed to prevent the Tenant from
prosecuting in any condemnation proceedings a separate claim for the value of
any of the Tenant's trade fixtures installed in the Premises by the Tenant at
the Tenant's expense and for relocation expenses, provided that such action
shall not affect the amount of compensation otherwise recoverable hereunder by
the Landlord from the taking authority.
14.3 ABATEMENT OF RENT.
In the event of any such taking of the Premises, the Rent and other
charges, or a fair and just proportion thereof, according to the nature and
extent of the damage sustained, shall be suspended or abated, as appropriate and
equitable in the circumstances.
14.4 MISCELLANEOUS.
In no event shall the Landlord have any obligation to make any repairs
under this Article XIV if prevented from doing so by reason or any cause beyond
its reasonable control, including requirements of any applicable laws, codes,
ordinances, permit conditions, rules or regulations. Further, the Landlord shall
not be obligated to make any repairs to any portions of the Premises or the
Building which were constructed or installed by or for some party other than the
Landlord or which were not the property of the Landlord.
ARTICLE XV
INSURANCE
15.1 PUBLIC LIABILITY AND PROPERTY INSURANCE.
The Tenant agrees to maintain in full force from the date upon which
the Tenant first enters the Premises for any reason, throughout the Lease Term,
and thereafter so long as the Tenant is in occupancy of any part of the
Premises, a policy of comprehensive public liability insurance, written on an
occurrence basis and including contractual liability coverage to cover any
liabilities assumed under this Lease, insuring against all claims for injury to
or death of
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persons or damage to property on or about the Premises or arising out of the use
of the Premises and under which the Landlord, and such other persons as are in
privity of estate with the Landlord (as may be set forth in a notice given from
time to time by the Landlord) and the Tenant are named as insureds, as their
respective interests appear, each with the same effect as if separately insured.
The minimum limits of liability of such insurance shall be: Bodily injury -
$1,000,000 per occurrence and in the aggregate over the term of the policy, and
Property Damage - $1,000,000 per occurrence. The Landlord shall have the right
from time to time to increase such minimum limits upon notice to the Tenant,
provided that any such increase shall provide for coverage in amounts similar to
like coverage being carried on like property in the greater Boston area.
The Tenant shall also maintain in full force and effect from the date
upon which the Tenant first enters the Premises for any reason, throughout the
Lease Term and thereafter so long as the Tenant is in occupancy of any part of
the Premises property insurance covering the Tenant's furnishings, fixtures,
equipment or other personal property of the Tenant written on an "All Risk"
basis for full replacement cost, and such other insurance as the Landlord may,
from time to time, reasonably require. Without limiting the provisions of
Section 11.2, if the Tenant fails to take out or maintain any policy of
insurance required by this Article XV to be taken out and maintained, such
failure shall be compete defense to any claim asserted by the Tenant against the
Landlord by reason of any loss sustained by the Tenant that would have been
covered by such policy.
Each such policy shall be non-cancellable and non-amendable with
respect to the Landlord and such designees of the Landlord without thirty (30)
days' prior notice to the Landlord, and a duplicate original of certificate
thereof shall be delivered to the Landlord.
15.2 NON-SUBROGATION.
Insofar as, and to the extent that, the following provision may be
effective without invalidating or making it impossible to secure insurance
coverage obtainable from responsible insurance companies doing business in the
locality in which the Premises are located (even though extra premium may result
therefrom), the Landlord and the Tenant mutually agree that, with respect to any
hazard which is covered by insurance then being carried by them, respectively,
the one carrying such insurance and suffering such loss releases the other of
and from any and all claims with respect to such loss; and they further mutually
agree that their respective insurance companies shall have no right of
subrogation against the other on account thereof. In the event that extra
premium is payable by either party as a result of this provision, the other
party shall reimburse the party paying such premium the amount of such extra
premium. If, at the request of one party, this release and non-subrogation
provision is waived, then the obligation of reimbursement shall cease for such
period of time as such waiver shall be effective. If the release of either party
provided above shall contravene any law with respect to exculpatory agreements,
the liability of the party for whose benefit such release was intended shall
remain but shall be secondary to that of the other party's insurer.
15.3 EXTRA HAZARDOUS USE.
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The Tenant covenants and agrees that the Tenant will not do or permit
anything to be done in or upon the Premises, or bring in anything or keep
anything therein, which would invalidate or be in conflict with insurance
coverage maintained by or for the Landlord with respect to the Building or which
would increase the rate of insurance on the Premises or on the Building above
the standard rate applicable to the Premises or the Building for the use to
which the Tenant has agreed to devote the Premises; and the Tenant further
agrees that, in the event that the Tenant shall do any of the foregoing, the
Tenant will, at Landlord's election, cease such activity or promptly pay to the
Landlord, on demand, any such increase resulting therefrom, which shall be due
and payable as additional rent hereunder.
Tenant shall not cause or permit any hazardous or toxic wastes,
hazardous or toxic substances or hazardous or toxic materials (collectively,
"Hazardous Materials") to be used, generated, stored or disposed of on, under or
about, or transported to or from, the Premises (collectively, "Hazardous
Materials Activities") without first receiving Landlord's written consent, which
may be withheld for any reason and revoked at any time. If Landlord consents to
any such Hazardous Materials Activities, Tenant shall conduct them in strict
compliance (at Tenant's expense) with all applicable Regulations, as hereinafter
defined, and using all necessary and appropriate precautions to prevent any
spill, discharge, release or exposure to persons or property. Landlord shall not
be liable to Tenant for any loss, cost, expense, claims, damage or liability
arising out of any Hazardous Materials Activities by Tenant, Tenant's employees,
agents, contractors, licensees, customers or invitees, whether or not consented
to by Landlord. Tenant shall indemnify, defend with counsel acceptable to
Landlord, and hold Landlord harmless from and against any and all loss, costs,
expenses, claims, damages or liabilities arising out of all Hazardous Materials
Activities on the Premises, whether or not consented to by Landlord, which
obligation shall survive the termination of this Lease. For purposes hereof,
Hazardous Materials shall include but not be limited to substances defined as
"hazardous substances", "toxic substances", or "hazardous waste" in the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended; the Federal Hazardous Materials Transportation Act, as amended; and the
Federal Resource Conservation and Recovery Act, as amended ("RCRA"); those
substances defined as "hazardous wastes" in the Massachusetts Hazardous Waste
Facility Siting Act, as amended (Massachusetts General Laws Chapter 21D); those
substances defined as "hazardous materials" or "oil" in Massachusetts General
Laws Chapter 21E, as amended; and as such substances are defined in any
regulations adopted and publication promulgated pursuant to any of said laws
(collectively, "Regulations"). If Landlord consents to any Hazardous Materials
Activities, prior to using, storing or maintaining any Hazardous Materials on or
about the Premises, Tenant shall provide Landlord with a list of the types and
quantities thereof, and shall update such list as necessary for continued
accuracy. Tenant shall also provide Landlord with a copy of any Hazardous
Materials inventory statement required by any applicable Regulations, and any
update filed in accordance with any applicable Regulations. If Tenant's
activities violate or create a risk of violation of any Regulations or cause a
spill, discharge, release or exposure to any persons or property, Tenant shall
cease such activities immediately upon notice from Landlord. Tenant shall
immediately notify Landlord both by telephone and in writing of any spill,
discharge, release or exposure of Hazardous Materials or of any condition
constituting an "imminent hazard" under any Regulations. Landlord, Landlord's
representatives and employees may enter the Premises at any time during
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the Term to inspect Tenant's compliance herewith, and may disclose any spill,
discharge, release, or exposure or any violation of any Regulations to any
governmental agency with jurisdiction. Nothing herein contained shall prohibit
Tenant from using minimal quantities of cleaning fluid and office supplies which
may constitute Hazardous Materials but which are customarily present in premises
devoted to office use, provided that such use is in compliance with all
Regulations and shall be subject to all of the other provisions of this
Section 15.3.
ARTICLE XVI
DEFAULT
16.1 TENANT'S DEFAULT.
The occurrence of any of the following shall constitute an "Event of
Default" on the part of the Tenant:
a) the Tenant shall fail to pay the Rent or other charges on or
before the date on which the same becomes due and payable and the
same continues for ten (10) days (up to two times per year) after
the date the same becomes due hereunder, or
b) the Tenant shall fail to perform or observe any other term or
condition contained in this Lease within thirty (30) days after
notice from the Landlord thereof, unless such default is of such
a nature that it cannot be cured within such thirty (30) day
period, in which case no event of default shall occur unless the
Tenant shall not commence to cure such failure promptly within
such ten (10) day period and thereafter continuously and
diligently complete the curing of the same, or
c) the Tenant shall vacate or abandon the Lease Premises, or
d) if the Tenant's interest in this Lease shall devolve upon or pass
to any person, whether by operation of law or otherwise, except
as expressly permitted under Article VI,
e) except as otherwise provided by applicable law, if the estate
hereby created shall be taken on execution or by other process of
law, or if the Tenant shall be judicially declared bankrupt or
insolvent according to law, or if any assignment shall be made of
the property of the Tenant for the benefit of creditors, or if a
receiver, guardian, conservator, trustee in involuntary
bankruptcy or other similar officer shall be appointed to take
charge of all or any substantial part of the Tenant's property by
a court of competent jurisdiction, or if a petition shall be
filed for the reorganization of the Tenant under any provisions
of law now or hereafter enacted, and such proceeding is not
dismissed within forty-five (45)
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days after it is begun, or if the Tenant shall file a petition
for such reorganization, or for arrangements under any provisions
of such laws providing a plan for a debtor to settle, satisfy or
extend the time for the payment of debts.
16.2 REMEDIES UPON DEFAULT.
(a) If an Event of Default occurs, Landlord shall have the right, with
or without notice or demand, immediately to terminate this Lease, and at any
time thereafter recover possession of the Premises or any part thereof and expel
and remove therefrom Tenant and any other person occupying the same, by any
lawful means, and again repossess and enjoy the Premises without prejudice to
any of the remedies that Landlord may have under this Lease, or at law or equity
be reason of Tenant's default or of such termination.
(b) Even though Tenant has breached this Lease, this Lease shall
continue in effect for so long as Landlord does not terminate Tenant's right to
possession under Section 16.2(a) hereof, and Landlord may enforce all of its
rights and remedies under this Lease, including, without limitation, the right
to recover Rent as it becomes due. Acts of maintenance, preservation or efforts
to lease the Premises or the appointment of a receiver upon application of
Landlord to protect Landlord's interest under this Lease shall not constitute an
election to terminate Tenant's right to possession.
16.3 DAMAGES UPON TERMINATION.
Should Landlord terminate this Lease pursuant to the provisions of
Section 16.2(a) hereof, Landlord shall have all the rights and remedies of a
landlord in law or in equity. Upon such termination, in addition to any other
rights and remedies to which Landlord may be entitled under applicable law,
Landlord shall be entitled to recover from Tenant: (i) the worth at the time of
award of the unpaid Rent and other amounts which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of such Rent loss that the Tenant proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term after the time of award
exceeds the rental value of the Premises for the balance of the Term after the
time of award exceeds the rental value of the Premises for the balance of the
Term; and (iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which, in the ordinary course, would be likely to result
therefrom. Tenant further covenants, as an additional cumulative obligation
after any such termination, to punctually pay to Landlord all sums and perform
all obligations which Tenant covenants in this Lease to pay and to perform, as
if this Lease had not been terminated. In calculating the amounts to be paid by
Tenant pursuant to this Section 16.3, Tenant shall be credited with any amount
paid to Landlord pursuant to this Section 16.3 and also (in respect of the
amounts referred to in (i) and (ii)) the net proceeds of rent obtained by
Landlord by reletting the Premises through the time of award, after deducting
all Landlord's expenses in connection with such reletting, including, without
limitation, all repossession costs, brokerage commission, fees for legal
services and expenses of preparing the Premises for reletting it being agreed by
Tenant that Landlord may (x) relet the Premises or any part thereof for a term
or terms which may at Landlord's option be
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equal or less than or exceed the period which would otherwise have constituted
the balance of the Term and may grant such concessions and free rent as Landlord
in its sole judgement considers advisable or necessary to relet the same and (y)
make such alterations, repairs and decorations in the Premises as Landlord in
its sole judgment considers advisable or necessary to relet the same, and no
action of Landlord in accordance with the foregoing or failure to relet to
collect rent under Landlord's reletting of the Premises shall operate or be
construed to release or reduce Tenant's liability as aforesaid. The "time of
award" shall refer to such time as (I) Tenant shall, as a settlement of the
amounts due pursuant to this Section 16.3, pay to Landlord such sums pursuant to
a written agreement in form and substance satisfactory to Landlord or (II) the
date on which a judgment shall be entered in a court of competent jurisdiction
to the effect that Tenant shall pay Landlord the amounts due and owing pursuant
to this Section 16.3. The "worth at the time of award" of the amounts referred
to in (i) and (ii) shall mean such amounts together with interest at the lesser
of eighteen percent (18%) per annum or the maximum rate allowed by law. The
"worth at the time of award" of the amount referred to in (iii) shall mean such
amounts as computed by referenced to competent appraisal evidence or the formula
prescribed by and using the lowest discount rate permitted under applicable law.
16.4 COMPUTATION OF RENT FOR PURPOSES OF DEFAULT.
For purposes of computing unpaid Rent which would have accrued and
become payable under this Lease pursuant to the provisions of Section 16.3,
unpaid Rent shall consist of the sum of:
(1) the total Base Rent for the balance of the Term, plus
(2) a computation of the Operating Expenses and Taxes for the balance
oft he Term, the assumed Operating Expenses for the calendar year
of the default and each future calendar year in the Term to be
equal to the Operating Expenses and Taxes for the calendar year
prior to the year in which the default occurs compounded at a per
annum rate equal to the mean average rate of inflation for the
preceding five (5) calendar years as determined by the United
States Department of Labor, Bureau of Labor Statistics Consumer
Price Index (All Urban Consumers, All Items, 1967 equals 100) for
the metropolitan Area or Region of which Boston, Massachusetts is
a part. If such Index is discontinued or revised, the average
rate of inflation shall be determined by reference to the index
designated as the successor or substitute index by the government
of the United States, plus
(3) the amounts, if any, designated in Section 4.1.
16.5 RIGHTS OF LANDLORD IN BANKRUPTCY.
Nothing contained in this Lease shall limit or prejudice the right of
Landlord to prove for and obtain in proceedings for bankruptcy or insolvency, by
reason of the termination of this Lease, an amount equal to the maximum allowed
by any statute or rule of law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or
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not the amount be greater, equal to, or less than the amount of the loss or
damages referred to in this Article XVI.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 WAIVER.
Failure on the part of the Landlord to complain of any action or
non-action on the part of the Tenant, no matter how frequently the same may
occur or how long the same may continue, shall never by a waiver by the Landlord
of its rights hereunder. Further, no waiver at any time of any of the provisions
hereof by the Landlord shall be construed as a waiver of any of the other
provisions hereof, and a waiver at any time of any of the provisions hereof
shall not be construed as a waiver at any subsequent time of the same
provisions. The consent or approval of the Landlord to or of any action by the
other requiring such consent or approval shall not be construed to waive or
render unnecessary the Landlord's consent or approval to or of any subsequent
similar act by the Tenant. No option or right granted to the Tenant to renew
this Lease or to extend the Lease Term shall be considered to give the Tenant
any further option or right to renew or extend.
17.2 COVENANT OF QUIET ENJOYMENT.
Subject to the terms and provisions of this Lease and on payment of the
rent and compliance with all of the terms and provisions of this Lease, the
Tenant shall lawfully, peaceably and quietly have, hold, occupy and enjoy the
Premises during the term hereof, without hindrance or ejection by the Landlord
or by any persons lawfully claiming under the Landlord; the foregoing covenant
of quiet enjoyment is in lieu of any other covenant, express or implied.
17.3 NO PERSONAL LIABILITY OF THE LANDLORD.
The Tenant agrees to look solely to the Landlord's then equity interest
in the Building at the time owned, or in which the Landlord holds an interest as
ground lessee, for recovery of any judgment from the Landlord; it being
specifically agreed that neither the Landlord (whether the Landlord be an
individual, partnership, firm, corporation, trustee or other fiduciary) nor any
of the partners comprising the Landlord, nor any beneficiary of any trust of
which any person holding the Landlord's interest is trustee nor any successor in
interest to any of the foregoing shall ever by personally liable for any such
judgment, or for the payment of any monetary obligation to the Tenant. The
covenants of the Landlord contained in this Lease shall be binding upon the
Landlord and the Landlord's successors only with respect to breaches occurring
during the Landlord's and the Landlord's successors' respective periods of
ownership of the Landlord's interest hereunder.
17.4 NOTICE TO MORTGAGEE AND GROUND LESSOR; OPPORTUNITY TO CURE.
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After receiving notice from any person, firm or other entity that it
holds a mortgage which includes the Premises as part of the mortgaged premises,
or that it is the ground lessor under a lease with the Landlord, as ground
lessee, which includes the Premises as a part of the demised premises, no notice
from the Tenant to the Landlord shall be effective unless and until a copy of
the same is given to such holder or ground lessor, and the curing of any of the
Landlord's defaults by such holder or ground lessor shall be treated as
performance by the Landlord. Accordingly, no act or failure to act on the part
of the Landlord which would entitle the Tenant under the terms of this Lease, or
by law, to be relieved of the Tenant's obligations hereunder or to terminate
this Lease, shall result in a release or termination of such obligations or a
termination of this Lease unless (i) the Tenant shall have first given written
notice of the Landlord's act or failure to act to such holder or ground lessor,
if any, specifying the act or failure to act on the part of the Landlord which
could or would give basis to the Tenant's rights; and (ii) such holder or ground
lessor, after receipt of such notice, has failed or refused to correct or cure
the condition complained of within a reasonable time thereafter, but nothing
contained in this paragraph shall be deemed to impose any obligation on any such
holder or ground lessor to correct or cure any such condition. "Reasonable time"
as used above means and includes a reasonable time to obtain possession of the
Lot and Building if any such holder or ground lessor elects to do so and a
reasonable time to correct or cure the condition if such condition is determined
to exist.
17.5 NO BROKERAGE.
The Tenant warrants and represents that the Tenant has dealt with no
broker other than the Broker in connection with the consummation of this Lease,
and, in the event of any brokerage claims, other than claims by the Broker,
against the Landlord predicated upon prior dealings with the Tenant named
herein, the Tenant agrees to defend the same and indemnify the Landlord against
any such claim. Landlord shall be responsible for the payment to Broker of any
commission arising out of this Lease.
17.6 INVALIDITY OF PARTICULAR PROVISIONS.
If any term or provision of this Lease, or the application thereof to
any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and been forced to the fullest extent permitted by
law.
17.7 PROVISIONS BINDING, ETC.
Except as herein otherwise expressly provided, the terms hereof shall
be binding upon and shall inure to the benefit of the successors and assigns,
respectively, of the Landlord and the Tenant and, if the Tenant shall be an
individual, upon and to his heirs, executors, administrators, legal
representatives, successors and assigns. Each term and each provision of this
Lease to be performed by the Tenant shall be construed to be both a covenant and
a condition. The reference contained to successors and assigns of the Tenant is
not intended to constitute a consent to assignment by the Tenant, but has
reference only to those instances in which the Landlord may later give consent
to a particular assignment as required by those provisions of Article VI hereof.
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If the Tenant be several persons, natural or corporate, the liability of such
persons for compliance with the obligations of the Tenant under this Lease shall
be joint and several. In all instances where the Tenant is required under this
Lease to pay any sum or do any act at or by a particular time it is agreed that
time is of the essence.
17.8 RECORDING.
The Tenant agrees not to record this Lease.
17.9 NOTICES.
Whenever, by the terms of this Lease, notice shall or may be given
either to the Landlord or to the Tenant, such notice shall be in writing and
shall be sent by registered or certified mail, postage prepaid or by so-called
"express" mail (such as Federal Express or U.S. Postal Service Express Mail);
If intended for the Landlord, addressed to the Landlord at the
address set forth on the first page of this Lease, or to such other
address or addresses as may from time to time hereafter be designated
by the Landlord by like notice.
with a copy to : Meredith & Grew Incorporated
160 Federal Street
Boston, Massachusetts 02110-1701
If intended for the Tenant, addressed to the Tenant at the
address set forth on the first page of this Lease, or to such other
address or addresses as may from time to time hereafter be designated
by the Tenant by like notice.
All such notices shall be effective two (2) days after deposited in the
United States mail within the Continental United States or when received by the
"express" mail carrier, as the case may be.
17.10 WHEN LEASE BECOMES BINDING.
Employees or agents of the Landlord have no authority to make or agree
to make a lease or any other agreement or undertaking in connection herewith.
The submission of this document for examination and negotiation does not
constitute an offer to lease, or a reservation of , or option for, the Premises,
and this document shall become effective and binding only upon the execution and
delivery hereof by both the Landlord and the Tenant. All negotiations,
consideration, representations and understandings between the Landlord and the
Tenant are incorporated herein and may be modified or altered only by written
agreement between the Landlord and the Tenant, and no act or omission of any
employee or agent of the Tenant, and no act or omission of any employee or agent
of the Landlord shall alter, change or modify any of the provisions hereof.
17.11 PARAGRAPH HEADINGS.
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The paragraph headings throughout this instrument are for convenience
and reference only, and the words contained therein shall in no way be held to
explain, modify, amplify or aid in the interpretation, construction or meaning
of the provisions of this Lease.
17.12 RIGHTS OF MORTGAGEE.
(a) If any holder of a mortgage or holder of a ground lease of
property which includes the Premises, originally given to a
lender, and executed and recorded subsequent to the date of this
Lease, shall so elect, the interest of the Tenant hereunder shall
be subordinate to the rights of such holder. If any holder of a
mortgage or holder of a ground lease of property which includes
the premises, originally given to a lender, and executed and
recorded prior to the date of this Lease, shall so elect, this
Lease, and the rights of the Tenant hereunder, shall be superior
in right to the rights of such holder, with the same force and
effect as if this Lease had been executed and delivered, and
recorded, or a statutory notice hereof recorded, prior to the
execution, delivery and recording of any such mortgage. If in
connection with obtaining financing for the Building, a bank,
insurance company, pension trust or other institutional lender
shall request reasonable modifications in this Lease as a
condition to such financing, the Tenant will not unreasonably
withhold, delay or condition its consent thereto, provided that
such modifications do not materially increase the obligations of
the Tenant hereunder or materially adversely affect the Tenant or
the leasehold interest hereby created. No assignment of this
Lease and no agreement to make or accept any surrender,
termination or cancellation of this Lease and no agreement to
modify so as to reduce the rent, change the term, or otherwise
materially change the rights of the Landlord under this Lease, or
to relieve the Tenant of any obligations or liability under this
Lease, shall be valid unless consented to in writing by the
Landlord's mortgagees of record, if any. Tenant agrees on request
of the Landlord to execute and deliver from time to time any
agreement which may reasonably be deemed necessary to implement
the provisions of this Section 17.12.
(b) Notwithstanding anything to the contrary contained in Section
14.15(a) or Section 14.6(b), Tenant shall not be required to
subordinate this Lease to any mortgage or to thee lien of any
mortgage or sale and leaseback, nor shall the subordination
provided herein be self-operative unless the holder of such
mortgage or ground lease, as the case may be, shall enter into an
agreement with Tenant, recordable in form, to the effect that in
the event of foreclosure of, or similar action taken under, such
mortgage or ground lease, this Lease shall not be terminated or
disturbed by such mortgageholder or ground lessor or anyone
claiming under such mortgageholder or ground lessor, as the case
may be, so long as Tenant shall not be in Default under this
Lease. The form of any such agreement shall not be the form as
required by any such mortgagee or ground lessor (consistent with
the provisions of this Lease).
17.13 STATUS REPORT; MODIFICATION.
Recognizing that the Landlord may find it necessary to establish to
third parties, such as accountants, banks, mortgagees or the like, the then
current status of performance hereunder Tenant agrees to execute in form
satisfactory to the Landlord within ten (10) days of a written request therefor
a certificate stating (i) that this Lease is then in full force and effect and
has not
29
<PAGE> 33
been modified or if modified, setting forth the specific nature of all
modifications, (ii) the date to which the Rent and any additional rent or other
charges has been paid, (iii) whether or not the Landlord is in default under
this Lease, and if the Landlord is in default, setting forth the specific nature
of all such defaults) and (iv) any other matters relating to the Lease
reasonably requested by Landlord. Tenant's failure to deliver such statement
within such time shall be conclusive upon Tenant that this Lease is in full
force and effect, without modification except as may be represented by Landlord,
that there are no uncured defaults in Landlord's performance and that not more
than one (1) month's Rent has been paid in advance. Without limiting the
generality of the foregoing, the Tenant specifically agrees, promptly upon the
commencement of the Term hereof, to acknowledge to the Landlord satisfaction of
any requirements with respect to construction except for such matters as the
Tenant may set forth specifically in such statement. The Tenant acknowledges
that any statement delivered pursuant to this Section 17.13 may be relied upon
by any purchaser or owner of the Building, or the Lot or any part thereof, or
Landlord's interest in the Building or the Lot or any ground or underlying
lease, or by any mortgagee, or by any assignee of any mortgagee, or by any
lessee under any ground or underlying lease.
17.14 SECURITY DEPOSIT.
If, in Section 1.1 hereof a security deposit is specified, the Tenant
agrees that the same will be paid upon execution and delivery of this Lease, and
that the Landlord shall hold the same, throughout the term of this Lease, as
security for the performance by the Tenant of all obligations on the part of the
Tenant to be kept and performed. The Landlord shall have the right from time to
time, without prejudice to any other remedy the Landlord may have on account
thereof, to apply such deposit, or any part thereof, to the Landlord's damages
arising from any default on the part of the Tenant. Upon such application the
amount so applied shall be paid by Tenant to Landlord upon demand in order that
the security deposit may at all times be equal to the amount set forth in
Section 1.1. The Tenant not then being in default, the Landlord shall return the
deposit, or so much thereof as shall not have theretofore been applied in
accordance with the terms of this Section 17.14, to the Tenant on the expiration
or earlier termination of the Lease Term and surrender of possession of the
Premises by the Tenant to the Landlord at such time. The Landlord shall, unless
otherwise required by law, have no obligation to pay interest on the deposit and
shall have the right to commingle the same with the Landlord's other funds. If
the Landlord conveys the Landlord's interest under this Lease, the deposit, or
any part thereof not previously applied, may be turned over by the Landlord to
the Landlord's grantee, and, if so turned over, the Tenant agrees to look solely
to such grantee for proper application of the deposit in accordance with the
terms of this Section 17.14, and the return thereof in accordance herewith. The
Tenant agrees that the Tenant will not assign, encumber or pledge attempt to
assign, encumber or pledge the moneys deposited herein as security, and that
neither the Landlord, nor its successors and assigns, shall be bound by any such
assignment, encumbrance or pledge, attempted assignment, attempted pledge, or
attempted encumbrance.
The holder of a mortgage of property which includes the Premises shall
not be responsible to the Tenant for the return or applicability of any such
deposit, whether or not it
30
<PAGE> 34
succeeds to the position of the Landlord hereunder, unless such deposit shall
have been in hand by such holder.
17.15 SELF-HELP.
The Landlord shall have the right, but shall not be required, to pay
such sums or do any act which requires the expenditure of moneys which may be
necessary or appropriate by reason of the failure or neglect of the Tenant to
perform any of the provisions of this Lease, and in the event of the exercise of
such right by the Landlord, the Tenant agrees to pay to the Landlord forthwith
upon demand the cost of performing the same, plus an administrative charge
(covering overhead and profit) not to exceed 15% of such cost; and if the Tenant
shall default in such payment, the Landlord shall have the sane rights and
remedies as the Landlord as hereunder for the failure of the Tenant to pay the
Rent.
17.16 RELIEF LIMITED.
Whenever the Tenant shall claim under any provision of this Lease, that
the Landlord has unreasonably withheld or delayed is consent to some request of
the Tenant, the Tenant shall have no claim for damages by reason of such alleged
withholding or delay, and Tenant's sole remedy therefore shall be declaratory or
injunctive relief, but in no event without the recovery of damages.
17.17 HOLDING OVER.
Any holding over by the Tenant after the expiration of the term of this
Lease without the written consent or the Landlord shall be treated as a tenancy
at sufferance at double the rent specified herein (prorated on a daily basis)
and shall otherwise be on the terms and conditions set forth in this Lease, so
far as applicable.
Any holding over by the Tenant after the expiration of the term of this
Lease with the written consent of the Landlord shall be on a month-to-month
basis, terminable by either party on thirty (30) days notice and shall be at the
same Rent specified herein and shall otherwise be on the terms and conditions
set forth herein, so far as applicable.
17.18 CERTIFICATE.
If the Tenant is a corporation, each of the person executing this
instrument on behalf of the Tenant, hereby covenants and warrants that the
Tenant is a duly existing and valid and corporation and that the Tenant is
qualified to do business in Massachusetts. Further, if the Tenant is a
corporation, the Tenant shall deliver to the Landlord, at the time of execution
of this Lease, a Clerk's or Secretary's Certificate in the form attached hereto
as Exhibit H or other suitable form satisfactory to counsel for the Landlord),
as to the due authorization of this Lease and incumbency of the signing officer.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed, under seal, as of the Date set forth in Section 1.1.
31
<PAGE> 35
LANDLORD: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: HANCOCK REALTY INVESTORS, INC.
By: __________________________________
Melina E. Armour, Associate
TENANT: TRIPLE I CORPORATION
By: __________________________________
Juan J. Amodei, Its Chairman & CEO
hereunto duly authorized
32
<PAGE> 36
EXHIBIT A
PLAN SHOWING THE PREMISES
<PAGE> 37
EXHIBIT B
DESCRIPTION OF LOT
Land in Lowell and Tewksbury, Middlesex County, Massachusetts shown as Lot 1 on
a "Plan of Land in Lowell & Tewksbury, Mass. Prepared for the Iver Company"
dated April 2, 1984 by Fleming, Bienvenu & Associates, Inc. recorded with
Middlesex North District Deeds Plan Book 143, Plan 104, bounded and described,
as follows:
NORTHERLY: by Rogers Street, 58.65 feet;
WESTERLY: by land of owners unknown, 324.99 feet;
NORTHERLY: by land of owners unknown, 94.28 feet;
EASTERLY: by land of owners unknown, 17.03 feet;
WESTERLY: by land of owners unknown, 153.66 feet;
NORTHWESTERLY: by land of owners unknown, 16.76 feet;
SOUTHERLY, WESTERLY
and NORTHERLY: by land now or formerly of Duke, 7.21 feet and
410.62 feet;
SOUTHERLY,
SOUTHEASTERLY, EASTERLY,
SOUTHERLY, EASTERLY,
SOUTHEASTERLY and
EASTERLY: by Lot 2, as shown on said plan, 291.64 feet,
70.71 feet, 124.00 feet, 209.50 feet,
60.00 feet, 45.93 feet and 16.27 feet;
NORTHERLY: by Lot 4, shown on said plan, 429.43 feet;
EASTERLY: by said Lot 4 by four courses measuring
138.95 feet, 256,19 feet, 54.63 feet and
100.00 feet.
The following parcels of registered land are included within the above-described
premises:
PARCEL 1 (LOT 1 ON LAND COURT PLAN 34845B)
A certain parcel of land in Lowell, Middlesex County, Massachusetts, bounded and
described as follows:
NORTHEASTERLY: by the southwesterly line of Rogers Street by
two courses measuring respectively: 23.29 feet
and 7.62 feet;
<PAGE> 38
WESTERLY: by Lot 2 as shown on the plan hereinafter
mentioned, 97.80 feet; and
EASTERLY: by land of owners unknown 100.42 feet.
All of the boundaries are located as shown on a plan drawn by Essex Survey
Service, Inc. (Land Court Plan No. 34845B) filed with the Land Registration
Office with Certificate of Title No. 25071 and the premises described are shown
thereon as Lot 1.
PARCEL 2 (LOT 3 ON LAND COURT PLAN 34845B)
A certain parcel of land in Lowell, Middlesex County, Massachusetts, bounded and
described as follows:
NORTHERLY by Lot 2 as shown on the plan hereinafter
mentioned, 21.05 feet;
EASTERLY: by land of owners unknown, 34.25 feet; and
WESTERLY: by land of owners unknown; 34.26 feet.
All of the boundaries are located as shown on a plan drawn by Essex Survey
Service, Inc. (Land Court Plan No. 34845B) filed with the Land Registration
Office with Certificate of Title No. 25071 and the premises described are shown
thereon as Lot 3.
PARCEL 3 (LOT 4 ON LAND COURT PLAN NO. 36430C)
A certain parcel of land in Lowell, Middlesex County, Massachusetts, bounded and
described as follows:
NORTHERLY: by Rogers Street, 35.36 feet;
EASTERLY: by Lot 3 on the plan below mentioned by four
courses measuring respectively: 100.00 feet,
54.63 feet, 256.19 feet and 138.95 feet;
NORTHERLY: by said Lot 3, 394.73 feet;
SOUTHEASTERLY: by land now or formerly of Bournival by a
curved line with a radius of 60.00 feet, a
distance of 94.25 feet;
SOUTHERLY: by land now or formerly of said Bournival by
two courses measuring respectively: 372.84
feet and 50.10 feet;
WESTERLY: by land now or formerly of said Bournival
265.76 feet;
35
<PAGE> 39
NORTHWESTERLY: by Lot 3 shown on Land Court Plan Number
34845B, 34125 feet;
NORTHERLY AND WESTERLY: by land now or formerly of McDonald's Corp. by
two courses measuring respectively: 73.23 feet
and 227.19 feet; and
NORTHWESTERLY: by land now or formerly of Richard D.
Bournival, being Lot 1 on said Land Court Plan
No. 34845B, 100.41 feet.
All of the boundaries are located as shown on a plan drawn by Fleming, Bienvenu
& Associates, Inc. (Land Court Plan No. 36430C) filed with the Land Registration
Office with Certificate of Title No. 25853 and the premises described are shown
thereon as Lot 4.
That portion of the unregistered premises which is part of Parcel B on a "Plan
of Land in Lowell, Mass. Surveyed for Phoenix Real Estate Corp." dated June 1,
1961 by Dana F. Perkins and Sons. Inc. recorded with said Deeds, Plan Book 105,
Plan 93 is entitled to the to the benefit of a 45 foot easement over Parcel A on
said plan to Phoenix Avenue (which 45 foot easement is the same as the 45 foot
easement over land now or formerly of Duke shown on the plan first mentioned in
this Exhibit "A") as set forth in a deed from Joan V.
Sullivan to Odesseus J. Chiungos dated July 7, 1967 recorded with said Deeds,
Book 1802, Page 489.
The unregistered premises are entitled to the easements reserved in a deed from
Phoenix Real Estate Corporation to John C. MacLellan, Jr. dated October 28, 1964
recorded with said Deeds Book 1673, Page 338.
Said premises are entitled to the benefit of easements as set forth in an Access
and Parking Easement dated as of November 10, 1984, recorded with said Deeds
Book 2914, Page 256 also filed with said Registry District as Document
No. 103171.
36
<PAGE> 40
EXHIBIT C
RULES AND REGULATIONS
The Tenant shall observe faithfully, and comply with, and shall not
permit the violation of, the Rules and Regulations set forth in this Exhibit C
and such additional Rules and Regulations as Landlord may, from time to time,
adopt. All of the terms, covenants and conditions of this Exhibit C shall be
deemed part of this Lease as though fully set forth in the body of this Lease.
In case Tenant disputes the reasonableness of any additional Rules and
Regulations hereafter adopted by Landlord, the Tenant's right to dispute the
reasonableness of any additional Rule or Regulation shall be deemed waived
unless asserted by service of a notice upon the Landlord within ten (10) days
after the date upon which the Landlord shall give notice to the Tenant of the
adoption of any such additional Rule or Regulation.
The Tenant agrees:
1. The sidewalks, entrances, lobbies, corridors, elevators, fire
exits and stairways of the Building shall not be encumbered or
obstructed by any tenant or its agents, employees, licensees or
invitees, or be used for any purpose other than ingress to and
egress from the tenant's premises.
2. If a tenant's premises become infested with vermin due to tenants
own misuse of the premises, such tenant, at its sole cost and
expense, shall cause its premises to be exterminated by such
exterminators as shall be approved the Landlord at such times and
to such extent as the Landlord deems necessary to exterminate the
vermin.
3. No animals or birds shall be allowed in the Building.
4. The water and wash closets and other plumbing fixtures shall not
be used for any purposes other than those for which they were
constructed, and no sweeping, rubbish, rags or other substances
shall be thrown therein. All damages resulting from any misuse of
the fixtures by Tenant, its servants, employees, agents. visitors
or licensees, shall be borne by Tenant.
5. Each tenant shall, at its expense, provide artificial light for
the employees of Landlord when such are making repairs or
alterations in said premises. Landlord shall be in no way
responsible to any tenant for loss of property from the premises,
however occurring, or for damage done to the furniture or other
effects of any tenant by Landlord's agents, other janitors,
cleaners, employees or contractors doing work in the premises.
6. Each tenant shall be responsible for all persons under the
tenant's control authorized to have access to the Building and
shall be liable to Landlord for all of their acts while in the
Building or on the Lot.
<PAGE> 41
7. No curtains, blinds, shades or screens other than those furnished
by Landlord shall be attached to, hung in or used in connection
with, any window or door of the Premises, without the prior
written consent of Landlord. Such curtain, blinds, shades,
screens or other fixtures must be of a quality, type, design and
color, and attached in the manner approved by Landlord.
8. The Landlord reserves the right at any time to change, rescind or
waive any one or more of these Rules and Regulations, and to make
such other and further reasonable rules and regulations as its
judgment may from time to time be necessary for the safety, care,
convenience or cleanliness of the Building or for the
preservation of comfort or good order therein. The Landlord shall
not be liable to any tenant for violation of the same by any
other tenant, its agents, employees, licensees or invitees.
38
<PAGE> 42
AMENDMENT TO LEASE
This Amendment to Lease executed this 31st day of October, 1995 between
John Hancock Mutual Life Insurance Company, a corporation ("Landlord") and
Triple I Corporation, a corporation ("Tenant").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Landlord and Tenant executed an Indenture of Lease dated
November 5, 1992 (the "Original Lease") of premises located at 847 Rogers
Street, Lowell, Massachusetts;
WHEREAS, Landlord and Tenant wish to extend the term of the Lease and
to otherwise amend the Lease in accordance with the provisions hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. All capitalized terms used herein and not defined herein shall
have the meanings ascribed to them in the Lease.
2. The Lease Term, which but for this Amendment is currently
scheduled to expire on November 30, 1995, is hereby extended for one (1) period
of three (3) years commencing on December 1, 1995 and expiring on November 30,
1998 (the "Extended Term"), unless sooner terminated in accordance with the
provisions of the Lease, such extension to be upon all of the same terms and
conditions set forth in the Lease, such extension to be upon all of the same
terms and conditions set forth in the Lease except as otherwise provided in this
Amendment.
3. The original Premises is hereby expanded by 2,957 square feet as
outlined on the attached Exhibit A, and the Premises will be 14,075 square feet
as of December 1, 1995.
4. Tenant's Proportionate Share shall be increased to 26% upon
expansion into the 2,957 square feet as outlined in the attached Exhibit A.
5. During the Extended Term, Basic Rent shall be payable by Tenant at
the annual rate of $119,637.50 (being the product of (a) $8.50 and (b) the
rentable floor area of the premises (being 14,075 square feet)). For the period
prior to December 1, 1995, basic Rent shall continue to be paid by Tenant as set
forth in the Lease prior to this Amendment.
6. Landlord will construct improvements to the Premises as outlined
in the specifications attached hereto as Exhibit B. Landlord shall contribute
$10,000 towards said improvements and Tenant shall reimburse Landlord promptly
in full upon receipt of invoice for the balance of the cost of said
improvements.
<PAGE> 43
7. Tenant warrants and represents that Tenant has not dealt with any
broker in connection with the consummation of this Amendment other than Meredith
& Grew, Incorporated. In the event that any claim is made against Landlord
relative to dealings by Tenant with any brokers (other than Meredith & Grew,
Incorporated), Tenant shall defend the claim with counsel reasonably acceptable
to Landlord and save harmless and indemnify Landlord on account of loss, cost or
damage which may arise by reason of such claim.
8. Except as set forth herein, the Lease shall remain unmodified and
in full force and effect.
EXECUTED as a sealed insturment as of the day and year first written
above.
LANDLORD:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By:
---------------------------------
Melina E. Armour
Its: Associate Investment Officer
Hereunto Duly Authorized
TENANT:
TRIPLE I CORPORATION
By:
---------------------------------
Its:Chief Financial Officer
Hereunto Duly Authorized
2
<PAGE> 44
EXHIBIT B
(PAGE ONE OF TWO)
IMPROVEMENTS TO AREA AS DEFINED IN EXHIBIT A
Demolition
Remove carpet in first room, main room and hallway including vinyl
base
Scrape floor at old computer room
Remove 64 lineal feet of existing hallway partition
Cut in one 3070 door and one 6070 door opening
Remove debris from site
Leave existing two floor standing Liebert HVAC units
Leave 24 lineal feet of existing partition at first room
Leave electrical disconnect
panels and excess outlets
Drywall
Patch walls at removed electrical outlets
Patch & prep walls as required
Do not create soffitt at reception wall as not being demolished
Doors
Doors
Furnish and install one new pair of doors, 6070
Painting
Paint walls two coats, latex eggshell
Paint door frames and touch up doors
Ceilings
Patch back grid at demising walls
Replace damaged ceiling tiles as required
Flooring
Furnish and install 26 ounce level loop carpet at main room and
first room
Patch flooring at removed hallway partition
Furnish and install 4" vinyl base
Furnish and install Tarkett VCT in computer room
3
<PAGE> 45
EXHIBIT B
(PAGE TWO OF TWO)
IMPROVEMENTS TO AREA AS DEFINED IN EXHIBIT A
Plumbing
No plumbing, sinks, ejector pump included
HVAC
Add required ductwork to serve both new and old computer room
Relocate six diffusers and relocate one thermostat
Start up, test & air balance
Work does not include removal of any existing HVAC equipment or moving of
existing HVAC equipment
Electrical
Rework electrical as required at demolished walls
Add specified outlets per Tenant's list (Does not include 400 volt,
triple phase, 15 amp outlet)
Phone and data excluded
General Conditions
Building permit
Supervision
Insurance
Progress cleaning and broom clean at completion
No stamped architectural plans
4
<PAGE> 46
ATTACHMENT B
October 10, 1995
Karen L. Heinick, RPA
Meredith and Grew, Inc.
160 Federal Street
Boston, MA 02110-1701
RE: Triple I Expansion Revised Proposal
847 Rogers Street, Lowell
Dear Karen,
We submit this revised proposal to furnish all labor and materials to construct
the following per attached sketch and our discussion:
Demolition
* remove existing carpet in first room, main room, and hallway
including vinyl base
* scrape floor at old computer room
* remove 64 lineal feet of existing hallway partition
* cur in one 3070 door and one 6070 door opening
* remove debris from site
* existing Liebert units to remain as is
* existing partition at first room to remain as is
* existing electrical panels and excess outlets to remain as is
Drywall
* patch walls at removed electrical outlets
* parch and prep wails as required
* soffit at reception area is excluded
Doors
* furnish and install one new pair of doors, 6070
* reinstall one 3070 door and frame
Painting
* paint walls two coats, latex eggshell
* paint door frames and touch up doors
5
<PAGE> 47
Ceilings
* patch back grid at demising walls
* replace damaged ceiling tiles as required
Plumbing and Sprinkler
* excludes all plumbing and sprinkler work
Flooring
* furnish and install 26 ounce level loop carpet at main room and first room
* furnish and install 4" vinyl base
* furnish and install Tarkctt VCT in computer room
* patch flooring at removed hallway partition
HVAC
* add required ductwork to serve new and old computer rooms
* install six diffusers and one thermostat
* start up, test, and air balance
* excludes removal or relocation of any existing HVAC equipment excludes any
hook up of existing HVAC equipment
Electrical
* rework electrical as required at demolished walls
* add specified outlets per renovation list, excludes the 400 volt, triple
phase 15 amp outlets
* existing panels to remain as is
* phone and data excluded
General Conditions
* building permit is included
* includes supervision
* includes insurance
* includes progress cleaning and broom clean at completion
* excludes cost of stamped architectural plans
The revised cost of construction as listed above is twenty thousand eight
hundred twenty dollars (20,820.), subject to additions and deductions. The
payment terms are net ten days from invoice. Invoicing to be as work progresses.
We expect to need three weeks for construction.
This proposal presented in outline form, more detail available upon request.
_____________________________ _________________________________
Meredith and Grew, Inc. Chapman Construction/Design, Inc.
by Karen L. Heinick, RPA by John J. Ferreira
6
<PAGE> 1
EXHIBIT 10F
SHAREHOLDER AGREEMENT
BY AND AMONG
ORBIS, INC.,
TRIPLE I CORPORATION
AND
THE SHAREHOLDERS OF TRIPLE I CORPORATION
DATED AS OF DECEMBER 5, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Exchange of Shares......................................................1
1.1 Transfer of Triple I Stock........................................1
1.2 Issuance of Industrial Imaging Common Stock.......................2
1.3 Conversion of Warrants and Options................................2
2. Representations and Warranties of Triple I..............................2
2.1 Capitalization of Triple I........................................2
2.2 Authorization.....................................................3
2.3 Organization and Good Standing....................................3
2.4 Books and Records.................................................3
2.5 Financial Statements..............................................4
2.6 Tax Matters.......................................................4
2.7 Title to Properties...............................................5
2.8 Agreements, Contracts and Commitments.............................5
2.9 Required Consents, No Default.....................................6
2.10 Litigation........................................................6
2.11 No Broker's or Finder's Fees......................................6
2.12 Compliance with Agreements and Laws...............................6
2.13 Employee Relations and Labor Matters..............................7
2.14 Tort Claims.......................................................7
2.15 Disclosure........................................................7
3. Representations and Warranties of Orbis.................................7
3.1 Reincorporation and Capitalization of Orbis.......................8
3.2 Authorization.....................................................8
3.3 Organization and Good Standing....................................8
3.4 Books and Records.................................................9
3.5 Financial Statements..............................................9
3.6 Tax Matters.......................................................9
3.7 Title to Properties..............................................10
3.8 Agreements, Contracts and Commitments............................10
3.9 Required Consents, No Default....................................11
3.10 Litigation.......................................................11
3.11 No Broker's or Finder's Fees.....................................11
3.12 Tort Claims......................................................11
3.13 Disclosure.......................................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
4. Representations and Warranties of the Shareholders.....................12
5. Conditions to Closing..................................................12
5.1 Resignation of Officers..........................................12
5.2 Opinion of Counsel...............................................13
5.3 Accuracy of Representations and Warranties and Performance
of Obligation by Triple I and Orbis..............................13
5.4 Legal Proceedings................................................13
5.5 Orbis Stockholder Approval.......................................13
6. Provisions for Indemnification.........................................13
7. Termination............................................................14
8. Tax Consequences.......................................................14
9. Entire Agreement.......................................................14
10. Waiver.................................................................15
11. Severability...........................................................15
12. Governing Law..........................................................15
13. Binding Agreement......................................................15
14 Counterparts...........................................................15
15. Assignment.............................................................15
16. Arbitration............................................................15
17. Counsel................................................................15
Exhibit A List of Triple I Shareholders
Exhibit B Triple I's Master Schedule
Exhibit C Outstanding Options and Warrants of Triple I
Exhibit D Orbis Master Schedule
</TABLE>
ii
<PAGE> 4
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement (the "Agreement") is made and entered into
as of the 5th day of December, 1996 (the "Effective Date") by and among Orbis,
Inc. ("Orbis" or its successor corporation Industrial Imaging Corporation) a
Rhode Island corporation and the shareholders of Triple I Corporation, a
Delaware Corporation ("Triple I"), which are listed in Exhibit A (collectively,
the "Shareholders").
W I T N E S S E T H:
WHEREAS, the Shareholders own all of the issued and outstanding capital
stock of Triple I Corporation, a Delaware corporation with its principal place
of business at One Lowell Research Center, 847 Rogers Street, Lowell,
Massachusetts 01852; and
WHEREAS, Orbis shall reincorporate under Delaware corporate law and
change its name to Industrial Imaging Corporation ("Industrial Imaging");
WHEREAS, Industrial Imaging will have authority to issue 20,000,000
shares of Common Stock, $.01 par value, of Industrial Imaging (the "Industrial
Imaging Common Stock"), 525,000 shares of which will be issued and outstanding
immediately prior to the date of the Exchange (as defined below);
WHEREAS, the Shareholders believe that it is in each of their best
interests to exchange all of Triple I outstanding Common Stock, $.01 par value
(the "Triple I Stock") for Industrial Imaging Common Stock (the "Exchange"); and
WHEREAS, the Board of Directors of Industrial Imaging (as the successor
corporation of Orbis), by resolutions duly adopted, has approved this Agreement
and the issuance of a total of 5,000,237 shares of Industrial Imaging Common
Stock to the Shareholders in the amounts as hereinafter described;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, Orbis, Triple I and the Shareholders agree as follows:
1. EXCHANGE OF SHARES
1.1. Transfer of Triple I Stock. The Exchange shall be effective upon
the ratification of this Agreement by Orbis shareholders, the reincorporation of
Orbis as a Delaware corporation under the name of Industrial Imaging and the
approval by each Shareholder of this Agreement as indicated by their signature
hereto. Each Shareholder shall deliver the certificate evidencing their Triple I
Stock to a representative of Triple I's legal counsel, O'Connor, Broude &
Aronson, as agent (the "Exchange Agent"). The Exchange Agent shall mail to any
Shareholder who has not duly surrendered his Triple I Stock certificates as of
the Effective Date, a letter of transmittal, together
1
<PAGE> 5
with instructions on how to surrender such Triple I Stock certificates to the
Exchange Agent. Upon receiving these instructions, each holder of an outstanding
certificate who has not previously delivered his Triple I Stock certificates
shall surrender them to the Exchange Agent.
1.2. Issuance of Industrial Imaging Common Stock. On the Effective
Date, Industrial Imaging shall issue to each Shareholder who has surrendered his
Triple I Stock certificates, as described in this Section 1, one share of
Industrial Imaging Common Stock for each share of Triple I Stock. All shares of
Industrial Imaging Common Stock to be issued on the Effective Date will be
deemed issued as of the Effective Date. Triple I Stock shall be deemed to be
cancelled whether or not the certificates have been surrendered or otherwise
accounted for.
Holders of Triple I Stock will not receive any dividends or
distributions with respect to shares of Industrial Imaging Common Stock which
may be declared or payable following the Effective Date to holders of record of
Industrial Imaging Common Stock until and unless they surrender their Triple I
Stock certificates to the Exchange Agent. Former holders of Triple I Stock will
be entitled to exercise all rights of holders of shares of Industrial Imaging
Common Stock without having to surrender their stock certificates, except the
right to receive dividends or distributions.
1.3. Conversion of Warrants and Options. At the Effective Date, by
virtue of the Exchange and without any action on the part of the holder thereof
each option and/or warrant to purchase Triple I Common Stock outstanding
immediately prior to the Effective Date shall be changed and converted into an
option and/or warrant to purchase Industrial Imaging Common Stock on the basis
of the following ratio:
(a) An option to purchase one (1) share of Triple I Common Stock shall
be converted into an option to purchase one (1) share of Industrial Imaging
Common Stock.
(b) A warrant to purchase one (1) share of Triple I Common Stock shall
be converted into a warrant to purchase one (1) share of Industrial Imaging
Common Stock.
2. REPRESENTATIONS AND WARRANTIES OF TRIPLE I.
Triple I represents and warrants to Industrial Imaging, upon which
representations and warranties Industrial Imaging shall be entitled to rely
regardless of any investigation by Industrial Imaging of the affairs of Triple
I, as follows (as supplemented by any referenced exhibit or on the Triple I's
Master Schedule listed in Exhibit B (the "Triple I's Master Schedule"),:
2.1 Capitalization of Triple I. Triple I's authorized capital stock
consists of 8,700,000 shares of Common Stock, $.01 par value per share, of which
5,000,237 shares are issued and outstanding on the date hereof, 1,000,000 shares
of Series A Preferred Stock, $.01 par value per share, of which no shares are
issued and outstanding on the date hereof, and 300,000 shares of Series B
Preferred Stock, $.01 par value per share, of which no shares are issued and
outstanding on the date hereof. All such issued and outstanding shares of Common
Stock have been duly and validly
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issued and are fully paid and non-assessable. All outstanding options, warrants
or other rights to purchase from Triple I any capital stock of Triple I are
listed on Exhibit C.
2.2 Authorization. This Agreement has been duly and validly executed
and delivered by Triple I. Subject to the approval of the Agreement by the
Shareholders, this Agreement constitutes, and, when executed and delivered at
the Closing, all other agreements entered into in connection with the
transactions contemplated hereby to which Triple I is a party will constitute,
the valid and legally binding obligations of Triple I, enforceable against it in
accordance with their respective terms except insofar as enforceability may be
limited by bankruptcy, insolvency, or similar laws affecting the rights of
creditors and general equitable principles. The execution, delivery and
performance by Triple I of this Agreement and the agreements provided for
herein, and the consummation by Triple I of the transactions contemplated hereby
and thereby, will not, with or without the giving of notice or the passage of
time or both, (a) violate the provisions of any law, rule or regulation
applicable to Triple I; (b) violate the provisions of the Certificate of
Incorporation or Bylaws of Triple I; (c) violate any judgment, decree, order or
award of any court, governmental body or arbitrator; or (d) conflict with or
result in the breach or termination of any term or provision of, or constitute a
default under, or cause any acceleration under or the creation of any
indebtedness, contract, lease, license, permit, lien, charge or encumbrance upon
the properties or assets of Triple I pursuant to, any indenture, mortgage, deed
of trust or other instrument or agreement to which Triple I is a party or by
which Triple I or any of its properties is or may be bound, subject to the
consent requirements described in Triple I's Master Schedule.
2.3 Organization and Good Standing. Triple I is a corporation duly
organized, validly existing and in good standing under the laws of the Delaware
and has all requisite power and authority (corporate and other) to own its
properties and to carry on its business as now being conducted. Except as
disclosed in Triple I's Master Schedule, Triple I is duly qualified to do
business and in good standing in all jurisdictions in which its ownership of
property or the character of its business requires such qualification and where
failure to be so qualified would have an adverse effect on Triple I. Neither
Triple I nor any of its officers or directors are subject to any agreement,
commitment or understanding which restricts or may restrict the conduct of
Triple I's business in any jurisdiction or location. The copies of the
Certificate of Incorporation and Bylaws of Triple I previously delivered to
Industrial Imaging are complete and correct.
2.4 Books and Records. The minute books of Triple I produced for
Industrial Imaging's review contain an accurate record of all meetings and other
corporate action of the Triple I Shareholders and the Board of Directors of
Triple I. The stock ledgers of Triple I produced for Industrial Imaging's review
contain an accurate record of the holdings of the stock issued by Triple I and
all transfers in connection therewith.
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2.5 Financial Statements.
(a) Triple I's Financial Statements. Triple I has delivered to
Industrial Imaging true and complete copies of its Balance Sheets as of
September 31, 1995 and related Statements of Operations, Stockholders' Equity
and Cash Flows, all of which have been audited by Coopers & Lybrand L.L.P. as
set forth in their report thereon, and its unaudited Balance Sheet as of
June 30, 1996 and related Statement of Operations for the nine months then ended
(collectively, the "Financial Statements"). Except as described in Triple I's
Master Schedule, all Financial Statements are in accordance with the books and
records of Triple I, and (i) present fairly the financial position and results
of operations of Triple I as of the respective dates and for the respective
periods indicated, (ii) include all adjustments required to fairly reflect the
financial condition of Triple I and, (iii) have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior periods and practices; provided, however, that the interim financial
statements as of and for the nine months ended June 30, 1996 have been prepared
in accordance with Triple I's normal practices for internal management reporting
purposes and accordingly certain items may not be classified in a manner
consistent with the generally accepted accounting principles followed in the
preparation of Triple I's audited financial statements and such interim
financial statements do not include the notes required by generally accepted
accounting principles.
(b) No Adverse Changes or Undisclosed Liabilities. Except as
disclosed in Triple I's Master Schedule, since June 30, 1996, there has not
occurred or arisen, whether or not in the ordinary course of business any
material adverse change in the assets or financial condition of Triple I or any
adverse change in the operation or business of Triple I. Triple I has no
liabilities or obligations, fixed, accrued, contingent or otherwise, which are
required to be reflected on financial statements prepared in accordance with the
generally accepted accounting principles as set forth in the Financial
Statements and which are not fully reflected or provided for on, or disclosed in
the notes to, the Financial Statements, where applicable, except liabilities and
obligations incurred in the ordinary course of business since June 30, 1996,
none of which individually or in the aggregate has been or is adverse to the
operations, business, financial condition or prospects of Triple I.
2.6 Tax Matters.
(a) Except as disclosed on Triple I's Master Schedule, Triple I
has paid (and, as to any of the following which are payable after the Effective
Date, Triple I has properly reserved against in accordance with generally
accepted accounting principles) all income taxes, capital gains taxes, payroll
and withholding taxes, capital taxes, sales and use taxes, goods and services
taxes, business taxes, ad valorem taxes, property taxes, excise taxes, customs
and import duties, rates, levies, assessments and fees, and all other taxes of
every kind, character or description, including all interest, fines, and
penalties relating thereto, imposed by any governmental or quasi-governmental
authority, domestic or foreign, whether federal, state, territorial or municipal
(collectively, the "Taxes") required to be paid by Triple I for all periods
prior to the Effective Date. No outstanding assessments, reassessments, Notices
of Determination, or notices of any kind whatsoever with respect to any such
Taxes exist or could become a lien on the properties or assets of Triple I.
Except
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as disclosed on Triple I's Master Schedule, Triple I has duly and timely filed
or caused to be filed all reports, returns and other documents relating to or
covering all such Taxes, which are due or required to be filed at or prior to
the date of Effective Date, and the Taxes or applicable amount shown thereon
have been timely accrued and paid. No such filings have contained any
misstatement or omitted any statement of any fact that should have been included
therein.
2.7 Title to Properties. Except as disclosed in Triple I's Master
Schedule, Triple I has good and marketable title to all of its properties and
assets reflected in the Financial Statements or acquired since June 30, 1996,
except properties and assets disposed of in the ordinary course of business
since the date thereof, and none of such properties or assets is subject to any
mortgage, pledge, lien, security interest, lease, charge, encumbrance,
objection, claim or joint ownership. To its knowledge, Triple I is not in
violation of any applicable zoning laws or in violation of any other local,
state or federal laws and regulations affecting the use and occupancy of such
property, which violation would have a material adverse effect on Triple I.
2.8 Agreements, Contracts and Commitments. Except as shown on Triple
I's Master Schedule, Triple I is not a party to or liable in connection with and
has not made or granted any oral or written:
(a) Note, loan, credit, security or guaranty agreement or other
obligation relating to the borrowing of money;
(b) license agreement, or sales representative, distributor,
franchise, advertising or property management agreement;
(c) agreement for the future purchase by Triple I of any material,
equipment, services or supplies in an amount in excess of $25,000 in any
instance or $100,000 in the aggregate, other than purchase orders issued by
Triple I in the ordinary course of business for components and supplies used in
the manufacture and service of its products;
(d) agreement for the future sale by Triple I of any materials,
equipment, services or supplies in an amount in excess of $25,000 in any
instance or $100,000 in the aggregate, other than purchase orders for Triple I
products and services received by Triple I from customers in the ordinary course
of business;
(e) agreement, not elsewhere specifically disclosed pursuant to
this Agreement, involving, or providing any benefit to, any officer, director,
employee or stockholder of Triple I;
(f) agreement or arrangement for the sale of any of its assets or
the grant of any preferential rights to purchase any of its assets, property or
rights or requiring the consent of any party to the transfer and assignment of
such assets, property or rights, other than purchase orders for Triple I
products in the ordinary course of business;
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(g) any contracts, agreements or other arrangements imposing a
non-competition or non-solicitation obligation on Triple I; and
(h) any other agreement, whether or not in the ordinary course of
business, which is not otherwise disclosed in this Agreement and which (i) can
reasonably be expected to require the payment to or by Triple I of more than
$25,000 in the aggregate for all such agreements in any period of 12 months or
(ii) has a remaining term of more than six months and cannot be terminated by
Triple I on 60 days' or less notice.
All agreements listed on Triple I's Master Schedule are valid and in
full force and effect, unless otherwise indicated therein.
2.9 Required Consents, No Default. Except as described in Triple I's
Master Schedule, neither the execution and delivery of this Agreement nor the
consummation of the Exchange, nor compliance by Triple I with its terms and
provisions will require the affirmative consent, approval, order or
authorization of or any registration, declaration or filing with any third party
or governmental authority, the failure to obtain which would have an adverse
effect on the Surviving Corporation after the Effective Date. Triple I is not in
default under or in violation of any provision of its Certificate of
Incorporation or Bylaws. Triple I is not in default under or in violation of any
provision of any indenture, mortgage, lease, loan or other agreement to which it
is a party or is bound or to which its properties are subject, which default or
violation would have an adverse effect on Triple I's business.
2.10 Litigation. There is no action, suit or proceeding to which Triple
I is a party (either as a plaintiff or defendant or otherwise) pending or, to
Triple I's knowledge, threatened before any court or governmental agency,
authority, body or arbitrator, and Triple I is not aware of any basis for any
such action, suit or proceeding. Neither Triple I nor any officer, director or
employee of Triple I has been permanently or temporarily enjoined by any order,
judgment or decree of any court or any governmental agency, authority or body
from engaging in or continuing any conduct or practice in connection with the
business, assets, or properties of Triple I. There is not in existence on the
date hereof any order, judgment or decree of any court, tribunal or agency
enjoining or requiring Triple I to take any action of any kind with respect to
its business, assets or properties.
2.11 No Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf of Triple I or any of its affiliates or under
the authority of any of them is or will be entitled to any broker's or finder's
fee or any other commission or similar fee directly or indirectly in connection
with any of the transactions contemplated herein.
2.12 Compliance with Agreements and Laws. Triple I has all required
licenses, permits and certificates, including health and safety permits, from
federal, state and local authorities necessary to conduct its business as
currently conducted the failure to have which, individually or collectively,
would have an adverse effect on its business or assets (collectively, the
"Permits"). To the best of Triple I's knowledge, the business of Triple I as
conducted through the date hereof has
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not violated any federal, state, local or foreign laws, regulations or orders
(including, but not limited to, any of the foregoing relating to employment
discrimination, occupational safety, conservation, or corrupt practices), the
enforcement of which would have an adverse effect on the business of Triple I.
Triple I has had no notice or communication from any federal, state or local
governmental or regulatory authority or otherwise of any such violation or
noncompliance.
2.13 Employee Relations and Labor Matters.
(a) Triple I is in compliance with all federal, state and
municipal laws regarding employment, employment practices, terms and conditions
of employment and wages and hours, the failure of which would, individually or
collectively, have an adverse effect on Triple I's business or assets, and it is
not engaged in any unfair labor practice, and there are no arrears in the
payment of wages or social security taxes.
(b) None of the employees of Triple I is represented by any labor
union, nor does Triple I have any agreements, whether directly or indirectly,
with any labor union, employee association or other similar entity. Triple I has
not made commitments to or conducted negotiations with any labor union or
employee association or similar entity with respect to any future agreements. No
trade union, employee association or other similar entity has any bargaining
rights acquired by either certification or voluntary recognition with respect to
the employees of Triple I. There is no unfair labor practice complaint against
Triple I pending before any federal, state or local agency. There is no pending
labor strike or other material labor trouble affecting Triple I (including,
without limitation, any organizational drive).
(c) Triple I is in compliance with all applicable and material
provisions of the Federal Fair Labor Standards Act or any similar state statute
and all rules and regulations under each, the failure of which would,
individually or collectively, have an adverse effect on Triple I's business or
assets.
2.14 Tort Claims. Except as disclosed in Triple I's Master Schedule,
there are no personal injury, property damage or other tort claims made against
Triple I, not including service calls, and all accidents known to Triple I which
could reasonably be expected to give rise to such a claim.
2.15 Disclosure. The representations and warranties by Triple I in this
Agreement, including the certificates, Exhibits and Schedules furnished by
Triple I do not contain any untrue or misleading statement of a material fact or
omit to state a material fact reasonably related to the transactions covered by
this Agreement, and all such representations and warranties are and on the
Effective Date will be accurate and complete in all material respects.
3. REPRESENTATIONS AND WARRANTIES OF ORBIS.
Orbis represents and warrants to the Shareholders and Triple I, upon
which representations and warranties the Shareholders and Triple I shall be
entitled to rely regardless of any investigation
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by Shareholders and Triple I of the affairs of Orbis (and its successor
corporation Industrial Imaging), as follows (as supplemented by any referenced
exhibit or on Orbis's master schedule at Exhibit D (the "Orbis Master
Schedule"):
3.1 Reincorporation and Capitalization of Orbis. As of the Effective
Date, Orbis will have (i) reincorporated as a Delaware corporation, (ii) changed
its name to Industrial Imaging, and (iii) authorized capital stock will consist
of 20,000,000 shares of Common Stock, $.01 par value per share, of which 525,000
shares are issued and outstanding, and 1,000,000 shares of Preferred Stock, $.01
par value per share, of which no shares are issued and outstanding. Orbis shall
also have authorized a 1996 Stock Option Plan with 600,000 shares reserved for
issuance under the plan. All such issued and outstanding shares of Common Stock
have been duly and validly issued and are fully paid and non-assessable. Except
as provided in Orbis's Master Schedule, there are no outstanding options,
warrants or other rights to purchase from Orbis any capital stock of Orbis.
3.2 Authorization. This Agreement has been duly and validly executed
and delivered by Orbis. This Agreement constitutes, and, when executed and
delivered on the Effective Date, all other agreements entered into in connection
with the transactions contemplated hereby to which Orbis is a party will
constitute, the valid and legally binding obligations of Orbis, enforceable
against it in accordance with their respective terms except insofar as
enforceability may be limited by bankruptcy, insolvency, or similar laws
affecting the rights of creditors and general equitable principles. The
execution, delivery and performance by Orbis of this Agreement and the
agreements provided for herein, and the consummation by Orbis of the
transactions contemplated hereby and thereby, will not, with or without the
giving of notice or the passage of time or both, (a) violate the provisions of
any law, rule or regulation applicable to Orbis; (b) violate the provisions of
the Certificate of Incorporation or Bylaws of Orbis; (c) violate any judgment,
decree, order or award of any court, governmental body or arbitrator; or (d)
conflict with or result in the breach or termination of any term or provision
of, or constitute a default under, or cause any acceleration under or the
creation of any indebtedness, contract, lease, license, permit, lien, charge or
encumbrance upon the properties or assets of Orbis pursuant to, any indenture,
mortgage, deed of trust or other instrument or agreement to which Orbis is a
party or by which Orbis or any of its properties is or may be bound.
3.3 Organization and Good Standing. Orbis is (and as of the Effective
Date, Industrial Imaging will be) a corporation duly organized, validly existing
and in good standing under the laws of its State of incorporation and has all
requisite power and authority (corporate and other) to own its properties and to
carry on its business as now being conducted. Except as disclosed in the Orbis's
Master Schedule, Orbis is duly qualified to do business and in good standing in
all jurisdictions in which its ownership of property or the character of its
business requires such qualification and where failure to be so qualified would
have an adverse effect on Orbis. Neither Orbis nor any of its officers or
directors are subject to any agreement, commitment or understanding which
restricts or may restrict the conduct of Orbis's business in any jurisdiction or
location. The copies of the Certificate of Incorporation and Bylaws of Orbis
previously delivered to Triple I are complete and correct.
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3.4 Books and Records. The minute books of Orbis produced for Triple
I's review contain an accurate record of all meetings and other corporate action
of the Orbis stockholders and the Board of Directors of Orbis. The stock ledgers
of Orbis produced for Triple I's review contain an accurate record of the
holdings of the stock issued by Orbis and all transfers in connection therewith.
3.5 Financial Statements.
(a) Orbis's Financial Statements. Orbis has delivered to Triple I
true and complete copies of its Balance Sheets as of March 31, 1996 and related
Statements of Operations, Stockholders' Equity and Cash Flows, all of which have
been audited by Cager, Prescott, Clune & Chatellier as set forth in their report
thereon, (collectively, the "Financial Statements"). Except as described in the
Orbis Master Schedule, all Financial Statements are in accordance with the books
and records of Orbis, and (i) present fairly the financial position and results
of operations of Orbis as of the respective dates and for the respective periods
indicated, (ii) include all adjustments required to fairly reflect the financial
condition of Orbis and, (iii) have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
and practices.
(b) No Adverse Changes or Undisclosed Liabilities. Except as
disclosed in Master Schedule, since March 31, 1996, there has not occurred or
arisen, whether or not in the ordinary course of business any material adverse
change in the assets or financial condition of Orbis or any adverse change in
the operation or business of Orbis. Orbis has no liabilities or obligations,
fixed, accrued, contingent or otherwise, which are required to be reflected on
financial statements prepared in accordance with the generally accepted
accounting principles as set forth in the Financial Statements and which are not
fully reflected or provided for on, or disclosed in the notes to, the Financial
Statements, where applicable, except liabilities and obligations incurred in the
ordinary course of business since March 31, 1996, none of which individually or
in the aggregate has been or is adverse to the operations, business, financial
condition or prospects of Orbis.
3.6 Tax Matters.
Except as disclosed on the Orbis Master Schedule, Orbis has paid
(and, as to any of the following which are payable after the Effective Date,
Orbis has properly reserved against in accordance with generally accepted
accounting principles) all income taxes, capital gains taxes, payroll and
withholding taxes, capital taxes, sales and use taxes, goods and services taxes,
business taxes, ad valorem taxes, property taxes, excise taxes, customs and
import duties, rates, levies, assessments and fees, and all other taxes of every
kind, character or description, including all interest, fines, and penalties
relating thereto, imposed by any governmental or quasi-governmental authority,
domestic or foreign, whether federal, state, territorial or municipal
(collectively, the "Taxes") required to be paid by Orbis for all periods prior
to the Effective Date. No outstanding assessments, reassessments, Notices of
Determination, or notices of any kind whatsoever with respect to any such Taxes
exist or could become a lien on the properties or assets of Orbis. Except
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as disclosed on the Orbis Master Schedule, Orbis has duly and timely filed or
caused to be filed all reports, returns and other documents relating to or
covering all such Taxes, which are due or required to be filed at or prior to
the date of Effective Date, and the Taxes or applicable amount shown thereon
have been timely accrued and paid. No such filings have contained any
misstatement or omitted any statement of any fact that should have been included
therein.
3.7 Title to Properties. Except as disclosed in the Orbis Master
Schedule, Orbis has good and marketable title to all of its properties and
assets reflected in the Financial Statements or acquired since March 31, 1996,
except properties and assets disposed of in the ordinary course of business
since the date thereof, and none of such properties or assets is subject to any
mortgage, pledge, lien, security interest, lease, charge, encumbrance,
objection, claim or joint ownership.
3.8 Agreements, Contracts and Commitments. Except as shown on the
Orbis Master Schedule, Orbis is not a party to or liable in connection with and
has not made or granted any oral or written:
(a) Note, loan, credit, security or guaranty agreement or other
obligation relating to the borrowing of money;
(b) license agreement, or sales representative, distributor,
franchise, advertising or property management agreement;
(c) agreement for the future purchase by Orbis of any material,
equipment, services or supplies in an amount in excess of $25,000 in any
instance or $100,000 in the aggregate, other than purchase orders issued by
Orbis in the ordinary course of business for components and supplies used in the
manufacture and service of its products;
(d) agreement for the future sale by Orbis of any materials,
equipment, services or supplies in an amount in excess of $25,000 in any
instance or $100,000 in the aggregate, other than purchase orders for Orbis
products and services received by Orbis from customers in the ordinary course of
business;
(e) agreement, not elsewhere specifically disclosed pursuant to
this Agreement, involving, or providing any benefit to, any officer, director,
employee or stockholder of Orbis;
(f) agreement or arrangement for the sale of any of its assets or
the grant of any preferential rights to purchase any of its assets, property or
rights or requiring the consent of any party to the transfer and assignment of
such assets, property or rights, other than purchase orders for Orbis products
in the ordinary course of business;
(g) any contracts, agreements or other arrangements imposing a
non-competition or non-solicitation obligation on Orbis; and
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(h) any other agreement, whether or not in the ordinary course of
business, which is not otherwise disclosed in this Agreement and which (i) can
reasonably be expected to require the payment to or by Orbis of more than
$25,000 in the aggregate for all such agreements in any period of 12 months or
(ii) has a remaining term of more than six months and cannot be terminated by
Orbis on 60 days' or less notice.
All agreements listed on Master Schedule are valid and in full force and effect,
unless otherwise indicated therein.
3.9 Required Consents, No Default. Except as described in the Orbis
Master Schedule, neither the execution and delivery of this Agreement nor the
consummation of the Exchange, nor compliance by Orbis with its terms and
provisions will require the affirmative consent, approval, order or
authorization of or any registration, declaration or filing with any third party
or governmental authority, the failure to obtain which would have an adverse
effect on the Surviving Corporation after the Effective Date. Orbis is not in
default under or in violation of any provision of its Certificate of
Incorporation or Bylaws. Orbis is not in default under or in violation of any
provision of any indenture, mortgage, lease, loan or other agreement to which it
is a party or is bound or to which its properties are subject, which default or
violation would have an adverse effect on Orbis's business.
3.10 Litigation. There is no action, suit or proceeding to which Orbis
is a party (either as a plaintiff or defendant or otherwise) pending or, to
Orbis's knowledge, threatened before any court or governmental agency,
authority, body or arbitrator, and Orbis is not aware of any basis for any such
action, suit or proceeding. Neither Orbis nor any officer, director or employee
of Orbis has been permanently or temporarily enjoined by any order, judgment or
decree of any court or any governmental agency, authority or body from engaging
in or continuing any conduct or practice in connection with the business,
assets, or properties of Orbis. There is not in existence on the date hereof any
order, judgment or decree of any court, tribunal or agency enjoining or
requiring Orbis to take any action of any kind with respect to its business,
assets or properties.
3.11 No Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf of Orbis or any of its affiliates or under the
authority of any of them is or will be entitled to any broker's or finder's fee
or any other commission or similar fee directly or indirectly in connection with
any of the transactions contemplated herein.
3.12 Tort Claims. Except as disclosed in the Orbis's Master Schedule,
there are no personal injury, property damage or other tort claims made against
Orbis, not including service calls, and all accidents known to Orbis which could
reasonably be expected to give rise to such a claim.
3.13 Disclosure. The representations and warranties by Orbis in this
Agreement, including the certificates, Exhibits and Schedules furnished by Orbis
do not contain any untrue or misleading statement of a material fact or omit to
state a material fact reasonably related to the transactions
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covered by this Agreement, and all such representations and warranties are and
on the Effective Date will be accurate and complete in all material respects.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
Each of the Shareholders represents and warrants to Industrial Imaging,
jointly and severally, upon which representations and warranties Orbis relies,
and which representations and warranties shall survive the Closing,
notwithstanding any investigation of the affairs by Orbis (and its successor
Industrial Imaging), as follows:
4.1 The Shareholders have full power and authority to execute and
deliver this Agreement and consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by each
of the Shareholders and no other actions or proceedings on the part of the
Shareholders are necessary to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by each of the
Shareholders and constitutes the valid and legally binding obligation of each of
the Shareholders and enforceable against each of them in accordance with its
terms, subject only as to enforcement to general equitable principles and to
bankruptcy, insolvency, reorganization, moratorium, or similar laws of general
application affecting the rights and remedies of creditors.
4.2 In connection with the receipt by each of the Shareholders of any
and all of the Industrial Imaging Common Stock that such Stockholder may receive
pursuant to this Agreement, each Stockholder acknowledges by their signature
that the Common Stock is not being registered under the Securities Act of 1933,
as amended (the "Securities Act"), on the basis of a statutory exemption that is
based in part on the representations made by the Shareholders in connection with
this Agreement.
Each Stockholder shall warrant and represent in writing that (a) he or
it is acquiring such Common Stock for his or its own account and not with a view
to reselling or otherwise distributing such shares in violation of any relevant
federal or state securities laws; (b) he or it does not intend to resell or
otherwise dispose of such shares unless and until a registration statement under
the Securities Act is then in effect with respect to such shares or an exemption
from the registration requirements of the Securities Act is then in fact
applicable to such transfer; and (c) any and all stock certificates evidencing
ownership of any Common Stock shall bear any legends that counsel for Industrial
Imaging deem, in their sole opinion, to be required by state or federal law.
5. CONDITIONS TO CLOSING.
5.1 Resignation of Officers. The Officers of Orbis, on the Effective
Date, shall deliver their resignations, all of which resignations shall take
effect on the Effective Date. The new officers of Industrial Imaging shall
thereafter be appointed by the Board of Directors of Industrial Imaging.
12
<PAGE> 16
5.2 Opinion of Counsel. Triple I shall have received from counsel to
Orbis, an opinion, dated the Effective Date, in form and substance satisfactory
to Triple I as to the matters described in Exhibit E.
5.3 Accuracy of Representations and Warranties and Performance of
Obligations by Triple I and Orbis. The representations and warranties of Triple
I and Orbis (applying to both Orbis and its successor corporation Industrial
Imaging) set forth in Sections 2 and 3 shall be true and correct in all material
respects on the Effective Date, with the same effect as though made at such
time, except for changes expressly contemplated by this Agreement. Orbis shall
have performed all obligations and complied with all covenants and conditions
required by this Agreement to be performed or complied with by it prior to the
Effective Date. Triple I and Orbis shall have received certificates from
authorized officers of the other company as to the fulfillment of the conditions
set forth in this Section 5.3.
5.4 Legal Proceedings. No action or proceeding by or before any court
or any governmental body shall have been instituted or threatened to restrain,
prohibit or invalidate the transactions contemplated by this Agreement which
might affect the right of the Shareholders and Triple I to own, operate or
control Industrial Imaging after the Effective Date or which, either
individually or in the aggregate, might be materially adverse to the operations,
business, financial condition or prospects of Industrial Imaging.
5.5 Orbis Stockholder Approval. The Orbis stockholders shall have
approved the Exchange as described in Section 1.
6. PROVISIONS FOR INDEMNIFICATION
6.1 In the manner and to the extent provided in this Section 6, the
Shareholders shall be defended, indemnified and held harmless from and against
any and all damages, losses and expenses (including reasonable legal and other
costs and expenses arising from or in connection with any action, suit,
proceeding, claim or investigation) suffered or incurred by them or by any of
their officers, directors, successor or assigns resulting from (i) any breach of
a representation or warranty of Orbis in this Agreement or any Schedule or
certificate thereto, (ii) any failure by Orbis to perform any covenant made by
it in this Agreement, and (iii) all awards, judgments or settlements arising
from or in connection with any action, suit, proceeding or claim by any third
party as a consequence of any such breach or failure.
6.2 Triple I, its directors, officers, employees or agents, if
claiming a right to indem nification under the provisions of this Section 6
(hereinafter, the "Indemnitee"), shall give prompt written notice to the Orbis
of each claim for indemnification hereunder, specifying the amount and nature of
the claim, and of any matter which, in the opinion of the claiming party, is
likely to give rise to an indemnification claim. The party against whom such
indemnity is sought to be recovered (hereinafter, the "Indemnitor") shall have
the right to undertake and control the defense and settlement (so long as such
settlement imposes no financial or other obligation upon Triple I or its
13
<PAGE> 17
directors, officers, employees or agents) of any such matter at Indemnitor's
sole expense and through legal counsel acceptable to Indemnitee, provided that
Indemnitor proceeds in good faith, expeditiously and diligently. Indemnitee
shall, at its option and expense, have the right to participate in any defense
undertaken by Indemnitor, with legal counsel of its own selection. No settlement
or compromise may be made by Indemnitor without the prior written consent of
Indemnitee unless (i) prior to such settlement or compromise Indemnitor
acknowledges in writing Indemnitor's obligation to pay in full the amount of the
settlement or compromise and all associated expenses and (ii) Indemnitee is
furnished with security reasonably satisfactory to Indemnitee that Indemnitor
will in fact pay such amount and expenses.
6.3 Orbis shall pay to Indemnities the amount of established claims
for indemnification within fifteen (15) days after the establishment thereof.
Indemnities may set off the amount of any established claim due to it from the
Orbis against Indemnities any Deficiency Payment due to the Shareholders.
6.4 No claim for indemnification provided in this Section 6 shall be
made more than 36 months (or, if longer, the applicable statute of limitations
period with respect to tax matters) following the Effective Date.
6.5 Any remedies of the indemnitees shall be cumulative and not
exclusive.
7 . TERMINATION.
This Agreement may be terminated by Orbis or Triple I, in its sole
discretion, upon the occurrence of any of the following circumstances, by
written notice given to the non-terminating party on or before the Effective
Date:
(a) A breach by the non-terminating party of any representation,
warranty, covenant or other agreement contained herein; or
(b) If any condition to its obligations is not fulfilled on or before
the Effective Date.
Notwithstanding the foregoing, the parties may terminate this agreement
at any time upon their mutual written agreement.
8. TAX CONSEQUENCES. The Exchange is intended to qualify as a tax-free
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended (the "Code").
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Shareholders and the Company with respect to the subject matter
hereof and supersedes any and all prior oral or written communications,
understanding or agreements concerning the subject matter hereof. This Agreement
may be amended or modified only by a written instrument signed by all of the
Shareholders and an officer of the Company.
14
<PAGE> 18
10. WAIVER. No waiver of any right under this Agreement shall be deemed
effective unless contained in a writing signed by the Shareholder charged with
such waiver, and no waiver of any right arising from any breach or failure to
perform shall be deemed to be a waiver of any future such right or of any other
right arising under this Agreement.
11. SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision. If any provision of this Agreement is or becomes or is deemed
invalid, illegal or unenforceable to the maximum extent permissible in any
jurisdiction, such provision shall be deemed amended to conform to applicable
laws so as to be valid and enforceable or, if it cannot be so amended without
materially altering the intention of the parties, it shall be stricken and the
remainder of this Agreement shall remain in full force and effect.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
13. BINDING AGREEMENT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives and
successors.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
15. ASSIGNMENT. No Shareholder may assign this Agreement or his rights
hereunder without the other Shareholders' written consent, which consent may be
withheld at the non-assigning Shareholders' sole discretion.
16. ARBITRATION. Any dispute concerning this Agreement including but not
limited to, its existence, validity, interpretation, performance or
non-performance, arising before or after termination or expiration of this
Agreement, shall be settled by a single arbitrator in Boston, Massachusetts, in
accordance with the rules then in effect of the American Arbitration
Association. Judgment upon any award may be entered in any court of competent
jurisdiction. The cost of such arbitration shall borne equally between the
parties thereto unless otherwise determined by such arbitrator.
17. COUNSEL. Each of the parties acknowledges and confirms that each has
had the opportunity to secure advice, counsel and suggestions from professional
persons of such party's choosing in connection with this Agreement and related
matters.
15
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
on this 5th day of December, 1996.
ATTEST: ORBIS, INC.
By:
- -------------------------- ----------------------------------
Pasquale Ruggieri, President
ATTEST: TRIPLE I CORPORATION
By:
- -------------------------- ----------------------------------
Juan J. Amodei, Ph.D., President
TRIPLE I SHAREHOLDERS
WITNESS: JUAN J. AMODEI, Ph.D.
- -------------------------- ----------------------------------
WITNESS: JOSEPH BORDOGNA
- -------------------------- ----------------------------------
ATTEST: CENTENNIAL TECHNOLOGIES
By:
- -------------------------- ----------------------------------
Emanuel Pinez, President
16
<PAGE> 20
WITNESS: CHARLES RIVER MORTGAGE
COMPANY, INC.
By:
- -------------------------- ----------------------------------
WITNESS: ROBERT COHEN
- -------------------------- ----------------------------------
WITNESS: CRESENT CAPITAL COMPANY, LLC
By:
- -------------------------- ----------------------------------
WITNESS: EZREIL DIAMOND
- -------------------------- ----------------------------------
WITNESS: WILLIAM G. EATON JR.
- -------------------------- ----------------------------------
WITNESS: S. MARCUS FINKLE
- -------------------------- ----------------------------------
WITNESS: LAWRENCE K. FLEISCHMANN
- -------------------------- ----------------------------------
17
<PAGE> 21
WITNESS: ARTHUR G. JENKINS AND ROBERT R.
JENKINS, JTWROS
By:
- -------------------------- ----------------------------------
WITNESS: PETER O. KLIEM
- -------------------------- ----------------------------------
WITNESS: DAVID S. LAWI
- -------------------------- ----------------------------------
WITNESS: JAMES LEE
- -------------------------- ----------------------------------
WITNESS: DAVID & ESTER MANN, JTWROS
By:
- -------------------------- ----------------------------------
ATTEST: MASSACHUSETTS COMMUNITY
DEVELOPMENT FINANCE CORPORATION
By:
- -------------------------- ----------------------------------
ATTEST: MASSACHUSETTS TECHNOLOGY
DEVELOPMENT CORPORATION
By:
- -------------------------- ----------------------------------
18
<PAGE> 22
WITNESS: POLAROID CORPORATION
- -------------------------- ----------------------------------
WITNESS: P. DANIEL QUINN
- -------------------------- ----------------------------------
ATTEST: RETIREMENT ACCOUNTS, INC. CUST
FBO JAMES F. TWADDLE
By:
- -------------------------- ----------------------------------
WITNESS: JEFFREY RUBIN
- -------------------------- ----------------------------------
WITNESS: HAROLD SCHEIN
- -------------------------- ----------------------------------
WITNESS: K. JOSEPH SHEKARCHI
- -------------------------- ----------------------------------
WITNESS: SHIRLEY HSIN-HUI WANG
19
<PAGE> 23
- -------------------------- ----------------------------------
WITNESS: HARRY HSUAN YEH
- -------------------------- ----------------------------------
WITNESS: JOSEPH TEVES
20
<PAGE> 1
EXHIBIT 10g
Issued to :
-------------------
INDUSTRIAL IMAGING CORPORATION
SUBSCRIPTION BOOKLET
In the event you decide not to participate in this offering
please return the Information Statement, the Confidential Overview
of Bridge Financing and the Subscription Agreement to the Company.
January 15, 1997
<PAGE> 2
SUBSCRIPTION INSTRUCTIONS
(PLEASE READ CAREFULLY)
NO PERSON WILL BE ACCEPTED AS A SUBSCRIBER PRIOR TO A CLOSING OF THE
OFFERING. THE COMPANY RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION, IN WHOLE OR
IN PART, OR TO ALLOT TO ANY PROSPECTIVE SUBSCRIBER LESS THAN THE AMOUNT
SUBSCRIBED FOR BY SUCH SUBSCRIBER. ANY REPRESENTATION TO THE CONTRARY IS
UNAUTHORIZED AND MUST NOT BE RELIED UPON.
I. THIS SUBSCRIPTION BOOKLET CONTAINS MATERIAL NECESSARY FOR YOU TO
PURCHASE ONE OR MORE UNITS, EACH UNIT CONSISTING OF ONE SUBORDINATED
PROMISSORY NOTE IN THE PRINCIPAL AMOUNT OF $50,000 AND 10,714 SHARES OF
COMMON STOCK. THIS MATERIAL IS ARRANGED IN THE FOLLOWING ORDER:
A. Overview of Bridge Financing;
B. Subscription Agreement, including Form of Promissory Note,
attached thereto as an Exhibit;
C. Questionnaire for an INDIVIDUAL Subscriber;
D. Questionnaire for a TRUST Subscriber;
E. Questionnaire for a PARTNERSHIP Subscriber;
F. Questionnaire for a CORPORATE Subscriber; and
G. Questionnaire for a RETIREMENT PLAN Subscriber.
<PAGE> 3
The respective Questionnaires are designed to allow you to demonstrate
that you meet the minimum legal requirements relating to your subscription.
II. EACH SUBSCRIBER MUST READ AND COMPLETE THE SUBSCRIPTION AGREEMENT AND
ONE OF THE FIVE QUESTIONNAIRES. THE QUESTIONNAIRE AND THE SUBSCRIPTION
AGREEMENT CONTAIN REPRESENTATIONS RELATING TO YOUR SUBSCRIPTION.
Once you have completed the Subscription Agreement and the appropriate
Questionnaire, please return the entire Subscription Agreement and any
additional required documents (as described in the Questionnaire) to O'Connor,
Broude & Aronson at the address set forth below in Section IV. FAILURE TO COMPLY
WITH THE ABOVE INSTRUCTIONS WILL CONSTITUTE AN INVALID SUBSCRIPTION, WHICH, IF
NOT CORRECTED, WILL RESULT IN THE
-i-
<PAGE> 4
REJECTION OF YOUR SUBSCRIPTION REQUEST. EVEN IF CORRECTED, THE DELAY MAY RESULT
IN (1) THE ACCEPTANCE OF ANOTHER SUBSCRIBER WHOSE SUBSCRIPTION AGREEMENT WAS
INITIALLY RECEIVED BY O'CONNOR, BROUDE & ARONSON AFTER YOURS OR (2) THE OFFERING
BEING CLOSED WITHOUT YOUR SUBSCRIPTION REQUEST BEING CONSIDERED BY THE COMPANY.
III. ENCLOSE A CERTIFIED OR BANK CHECK PAYABLE TO THE ORDER OF "O'CONNOR,
BROUDE & ARONSON - CLIENT FUND ACCOUNT FOR INDUSTRIAL IMAGING
CORPORATION" IN THE AMOUNT OF THE PAYMENT DUE UPON SUBSCRIPTION.
or
WIRE TRANSFER THE AMOUNT OF THE PAYMENT DUE UPON SUBSCRIPTION AS
FOLLOWS:
Cambridge Trust Company, 1336 Massachusetts Avenue, Cambridge,
Massachusetts, ABA number 011300595, for deposit to O'Connor,
Broude & Aronson Client Fund Account, number 57-240-3-01, in
favor of "Industrial Imaging Corporation."
PLEASE CONTACT STEVEN J. CAGNETTA, ESQUIRE, AT O'CONNOR, BROUDE &
ARONSON AT (617) 890-6600 BEFORE INITIATING THE WIRE TRANSFER.
IV. SEND ALL COMPLETED DOCUMENTS AND YOUR CHECK TO THE FOLLOWING ADDRESS:
O'Connor, Broude & Aronson
Bay Colony Corporate Center
950 Winter Street, Suite 2300
Waltham, Massachusetts 02154
Attention: Marguerite J. Hill, Esquire
V. QUESTIONS REGARDING COMPLETION OF SUBSCRIPTION DOCUMENTS SHOULD BE
DIRECTED TO:
O'Connor, Broude & Aronson
Bay Colony Corporate Center
950 Winter Street, Suite 2300
Waltham, Massachusetts 02154
Attention: Marguerite J. Hill, Esquire or
Steven J. Cagnetta, Esquire
Telephone: (617) 890-6600
PLEASE PRINT IN INK OR TYPE ALL INFORMATION
-ii-
<PAGE> 5
SUBSCRIPTION AGREEMENT
LIMITED OFFERING OF INVESTMENT UNITS
OF INDUSTRIAL IMAGING CORPORATION
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES
LAWS, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE REGULATORY
AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS AGREEMENT OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE
SECURITIES MAY NOT BE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED.
THE INFORMATION CONTAINED IN THIS AGREEMENT DOES NOT PURPORT TO BE ALL
INCLUSIVE OR TO CONTAIN ALL THE INFORMATION THAT A PROSPECTIVE SUBSCRIBER MAY
DESIRE IN INVESTIGATING THE COMPANY. EACH SUBSCRIBER MUST RELY ON THE
SUBSCRIBER'S OWN EVALUATION OF THE COMPANY AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED, IN MAKING AN INVESTMENT DECISION WITH
RESPECT TO THE SECURITIES. SEE "RISK FACTORS" CONTAINED IN THE INFORMATION
STATEMENT FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED IN
CONNECTION WITH THE PURCHASE OF THE SECURITIES.
THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY THE SECURITIES IN ANY STATE OR OTHER JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
EXCEPT AS OTHERWISE INDICATED, THIS AGREEMENT SPEAKS AS OF THE DATE
HEREOF. NEITHER THE DELIVERY OF THIS AGREEMENT NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY AFTER THE DATE HEREOF.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS AGREEMENT IN CONNECTION WITH
THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE PLACEMENT AGENT. EACH SUBSCRIBER WILL BE ENTITLED TO RELY SOLELY ON THOSE
REPRESENTATIONS
-iii-
<PAGE> 6
AND WARRANTIES WHICH MAY BE MADE TO IT IN ANY FINAL SUBSCRIPTION AGREEMENT
RELATING TO THE SECURITIES.
PROSPECTIVE SUBSCRIBERS ARE NOT TO CONSTRUE THE CONTENTS OF THIS
AGREEMENT AS LEGAL ADVICE. EACH SUBSCRIBER SHOULD CONSULT THEIR OWN ATTORNEY OR
BUSINESS ADVISOR AS TO THE LEGAL, TAX AND OTHER CONSIDERATIONS RELATING TO AN
INVESTMENT IN THE SECURITIES.
OFFERS AND SALES WILL ONLY BE MADE TO PERSONS WHOM THE COMPANY BELIEVES
TO BE "ACCREDITED INVESTORS" AS DEFINED IN REGULATION D, PROMULGATED UNDER THE
ACT WHO, EITHER ALONE OR WITH SUCH SUBSCRIBER REPRESENTATIVE, HAVE SUCH
KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT SUCH SUBSCRIBER
IS CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE PROSPECTIVE INVESTMENT. IT
IS EXPECTED THAT SUCH SECURITIES WOULD BE EXEMPT FROM REGISTRATION UNDER THE ACT
PURSUANT TO AN EXEMPTION FROM REGISTRATION CONTAINED IN SECTION 4(2) OF THE ACT
AND RULE 506 UNDER REGULATION D.
A SUBSCRIBER'S INVESTMENT IN THE SECURITIES PROPOSED UNDER THE TERMS OF
THIS OFFERING WILL BE SUBJECT TO CERTAIN RESTRICTIONS AS DESCRIBED MORE FULLY IN
THE TERMS OF THE OFFERING AND THE SUBSCRIPTION AGREEMENT. THESE SECURITIES ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, AND THE APPLICABLE STATE SECURITIES
LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. SUBSCRIBERS MUST EXPECT TO
BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE SECURITIES FOR AN INDEFINITE
PERIOD OF TIME.
THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED HEREBY.
CERTAIN PROVISIONS OF VARIOUS OF DOCUMENTS ARE SUMMARIZED IN THIS
AGREEMENT BUT PROSPECTIVE SUBSCRIBERS SHOULD NOT ASSUME THAT THESE SUMMARIES ARE
COMPLETE. SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO TEXT OF
THE ORIGINAL DOCUMENT WHICH WILL BE MADE AVAILABLE TO PROSPECTIVE SUBSCRIBERS BY
THE COMPANY UPON REQUEST.
BY ACCEPTANCE OF THIS AGREEMENT, PROSPECTIVE SUBSCRIBERS RECOGNIZE AND
ACCEPT THE NEED TO CONDUCT THEIR OWN THOROUGH INVESTIGATION AND DUE DILIGENCE
BEFORE CONSIDERING PURCHASING THE SECURITIES OFFERED HEREBY.
-iv-
<PAGE> 7
STATE SECURITIES NOTICES
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
FOR CONNECTICUT RESIDENTS
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER SECTION
36B-21 OF THE CONNECTICUT UNIFORM SECURITIES ACT AND, THEREFORE, CANNOT BE
RESOLD UNLESS THEY ARE REGISTERED UNDER SUCH ACT OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
FOR FLORIDA RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER
SECTION 517.061 OF THE FLORIDA SECURITIES ACT AND HAVE NOT BEEN REGISTERED UNDER
SAID ACT IN THE STATE OF FLORIDA.
-v-
<PAGE> 8
INDUSTRIAL IMAGING CORPORATION
SUBSCRIPTION AGREEMENT
PRIVATE OFFERING OF UNITS CONSISTING
OF SUBORDINATED PROMISSORY NOTES
AND SHARES OF COMMON STOCK
SUBSCRIPTION AGREEMENT made as of the date set forth below between
Industrial Imaging Corporation, a publicly held Delaware corporation with its
principal offices at One Research Center, 847 Rogers Street, Lowell,
Massachusetts 01852 (the "Company") and the undersigned (the "Subscriber").
WHEREAS, the Company desires to issue an aggregate of up to $600,000 of
investment units (the "Investment Units"), each Investment Unit consisting of a
two year, 10% Subordinated Promissory Note in the principal amount of $50,000
(the "Notes") and 10,714 shares of Common Stock (the "Shares"), on the terms and
conditions hereinafter set forth and the Subscriber desires to acquire the
amount of Investment Units set forth herein (the "Offering").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
1. SUBSCRIPTION FOR INVESTMENT UNITS.
1.1 Subscription. Subject to the terms and conditions
hereinafter set forth, the Subscriber hereby subscribes for and agrees to
purchase from the Company such Investment Units as is set forth in Section
1.4(a) below at a purchase price equal to $50,000 per Investment Unit (the
"Purchase Price") and the Company agrees to sell such Investment Units to the
Subscriber for said Purchase Price. Except as provided under state securities
laws, this Subscription Agreement is irrevocable, provided that the
undersigned's obligations hereunder will terminate if this subscription is not
accepted by the Company by the Termination Date, as hereinafter defined.
Funds will be paid to the Company in accordance with the closing
provisions set forth herein and pursuant to the terms of the Company's
Confidential Overview of Bridge Financing dated as of January 15, 1997 (the
"Overview of Financing"). The Company reserves the unrestricted right to accept
subscriptions for a fraction of an Investment Unit or reject any subscription,
notwithstanding prior receipt by the Subscriber of notice of acceptance. The
Company may, in its discretion, increase the size of the Offering. If this
subscription is accepted in part and all other conditions are satisfied, any
amounts that have been tendered in excess of the payment for the Investment
Units allocated to the Subscriber will be returned without interest to the
Subscriber.
-1-
<PAGE> 9
1.2 Validity of Documents. The Company and the Escrow Agent may
rely, and shall be protected in acting, upon any papers or other documents that
may be submitted to either of them in connection with the Investment Units and
which are believed by them to be genuine and to have been signed or presented by
the proper party or parties, and neither the Company nor the Escrow Agent shall
have any liability or responsibility with respect to the form, execution, or
validity thereof.
1.3 Purchase Price. The Purchase Price is payable by (i) wire
transfer, or (ii) certified or bank check made payable to the "O'Connor, Broude
& Aronson - Client Fund Account for Industrial Imaging Corporation"
contemporaneously with the execution and delivery of this Subscription
Agreement.
The Purchase Price of the Investment Units shall be determined
as follows:
(a) Purchase Price of Each Investment Unit $ 50,000
(b) Number of Investment Units subscribed for: ______
(c) Total Purchase Price
(the amount in (a) multiplied
by the amount in (b)) $
1.4 USE OF PROCEEDS. Upon acceptance of this Subscription
Agreement by the Company, the Company may use such funds for working capital and
general corporate purposes, including reduction of trade payables and a $100,000
promissory note.
1.5 PLACEMENT AGENT. In connection with the Offering,
Schneider Securities, Inc. (the "Placement Agent") will receive as compensation
a commission of ten percent (10%) of the Purchase Price of the aggregate number
of Investment Units sold in the Offering.
2. CONSUMMATION OF OFFERING OF INVESTMENT UNITS.
2.1 CLOSING DATE. The Company expects to hold one or more
closings (the "Closing") of this Offering, with the first Closing expected to be
held on January 20, 1997 and the final Closing being held on the Termination
Date (as hereinafter defined). This Offering of Investment Units shall terminate
upon the earlier of (i) the Company selling an aggregate of $600,000 in
Investment Units or (ii) January 31, 1997, unless extended or earlier terminated
by the Company in its sole discretion ((i) or (ii) is referred to as the
"Termination Date").
2.2 DELIVERY. Within fifteen (15) days following the Closing,
the Company will use its best efforts to deliver to each Subscriber a
certificate or certificates, in such denominations and registered in such name
or names as each Subscriber may designate by notice to the Company, representing
the Shares purchased by each Subscriber from the Company. Prior to the Closing,
each
-2-
<PAGE> 10
Subscriber shall have delivered to the Company payment of the Purchase Price
therefor by certified check or wire transfer to such Company account as the
Company shall designate. If, at the Closing, any of the Subscribers shall have
failed to tender the Purchase Price for the Investment Units to be purchased by
such Subscriber at the Closing or any of the conditions specified herein shall
not have been fulfilled to the satisfaction of the Company, the Company shall,
at its election, be relieved of all of its obligations under this Agreement to
such Subscriber. The Company shall be under no obligation to accept this offer
and to close this transaction until the Closing.
2.3 FURTHER UNDERTAKINGS BY SUBSCRIBERS. Each Subscriber
undertakes to execute and deliver to the Company, within five (5) days after
receipt of the Company's request therefor, such further designations,
authorizations, and other instruments as the Company deems necessary or
appropriate to carry out the provisions of this Agreement.
2.4 DISCRETION TO USE FUNDS. The Company shall be entitled to
use the funds received from the sale of the Investment Units immediately upon
its acceptance of the subscription contemplated herein. No minimum amount of
Investment Units shall be required to be sold (i) by the Company in the
Offering, or (ii) before a Closing occurs.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Subscriber as follows:
3.1 DUE ORGANIZATION. It is a corporation duly organized,
validly existing, and in good corporate standing under the laws of the State of
Delaware.
3.2 SALE OF SECURITIES. The Notes and Shares included in each
Investment Unit will be duly authorized and enforceable.
4. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER. The Subscriber hereby
represents and warrants as follows:
4.1 RELIANCE ON REPRESENTATIONS AND WARRANTIES. The Subscriber
acknowledges that the Company is offering the Investment Units in reliance upon
the representations, warranties, and other information set forth by the
Subscriber. The Subscriber undertakes to notify the Company immediately of any
changes in any of the representations, warranties, and other information
contained herein.
4.2 SUBSCRIBER'S AUTHORITY. The Subscriber represents that he
has full legal power and authority to enter into this Agreement and to purchase
the Investment Units.
4.3 RISKS ASSOCIATED WITH OFFERING. The Subscriber recognizes
that the purchase of the Investment Units involves a high degree of risk in that
(i) he may not be able to liquidate his investment; (ii) transferability is
extremely limited; and (iii) in the event of a disposition, he could sustain the
loss of his entire investment. In addition, the Subscriber recognizes
-3-
<PAGE> 11
additional risks, including, but not limited to, those set forth in the Overview
of Financing and the Information Statement of the Company, dated as of November
14, 1996 (the "Information Statement"), which risks the Subscriber has carefully
read and considered.
4.4 INVESTMENT REPRESENTATIONS. The Subscriber represents that
he is acquiring the Investment Units hereunder for his own account and not with
a view to reselling or otherwise distributing such securities in violation of
any Federal or state securities laws and understands and agrees that the
securities to be issued hereunder are restricted on transfer and must be held
unless (i) they are registered under the Securities Act of 1933, as amended,
(the "Act") or (ii) an exemption from registration is available, and the Company
has received an opinion of counsel, in form and substance satisfactory to it, to
such effect. There can be no assurance that the Company will make available to
the public at any time in the future information necessary to enable security
holders to make routine sales of securities pursuant to Rule 144 under the Act.
4.5 SOPHISTICATION AND ABILITY TO RISK LOSS OF INVESTMENT. The
Subscriber acknowledges that he has prior investment experience, including
investment in non-listed and non-registered securities, or he has employed the
services of an investment advisor, attorney or accountant to read all of the
documents furnished or made available by the Company both to him and to all
other prospective subscribers in connection with the Offering and to evaluate
the merits and risks of such an investment on his behalf; that he recognizes the
highly speculative nature of this investment; that a noteholder, including the
Subscriber, may not at any time demand the withdrawal of capital from the
Company; and that he is able to bear the economic risk he hereby assumes,
namely, of holding the Investment Units for an indefinite period of time and of
losing his entire investment. The Subscriber represents that his overall
commitment to investments that are not readily marketable is not excessive in
view of his net worth and financial circumstances and the purchase of the
Investment Units will not cause such commitment to become excessive, and that
the investment is a suitable one for the Subscriber.
4.6 ACCESS TO INFORMATION. The Subscriber acknowledges receipt
of the Overview of Financing and the Information Statement, which contains
certain audited and unaudited financial statements of the Company. The
Subscriber hereby represents and acknowledges that he has carefully read the
Overview of Financing and Information Statement furnished by the Company during
the course of this transaction and all additional information regarding the
Company that he had requested or desired to know; that all documents which could
be reasonably provided have been made available for his inspection and review;
that he has been afforded the opportunity to ask questions of and receive
answers from duly authorized officers or other representatives of the Company
concerning the terms and conditions of the Offering, and that he has received
any additional information that he has requested. The Subscriber further
represents and acknowledges that because certain of the financial statements and
financial information included in the Information Statement are unaudited, that
such statements and information are subject to change and that the final
financial statements may report the Company's results of operations for and
financial condition as of the respective dates of such statements to be less
than and/or worse than the financial statements provided.
-4-
<PAGE> 12
4.7 FINDINGS OR RECOMMENDATIONS. The Subscriber is aware that
neither the Securities and Exchange Commission (the "SEC") nor the Attorney
General of the State of Delaware nor any other federal or state agency has made
any findings or determination as to the fairness of the Investment Units, nor
has any recommendation or any endorsement of the Investment Units has been made
and the Investment Units offered are not registered under federal, Delaware or
any other state law and the securities are restricted securities within the
meaning of the U.S. federal securities laws because of the Company's
representations that this is intended to be a non-public offering pursuant to
Section 4(2) and/or 4(6) of the Act.
4.8 REGISTRATION EXEMPTION. The Subscriber understands that
the Investment Units have not been registered under the Act by reason of a
claimed exemption under the provisions of the Act which depends, in part, upon
his investment intention. In this connection, the Subscriber understands that it
is the position of the SEC that the statutory basis for such exemption would not
be present if his representation merely meant that his present intention was to
hold such securities for a short period, such as the capital gains period of tax
statutes, for a deferred sale, for a market rise, assuming that a market
develops, or for any other fixed period. The Subscriber realizes that, in the
view of the SEC's position, a purchase now with an intent to resell would
represent a purchase with an intent inconsistent with his representation to the
Company, and the SEC might regard such a sale or disposition as a deferred sale
to which the exemption is not available.
4.9 LIMITED AND NO PUBLIC MARKET FOR SECURITIES. The
Subscriber understands that no public market for the Notes exists and no public
market can be expected to develop for the Notes. The Company's Common Stock
trades on the NASDAQ System. The Subscriber understands that trading of the
Company's Common Stock has been limited and no assurance can be given that an
active public trading market for the Common Stock will develop, or if developed,
be sustained. The Subscriber understands that it may not be possible to
liquidate an investment in the Investment Units on an emergency basis. The
Subscriber understands that the Company makes no representation or warranty
regarding its fulfillment in the future of any reporting requirements under the
Securities Exchange Act of 1934, as amended, or its dissemination to the public
of any current financial or other information concerning the Company, if
required as one of the conditions of the availability of any exemption. The
Subscriber understands and hereby acknowledges that the Company is under no
obligation to register the Investment Units under the Act.
4.10 LEGENDS. The Subscriber consents to the placement of any
legends required by state securities laws and of a legend, in a form
satisfactory to the Company's counsel, on any certificate or other document
evidencing the Notes or the Shares indicating that they have not been registered
under the Act and setting forth or referring to the restrictions on
transferability and sale thereof. The Subscriber is aware that the Company will
make a notation in its appropriate records with respect to the restrictions on
the transferability of such securities.
4.11 UNREGISTERED SECURITIES. The Subscriber understands that
the Notes and the Shares are not registered under the Act, or the securities
laws of any state, and that the Company is under no obligation to so register
them. As such, the Notes and the Shares will be considered
-5-
<PAGE> 13
"restricted securities" and may not be transferred unless registered under the
Act or an exemption under the Act and the relevant state securities laws is
available. The Company may, if it desires, permit the transfer out of the
Subscriber's name of the Investment Units only if the Subscriber's request for
transfer is accompanied by an opinion of counsel reasonably satisfactory to the
Company that neither the sale nor the proposed transfer results in a violation
of the Act or any applicable state "blue sky" laws (collectively, the
"Securities Laws"). The Subscriber agrees to indemnify, and hold the Company and
its directors, officers, and controlling persons and their respective heirs,
representatives, successors, and assigns harmless and to indemnify them against
all liabilities, costs, and expenses incurred by them as a result of any
misrepresentation made by Subscriber contained herein or in the Confidential
Subscriber Questionnaire (attached hereto and made a part hereof) or material
breach of an agreement or representation made by the Subscriber herein or any
sale or distribution by the Subscriber in violation of any Securities Laws.
4.12 DECISION TO INVEST. In making his decision to purchase
the Investment Units herein subscribed for, the Subscriber is not relying on any
representations or warranties from the Company or any of its officers,
directors, affiliates, employees or agents, other than the information provided
by the Company to him in this Offering. In addition, the Subscriber represents
that he is not purchasing any Investment Units as a result of or subsequent to
(i) any advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio or
(ii) any seminar or meeting whose attendees, including the Subscriber, were
invited as a result of, subsequent to, or pursuant to, any general solicitation.
4.13 NO PROTECTION OF SUBSCRIBER'S INTERESTS. The Subscriber
has been advised that the Company has not retained any independent professionals
to review or comment on this Offering or otherwise protect the interests of the
Subscriber. Although the Company has retained its own counsel, neither such firm
nor any other firm has acted on behalf of the Subscriber, and any Subscriber of
the Investment Units offered hereby should not rely on the firm so retained by
the Company with respect to any matters herein described.
4.14 SUBSCRIBER'S FINANCIAL CONDITION. The Subscriber has
completed the accompanying confidential Subscriber Questionnaire and has
delivered it herewith and represents and warrants that it accurately sets forth
his financial condition on the date hereof. The Subscriber has no reason to
expect there will be any material adverse change in his financial condition and
will immediately advise the Company of any such changes occurring prior to any
Closing or termination of the Offering.
4.15 NO REPRESENTATIONS ON COMPANY'S RESULTS OF OPERATIONS.
There has never been represented, guaranteed, or warranted to the Subscriber by
any broker, the Company, its officers, directors, agents, or employees or any
other person, expressly or by implication (i) the percentage of profits and/or
amount of or type of consideration, profit or loss to be realized, if any, as a
result of the Company's operations; and (ii) that the past performance or
experience on the part of the management of the Company, or of any other person,
will in any way result in the overall profitable operations of the Company.
-6-
<PAGE> 14
4.16 NO BROKERAGE COMMISSIONS. The Subscriber represents the
he has taken no action that would give rise to any claim by any person for
brokerage commissions, finders' fees or the like relating to this Subscription
Agreement or the transactions contemplated hereby (other than commissions to be
paid by the Company to the Placement Agent).
4.17 ENTITY ORGANIZATION AND AUTHORITY. The Subscriber
represents that if the Subscriber is a corporation, partnership, association,
joint stock company, trust, unincorporated organization or other entity, such
entity was not formed for the specific purpose of acquiring the Investment
Units, such entity is duly organized, validly existing and in good standing
under the laws of the state of its organization, the consummation of the
transactions contemplated hereby is authorized by, and will not result in, a
violation of state law or its charter or other organizational documents, such
entity has full power and authority to execute and deliver this Agreement and
all other related agreements or certificates and to carry out the provisions
hereof and thereof and to purchase and hold the securities constituting the
Investment Units. The Subscriber also represents that (i) the execution and
delivery of this Agreement has been duly authorized by all necessary action;
(ii) this Agreement has been duly executed and delivered on behalf of such
entity; and (iii) is a legal, valid and binding obligation of such entity.
4.18 REPRESENTATIVE OR FIDUCIARY CAPACITY. The Subscriber
warrants that if he is executing this Agreement in a representative or fiduciary
capacity, he has full power and authority to execute and deliver this Agreement
in such a capacity and on behalf of the subscribing individual, ward,
partnership, trust estate, corporation or other entity for whom the Subscriber
is executing this Agreement, and such individual, ward, partnership, trust,
estate, corporation or other entity has full right and power to perform pursuant
to this Agreement and make an investment in the Company, and this Agreement
constitutes a legal, valid and binding obligation of such entity.
4.19 REVIEW OF SUBSCRIPTION AGREEMENT. The Subscriber
understands that the Company will review this Agreement and is hereby given
authority by the undersigned to call his bank or place of employment or
otherwise review the financial standing of the Subscriber; and it is further
agreed and understood that the Company reserves the unrestricted right to reject
or limit any subscription and to close the Offering at any time.
5. REGISTRATION OF SHARES.
5.1 REGISTRATION RIGHTS.
(a) At any time within nine (9) months after the
closing of an underwritten public offering in which the Company raises gross
proceeds of at least $4,000,000 and provided that the Company is eligible to use
a Form S-3 registration statement, the Company will use its best reasonable
efforts to prepare and file with the Securities and Exchange Commission a
registration statement on Form S-3 (or any successor form) relating to the
Shares sold in this Offering. Other selling security holders may participate in
this registration at the sole option of the Company. In addition, the Company
may, in its sole discretion, at any time and after notice to the Subscribers,
-7-
<PAGE> 15
elect to register all of such Shares on a Form SB-2 or Form S-3 (or other
appropriate form) in connection with any other registration statement or on a
stand-alone basis.
(b) If permitted by applicable law and regulation, the
Company at the request of the holders owning a majority of the Shares, shall
file such amendments and/or supplements to such registration statement, and,
subject to this Section 5 hereof, take such other steps as may be required to
maintain such registration statement in effect, and to keep the information
therein current, until the earlier of the sale of all of the Shares included in
the registration statement or the expiration of nine (9) months from the
effective date of such registration statement.
(c) The Company will use its reasonable efforts to
furnish to the security holders participating in such registration (the "Selling
Security Holders") and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities.
(d) In connection with any registration statement
referred to in Section 6 of this Agreement, Subscriber will furnish to the
Company such information as the Company may reasonably require from the
Subscriber for inclusion in the registration statement (and the prospectus
included therein).
(e) The Company's obligations under this Agreement
shall be conditioned upon the Subscriber executing and delivering to the Company
an appropriate agreement, if necessary in the reasonable opinion of counsel to
the Company, in form reasonably satisfactory to counsel for the Company, that it
will comply with all anti-stabilization, manipulation, and similar provisions of
Section 10 of the 1934 Act, and any rules promulgated thereunder and will
furnish to the Company information about sales made in such public offering.
(f) The Company, at its expense, shall cause all of
the Shares included in a registration statement referred to in Section 5 hereof
to be qualified under the laws of such reasonable number of jurisdictions, as
the Company may reasonably designate, and the Company will continue such
qualification in effect for such period of time not to exceed nine (9) months
from the effective date of the registration statement referred to in Section 5
which relates to such Shares, provided, however, that the Company shall not for
any purpose be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified.
(g) The Company shall not be required to effect any
registration within three months after the effective date of any other
underwritten registration statement of the Company. The Company shall have the
right to designate the managing underwriter in respect of a public offering
pursuant to this Section 5.1.
-8-
<PAGE> 16
(h) If at the time the Company is registering the
Shares pursuant to this subsection 5.1, the Company is engaged or has fixed
demonstrable plans to engage within ninety (90) days of the time of the request
in an underwritten public offering (other than on a Form S-4 or S-8) as to which
the holders may include Common Stock pursuant to subsection 5.1 or is engaged in
any other activity which, in the good faith determination of the Company's Board
of Directors, would be adversely affected by the registration to the material
detriment of the Company, then the Company may, at its option (i) refuse to
register the Shares or (ii) direct that if the managing underwriter agrees and
the Company effectuates the registration, the holders of the Shares shall agree
not to publicly sell such registered Shares for such period of time as requested
by the underwriter managing the public offering or by the Company's Board of
Directors.
5.2 EXPENSES.
(a) With respect to the registration right granted in
Section 5.1 hereof, all fees, costs and expenses of an incidental to such
registration, inclusion and public offering (as specified in paragraph (b)
below) in connection therewith shall be borne by the Company, provided, however,
that any Selling Security Holders participating in such registration shall bear
their pro rata share of the underwriting discount and commissions and transfer
taxes, if any.
(b) The fees, costs and expenses of registration to
be borne by the Company as provided in paragraph (a) above shall include,
without limitation, all registration, filing, and NASD fees, printing expenses,
fees and disbursements of counsel and accountants for the Company, and all legal
fees and disbursements and other expenses of complying with state securities or
blue sky laws of any jurisdictions in which the securities to be offered are to
be registered and qualified (except as provided in 5.2(a) above). Fees and
disbursements of counsel and accountants for the selling security holders and
any other expenses incurred by the selling security holders not expressly
included above shall be borne by the Selling Security Holders.
6. MISCELLANEOUS
6.1 Notices. Any notice or other communication given hereunder
shall be deemed sufficient if in writing and sent by registered or certified
mail, return receipt requested, addressed to the Company, at its registered
office, One Lowell Research Center, 847 Rogers Street, Lowell, Massachusetts
01852, Attention: Juan J. Amodei, Ph.D., President, with a copy to O'Connor,
Broude & Aronson, 950 Winter Street, Suite 2300, Waltham, Massachusetts 02154,
Attention: Marguerite J. Hill, Esquire, and to the Subscriber at his address
indicated on the last page of this Subscription Agreement. Notices shall be
deemed to have been given on the date of mailing, except notices of change of
address, which shall be deemed to have been given when received.
6.2 Modifications. This Subscription Agreement shall not be
changed, modified or amended except by a writing signed by the parties to be
charged, and this Subscription Agreement may not be discharged except by
performance in accordance with its terms or by a writing signed by the party to
be charged.
-9-
<PAGE> 17
6.3 BINDING EFFECT; ENTIRE AGREEMENT. This Subscription
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors, and assigns.
This Subscription Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and merges and supersedes
all prior discussions, agreements, and understandings of any and every nature
among them.
6.4 GOVERNING LAW. This Subscription Agreement and its
validity, construction and performance shall be governed in all respects by the
laws of the Commonwealth of Massachusetts, without regard to its conflict of
laws principles. Subscriber agrees that any disputes arising with respect to or
in connection with this Agreement shall be finally decided in accordance with
the rules of arbitration.
6.5 USE OF SPEECH. All pronouns contained herein and any
variations thereof, shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the parties may require.
6.6 HEADINGS. Headings contained in this Agreement are only as
a matter of convenience and in no way define, limit, extend, or describe the
scope of this Agreement or the intent of any provisions hereof.
6.7 UNENFORCEABILITY. If any provision of this Agreement is or
becomes or is deemed invalid, illegal, or unenforceable in any jurisdiction, to
the maximum extent permissible, such provision shall be deemed amended to
conform to applicable laws so as to be materially altering the intention of the
parties, it shall be stricken and the remainder of this Agreement shall remain
in full force and effect.
6.8 ASSIGNMENT. The Subscribers may not assign this Agreement
or its rights hereunder without the Company's written consent.
6.9 MULTIPLE SUBSCRIBERS. If more than one person is signing
this Agreement, each representation, warranty, and undertaking stated herein
shall be the joint and several representation, warranty, and undertaking of each
such person. Notwithstanding the foregoing, no Subscriber shall be liable with
respect to any representation, warranty or undertaking of any other Subscriber
who signed a separate Subscription Agreement. The Subscribers understand the
meaning and legal consequences of the representations and warranties contained
in this Agreement.
6.10 SUBMISSION TO JURISDICTION. Each of the parties submits
to the jurisdiction of any state or federal court sitting in the Commonwealth of
Massachusetts, in any action or proceeding arising out of or relating to this
Agreement and offering and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Each party also agrees
not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each of the parties waives any defense or
inconvenient forum to the maintenance of any
-10-
<PAGE> 18
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other party with respect thereto.
6.11 BLUE SKY QUALIFICATION. The right to purchase Investment
Units under this Agreement is expressly conditioned upon the exemption from
qualification of the offer and sale of the Investment Units from applicable
federal and state securities laws. The Company shall not be required to qualify
this transaction under the securities laws of any jurisdiction and, should
qualification be necessary, the Company shall be released from any and all
obligations to maintain its offer, and may rescind any sale contracted, in the
jurisdiction.
6.12 CONFIDENTIALITY. The Subscriber acknowledges and agrees
that any information or data it has acquired from or about the Company, not
otherwise properly in the public domain, was received in confidence. The
Subscriber agrees not to divulge, communicate or disclose, except as may be
required by law or for the performance of this Agreement, or use to the
detriment of the Company or for the benefit of any other person or persons, or
misuse in any way, any confidential information of the Company, including any
scientific, technical, trade or business secrets of the Company and any
scientific, technical, trade or business materials that are treated by the
Company as confidential or proprietary, including, but not limited to, ideas,
discoveries, inventions, developments and improvements belonging to the Company
and confidential information obtained by or given to the Company about or
belonging to third parties.
6.13 SURVIVAL. The Subscriber's representations and warranties
made in this Agreement shall survive the execution and delivery of this
Agreement and of the Investment Units.
6.14 EXPENSES. Each of the parties hereto shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby, whether or not the transactions contemplated
hereby are consummated.
6.15 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which when so executed and
delivered shall be taken to be an original; but such counterparts shall together
constitute one and the same document binding all parties, notwithstanding that
all parties are not signatories to the same counterpart. Upon the execution and
delivery of this Subscription Agreement by the Subscriber, this Subscription
Agreement shall become a binding obligation of the Subscriber with respect to
the purchase of Investment Units as herein provided; subject, however, to the
right hereby reserved to the Company to enter into the same agreements with
other subscribers and to add and/or to delete other persons as subscribers.
IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of this ___ day of January, 1997.
By:
-----------------------------
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<PAGE> 19
-----------------------------------
Street Address
-----------------------------------
City, State, Zip Code
ACCEPTED:
INDUSTRIAL IMAGING CORPORATION
By:
------------------------------
Juan J. Amodei, Ph.D.
President
Date:
----------------------------
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<PAGE> 20
IMPORTANT: Subscriber Name:_______________________
Please Complete
Booklet No.:___________________________
INDIVIDUAL SUBSCRIBER QUESTIONNAIRE
------------------------------
INDUSTRIAL IMAGING CORPORATION
------------------------------
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned's subscription to purchase Investment
Units of Industrial Imaging Corporation (the "Company") may be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned understands, however, that the Company may
present this Questionnaire to such parties as it deems appropriate if called
upon to establish that the proposed offer and sale of the Shares is exempt from
registration under the Securities Act of 1933, as amended, or meets the
requirements of applicable state securities or "blue sky" laws. Further, the
undersigned understands that the Offering is required to be reported to the
Securities and Exchange Commission and to various state securities or "blue sky"
regulators.
IF YOU ARE PURCHASING INVESTMENT UNITS WITH YOUR SPOUSE, YOU MUST BOTH
SIGN THE SIGNATURE PAGE (PAGE A-5).
IF YOU ARE PURCHASING INVESTMENT UNITS WITH ANOTHER PERSON NOT YOUR
SPOUSE, YOU MUST EACH FILL OUT A SEPARATE QUESTIONNAIRE. Please make a photocopy
of pages A-1 to A-5 and return both completed Questionnaires to the Company in
the same envelope.
A-1
<PAGE> 21
I. PLEASE INDICATE DESIRED TYPE OF OWNERSHIP OF INVESTMENT UNITS
___ Individual
___ Joint Tenants (rights of survivorship)
___ Tenants in Common (no rights of survivorship)
II. PLEASE CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TO YOU
___ 1. I have an individual net worth* or joint net worth
with my spouse in excess of $1,000,000.
___ 2. I have had an individual income* in excess of
$200,000 in each of the two most recent years and I
reasonably expect an individual income in excess of
$200,000 for the current year. NOTE: IF YOU ARE
BUYING JOINTLY WITH YOUR SPOUSE, YOU MUST EACH HAVE
AN INDIVIDUAL INCOME IN EXCESS OF $200,000 IN EACH OF
THESE YEARS IN ORDER TO CHECK THIS BOX.
___ 3. My spouse and I have had a joint income* in excess of
$300,000 in each of the two most recent years and I
reasonably expect a joint income in excess of
$300,000 for the current year.
III. OTHER CERTIFICATIONS
By signing the Signature Page, I certify the following (or, if I am
purchasing Investment Units with my spouse as co-owner, each of us certifies the
following):
(a) that I am at least 21 years of age;
(b) that my purchase of Investment Units will be solely for my own
account and not for the account of any other person (other
than my spouse, if co-owner);
(c) that the name, home address and social security number or
taxpayer identification number as set forth in this
Questionnaire are true, correct and complete; and
(d) that one of the following is true and correct (check one):
A-2
<PAGE> 22
Spouse, if
Subscriber Co-Owner
___ ___ (i) I am a United States citizen or resident of
the United States for United States federal
income tax purposes.
___ ___ (ii) I am neither a United States citizen nor a
resident of the United States for United
States federal income tax purposes.
- -------------
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, a subscriber should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement
plans, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
IV. GENERAL INFORMATION
(a) PERSONAL INFORMATION.
Subscriber
Name:___________________________________________________________________________
Social Security or Taxpayer Identification Number:______________________________
Residence Address:______________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Residence Telephone Number:_____________________________________________________
(Area Code) (Number)
Business Address:_______________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Business Telephone Number:______________________________________________________
(Area Code) (Number)
A-3
<PAGE> 23
I prefer to have correspondence sent to: ____ Residence ____ Business
SPOUSE, IF CO-OWNER
Name:___________________________________________________________________________
Social Security or Taxpayer Identification Number:______________________________
Residence Address:______________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Residence Telephone Number (if different from Subscriber's):____________________
(Area Code) (Number)
Business Address:_______________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Business Telephone Number (if different from Subscriber's):_____________________
(Area Code) (Number)
I prefer to have correspondence sent to: ____ Residence ____ Business
V. SIGNATURE
The Signature Page to this Questionnaire is contained on page A-5,
entitled Individual Signature Page.
A-4
<PAGE> 24
INDIVIDUAL SIGNATURE PAGE
------------------------------
INDUSTRIAL IMAGING CORPORATION
------------------------------
Your signature on this Individual Signature Page evidences your
agreement to be bound by the Questionnaire and the Subscription Agreement.
1. The undersigned represents that (a) he/she has read and understands this
Subscription Agreement, (b) the information contained in this Questionnaire is
complete and accurate and (c) he/she will telephone the Company (contact at
508-937-5400) immediately if any material change in any of this information
occurs before the acceptance of his/her subscription and will promptly send the
Company written confirmation of such change.
____________________
Number of Investment
Units applied for
____________________
Date
_________________________________
Name (Please Type or Print)
_________________________________
Signature
_________________________________
Name of Spouse if Co-Owner
(Please Type or Print)
_________________________________
Signature of Spouse if Co-Owner
IF YOU ARE PURCHASING INVESTMENT UNITS WITH YOUR SPOUSE, YOU MUST BOTH
SIGN THE SIGNATURE PAGE (PAGE A-5).
IF YOU ARE PURCHASING INVESTMENT UNITS WITH ANOTHER PERSON NOT YOUR
SPOUSE, YOU MUST EACH FILL OUT A SEPARATE QUESTIONNAIRE. Please make a photocopy
of pages A-1 to A-5 and return both completed Questionnaires to the Company in
the same envelope.
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
CONCURRED IN BY COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT
REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.
A-5
<PAGE> 25
IMPORTANT: Subscriber Name:___________
Please complete Booklet No.:_______________
TRUST QUESTIONNAIRE
__________________________________
INDUSTRIAL IMAGING CORPORATION
__________________________________
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned TRUST's subscription to purchase
Investment Units of Industrial Imaging Corporation (the "Company") may be
accepted.
NOTE: RETIREMENT PLANS SHOULD COMPLETE THE QUESTIONNAIRE ON PAGES E-1
to E-4.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned TRUST understands, however, that the Company may
present this Questionnaire to such parties as it deems appropriate if called
upon to establish that the proposed offer and sale of the Investment Units is
exempt from registration under the Securities Act of 1933, as amended, or meets
the requirements of applicable state securities or "blue sky"' laws. Further,
the undersigned TRUST understands that the Offering is required to be reported
to the Securities and Exchange Commission and to various state securities or
"blue sky" regulators.
I. PLEASE CHECK STATEMENTS 1 AND 2 BELOW, AS APPLICABLE
___ 1. (a) the TRUST has total assets in excess of $5,000,000;
and
(b) the TRUST was not formed for the specific purpose of
acquiring the Investment Units;
(c) the purchase by the TRUST is directed by a person who
has such knowledge and experience in financial and
business matters that he/she is capable of evaluating
the merits and risks of an investment in the
Investment Units; and
B-1
<PAGE> 26
(d) the purchase by the TRUST is directed by a person who
has such knowledge and experience in financial and
business matters that he/she is capable of evaluating
the merits and risks of an investment in the
Investment Units.
___ 2. The grantor of the TRUST may revoke the TRUST at any time; the
grantor retains sole investment control over the assets of the trust and
(a) the grantor is a natural person whose individual net
worth* or joint net worth with the grantor's spouse
exceeds $1,000,000; or
(b) the grantor is a natural person who had an individual
income* in excess of $200,000 in each of the two most
recent years and who reasonably expects an individual
income in excess of $200,000 in the current year; or
(c) the grantor is a natural person who, together with
his or her spouse, has had a joint income* in excess
of $300,000 in each of the two most recent years and
who reasonably expects a joint income in excess of
$300,000 in the current year.
IF YOU CHECKED STATEMENT 2 IN SECTION I AND DID NOT CHECK STATEMENT 1,
THE GRANTOR MUST PROVIDE A COMPLETED INDIVIDUAL SUBSCRIBER QUESTIONNAIRE (PAGES
A-1 TO A-5) FOR EACH GRANTOR.
II. OTHER CERTIFICATIONS
By signing the Signature Page, the undersigned certifies the following:
(a) that the TRUST's purchase of the Investment Units will be
solely for the TRUST's own account and not for the account of
any other person;
(b) that the TRUST's purchase of the Investment Units is within
the investment powers and authority of the TRUST (as set forth
in the declaration of trust or other governing instrument) and
that all necessary consents, approvals and authorizations for
such purchase have been obtained and that each person who
signs the Signature Page has all requisite power and authority
as trustee to execute this Questionnaire and the Subscription
Agreement on behalf of the TRUST;
(c) that the TRUST has not been established in connection with
either (i) an employee benefit plan (as defined in Section
3(3) of ERISA), whether or not subject to the provisions of
Title I of ERISA, or (ii) a plan described in Section
4975(e)(i) of the Internal Revenue Code;
B-2
<PAGE> 27
(d) that the TRUST's name, address of principal office, place of
formation and taxpayer identification number as set forth in
this Questionnaire are true, correct and complete; and
(e) that one of the following is true and correct (check one):
___ (i) the TRUST is an estate or trust whose income from
sources outside of the United States is includable in
its gross income for United States federal tax
purposes regardless of its connection with a trade or
business carried on in the United States.
___ (ii) the TRUST is an estate or trust whose income
from sources outside the United States is not
includable in its gross income for United States
federal income taxes purposes regardless of its
connection with a trade or business carried on in the
United States.
- -------------------
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, a subscriber should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement
plans, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
III. GENERAL INFORMATION
(a) PROSPECTIVE SUBSCRIBER (THE TRUST)
Name:___________________________________________________________________________
Address:________________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Address for Correspondence (if different):
________________________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
B-3
<PAGE> 28
Telephone Number:_______________________________________________________________
(Area Code) (Number)
State in which Formed:__________________________________________________________
Date of Formation:______________________________________________________________
Taxpayer Identification Number:_________________________________________________
(b) TRUSTEES WHO ARE EXECUTING THIS QUESTIONNAIRE ON BEHALF OF
THE TRUST
Name(s) of Trustee(s):
IV. ADDITIONAL INFORMATION
A TRUST MUST ATTACH A COPY OF ITS DECLARATION OF TRUST OR OTHER
GOVERNING INSTRUMENT, AS AMENDED, AS WELL AS ALL OTHER DOCUMENTS THAT AUTHORIZE
THE TRUST TO INVEST IN THE INVESTMENT UNITS. ALL DOCUMENTATION MUST BE COMPLETE
AND CORRECT.
V. SIGNATURE
The Signature Page to this Questionnaire is contained on page B-5,
entitled Trust Signature Page.
B-4
<PAGE> 29
TRUST SIGNATURE PAGE
------------------------------
INDUSTRIAL IMAGING CORPORATION
------------------------------
Your signature on this TRUST Signature Page evidences the agreement by
the Trustee(s), on behalf of the TRUST, to be bound by the Questionnaire and the
Subscription Agreement.
1. The undersigned represent that (a) the information contained in this
Questionnaire is complete and accurate and (b) the TRUST will notify the Company
(contact at 508-937-5400) immediately if any material change in any of this
information occurs before the acceptance of the TRUST's subscription and will
promptly send the Company written confirmation of such change.
2. The undersigned Trustees hereby certify that they have read and understand
this Subscription Agreement.
3. The undersigned TRUST hereby represents and warrants that the persons signing
this Subscription Agreement on behalf of the TRUST are duly authorized to
acquire the Investment Units and sign this Subscription Agreement on behalf of
the TRUST and, further, that the undersigned TRUST has all requisite authority
to purchase such Investment Units and enter into this Subscription Agreement.
____________________
Number of Investment
Units applied for
____________________
Date
______________________________________
Title of Trust
(Please Type or Print)
By:___________________________________
Signature of Trustee
Name of Trustee:______________________
(Please Type or Print)
By:___________________________________
Signature of Co-Trustee
Name of Co-Trustee:___________________
(Please Type or Print)
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
CONCURRED IN BY COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT
REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.
B-5
<PAGE> 30
IMPORTANT: Subscriber Name:______________________
Please complete Booklet No.:__________________________
PARTNERSHIP QUESTIONNAIRE
------------------------------
INDUSTRIAL IMAGING CORPORATION
------------------------------
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned PARTNERSHIP's subscription to
purchase Investment Units of Industrial Imaging Corporation (the "Company") may
be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned PARTNERSHIP understands, however, that the
Company may present this Questionnaire to such parties as it deems appropriate
if called upon to establish that the proposed offer and sale of the Investment
Units is exempt from registration under the Securities Act of 1933, as amended,
or meets the requirements of applicable state securities or "blue sky" laws.
Further, the undersigned PARTNERSHIP understands that the Offering is
required to be reported to the Securities and Exchange Commission and to various
state securities or "blue sky" regulators.
I. PLEASE CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TO THE PARTNERSHIP
___ 1. Each of the partners of the undersigned PARTNERSHIP is able to
certify that such partner meets at least one of the following conditions:
(a) The partner is a natural person whose individual net worth* or
joint net worth with his or her spouse exceeds $1,000,000.
(b) The partner is a natural person whose individual income* was
in excess of $200,000 in each of the two most recent years and
who reasonably expects an individual income in excess of
$200,000 in the current year.
C-1
<PAGE> 31
___ 2. Each of the partners of the undersigned PARTNERSHIP is able to certify
that such partner is a natural person who, together with his or her spouse, has
had a joint income* in excess of $300,000 in each of the two most recent years
and who reasonably expects a joint income in excess of $300,000 in the current
year.
___ 3. The undersigned PARTNERSHIP:(a) was not formed for the specific
purpose of acquiring the Investment Units; and (b) has total assets in excess of
$5,000,000.
IF YOU CHECKED STATEMENT 1 OR STATEMENT 2 IN SECTION I AND DID NOT
CHECK STATEMENT 3, YOU MUST PROVIDE A LETTER SIGNED BY A GENERAL PARTNER OF THE
UNDERSIGNED PARTNERSHIP LISTING THE NAME OF EACH PARTNER (WHETHER A GENERAL OR
LIMITED PARTNER) AND THE REASON (UNDER STATEMENT 1 OR STATEMENT 2) SUCH PARTNER
QUALIFIES AS AN ACCREDITED INVESTOR (ON THE BASIS OF NET WORTH, INDIVIDUAL
INCOME OR JOINT INCOME), OR EACH PARTNER MUST PROVIDE A COMPLETED INDIVIDUAL
SUBSCRIBER QUESTIONNAIRE (PAGES A-1 TO A-5).
II. OTHER CERTIFICATIONS
By signing the Signature Page, the undersigned certifies the following:
(a) that the PARTNERSHIP's purchase of the Investment Units will
be solely for the PARTNERSHIP's own account and not for the
account of any other person;
(b) that the PARTNERSHIP's name, address of principal office,
place of formation and taxpayer identification number as set
forth in this Questionnaire are true, correct and complete;
and
(c) that one of the following is true and correct (check one):
___ (i) the PARTNERSHIP is a partnership formed in or under
the laws of the United States or any political
subdivision thereof.
___ (ii) the PARTNERSHIP is not a partnership formed in or
under the laws of the United States or any political
subdivision thereof.
- ----------------
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, a subscriber should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement
plans, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
C-2
<PAGE> 32
III. GENERAL INFORMATION
(a) PROSPECTIVE SUBSCRIBER (THE PARTNERSHIP)
Name:___________________________________________________________________________
Principal Place of Business:____________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Address for Correspondence
(if different):_________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number:_______________________________________________________________
(Area Code) (Number)
State in which Formed:__________________________________________________________
Date of Formation:______________________________________________________________
Taxpayer Identification Number:_________________________________________________
Number of Partners:_____________________________________________________________
(b) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF
THE PARTNERSHIP
____________________________
Name
____________________________
Position or Title
IV. SIGNATURE
The Signature Page to this Questionnaire is contained on page C-4,
entitled Partnership Signature Page.
C-3
<PAGE> 33
PARTNERSHIP SIGNATURE PAGE
------------------------------
INDUSTRIAL IMAGING CORPORATION
------------------------------
Your signature on this PARTNERSHIP Signature Page evidences the
agreement by the PARTNERSHIP to be bound by the Questionnaire and the
Subscription Agreement.
1. The undersigned PARTNERSHIP represents that (a) the information contained in
this Questionnaire is complete and accurate and (b) the PARTNERSHIP will notify
the Company (contact at 508-937-5400) immediately if any material change in any
of this information occurs before the acceptance of the undersigned
PARTNERSHIP's subscription and will promptly send the Company written
confirmation of such change.
2. The undersigned PARTNERSHIP hereby certifies that it has read and understands
this Subscription Agreement.
3. The undersigned PARTNERSHIP hereby represents and warrants that the person
signing this Subscription Agreement on behalf of the PARTNERSHIP is a general
partner of the PARTNERSHIP, has been duly authorized by the PARTNERSHIP to
acquire the Investment Units and sign this Subscription Agreement on behalf of
the PARTNERSHIP and, further, that the undersigned PARTNERSHIP has all requisite
authority to purchase such Investment Units and enter into this Subscription
Agreement.
______________________
Number of Investment
Units applied for
______________________
Date
______________________________________
Name of Partnership (Please Type or
Print)
______________________________________
Signature
______________________________________
Name (Please Type or Print)
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
CONCURRED IN BY COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT
REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.
C-4
<PAGE> 34
IMPORTANT: Subscriber Name:___________
Please Complete Booklet No.:_______________
CORPORATION QUESTIONNAIRE
------------------------------
INDUSTRIAL IMAGING CORPORATION
------------------------------
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned CORPORATION's subscription to
purchase Investment Units of Industrial Imaging Corporation (the "Company") may
be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned CORPORATION understands, however, that the
Company may present this Questionnaire to such parties as it deems appropriate
if called upon to establish that the proposed offer and sale of the Investment
Shares is exempt from registration under the Securities Act of 1933, as amended,
or meets the requirements of applicable state securities or "blue sky" laws.
Further, the undersigned CORPORATION understands that the Offering is
required to be reported to the Securities and Exchange Commission and to various
state securities or "blue sky" regulators.
I. PLEASE CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TO THE
CORPORATION
___ 1. Each of the shareholders of the undersigned CORPORATION is able
to certify that such shareholder meets at least one of the following two
conditions:
(a) The shareholder is a natural person whose individual net
worth* or joint net worth with his or her spouse exceeds
$1,000,000; or
(b) The shareholder is a natural person who had an individual
income* in excess of $200,000 in each of the two most recent
years and who reasonably expects an individual income in
excess of $200,000 in the current year.
D-1
<PAGE> 35
___ 2. Each of the shareholders of the undersigned CORPORATION is able to
certify that such shareholder is a natural person who, together with his or her
spouse, has had a joint income* in excess of $300,000 in each of the two most
recent years and who reasonably expects a joint income in excess of $300,000
during the current year.
___ 3. The undersigned CORPORATION: (a) was not formed for the specific purpose
of acquiring any Investment Units; and (b) has total assets in excess of
$5,000,000.
IF YOU CHECKED STATEMENT 1 OR STATEMENT 2 IN SECTION 1 AND DID NOT
CHECK STATEMENT 3, YOU MUST PROVIDE A LETTER SIGNED BY AN OFFICER OF THE
UNDERSIGNED CORPORATION LISTING THE NAME OF EACH SHAREHOLDER AND THE REASON
(UNDER STATEMENT 1 OR STATEMENT 2) WHY SUCH SHAREHOLDER QUALIFIES AS AN
ACCREDITED INVESTOR (ON THE BASIS OF NET WORTH, INDIVIDUAL INCOME OR JOINT
INCOME), OR EACH SHAREHOLDER MUST PROVIDE A COMPLETED INDIVIDUAL SUBSCRIBER
QUESTIONNAIRE (PAGES A-1 TO A-5).
II. OTHER CERTIFICATIONS
By signing the Signature Page, the undersigned certifies the following:
(a) that the CORPORATION's purchase of the Investment Units will
be solely for the CORPORATION's own account and not for the
account of any other person or entity;
(b) that the CORPORATION's name, address of principal office,
place of incorporation and taxpayer identification number as
set forth in this Questionnaire are true, correct and
complete; and
(c) that one of the following is true and correct (check one):
___ (i) the CORPORATION is a corporation organized in or
under the laws of the United States or any political
subdivision thereof.
___ (ii) the CORPORATION is a corporation which is neither
created nor organized in or under the United States
or any political subdivision thereof, but which has
made an election under either Section 897(i) or
897(k) of the United States Internal Revenue Code of
1986, as amended, to be treated as a domestic
corporation for certain purposes of United States
federal income taxation (A COPY OF THE INTERNAL
REVENUE SERVICE ACKNOWLEDGMENT OF THE UNDERSIGNED'S
ELECTION MUST BE ATTACHED TO THIS SUBSCRIPTION
AGREEMENT IF THIS PROVISION IS APPLICABLE).
___ (iii) neither (i) nor (ii) above is true.
D-2
<PAGE> 36
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, a subscriber should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement
plans, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
III. GENERAL INFORMATION
(a) PROSPECTIVE SUBSCRIBER (THE CORPORATION)
Name:___________________________________________________________________________
Principal Place of Business:____________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Address for Correspondence
(if different):_________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number:_______________________________________________________________
(Area Code) (Number)
State of Incorporation:_________________________________________________________
Date of Formation:______________________________________________________________
Taxpayer Identification Number:_________________________________________________
Number of Shareholders:_________________________________________________________
(b) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF
THE CORPORATION
Name:___________________________________________________________________________
Position or Title:______________________________________________________________
IV. SIGNATURE
The Signature Page to this Questionnaire is contained on page D-4,
entitled Corporation Signature Page.
D-3
<PAGE> 37
CORPORATION SIGNATURE PAGE
------------------------------
INDUSTRIAL IMAGING CORPORATION
------------------------------
Your signature on this CORPORATION Signature Page evidences the
agreement by the CORPORATION to be bound by the Questionnaire and the
Subscription Agreement.
1. The undersigned CORPORATION represents that (a) the information contained in
this Questionnaire is complete and accurate and (b) the CORPORATION will notify
the Company (contact at 508-937-5400) immediately if any material change in any
of the information occurs prior to the acceptance of the undersigned
CORPORATION's subscription and will promptly send the Company written
confirmation of such change.
2. The undersigned CORPORATION hereby certifies that it has read and understands
this Subscription Agreement.
3. The undersigned CORPORATION hereby represents and warrants that the person
signing this Subscription Agreement on behalf of the CORPORATION has been duly
authorized by all requisite action on the part of the CORPORATION to acquire the
Investment Units and sign this Subscription Agreement on behalf of the
CORPORATION and, further, that the undersigned CORPORATION has all requisite
authority to purchase the Investment Units and enter into this Subscription
Agreement.
________________________
Number of Investment
Units applied for
________________________
Date
________________________________________
Name of Corporation (Please Type or
Print)
By:_____________________________________
Signature
Title:__________________________________
(Please Type or Print)
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
CONCURRED IN BY COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT
REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.
D-4
<PAGE> 38
IMPORTANT: Subscriber Name:___________
Please Complete Booklet No.:_______________
RETIREMENT PLAN QUESTIONNAIRE
------------------------------
INDUSTRIAL IMAGING CORPORATION
------------------------------
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned RETIREMENT PLAN's subscription to
purchase Investment Units of Industrial Imaging Corporation (the "Company") may
be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned RETIREMENT PLAN understands, however, that the
Company may present this Questionnaire to such parties as it deems appropriate
if called upon to establish that the proposed offer and sale of the Investment
Units is exempt from registration under the Securities Act of 1933, as amended,
or meets the requirements of applicable state securities or "blue sky" laws.
Further, the undersigned RETIREMENT PLAN understands that the Offering is
required to be reported to the Securities and Exchange Commission and to various
state securities or "blue sky" regulators.
I. PLEASE CHECK ANY OF THE FOLLOWING STATEMENTS, AS APPLICABLE
___ 1. The undersigned RETIREMENT PLAN certifies that it is an employee benefit
plan within the meaning of the Employee Retirement Income Security Act of 1974
("ERISA") and:
(a) the investment decisions are made by a plan fiduciary
as defined in Section 3(21) of ERISA that (i) is
either a bank, insurance company or registered
investment advisor or (ii) is a savings and loan
association; or
(b) The undersigned RETIREMENT PLAN has total assets in
excess of $5,000,000; or
E-1
<PAGE> 39
(c) The undersigned RETIREMENT PLAN is self-directed,
with investment decisions made solely by persons each
of whom satisfies at least one of the following
conditions:
(i) such person's individual net worth* or joint
net worth with his or her spouse exceeds
$1,000,000; or
(ii) such person had an individual income* in
excess of $200,000 in each of the two most
recent years and reasonably expects an
individual income in excess of $200,000 in
the current year; or
(iii) such person together with his or her spouse,
had a joint income* in excess of $300,000 in
each of the two most recent years and
reasonably expects a joint income in excess
of $300,000 in the current year.
___ 2. The undersigned RETIREMENT PLAN certifies that it is an employee benefit
plan, Keogh plan or Individual Retirement Account in which each participant
satisfies at least one of the following conditions:
(a) such person's individual net worth* or joint net
worth with his or her spouse exceeds $1,000,000; or
(b) such person had an individual income* in excess of
$200,000 in each of the two most recent years and
reasonably expects an individual income in excess of
$200,000 in the current year; or
(c) such person, together with his or her spouse, had a
joint income* in excess of $300,000 in each of the
two most recent years and reasonably expects a joint
income in excess of $300,000 in the current year.
- ------------------
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, a subscriber should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement
plans, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
E-2
<PAGE> 40
IF YOU CHECKED STATEMENT 1(c) OR STATEMENT 2 AND NOT STATEMENT 1(a) OR
STATEMENT 1(b), YOU MUST PROVIDE A LETTER SIGNED BY A PERSON DULY AUTHORIZED BY
THE RETIREMENT PLAN LISTING, AS APPLICABLE (I) THE NAMES OF THE PERSONS (OR
ENTITIES) MAKING THE INVESTMENT DECISIONS, OR (II) THE NAMES OF ALL OF THE
PARTICIPANTS IN THE PLAN AND THE REASON (UNDER STATEMENT 1(c) OR STATEMENT 2)
SUCH PERSON (OR ENTITY), QUALIFIES AS AN ACCREDITED INVESTOR (ON THE BASIS OF
NET WORTH, INDIVIDUAL INCOME, JOINT INCOME OR OTHERWISE), OR EACH SUCH PERSON
(OR ENTITY) MUST COMPLETE THE APPROPRIATE QUESTIONNAIRE (i.e. FOR AN INDIVIDUAL,
TRUST, PARTNERSHIP OR CORPORATION).
II. OTHER CERTIFICATIONS
By signing the Signature Page, the undersigned certifies the following:
(a) that the RETIREMENT PLAN's purchase of the Investment Units
will be solely for the RETIREMENT PLAN's own account and not
for the account of any other person or entity;
(b) that the RETIREMENT PLAN's governing documents duly authorize
the type of investment contemplated herein, and the
undersigned is authorized and empowered to make such
investment on behalf of the RETIREMENT PLAN.
(c) that one of the following is true and correct (check one):
___ (i) the RETIREMENT PLAN is a retirement plan whose income
from sources outside of the United States is includable
in its gross income for United States federal tax
purposes regardless of its connection with a trade or
business carried on in the United States.
___ (ii) the RETIREMENT PLAN is a retirement plan whose income
from sources outside the United States is not includable
in its gross income for United States federal income tax
purposes regardless of its connection with a trade or
business carried on in the United States.
E-3
<PAGE> 41
III. GENERAL INFORMATION
(a) PROSPECTIVE SUBSCRIBER (THE RETIREMENT PLAN)
Name:___________________________________________________________________________
Address:________________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Address for Correspondence
(if different):_________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number:_______________________________________________________________
(Area Code) (Number)
State in which Formed:__________________________________________________________
Date of Formation:______________________________________________________________
Taxpayer Identification Number:_________________________________________________
(b) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF
THE RETIREMENT PLAN
Name:___________________________________________________________________________
Position or Title:______________________________________________________________
IV. ADDITIONAL INFORMATION
THE RETIREMENT PLAN MUST ATTACH COPIES OF ALL DOCUMENTS GOVERNING THE
PLAN AS WELL AS ALL OTHER DOCUMENTS AUTHORIZING THE RETIREMENT PLAN TO INVEST IN
THE INVESTMENT UNITS. INCLUDE, AS NECESSARY, DOCUMENTS DEFINING PERMITTED
INVESTMENTS BY THE RETIREMENT PLAN, AND DEMONSTRATING AUTHORITY OF THE SIGNING
INDIVIDUAL TO ACT ON BEHALF OF THE PLAN. ALL DOCUMENTATION MUST BE COMPLETE AND
CORRECT.
V. SIGNATURE
The Signature Page to this Questionnaire is contained on page E-5,
entitled Retirement Plan Signature Page.
E-4
<PAGE> 42
RETIREMENT PLAN SIGNATURE PAGE
------------------------------
INDUSTRIAL IMAGING CORPORATION
------------------------------
Your signature on this RETIREMENT PLAN Signature Page evidences the
agreement by the RETIREMENT PLAN to be bound by the Questionnaire and the
Subscription Agreement.
1. The undersigned RETIREMENT PLAN represents that (a) the information contained
in this Questionnaire is complete and accurate and (b) the RETIREMENT PLAN will
notify the Company (contact at 508-937- 5400) immediately if any material change
in any of the information occurs prior to the acceptance of the undersigned
RETIREMENT PLAN's subscription and will promptly send the Company written
confirmation of such change.
2. The undersigned RETIREMENT PLAN hereby certifies that it has read and
understands this Subscription Agreement.
3. The undersigned RETIREMENT PLAN hereby represents and warrants that the
person signing this Subscription Agreement on behalf of the RETIREMENT PLAN has
been duly authorized to acquire the Investment Units and sign this Subscription
Agreement on behalf of the RETIREMENT PLAN and, further, that the undersigned
RETIREMENT PLAN has all requisite authority to purchase the Investment Units and
enter into this Subscription Agreement.
_____________________
Number of Investment
Units applied for
_____________________
Date
________________________________________
Name of Retirement Plan (Please Type or
Print)
By:_____________________________________
Signature
Name:___________________________________
(Please Type or Print)
Title:__________________________________
(Please Type or Print)
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
CONCURRED IN BY COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT
REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.
E-5
<PAGE> 1
EXHIBIT 10h
ISSUED TO: _____________________
INDUSTRIAL IMAGING CORPORATION
SUBSCRIPTION BOOKLET
In the event you decide not to participate in this offering
please return the Information Statement, the Confidential Overview
of Bridge Financing and the Subscription Agreement to the Company.
January 15, 1997
<PAGE> 2
SUBSCRIPTION INSTRUCTIONS
(Please Read Carefully)
NO PERSON WILL BE ACCEPTED AS A SUBSCRIBER PRIOR TO A CLOSING OF THE
OFFERING. THE COMPANY RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION, IN WHOLE OR
IN PART, OR TO ALLOT TO ANY PROSPECTIVE SUBSCRIBER LESS THAN THE AMOUNT
SUBSCRIBED FOR BY SUCH SUBSCRIBER. ANY REPRESENTATION TO THE CONTRARY IS
UNAUTHORIZED AND MUST NOT BE RELIED UPON.
I. THIS SUBSCRIPTION BOOKLET CONTAINS MATERIAL NECESSARY FOR YOU TO
PURCHASE ONE OR MORE UNITS, EACH UNIT CONSISTING OF ONE SUBORDINATED
PROMISSORY NOTE IN THE PRINCIPAL AMOUNT OF $50,000 AND 14,700 SHARES OF
COMMON STOCK. THIS MATERIAL IS ARRANGED IN THE FOLLOWING ORDER:
A. Overview of Bridge Financing;
B. Subscription Agreement;
C. Questionnaire for an INDIVIDUAL Subscriber;
D. The Promissory Note
The respective Questionnaires are designed to allow you to demonstrate
that you meet the minimum legal requirements relating to your subscription.
II. EACH SUBSCRIBER MUST READ AND COMPLETE THE SUBSCRIPTION AGREEMENT AND
ONE OF THE FIVE QUESTIONNAIRES. THE QUESTIONNAIRE AND THE SUBSCRIPTION
AGREEMENT CONTAIN REPRESENTATIONS RELATING TO YOUR SUBSCRIPTION.
Once you have completed the Subscription Agreement and the appropriate
Questionnaire, please return the entire Subscription Agreement and any
additional required documents (as described in the Questionnaire) to O'Connor,
Broude & Aronson at the address set forth below in Section IV. FAILURE TO COMPLY
WITH THE ABOVE INSTRUCTIONS WILL CONSTITUTE AN INVALID SUBSCRIPTION, WHICH, IF
NOT CORRECTED, WILL RESULT IN THE REJECTION OF YOUR SUBSCRIPTION REQUEST. EVEN
IF CORRECTED, THE DELAY MAY RESULT IN (1) THE ACCEPTANCE OF ANOTHER SUBSCRIBER
WHOSE SUBSCRIPTION AGREEMENT WAS INITIALLY RECEIVED BY O'CONNOR, BROUDE &
ARONSON AFTER YOURS OR (2) THE OFFERING BEING CLOSED WITHOUT YOUR SUBSCRIPTION
REQUEST BEING CONSIDERED BY THE COMPANY.
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<PAGE> 3
III. ENCLOSE A CERTIFIED OR BANK CHECK PAYABLE TO THE ORDER OF "O'CONNOR,
BROUDE & ARONSON - CLIENT FUND ACCOUNT FOR INDUSTRIAL IMAGING
CORPORATION" IN THE AMOUNT OF THE PAYMENT DUE UPON SUBSCRIPTION.
or
WIRE TRANSFER THE AMOUNT OF THE PAYMENT DUE UPON SUBSCRIPTION AS
FOLLOWS:
Cambridge Trust Company, 1336 Massachusetts Avenue, Cambridge,
Massachusetts, ABA number 011300595, for deposit to O'Connor,
Broude & Aronson Client Fund Account, number 57-240-3-01, in
favor of "Industrial Imaging Corporation."
PLEASE CONTACT STEVEN J. CAGNETTA, ESQUIRE, AT O'CONNOR, BROUDE &
ARONSON AT (617) 890-6600 BEFORE INITIATING THE WIRE TRANSFER.
IV. SEND ALL COMPLETED DOCUMENTS AND YOUR CHECK TO THE FOLLOWING ADDRESS:
O'Connor, Broude & Aronson
Bay Colony Corporate Center
950 Winter Street, Suite 2300
Waltham, Massachusetts 02154
Attention: Marguerite J. Hill, Esquire
V. QUESTIONS REGARDING COMPLETION OF SUBSCRIPTION DOCUMENTS SHOULD BE
DIRECTED TO:
O'Connor, Broude & Aronson
Bay Colony Corporate Center
950 Winter Street, Suite 2300
Waltham, Massachusetts 02154
Attention: Marguerite J. Hill, Esquire or
Steven J. Cagnetta, Esquire
Telephone: (617) 890-6600
PLEASE PRINT IN INK OR TYPE ALL INFORMATION
-ii-
<PAGE> 4
SUBSCRIPTION AGREEMENT
LIMITED OFFERING OF INVESTMENT UNITS
OF INDUSTRIAL IMAGING CORPORATION
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES
LAWS, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE REGULATORY
AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS AGREEMENT OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE
SECURITIES MAY NOT BE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED.
THE INFORMATION CONTAINED IN THIS AGREEMENT DOES NOT PURPORT TO BE ALL
INCLUSIVE OR TO CONTAIN ALL THE INFORMATION THAT A PROSPECTIVE SUBSCRIBER MAY
DESIRE IN INVESTIGATING THE COMPANY. EACH SUBSCRIBER MUST RELY ON THE
SUBSCRIBER'S OWN EVALUATION OF THE COMPANY AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED, IN MAKING AN INVESTMENT DECISION WITH
RESPECT TO THE SECURITIES. SEE "RISK FACTORS" CONTAINED IN THE INFORMATION
STATEMENT FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED IN
CONNECTION WITH THE PURCHASE OF THE SECURITIES.
THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY THE SECURITIES IN ANY STATE OR OTHER JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
EXCEPT AS OTHERWISE INDICATED, THIS AGREEMENT SPEAKS AS OF THE DATE
HEREOF. NEITHER THE DELIVERY OF THIS AGREEMENT NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY AFTER THE DATE HEREOF.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS AGREEMENT IN CONNECTION WITH
THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE PLACEMENT AGENT. EACH SUBSCRIBER WILL BE ENTITLED TO RELY SOLELY ON THOSE
REPRESENTATIONS
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<PAGE> 5
AND WARRANTIES WHICH MAY BE MADE TO IT IN ANY FINAL SUBSCRIPTION AGREEMENT
RELATING TO THE SECURITIES.
PROSPECTIVE SUBSCRIBERS ARE NOT TO CONSTRUE THE CONTENTS OF THIS
AGREEMENT AS LEGAL ADVICE. EACH SUBSCRIBER SHOULD CONSULT THEIR OWN ATTORNEY OR
BUSINESS ADVISOR AS TO THE LEGAL, TAX AND OTHER CONSIDERATIONS RELATING TO AN
INVESTMENT IN THE SECURITIES.
OFFERS AND SALES WILL ONLY BE MADE TO PERSONS WHOM THE COMPANY BELIEVES
TO BE "ACCREDITED INVESTORS" AS DEFINED IN REGULATION D, PROMULGATED UNDER THE
ACT WHO, EITHER ALONE OR WITH SUCH SUBSCRIBER REPRESENTATIVE, HAVE SUCH
KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT SUCH SUBSCRIBER
IS CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE PROSPECTIVE INVESTMENT. IT
IS EXPECTED THAT SUCH SECURITIES WOULD BE EXEMPT FROM REGISTRATION UNDER THE ACT
PURSUANT TO AN EXEMPTION FROM REGISTRATION CONTAINED IN SECTION 4(2) OF THE ACT
AND RULE 506 UNDER REGULATION D.
A SUBSCRIBER'S INVESTMENT IN THE SECURITIES PROPOSED UNDER THE TERMS OF
THIS OFFERING WILL BE SUBJECT TO CERTAIN RESTRICTIONS AS DESCRIBED MORE FULLY IN
THE TERMS OF THE OFFERING AND THE SUBSCRIPTION AGREEMENT. THESE SECURITIES ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, AND THE APPLICABLE STATE SECURITIES
LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. SUBSCRIBERS MUST EXPECT TO
BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE SECURITIES FOR AN INDEFINITE
PERIOD OF TIME.
THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED HEREBY.
CERTAIN PROVISIONS OF VARIOUS OF DOCUMENTS ARE SUMMARIZED IN THIS
AGREEMENT BUT PROSPECTIVE SUBSCRIBERS SHOULD NOT ASSUME THAT THESE SUMMARIES ARE
COMPLETE. SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO TEXT OF
THE ORIGINAL DOCUMENT WHICH WILL BE MADE AVAILABLE TO PROSPECTIVE SUBSCRIBERS BY
THE COMPANY UPON REQUEST.
BY ACCEPTANCE OF THIS AGREEMENT, PROSPECTIVE SUBSCRIBERS RECOGNIZE AND
ACCEPT THE NEED TO CONDUCT THEIR OWN THOROUGH INVESTIGATION AND DUE DILIGENCE
BEFORE CONSIDERING PURCHASING THE SECURITIES OFFERED HEREBY.
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<PAGE> 6
STATE SECURITIES NOTICES
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
FOR CONNECTICUT RESIDENTS
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER SECTION
36B-21 OF THE CONNECTICUT UNIFORM SECURITIES ACT AND, THEREFORE, CANNOT BE
RESOLD UNLESS THEY ARE REGISTERED UNDER SUCH ACT OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
FOR FLORIDA RESIDENTS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER
SECTION 517.061 OF THE FLORIDA SECURITIES ACT AND HAVE NOT BEEN REGISTERED UNDER
SAID ACT IN THE STATE OF FLORIDA.
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<PAGE> 7
INDUSTRIAL IMAGING CORPORATION
SUBSCRIPTION AGREEMENT
PRIVATE OFFERING OF UNITS CONSISTING
OF SUBORDINATED PROMISSORY NOTES
AND SHARES OF COMMON STOCK
SUBSCRIPTION AGREEMENT made as of the date set forth below between
Industrial Imaging Corporation, a publicly held Delaware corporation with its
principal offices at One Research Center, 847 Rogers Street, Lowell,
Massachusetts 01852 (the "Company") and the undersigned (the "Subscriber").
WHEREAS, the Company desires to issue an aggregate of up to $150,000 of
investment units (the "Investment Units"), each Investment Unit consisting of a
two year, 10% Subordinated Promissory Note in the principal amount of $50,000
(the "Notes") and 14,700 shares of Common Stock (the "Shares"), on the terms and
conditions hereinafter set forth and the Subscriber desires to acquire the
amount of Investment Units set forth herein (the "Offering").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
1. SUBSCRIPTION FOR INVESTMENT UNITS.
1.1 SUBSCRIPTION. Subject to the terms and conditions
hereinafter set forth, the Subscriber hereby subscribes for and agrees to
purchase from the Company such Investment Units as is set forth in Section
1.4(a) below at a purchase price equal to $50,000 per Investment Unit (the
"Purchase Price") and the Company agrees to sell such Investment Units to the
Subscriber for said Purchase Price. Except as provided under state securities
laws, this Subscription Agreement is irrevocable, provided that the
undersigned's obligations hereunder will terminate if this subscription is not
accepted by the Company by the Termination Date, as hereinafter defined.
Funds will be paid to the Company in accordance with the closing
provisions set forth herein and pursuant to the terms of the Company's
Confidential Overview of Bridge Financing dated as of January 15, 1997 (the
"Overview of Financing"). The Company reserves the unrestricted right to accept
subscriptions for a fraction of an Investment Unit or reject any subscription,
notwithstanding prior receipt by the Subscriber of notice of acceptance. The
Company may, in its discretion, increase the size of the Offering. If this
subscription is accepted in part and all other conditions are satisfied, any
amounts that have been tendered in excess of the payment for the Investment
Units allocated to the Subscriber will be returned without interest to the
Subscriber.
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<PAGE> 8
1.2 VALIDITY OF DOCUMENTS. The Company and the Escrow Agent may
rely, and shall be protected in acting, upon any papers or other documents that
may be submitted to either of them in connection with the Investment Units and
which are believed by them to be genuine and to have been signed or presented by
the proper party or parties, and neither the Company nor the Escrow Agent shall
have any liability or responsibility with respect to the form, execution, or
validity thereof.
1.3 PURCHASE PRICE. The Purchase Price is payable by (i) wire
transfer, or (ii) certified or bank check made payable to the "O'Connor, Broude
& Aronson - Client Fund Account for Industrial Imaging Corporation"
contemporaneously with the execution and delivery of this Subscription
Agreement.
The Purchase Price of the Investment Units shall be determined as
follows:
<TABLE>
<S> <C>
(a) Purchase Price of Each Investment Unit $ 50,000
(b) Number of Investment Units subscribed for: 3
--------
(c) Total Purchase Price
(the amount in (a) multiplied
by the amount in (b)) $150,000
--------
</TABLE>
1.4 USE OF PROCEEDS. Upon acceptance of this Subscription
Agreement by the Company, the Company may use such funds for working capital and
general corporate purposes, including reduction of trade payables and a $100,000
promissory note.
2. CONSUMMATION OF OFFERING OF INVESTMENT UNITS.
2.1 CLOSING DATE. The Company expects to hold one or more
closings (the "Closing") of this Offering, with the first Closing expected to be
held on January 16, 1997 and the final Closing being held on the Termination
Date (as hereinafter defined). This Offering of Investment Units shall terminate
upon the earlier of (i) the Company selling an aggregate of $150,000 in
Investment Units or (ii) January 31, 1997, unless extended or earlier terminated
by the Company in its sole discretion ((i) or (ii) is referred to as the
"Termination Date").
2.2 DELIVERY. Within fifteen (15) days following the Closing,
the Company will use its best efforts to deliver to each Subscriber a
certificate or certificates, in such denominations and registered in such name
or names as each Subscriber may designate by notice to the Company, representing
the Shares purchased by each Subscriber from the Company. Prior to the Closing,
each Subscriber shall have delivered to the Company payment of the Purchase
Price therefor by certified check or wire transfer to such Company account as
the Company shall designate. If, at the Closing, any of the Subscribers shall
have failed to tender the Purchase Price
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<PAGE> 9
for the Investment Units to be purchased by such Subscriber at the Closing or
any of the conditions specified herein shall not have been fulfilled to the
satisfaction of the Company, the Company shall, at its election, be relieved of
all of its obligations under this Agreement to such Subscriber. The Company
shall be under no obligation to accept this offer and to close this transaction
until the Closing.
2.3 FURTHER UNDERTAKINGS BY SUBSCRIBERS. Each Subscriber
undertakes to execute and deliver to the Company, within five (5) days after
receipt of the Company's request therefor, such further designations,
authorizations, and other instruments as the Company deems necessary or
appropriate to carry out the provisions of this Agreement.
2.4 DISCRETION TO USE FUNDS. The Company shall be entitled to
use the funds received from the sale of the Investment Units immediately upon
its acceptance of the subscription contemplated herein. No minimum amount of
Investment Units shall be required to be sold (i) by the Company in the
Offering, or (ii) before a Closing occurs.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Subscriber as follows:
3.1 DUE ORGANIZATION. It is a corporation duly organized,
validly existing, and in good corporate standing under the laws of the State of
Delaware.
3.2 SALE OF SECURITIES. The Notes and Shares included in each
Investment Unit will be duly authorized and enforceable.
4. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER. The Subscriber
hereby represents and warrants as follows:
4.1 RELIANCE ON REPRESENTATIONS AND WARRANTIES. The Subscriber
acknowledges that the Company is offering the Investment Units in reliance upon
the representations, warranties, and other information set forth by the
Subscriber. The Subscriber undertakes to notify the Company immediately of any
changes in any of the representations, warranties, and other information
contained herein.
4.2 SUBSCRIBER'S AUTHORITY. The Subscriber represents that he
has full legal power and authority to enter into this Agreement and to purchase
the Investment Units.
4.3 RISKS ASSOCIATED WITH OFFERING. The Subscriber recognizes
that the purchase of the Investment Units involves a high degree of risk in that
(i) he may not be able to liquidate his investment; (ii) transferability is
extremely limited; and (iii) in the event of a disposition, he could sustain the
loss of his entire investment. In addition, the Subscriber recognizes additional
risks, including, but not limited to, those set forth in the Overview of
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<PAGE> 10
Financing and the Information Statement of the Company, dated as of November 14,
1996 (the "Information Statement"), which risks the Subscriber has carefully
read and considered.
4.4 INVESTMENT REPRESENTATIONS. The Subscriber represents that
he is acquiring the Investment Units hereunder for his own account and not with
a view to reselling or otherwise distributing such securities in violation of
any Federal or state securities laws and understands and agrees that the
securities to be issued hereunder are restricted on transfer and must be held
unless (i) they are registered under the Securities Act of 1933, as amended,
(the "Act") or (ii) an exemption from registration is available, and the Company
has received an opinion of counsel, in form and substance satisfactory to it, to
such effect. There can be no assurance that the Company will make available to
the public at any time in the future information necessary to enable security
holders to make routine sales of securities pursuant to Rule 144 under the Act.
4.5 SOPHISTICATION AND ABILITY TO RISK LOSS OF INVESTMENT. The
Subscriber acknowledges that he has prior investment experience, including
investment in non-listed and non-registered securities, or he has employed the
services of an investment advisor, attorney or accountant to read all of the
documents furnished or made available by the Company both to him and to all
other prospective subscribers in connection with the Offering and to evaluate
the merits and risks of such an investment on his behalf; that he recognizes the
highly speculative nature of this investment; that a noteholder, including the
Subscriber, may not at any time demand the withdrawal of capital from the
Company; and that he is able to bear the economic risk he hereby assumes,
namely, of holding the Investment Units for an indefinite period of time and of
losing his entire investment. The Subscriber represents that his overall
commitment to investments that are not readily marketable is not excessive in
view of his net worth and financial circumstances and the purchase of the
Investment Units will not cause such commitment to become excessive, and that
the investment is a suitable one for the Subscriber.
4.6 ACCESS TO INFORMATION. The Subscriber acknowledges receipt
of the Overview of Financing and the Information Statement, which contains
certain audited and unaudited financial statements of the Company. The
Subscriber hereby represents and acknowledges that he has carefully read the
Overview of Financing and Information Statement furnished by the Company during
the course of this transaction and all additional information regarding the
Company that he had requested or desired to know; that all documents which could
be reasonably provided have been made available for his inspection and review;
that he has been afforded the opportunity to ask questions of and receive
answers from duly authorized officers or other representatives of the Company
concerning the terms and conditions of the Offering, and that he has received
any additional information that he has requested. The Subscriber further
represents and acknowledges that because certain of the financial statements and
financial information included in the Information Statement are unaudited, that
such statements and information are subject to change and that the final
financial statements may report the Company's results of operations for and
financial condition as of the respective dates of such statements to be less
than and/or worse than the financial statements provided.
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<PAGE> 11
4.7 FINDINGS OR RECOMMENDATIONS. The Subscriber is aware that
neither the Securities and Exchange Commission (the "SEC") nor the Attorney
General of the State of Delaware nor any other federal or state agency has made
any findings or determination as to the fairness of the Investment Units, nor
has any recommendation or any endorsement of the Investment Units has been made
and the Investment Units offered are not registered under federal, Delaware or
any other state law and the securities are restricted securities within the
meaning of the U.S. federal securities laws because of the Company's
representations that this is intended to be a non-public offering pursuant to
Section 4(2) and/or 4(6) of the Act.
4.8 REGISTRATION EXEMPTION. The Subscriber understands that the
Investment Units have not been registered under the Act by reason of a claimed
exemption under the provisions of the Act which depends, in part, upon his
investment intention. In this connection, the Subscriber understands that it is
the position of the SEC that the statutory basis for such exemption would not be
present if his representation merely meant that his present intention was to
hold such securities for a short period, such as the capital gains period of tax
statutes, for a deferred sale, for a market rise, assuming that a market
develops, or for any other fixed period. The Subscriber realizes that, in the
view of the SEC's position, a purchase now with an intent to resell would
represent a purchase with an intent inconsistent with his representation to the
Company, and the SEC might regard such a sale or disposition as a deferred sale
to which the exemption is not available.
4.9 LIMITED AND NO PUBLIC MARKET FOR SECURITIES. The Subscriber
understands that no public market for the Notes exists and no public market can
be expected to develop for the Notes. The Company's Common Stock trades on the
NASDAQ System. The Subscriber understands that trading of the Company's Common
Stock has been limited and no assurance can be given that an active public
trading market for the Common Stock will develop, or if developed, be sustained.
The Subscriber understands that it may not be possible to liquidate an
investment in the Investment Units on an emergency basis. The Subscriber
understands that the Company makes no representation or warranty regarding its
fulfillment in the future of any reporting requirements under the Securities
Exchange Act of 1934, as amended, or its dissemination to the public of any
current financial or other information concerning the Company, if required as
one of the conditions of the availability of any exemption. The Subscriber
understands and hereby acknowledges that the Company is under no obligation to
register the Investment Units under the Act.
4.10 LEGENDS. The Subscriber consents to the placement of any
legends required by state securities laws and of a legend, in a form
satisfactory to the Company's counsel, on any certificate or other document
evidencing the Notes or the Shares indicating that they have not been registered
under the Act and setting forth or referring to the restrictions on
transferability and sale thereof. The Subscriber is aware that the Company will
make a notation in its appropriate records with respect to the restrictions on
the transferability of such securities.
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<PAGE> 12
4.11 UNREGISTERED SECURITIES. The Subscriber understands that the
Notes and the Shares are not registered under the Act, or the securities laws of
any state, and that the Company is under no obligation to so register them. As
such, the Notes and the Shares will be considered "restricted securities" and
may not be transferred unless registered under the Act or an exemption under the
Act and the relevant state securities laws is available. The Company may, if it
desires, permit the transfer out of the Subscriber's name of the Investment
Units only if the Subscriber's request for transfer is accompanied by an opinion
of counsel reasonably satisfactory to the Company that neither the sale nor the
proposed transfer results in a violation of the Act or any applicable state
"blue sky" laws (collectively, the "Securities Laws"). The Subscriber agrees to
indemnify, and hold the Company and its directors, officers, and controlling
persons and their respective heirs, representatives, successors, and assigns
harmless and to indemnify them against all liabilities, costs, and expenses
incurred by them as a result of any misrepresentation made by Subscriber
contained herein or in the Confidential Subscriber Questionnaire (attached
hereto and made a part hereof) or material breach of an agreement or
representation made by the Subscriber herein or any sale or distribution by the
Subscriber in violation of any Securities Laws.
4.12 DECISION TO INVEST. In making his decision to purchase the
Investment Units herein subscribed for, the Subscriber is not relying on any
representations or warranties from the Company or any of its officers,
directors, affiliates, employees or agents, other than the information provided
by the Company to him in this Offering. In addition, the Subscriber represents
that he is not purchasing any Investment Units as a result of or subsequent to
(i) any advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio or
(ii) any seminar or meeting whose attendees, including the Subscriber, were
invited as a result of, subsequent to, or pursuant to, any general solicitation.
4.13 NO PROTECTION OF SUBSCRIBER'S INTERESTS. The Subscriber has
been advised that the Company has not retained any independent professionals to
review or comment on this Offering or otherwise protect the interests of the
Subscriber. Although the Company has retained its own counsel, neither such firm
nor any other firm has acted on behalf of the Subscriber, and any Subscriber of
the Investment Units offered hereby should not rely on the firm so retained by
the Company with respect to any matters herein described.
4.14 SUBSCRIBER'S FINANCIAL CONDITION. The Subscriber has
completed the accompanying confidential Subscriber Questionnaire and has
delivered it herewith and represents and warrants that it accurately sets forth
his financial condition on the date hereof. The Subscriber has no reason to
expect there will be any material adverse change in his financial condition and
will immediately advise the Company of any such changes occurring prior to any
Closing or termination of the Offering.
4.15 NO REPRESENTATIONS ON COMPANY'S RESULTS OF OPERATIONS. There
has never been represented, guaranteed, or warranted to the Subscriber by any
broker, the Company, its officers, directors, agents, or employees or any other
person, expressly or by implication (i)
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<PAGE> 13
the percentage of profits and/or amount of or type of consideration, profit or
loss to be realized, if any, as a result of the Company's operations; and (ii)
that the past performance or experience on the part of the management of the
Company, or of any other person, will in any way result in the overall
profitable operations of the Company.
4.16 NO BROKERAGE COMMISSIONS. The Subscriber represents the he
has taken no action that would give rise to any claim by any person for
brokerage commissions, finders' fees or the like relating to this Subscription
Agreement or the transactions contemplated hereby (other than commissions to be
paid by the Company to the Placement Agent).
4.17 ENTITY ORGANIZATION AND AUTHORITY. The Subscriber represents
that if the Subscriber is a corporation, partnership, association, joint stock
company, trust, unincorporated organization or other entity, such entity was not
formed for the specific purpose of acquiring the Investment Units, such entity
is duly organized, validly existing and in good standing under the laws of the
state of its organization, the consummation of the transactions contemplated
hereby is authorized by, and will not result in, a violation of state law or its
charter or other organizational documents, such entity has full power and
authority to execute and deliver this Agreement and all other related agreements
or certificates and to carry out the provisions hereof and thereof and to
purchase and hold the securities constituting the Investment Units. The
Subscriber also represents that (i) the execution and delivery of this Agreement
has been duly authorized by all necessary action; (ii) this Agreement has been
duly executed and delivered on behalf of such entity; and (iii) is a legal,
valid and binding obligation of such entity.
4.18 REPRESENTATIVE OR FIDUCIARY CAPACITY. The Subscriber
warrants that if he is executing this Agreement in a representative or fiduciary
capacity, he has full power and authority to execute and deliver this Agreement
in such a capacity and on behalf of the subscribing individual, ward,
partnership, trust estate, corporation or other entity for whom the Subscriber
is executing this Agreement, and such individual, ward, partnership, trust,
estate, corporation or other entity has full right and power to perform pursuant
to this Agreement and make an investment in the Company, and this Agreement
constitutes a legal, valid and binding obligation of such entity.
4.19 REVIEW OF SUBSCRIPTION AGREEMENT. The Subscriber understands
that the Company will review this Agreement and is hereby given authority by the
undersigned to call his bank or place of employment or otherwise review the
financial standing of the Subscriber; and it is further agreed and understood
that the Company reserves the unrestricted right to reject or limit any
subscription and to close the Offering at any time.
-7-
<PAGE> 14
5. REGISTRATION OF SHARES.
5.1 REGISTRATION RIGHTS.
(a) At any time within nine (9) months after the closing of
an underwritten public offering in which the Company raises gross proceeds of at
least $4,000,000 and provided that the Company is eligible to use a Form S-3
registration statement, the Company will use its best reasonable efforts to
prepare and file with the Securities and Exchange Commission a registration
statement on Form S-3 (or any successor form) relating to the Shares sold in
this Offering. Other selling security holders may participate in this
registration at the sole option of the Company. In addition, the Company may, in
its sole discretion, at any time and after notice to the Subscribers, elect to
register all of such Shares on a Form SB-2 or Form S-3 (or other appropriate
form) in connection with any other registration statement or on a stand-alone
basis.
(b) If permitted by applicable law and regulation, the
Company at the request of the holders owning a majority of the Shares, shall
file such amendments and/or supplements to such registration statement, and,
subject to this Section 5 hereof, take such other steps as may be required to
maintain such registration statement in effect, and to keep the information
therein current, until the earlier of the sale of all of the Shares included in
the registration statement or the expiration of nine (9) months from the
effective date of such registration statement.
(c) The Company will use its reasonable efforts to furnish
to the security holders participating in such registration (the "Selling
Security Holders") and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities.
(d) In connection with any registration statement referred
to in Section 6 of this Agreement, Subscriber will furnish to the Company such
information as the Company may reasonably require from the Subscriber for
inclusion in the registration statement (and the prospectus included therein).
(e) The Company's obligations under this Agreement shall be
conditioned upon the Subscriber executing and delivering to the Company an
appropriate agreement, if necessary in the reasonable opinion of counsel to the
Company, in form reasonably satisfactory to counsel for the Company, that it
will comply with all anti-stabilization, manipulation, and similar provisions of
Section 10 of the 1934 Act, and any rules promulgated thereunder and will
furnish to the Company information about sales made in such public offering.
(f) The Company, at its expense, shall cause all of the
Shares included in a registration statement referred to in Section 5 hereof to
be qualified under the laws of such
-8-
<PAGE> 15
reasonable number of jurisdictions, as the Company may reasonably designate, and
the Company will continue such qualification in effect for such period of time
not to exceed nine (9) months from the effective date of the registration
statement referred to in Section 5 which relates to such Shares, provided,
however, that the Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified.
(g) The Company shall not be required to effect any
registration within three months after the effective date of any other
underwritten registration statement of the Company. The Company shall have the
right to designate the managing underwriter in respect of a public offering
pursuant to this Section 5.1.
(h) If at the time the Company is registering the Shares
pursuant to this subsection 5.1, the Company is engaged or has fixed
demonstrable plans to engage within ninety (90) days of the time of the request
in an underwritten public offering (other than on a Form S-4 or S-8) as to which
the holders may include Common Stock pursuant to subsection 5.1 or is engaged in
any other activity which, in the good faith determination of the Company's Board
of Directors, would be adversely affected by the registration to the material
detriment of the Company, then the Company may, at its option (i) refuse to
register the Shares or (ii) direct that if the managing underwriter agrees and
the Company effectuates the registration, the holders of the Shares shall agree
not to publicly sell such registered Shares for such period of time as requested
by the underwriter managing the public offering or by the Company's Board of
Directors.
5.2 EXPENSES.
(a) With respect to the registration right granted in
Section 5.1 hereof, all fees, costs and expenses of an incidental to such
registration, inclusion and public offering (as specified in paragraph (b)
below) in connection therewith shall be borne by the Company, provided, however,
that any Selling Security Holders participating in such registration shall bear
their pro rata share of the underwriting discount and commissions and transfer
taxes, if any.
(b) The fees, costs and expenses of registration to be
borne by the Company as provided in paragraph (a) above shall include, without
limitation, all registration, filing, and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered and qualified (except as provided in 5.2(a) above). Fees and
disbursements of counsel and accountants for the selling security holders and
any other expenses incurred by the selling security holders not expressly
included above shall be borne by the Selling Security Holders.
-9-
<PAGE> 16
6. MISCELLANEOUS
6.1 NOTICES. Any notice or other communication given hereunder
shall be deemed sufficient if in writing and sent by registered or certified
mail, return receipt requested, addressed to the Company, at its registered
office, One Lowell Research Center, 847 Rogers Street, Lowell, Massachusetts
01852, Attention: Juan J. Amodei, Ph.D., President, with a copy to O'Connor,
Broude & Aronson, 950 Winter Street, Suite 2300, Waltham, Massachusetts 02154,
Attention: Marguerite J. Hill, Esquire, and to the Subscriber at his address
indicated on the last page of this Subscription Agreement. Notices shall be
deemed to have been given on the date of mailing, except notices of change of
address, which shall be deemed to have been given when received.
6.2 MODIFICATIONS. This Subscription Agreement shall not be
changed, modified or amended except by a writing signed by the parties to be
charged, and this Subscription Agreement may not be discharged except by
performance in accordance with its terms or by a writing signed by the party to
be charged.
6.3 BINDING EFFECT; ENTIRE AGREEMENT. This Subscription
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors, and assigns.
This Subscription Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and merges and supersedes
all prior discussions, agreements, and understandings of any and every nature
among them.
6.4 GOVERNING LAW. This Subscription Agreement and its validity,
construction and performance shall be governed in all respects by the laws of
the Commonwealth of Massachusetts, without regard to its conflict of laws
principles. Subscriber agrees that any disputes arising with respect to or in
connection with this Agreement shall be finally decided in accordance with the
rules of arbitration.
6.5 USE OF SPEECH. All pronouns contained herein and any
variations thereof, shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the parties may require.
6.6 HEADINGS. Headings contained in this Agreement are only as a
matter of convenience and in no way define, limit, extend, or describe the scope
of this Agreement or the intent of any provisions hereof.
6.7 UNENFORCEABILITY. If any provision of this Agreement is or
becomes or is deemed invalid, illegal, or unenforceable in any jurisdiction, to
the maximum extent permissible, such provision shall be deemed amended to
conform to applicable laws so as to be materially altering the intention of the
parties, it shall be stricken and the remainder of this Agreement shall remain
in full force and effect.
-10-
<PAGE> 17
6.8 ASSIGNMENT. The Subscribers may not assign this Agreement or
its rights hereunder without the Company's written consent.
6.9 MULTIPLE SUBSCRIBERS. If more than one person is signing
this Agreement, each representation, warranty, and undertaking stated herein
shall be the joint and several representation, warranty, and undertaking of each
such person. Notwithstanding the foregoing, no Subscriber shall be liable with
respect to any representation, warranty or undertaking of any other Subscriber
who signed a separate Subscription Agreement. The Subscribers understand the
meaning and legal consequences of the representations and warranties contained
in this Agreement.
6.10 SUBMISSION TO JURISDICTION. Each of the parties submits to
the jurisdiction of any state or federal court sitting in the Commonwealth of
Massachusetts, in any action or proceeding arising out of or relating to this
Agreement and offering and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Each party also agrees
not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each of the parties waives any defense or
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
party with respect thereto.
6.11 BLUE SKY QUALIFICATION. The right to purchase Investment
Units under this Agreement is expressly conditioned upon the exemption from
qualification of the offer and sale of the Investment Units from applicable
federal and state securities laws. The Company shall not be required to qualify
this transaction under the securities laws of any jurisdiction and, should
qualification be necessary, the Company shall be released from any and all
obligations to maintain its offer, and may rescind any sale contracted, in the
jurisdiction.
6.12 CONFIDENTIALITY. The Subscriber acknowledges and agrees that
any information or data it has acquired from or about the Company, not otherwise
properly in the public domain, was received in confidence. The Subscriber agrees
not to divulge, communicate or disclose, except as may be required by law or for
the performance of this Agreement, or use to the detriment of the Company or for
the benefit of any other person or persons, or misuse in any way, any
confidential information of the Company, including any scientific, technical,
trade or business secrets of the Company and any scientific, technical, trade or
business materials that are treated by the Company as confidential or
proprietary, including, but not limited to, ideas, discoveries, inventions,
developments and improvements belonging to the Company and confidential
information obtained by or given to the Company about or belonging to third
parties.
6.13 SURVIVAL. The Subscriber's representations and warranties
made in this Agreement shall survive the execution and delivery of this
Agreement and of the Investment Units.
-11-
<PAGE> 18
6.14 EXPENSES. Each of the parties hereto shall pay its own fees
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby, whether or not the transactions contemplated
hereby are consummated.
6.15 COUNTERPARTS. This Agreement may be executed simultaneously
in any number of counterparts, each of which when so executed and delivered
shall be taken to be an original; but such counterparts shall together
constitute one and the same document binding all parties, notwithstanding that
all parties are not signatories to the same counterpart. Upon the execution and
delivery of this Subscription Agreement by the Subscriber, this Subscription
Agreement shall become a binding obligation of the Subscriber with respect to
the purchase of Investment Units as herein provided; subject, however, to the
right hereby reserved to the Company to enter into the same agreements with
other subscribers and to add and/or to delete other persons as subscribers.
-12-
<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of this ___ day of January, 1997.
By: ____________________________
________________________________
Street Address
________________________________
City, State, Zip Code
ACCEPTED:
INDUSTRIAL IMAGING CORPORATION
By: __________________________
Juan J. Amodei, Ph.D.
President
Date: ________________________
-13-
<PAGE> 20
IMPORTANT: Subscriber Name: ________________________
Please Complete Booklet No.:
INDIVIDUAL SUBSCRIBER QUESTIONNAIRE
INDUSTRIAL IMAGING CORPORATION
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned's subscription to purchase Investment
Units of Industrial Imaging Corporation (the "Company") may be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned understands, however, that the Company may
present this Questionnaire to such parties as it deems appropriate if called
upon to establish that the proposed offer and sale of the Shares is exempt from
registration under the Securities Act of 1933, as amended, or meets the
requirements of applicable state securities or "blue sky" laws. Further, the
undersigned understands that the Offering is required to be reported to the
Securities and Exchange Commission and to various state securities or "blue sky"
regulators.
IF YOU ARE PURCHASING INVESTMENT UNITS WITH YOUR SPOUSE, YOU MUST BOTH
SIGN THE SIGNATURE PAGE (PAGE A-5).
IF YOU ARE PURCHASING INVESTMENT UNITS WITH ANOTHER PERSON NOT YOUR
SPOUSE, YOU MUST EACH FILL OUT A SEPARATE QUESTIONNAIRE. Please make a photocopy
of pages A-1 to A-5 and return both completed questionnaires to the Company in
the same envelope.
I. PLEASE INDICATE DESIRED TYPE OF OWNERSHIP OF INVESTMENT UNITS
___ Individual
___ Joint Tenants (rights of survivorship)
___ Tenants in Common (no rights of survivorship)
A-1
<PAGE> 21
II. PLEASE CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TO YOU
___ 1. I have an individual net worth* or joint net worth with my
spouse in excess of $1,000,000.
___ 2. I have had an individual income* in excess of $200,000 in each
of the two most recent years and I reasonably expect an
individual income in excess of $200,000 for the current year.
NOTE: IF YOU ARE BUYING JOINTLY WITH YOUR SPOUSE, YOU MUST
EACH HAVE AN INDIVIDUAL INCOME IN EXCESS OF $200,000 IN EACH
OF THESE YEARS IN ORDER TO CHECK THIS BOX.
___ 3. My spouse and I have had a joint income* in excess of $300,000
in each of the two most recent years and I reasonably expect a
joint income in excess of $300,000 for the current year.
III. OTHER CERTIFICATIONS
By signing the Signature Page, I certify the following (or, if I am
purchasing Investment Units with my spouse as co-owner, each of us certifies the
following):
(a) that I am at least 21 years of age;
(b) that my purchase of Investment Units will be solely for my own
account and not for the account of any other person (other than my
spouse, if co-owner);
(c) that the name, home address and social security number or taxpayer
identification number as set forth in this Questionnaire are true,
correct and complete; and
(d) that one of the following is true and correct (check one):
Spouse, if
Subscriber Co-Owner
- ---------- ----------
___ ___ (i) I am a United States citizen or resident of the United
States for United States federal income tax purposes.
___ ___ (ii) I am neither a United States citizen nor a resident of
the United States for United States federal income tax
purposes.
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, a subscriber should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited
A-2
<PAGE> 22
partner in any limited partnership, deductions claimed for depletion,
contributions to IRA or Keogh retirement plans, alimony payments and any amount
by which income from long-term capital gains has been reduced in arriving at
adjusted gross income.
IV. GENERAL INFORMATION
(a) PERSONAL INFORMATION.
SUBSCRIBER
Name: __________________________________________________________________________
________________________________________________________________________________
Social Security or Taxpayer Identification Number: _____________________________
________________________________________________________________________________
Residence Address: _____________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Residence Telephone Number: ____________________________________________________
(Area Code) (Number)
Business Address: ______________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Business Telephone Number: _____________________________________________________
(Area Code) (Number)
I prefer to have correspondence sent to: ____ Residence ____ Business
A-3
<PAGE> 23
SPOUSE, IF CO-OWNER
Name: __________________________________________________________________________
________________________________________________________________________________
Social Security or Taxpayer Identification Number: _____________________________
________________________________________________________________________________
Residence Address: _____________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Residence Telephone Number (if different
from Subscriber's):_________________________________
(Area Code) (Number)
Business Address: ______________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
________________________________________________________________________________
Business Telephone Number (if different
from Subscriber's):_________________________________
(Area Code) (Number)
I prefer to have correspondence sent to: ____ Residence ____ Business
V. SIGNATURE
The Signature Page to this Questionnaire is contained on page A-5,
entitled Individual Signature Page.
A-4
<PAGE> 24
INDIVIDUAL SIGNATURE PAGE
INDUSTRIAL IMAGING CORPORATION
Your signature on this Individual Signature Page evidences your
agreement to be bound by the Questionnaire and the Subscription Agreement.
1. The undersigned represents that (a) he/she has read and understands
this Subscription Agreement, (b) the information contained in this Questionnaire
is complete and accurate and (c) he/she will telephone the Company (contact at
508-937-5400) immediately if any material change in any of this information
occurs before the acceptance of his/her subscription and will promptly send the
Company written confirmation of such change.
______________________________________
Number of Investment Units applied for Date: ___________________________
_________________________________
Name (Please Type or Print)
_________________________________
Signature
_________________________________
Name of Spouse if Co-Owner
(Please Type or Print)
_________________________________
Signature of Spouse if Co-Owner
IF YOU ARE PURCHASING INVESTMENT UNITS WITH YOUR SPOUSE, YOU MUST BOTH
SIGN THE SIGNATURE PAGE (PAGE A-5).
IF YOU ARE PURCHASING INVESTMENT UNITS WITH ANOTHER PERSON NOT YOUR
SPOUSE, YOU MUST EACH FILL OUT A SEPARATE QUESTIONNAIRE. Please make a photocopy
of pages A-1 to A-5 and return both completed questionnaires to the Company in
the same envelope.
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
CONCURRED IN BY COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT
REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.
A-5
<PAGE> 25
IMPORTANT: Subscriber Name: ________________________
Please Complete Booklet No.:
TRUST QUESTIONNAIRE
INDUSTRIAL IMAGING CORPORATION
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned TRUST's subscription to purchase
Investment Units of Industrial Imaging Corporation (the "Company") may be
accepted.
NOTE: RETIREMENT PLANS SHOULD COMPLETE THE QUESTIONNAIRE ON PAGES E-1 TO E-4.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned TRUST understands, however, that the Company may
present this Questionnaire to such parties as it deems appropriate if called
upon to establish that the proposed offer and sale of the Investment Units is
exempt from registration under the Securities Act of 1933, as amended, or meets
the requirements of applicable state securities or "blue sky" laws. Further,
the undersigned TRUST understands that the Offering is required to be reported
to the Securities and Exchange Commission and to various state securities or
"blue sky" regulators.
I. PLEASE CHECK STATEMENTS 1 AND 2 BELOW, AS APPLICABLE
___ 1. (a) the TRUST has total assets in excess of $5,000,000; and
(b) the TRUST was not formed for the specific purpose of
acquiring the Investment Units;
(c) the purchase by the TRUST is directed by a person who has
such knowledge and experience in financial and business
matters that he/she is capable of evaluating the merits and
risks of an investment in the Investment Units; and
B-1
<PAGE> 26
(d) the purchase by the TRUST is directed by a person who has
such knowledge and experience in financial and business
matters that he/she is capable of evaluating the merits and
risks of an investment in the Investment Units.
2. The grantor of the TRUST may revoke the TRUST at any time; the
grantor retains sole investment control over the assets of the trust AND
(a) the grantor is a natural person whose individual net worth*
or joint net worth with the grantor's spouse exceeds
$1,000,000; or
(b) the grantor is a natural person who had an individual
income* in excess of $200,000 in each of the two most recent
years and who reasonably expects an individual income in
excess of $200,000 in the current year; or
(c) the grantor is a natural person who, together with his or
her spouse, has had a joint income* in excess of $300,000 in
each of the two most recent years and who reasonably expects
a joint income in excess of $300,000 in the current year.
IF YOU CHECKED STATEMENT 2 IN SECTION I AND DID NOT CHECK STATEMENT 1,
THE GRANTOR MUST PROVIDE A COMPLETED INDIVIDUAL SUBSCRIBER QUESTIONNAIRE (PAGES
A-1 TO A-5) FOR EACH GRANTOR.
II. OTHER CERTIFICATIONS
By signing the Signature Page, the undersigned certifies the following:
(a) that the TRUST's purchase of the Investment Units will be solely
for the TRUST's own account and not for the account of any other
person;
(b) that the TRUST's purchase of the Investment Units is within the
investment powers and authority of the TRUST (as set forth in the
declaration of trust or other governing instrument) and that all
necessary consents, approvals and authorizations for such purchase
have been obtained and that each person who signs the Signature
Page has all requisite power and authority as trustee to execute
this Questionnaire and the Subscription Agreement on behalf of the
TRUST;
(c) that the TRUST has not been established in connection with either
(i) an employee benefit plan (as defined in Section 3(3) of
ERISA), whether or not subject to the provisions of Title I of
ERISA, or (ii) a plan described in Section 4975(e)(i) of the
Internal Revenue Code;
B-2
<PAGE> 27
(d) that the TRUST's name, address of principal office, place of
formation and taxpayer identification number as set forth in this
Questionnaire are true, correct and complete; and
(e) that one of the following is true and correct (check one):
___ (i) the TRUST is an estate or trust whose income from sources
outside of the United States is includable in its gross
income for United States federal tax purposes regardless of
its connection with a trade or business carried on in the
United States.
___ (ii) the TRUST is an estate or trust whose income from sources
outside the United States is not includable in its gross
income for United States federal income taxes purposes
regardless of its connection with a trade or business
carried on in the United States.
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, a subscriber should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement
plans, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
III. GENERAL INFORMATION
(a) PROSPECTIVE SUBSCRIBER (THE TRUST)
Name: __________________________________________________________________________
Address: _______________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
B-3
<PAGE> 28
Address for Correspondence (if different): _____________________________________
________________________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number: ______________________________________________________________
(Area Code) (Number)
State in which Formed: _________________________________________________________
Date of Formation: _____________________________________________________________
Taxpayer Identification Number: ________________________________________________
(b) TRUSTEES WHO ARE EXECUTING THIS QUESTIONNAIRE ON BEHALF OF
THE TRUST
Name(s) of Trustee(s): _________________________________________________________
IV. ADDITIONAL INFORMATION
A TRUST MUST ATTACH A COPY OF ITS DECLARATION OF TRUST OR OTHER
GOVERNING INSTRUMENT, AS AMENDED, AS WELL AS ALL OTHER DOCUMENTS THAT AUTHORIZE
THE TRUST TO INVEST IN THE INVESTMENT UNITS. ALL DOCUMENTATION MUST BE COMPLETE
AND CORRECT.
V. SIGNATURE
The Signature Page to this Questionnaire is contained on page B-5,
entitled Trust Signature Page.
B-4
<PAGE> 29
TRUST SIGNATURE PAGE
INDUSTRIAL IMAGING CORPORATION
Your signature on this TRUST Signature Page evidences the agreement by
the Trustee(s), on behalf of the TRUST, to be bound by the Questionnaire and the
Subscription Agreement.
1. The undersigned represent that (a) the information contained in this
Questionnaire is complete and accurate and (b) the TRUST will notify the Company
(contact at 508-937-5400) immediately if any material change in any of this
information occurs before the acceptance of the TRUST's subscription and will
promptly send the Company written confirmation of such change.
2. The undersigned Trustees hereby certify that they have read and
understand this Subscription Agreement.
3. The undersigned TRUST hereby represents and warrants that the persons
signing this Subscription Agreement on behalf of the TRUST are duly authorized
to acquire the Investment Units and sign this Subscription Agreement on behalf
of the TRUST and, further, that the undersigned TRUST has all requisite
authority to purchase such Investment Units and enter into this Subscription
Agreement.
______________________________________
Number of Investment Units applied for Date: ________________________________
Title of Trust: ______________________
(Please Type or Print)
By: __________________________________
Signature of Trustee
Name of Trustee: _____________________
(Please Type or Print)
By: __________________________________
Signature of Co-Trustee
Name of
Co-Trustee: _______________________
(Please Type or Print)
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
CONCURRED IN BY COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT
REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.
B-5
<PAGE> 30
IMPORTANT: Subscriber Name: ________________________
Please Complete Booklet No.:
PARTNERSHIP QUESTIONNAIRE
INDUSTRIAL IMAGING CORPORATION
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned PARTNERSHIP's subscription to
purchase Investment Units of Industrial Imaging Corporation (the "Company") may
be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned PARTNERSHIP understands, however, that the
Company may present this Questionnaire to such parties as it deems appropriate
if called upon to establish that the proposed offer and sale of the Investment
Units is exempt from registration under the Securities Act of 1933, as amended,
or meets the requirements of applicable state securities or "blue sky" laws.
Further, the undersigned PARTNERSHIP understands that the Offering is
required to be reported to the Securities and Exchange Commission and to various
state securities or "blue sky" regulators.
I. PLEASE CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TO THE PARTNERSHIP
___ 1. Each of the partners of the undersigned PARTNERSHIP is able to
certify that such partner meets at least one of the following conditions:
(a) The partner is a natural person whose individual net worth* or
joint net worth with his or her spouse exceeds $1,000,000.
(b) The partner is a natural person whose individual income* was in
excess of $200,000 in each of the two most recent years and who
reasonably expects an individual income in excess of $200,000 in
the current year.
___ 2. Each of the partners of the undersigned PARTNERSHIP is able to
certify that such partner is a natural person who, together with his or her
spouse, has had a joint income* in
C-1
<PAGE> 31
excess of $300,000 in each of the two most recent years and who reasonably
expects a joint income in excess of $300,000 in the current year.
___ 3. The undersigned PARTNERSHIP: (a) was not formed for the specific
purpose of acquiring the Investment Units; and (b) has total assets in excess of
$5,000,000.
IF YOU CHECKED STATEMENT 1 OR STATEMENT 2 IN SECTION I AND DID NOT
CHECK STATEMENT 3, YOU MUST PROVIDE A LETTER SIGNED BY A GENERAL PARTNER OF THE
UNDERSIGNED PARTNERSHIP LISTING THE NAME OF EACH PARTNER (WHETHER A GENERAL OR
LIMITED PARTNER) AND THE REASON (UNDER STATEMENT 1 OR STATEMENT 2) SUCH PARTNER
QUALIFIES AS AN ACCREDITED INVESTOR (ON THE BASIS OF NET WORTH, INDIVIDUAL
INCOME OR JOINT INCOME), OR EACH PARTNER MUST PROVIDE A COMPLETED INDIVIDUAL
SUBSCRIBER QUESTIONNAIRE (PAGES A-1 TO A-5).
II. OTHER CERTIFICATIONS
By signing the Signature Page, the undersigned certifies the following:
(a) that the PARTNERSHIP's purchase of the Investment Units will be
solely for the PARTNERSHIP's own account and not for the account
of any other person;
(b) that the PARTNERSHIP's name, address of principal office, place
of formation and taxpayer identification number as set forth in
this Questionnaire are true, correct and complete; and
(c) that one of the following is true and correct (check one):
___ (i) the PARTNERSHIP is a partnership formed in or under the
laws of the United States or any political subdivision
thereof.
___ (ii) the PARTNERSHIP is not a partnership formed in or under
the laws of the United States or any political subdivision
thereof.
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, a subscriber should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement
plans, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
C-2
<PAGE> 32
III. GENERAL INFORMATION
(a) PROSPECTIVE SUBSCRIBER (THE PARTNERSHIP)
Name: __________________________________________________________________________
________________________________________________________________________________
Principal Place of Business: ___________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Address for Correspondence
(if different): ________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number: ______________________________________________________________
(Area Code) (Number)
State in which Formed: _________________________________________________________
Date of Formation: _____________________________________________________________
Taxpayer Identification Number: ________________________________________________
Number of Partners: ____________________________________________________________
(b) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
PARTNERSHIP
Name: ______________________________________________
Position or Title: _________________________________
IV. SIGNATURE
The Signature Page to this Questionnaire is contained on page C-4,
entitled Partnership Signature Page.
C-3
<PAGE> 33
PARTNERSHIP SIGNATURE PAGE
INDUSTRIAL IMAGING CORPORATION
Your signature on this PARTNERSHIP Signature Page evidences the
agreement by the PARTNERSHIP to be bound by the Questionnaire and the
Subscription Agreement.
1. The undersigned PARTNERSHIP represents that (a) the information
contained in this Questionnaire is complete and accurate and (b) the PARTNERSHIP
will notify the Company (contact at 508-937-5400) immediately if any material
change in any of this information occurs before the acceptance of the
undersigned PARTNERSHIP's subscription and will promptly send the Company
written confirmation of such change.
2. The undersigned PARTNERSHIP hereby certifies that it has read and
understands this Subscription Agreement.
3. The undersigned PARTNERSHIP hereby represents and warrants that the
person signing this Subscription Agreement on behalf of the PARTNERSHIP is a
general partner of the PARTNERSHIP, has been duly authorized by the PARTNERSHIP
to acquire the Investment Units and sign this Subscription Agreement on behalf
of the PARTNERSHIP and, further, that the undersigned PARTNERSHIP has all
requisite authority to purchase such Investment Units and enter into this
Subscription Agreement.
______________________________________
Number of Investment Units applied for Date: _____________________________
___________________________________
Name of Partnership
(Please Type or Print)
___________________________________
Signature
___________________________________
Name (Please Type or Print)
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
CONCURRED IN BY COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT
REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.
C-4
<PAGE> 34
IMPORTANT: Subscriber Name: ________________________
Please Complete Booklet No.:
CORPORATION QUESTIONNAIRE
INDUSTRIAL IMAGING CORPORATION
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned CORPORATION's subscription to
purchase Investment Units of Industrial Imaging Corporation (the "Company") may
be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned CORPORATION understands, however, that the
Company may present this Questionnaire to such parties as it deems appropriate
if called upon to establish that the proposed offer and sale of the Investment
Shares is exempt from registration under the Securities Act of 1933, as amended,
or meets the requirements of applicable state securities or "blue sky" laws.
Further, the undersigned CORPORATION understands that the Offering is
required to be reported to the Securities and Exchange Commission and to various
state securities or "blue sky" regulators.
I. PLEASE CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TO THE CORPORATION
___ 1. Each of the shareholders of the undersigned CORPORATION is able
to certify that such shareholder meets at least one of the following two
conditions:
(a) The shareholder is a natural person whose individual net worth*
or joint net worth with his or her spouse exceeds $1,000,000; or
(b) The shareholder is a natural person who had an individual income*
in excess of $200,000 in each of the two most recent years and
who reasonably expects an individual income in excess of $200,000
in the current year.
___ 2. Each of the shareholders of the undersigned CORPORATION is able
to certify that such shareholder is a natural person who, together with his or
her spouse, has had a joint
D-1
<PAGE> 35
income* in excess of $300,000 in each of the two most recent years and who
reasonably expects a joint income in excess of $300,000 during the current year.
___ 3. The undersigned CORPORATION: (a) was not formed for the specific
purpose of acquiring any Investment Units; and (b) has total assets in excess of
$5,000,000.
IF YOU CHECKED STATEMENT 1 OR STATEMENT 2 IN SECTION 1 AND DID NOT
CHECK STATEMENT 3, YOU MUST PROVIDE A LETTER SIGNED BY AN OFFICER OF THE
UNDERSIGNED CORPORATION LISTING THE NAME OF EACH SHAREHOLDER AND THE REASON
(UNDER STATEMENT 1 OR STATEMENT 2) WHY SUCH SHAREHOLDER QUALIFIES AS AN
ACCREDITED INVESTOR (ON THE BASIS OF NET WORTH, INDIVIDUAL INCOME OR JOINT
INCOME), OR EACH SHAREHOLDER MUST PROVIDE A COMPLETED INDIVIDUAL SUBSCRIBER
QUESTIONNAIRE (PAGES A-1 TO A-5).
II. OTHER CERTIFICATIONS
By signing the Signature Page, the undersigned certifies the following:
(a) that the CORPORATION's purchase of the Investment Units will be
solely for the CORPORATION's own account and not for the account
of any other person or entity;
(b) that the CORPORATION's name, address of principal office, place
of incorporation and taxpayer identification number as set forth
in this Questionnaire are true, correct and complete; and
(c) that one of the following is true and correct (check one):
___ (i) the CORPORATION is a corporation organized in or under the
laws of the United States or any political subdivision
thereof.
___ (ii) the CORPORATION is a corporation which is neither created
nor organized in or under the United States or any
political subdivision thereof, but which has made an
election under either Section 897(i) or 897(k) of the
United States Internal Revenue Code of 1986, as amended, to
be treated as a domestic corporation for certain purposes
of United States federal income taxation (A COPY OF THE
INTERNAL REVENUE SERVICE ACKNOWLEDGMENT OF THE
UNDERSIGNED'S ELECTION MUST BE ATTACHED TO THIS
SUBSCRIPTION AGREEMENT IF THIS PROVISION IS APPLICABLE).
D-2
<PAGE> 36
___ (iii) neither (i) nor (ii) above is true.
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, a subscriber should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement
plans, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
III. GENERAL INFORMATION
(a) PROSPECTIVE SUBSCRIBER (THE CORPORATION)
Name: __________________________________________________________________________
Principal Place of Business: ___________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Address for Correspondence
(if different): ________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number: ______________________________________________________________
(Area Code) (Number)
State of Incorporation: ________________________________________________________
Date of Formation: _____________________________________________________________
________________________________________________________________________________
Taxpayer Identification Number: ________________________________________________
Number of Shareholders: ________________________________________________________
D-3
<PAGE> 37
(b) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
CORPORATION
Name: __________________________________________________________________________
________________________________________________________________________________
Position or Title: _____________________________________________________________
IV. SIGNATURE
The Signature Page to this Questionnaire is contained on page D-4,
entitled Corporation Signature Page.
D-4
<PAGE> 38
CORPORATION SIGNATURE PAGE
INDUSTRIAL IMAGING CORPORATION
Your signature on this CORPORATION Signature Page evidences the
agreement by the CORPORATION to be bound by the Questionnaire and the
Subscription Agreement.
1. The undersigned CORPORATION represents that (a) the information
contained in this Questionnaire is complete and accurate and (b) the CORPORATION
will notify the Company (contact at 508-937-5400) immediately if any material
change in any of the information occurs prior to the acceptance of the
undersigned CORPORATION's subscription and will promptly send the Company
written confirmation of such change.
2. The undersigned CORPORATION hereby certifies that it has read and
understands this Subscription Agreement.
3. The undersigned CORPORATION hereby represents and warrants that the
person signing this Subscription Agreement on behalf of the CORPORATION has been
duly authorized by all requisite action on the part of the CORPORATION to
acquire the Investment Units and sign this Subscription Agreement on behalf of
the CORPORATION and, further, that the undersigned CORPORATION has all requisite
authority to purchase the Investment Units and enter into this Subscription
Agreement.
______________________________________
Number of Investment Units applied for Date: _______________________________
_____________________________________
Name of Corporation
(Please Type or Print)
By: _________________________________
Signature
Title: ______________________________
(Please Type or Print)
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
CONCURRED IN BY COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT
REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.
D-5
<PAGE> 39
IMPORTANT: Subscriber Name: ________________________
Please Complete Booklet No.:
RETIREMENT PLAN QUESTIONNAIRE
INDUSTRIAL IMAGING CORPORATION
Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned RETIREMENT PLAN's subscription to
purchase Investment Units of Industrial Imaging Corporation (the "Company") may
be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned RETIREMENT PLAN understands, however, that the
Company may present this Questionnaire to such parties as it deems appropriate
if called upon to establish that the proposed offer and sale of the Investment
Units is exempt from registration under the Securities Act of 1933, as amended,
or meets the requirements of applicable state securities or "blue sky" laws.
Further, the undersigned RETIREMENT PLAN understands that the Offering is
required to be reported to the Securities and Exchange Commission and to various
state securities or "blue sky" regulators.
I. PLEASE CHECK ANY OF THE FOLLOWING STATEMENTS, AS APPLICABLE
___ 1. The undersigned RETIREMENT PLAN certifies that it is an employee
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974 ("ERISA") and:
(a) the investment decisions are made by a plan fiduciary as defined
in Section 3(21) of ERISA that (i) is either a bank, insurance
company or registered investment advisor or (ii) is a savings and
loan association; or
(b) The undersigned RETIREMENT PLAN has total assets in excess of
$5,000,000; or
(c) The undersigned RETIREMENT PLAN is self-directed, with investment
decisions made solely by persons each of whom satisfies at least
one of the following conditions:
(i) such person's individual net worth* or joint net worth with
his or her spouse exceeds $1,000,000; or
E-1
<PAGE> 40
(ii) such person had an individual income* in excess of $200,000
in each of the two most recent years and reasonably expects
an individual income in excess of $200,000 in the current
year; or
(iii) such person together with his or her spouse, had a joint
income* in excess of $300,000 in each of the two most
recent years and reasonably expects a joint income in
excess of $300,000 in the current year.
___ 2. The undersigned RETIREMENT PLAN certifies that it is an employee
benefit plan, Keogh plan or Individual Retirement Account in which each
participant satisfies at least one of the following conditions:
(a) such person's individual net worth* or joint net worth with
his or her spouse exceeds $1,000,000; or
(b) such person had an individual income* in excess of $200,000
in each of the two most recent years and reasonably expects
an individual income in excess of $200,000 in the current
year; or
(c) such person, together with his or her spouse, had a joint
income* in excess of $300,000 in each of the two most
recent years and reasonably expects a joint income in
excess of $300,000 in the current year.
* For purposes of this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In determining income, a subscriber should
add to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to IRA or Keogh retirement
plans, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
IF YOU CHECKED STATEMENT 1(c) OR STATEMENT 2 AND NOT STATEMENT 1(a) OR
STATEMENT 1(B), YOU MUST PROVIDE A LETTER SIGNED BY A PERSON DULY AUTHORIZED BY
THE RETIREMENT PLAN LISTING, AS APPLICABLE (I) THE NAMES OF THE PERSONS (OR
ENTITIES) MAKING THE INVESTMENT DECISIONS, OR (II) THE NAMES OF ALL OF THE
PARTICIPANTS IN THE PLAN AND THE REASON (UNDER STATEMENT 1(c) OR STATEMENT 2)
SUCH PERSON (OR ENTITY), QUALIFIES AS AN ACCREDITED INVESTOR (ON THE BASIS OF
NET WORTH, INDIVIDUAL INCOME, JOINT INCOME OR OTHERWISE), OR EACH SUCH PERSON
(OR ENTITY) MUST COMPLETE THE APPROPRIATE QUESTIONNAIRE (I.E. FOR AN INDIVIDUAL,
TRUST, PARTNERSHIP OR CORPORATION).
E-2
<PAGE> 41
II. OTHER CERTIFICATIONS
By signing the Signature Page, the undersigned certifies the following:
(a) that the RETIREMENT PLAN's purchase of the Investment Units will
be solely for the RETIREMENT PLAN's own account and not for the
account of any other person or entity;
(b) that the RETIREMENT PLAN's governing documents duly authorize the
type of investment contemplated herein, and the undersigned is
authorized and empowered to make such investment on behalf of the
RETIREMENT PLAN.
(c) that one of the following is true and correct (check one):
___ (i) the RETIREMENT PLAN is a retirement plan whose income from
sources outside of the United States is includable in its
gross income for United States federal tax purposes
regardless of its connection with a trade or business
carried on in the United States.
___ (ii) the RETIREMENT PLAN is a retirement plan whose income from
sources outside the United States is not includable in its
gross income for United States federal income tax purposes
regardless of its connection with a trade or business
carried on in the United States.
III. GENERAL INFORMATION
(a) PROSPECTIVE SUBSCRIBER (THE RETIREMENT PLAN)
Name: __________________________________________________________________________
Address: _______________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Address for Correspondence
(if different): ________________________________________________________________
(Number and Street)
________________________________________________________________________________
(City) (State) (Zip Code)
Telephone Number: ______________________________________________________________
(Area Code) (Number)
E-3
<PAGE> 42
State in which Formed: _________________________________________________________
Date of Formation: _____________________________________________________________
Taxpayer Identification Number: ________________________________________________
(b) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
RETIREMENT PLAN
Name: __________________________________________________________________________
________________________________________________________________________________
Position or Title: _____________________________________________________________
IV. ADDITIONAL INFORMATION
THE RETIREMENT PLAN MUST ATTACH COPIES OF ALL DOCUMENTS GOVERNING THE
PLAN AS WELL AS ALL OTHER DOCUMENTS AUTHORIZING THE RETIREMENT PLAN TO INVEST IN
THE INVESTMENT UNITS. INCLUDE, AS NECESSARY, DOCUMENTS DEFINING PERMITTED
INVESTMENTS BY THE RETIREMENT PLAN, AND DEMONSTRATING AUTHORITY OF THE SIGNING
INDIVIDUAL TO ACT ON BEHALF OF THE PLAN. ALL DOCUMENTATION MUST BE COMPLETE AND
CORRECT.
V. SIGNATURE
The Signature Page to this Questionnaire is contained on page E-5,
entitled Retirement Plan Signature Page.
E-4
<PAGE> 43
RETIREMENT PLAN SIGNATURE PAGE
INDUSTRIAL IMAGING CORPORATION
Your signature on this RETIREMENT PLAN Signature Page evidences the
agreement by the RETIREMENT PLAN to be bound by the Questionnaire and the
Subscription Agreement.
1. The undersigned RETIREMENT PLAN represents that (a) the information
contained in this Questionnaire is complete and accurate and (b) the RETIREMENT
PLAN will notify the Company (contact at 508-937- 5400) immediately if any
material change in any of the information occurs prior to the acceptance of the
undersigned RETIREMENT PLAN's subscription and will promptly send the Company
written confirmation of such change.
2. The undersigned RETIREMENT PLAN hereby certifies that it has read and
understands this Subscription Agreement.
3. The undersigned RETIREMENT PLAN hereby represents and warrants that the
person signing this Subscription Agreement on behalf of the RETIREMENT PLAN has
been duly authorized to acquire the Investment Units and sign this Subscription
Agreement on behalf of the RETIREMENT PLAN and, further, that the undersigned
RETIREMENT PLAN has all requisite authority to purchase the Investment Units and
enter into this Subscription Agreement.
______________________________________
Number of Investment Units applied for Date: _______________________________
_____________________________________
Name Retirement Plan
(Please Type or Print)
By: _________________________________
Signature
Name: _______________________________
(Please Type or Print)
Title: ______________________________
(Please Type or Print)
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR UNDER ANY STATE LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
CONCURRED IN BY COUNSEL TO THE COMPANY, HAS BEEN DELIVERED TO THE EFFECT THAT
REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.
E-5
<PAGE> 1
EXHIBIT 10i
Name of Offeree: Agreement No:
---------------------- -------
SUBSCRIPTION AGREEMENT
Triple I Corporation, a Delaware corporation (the "Corporation"), is
offering for sale to institutions and individuals who are "Accredited Investors"
as defined in Rule 501 of Regulation D under the Securities Act of 1933, as
amended, a minimum of 500,000 shares ("Minimum Offering") and a maximum of
2,000,000 shares ("Maximum Offering") of its Common Stock, $.01 par value per
share (the "Shares"), at a purchase price of $1.00 per share (the "Offering").
Upon receipt of subscriptions to purchase the Minimum Offering the
Corporation, will merge (the "Merger") with Orbis, Inc., a publicly held Rhode
Island corporation ("Orbis"). The Corporation was incorporated in October 1992
as a successor corporation to a designer, manufacturer and marketer of automated
optical vision and industrial imaging systems for inspection and identification
of defects in printed circuit boards. Orbis is the continuation of two Rhode
Island corporations, Information Systems, Inc., incorporated in 1971, and
Dataman, Inc., incorporated in 1973. In March 1987, Orbis completed a public
offering of 1,000,000 shares of its Common Stock, $.01 par value per share, at
an offering of $2.50 per share. Orbis has been a shell corporation and has not
had material revenue from any operations since 1992.
The Merger will take place immediately prior to the initial closing of
the Offering. As part of the Merger, all of the Corporation's securities will be
exchanged for similar securities of Orbis, on a one-for-one basis. UPON
COMPLETION OF THE MERGER, ORBIS HAS AGREED WITH THE CORPORATION TO CHANGE ITS
NAME TO INDUSTRIAL IMAGING CORPORATION, WHICH SHALL CONTINUE TO OPERATE AND
CONDUCT THE BUSINESS OF THE CORPORATION. ACCORDINGLY, SUBSCRIBERS IN THIS
OFFERING WILL RECEIVE STOCK CERTIFICATES REPRESENTING SHARES OF COMMON STOCK,
$.01 PAR VALUE PER SHARE, OF INDUSTRIAL IMAGING CORPORATION.
<PAGE> 2
FOR ACCREDITED INVESTORS ONLY
-----------------------------
SUBSCRIPTION AGREEMENT
----------------------
Private Placement of a minimum of 500,000 Shares and a
maximum of 2,000,000 Shares of Common Stock,
$.01 value per share, of Triple I Corporation
(a) Number of Shares subscribed for
(b) Total Subscription Price
(multiply (a) by $1.00 per Share)
THE UNDERSIGNED ("Subscriber") hereby subscribes for the number of
Shares of Common Stock, $.01 par value per share (the "Shares"), offered by
Triple I Corporation (the "Corporation"), a Delaware corporation, set forth in
(a) above. The Subscriber hereby agrees to pay the amount set forth in (b) above
upon execution of this Agreement, subject to and in accordance with the
following terms and conditions.
THE SUBSCRIBER UNDERSTANDS THAT AN INVESTMENT IN THE SECURITIES OF THE
CORPORATION IS HIGHLY SPECULATIVE, AND SHOULD CAREFULLY CONSIDER THE IMPACT OF
THE RISK FACTORS AND DILUTION IDENTIFIED IN THE CORPORATION'S CONFIDENTIAL
PRIVATE OFFERING MEMORANDUM, DATED NOVEMBER 7, 1995 (THE "MEMORANDUM").
SECTION 1. SUBSCRIPTION FOR SHARES
1.1 Subscriber hereby deposits with the Union Bank & Trust, Denver,
Colorado, the amount set forth in (b) above via wire transfer or certified or
bank check payable to "Schneider Securities, Inc., in favor of Triple I
Corporation." Should this Subscription Agreement not be accepted by the Company
or the terms and conditions of this Offering not be satisfied, the funds
deposited herewith shall be returned to Subscriber without interest accrued
thereon, net of bank fees.
1.2 Upon receipt and acceptance by the Corporation of subscriptions for
a minimum of 500,000 Shares or $500,000 (the "Minimum Offering") under this
Agreement, there shall be an initial closing (the "Initial Closing") of the
purchase of the Shares. Immediately prior to the Initial Closing, the
Corporation will merge with Orbis, Inc., a publicly-held Rhode Island
corporation ("Orbis"). As part of the merger by and between the Corporation and
Orbis, Orbis will change its
-2-
<PAGE> 3
name to Industrial Imaging Corporation, which shall continue to operate the
business of the Corporation as described in the Memorandum. In the merger, all
of the Corporation's securities will be exchanged for similar securities of
Industrial Imaging Corporation, on a one-for-one basis.
The Subscriber acknowledges that the Shares of Common Stock purchased
hereunder shall be shares of Common Stock, $.01 par value per share, of
Industrial Imaging Corporation. Accordingly, the Subscriber shall receive within
five (5) days after the relevant closing a stock certificate representing the
Shares of Common Stock of Industrial Imaging Corporation. Such shares shall be
registered in the Subscriber's name as set forth in the applicable purchaser
questionnaire completed and executed by the Subscriber in connection herewith.
Thereafter, one or more additional closings may take place (collectively, the
"Closings") until all Shares are subscribed for or until the Offering
terminates, in accordance with the terms as set forth in the Memorandum. The
Shares issued hereunder, when delivered to the Subscriber in accordance with the
terms hereof, shall be duly authorized by appropriate corporate action and shall
constitute validly issued and outstanding securities of the Corporation.
1.3 Subscriber hereby understands and agrees that the Corporation
reserves the right to reject this subscription for the Shares, as a whole or in
part, and at any time, notwithstanding prior receipt by Subscriber of notice of
acceptance by the Corporation of the Subscription, if in the Corporation's
judgment it deems such action to be in the best interest of the Corporation. In
the event of rejection of this Subscription, or a portion thereof, or if the
Minimum Offering is not completed, said payment will promptly be returned to
Subscriber, in accordance with Section 1.1 of this Agreement, and this
Subscription Agreement shall have no force or effect. If this subscription is
accepted, then upon closing the funds specified above shall be deposited in the
general account of the Corporation and the Shares will be delivered to
Subscriber in accordance with Section 1.2.
1.4 Subscriber agrees that he will not transfer or assign this
Subscription Agreement or any of Subscriber's interest herein. Subscriber may
not cancel, terminate or revoke this Subscription Agreement, and this
Subscription Agreement will be binding upon Subscriber's successors and assigns.
1.5 The Subscriber undertakes to execute and deliver to the Corporation
within five (5) days after receipt of the Corporation's request therefor, such
further designations, powers of attorney, proxies, consents, and other
instruments as the Corporation deems necessary or appropriate to carry out the
provisions of this Agreement, and the merger by and between the Corporation and
Orbis.
1.6 The Subscriber acknowledges that the Shares are being sold to him
pursuant to exemptions from the registration provisions of the Securities Act of
1933, as amended (the "Act") and the securities laws of the state of his legal
residence, in reliance upon the representations made by the Subscriber herein.
-3-
<PAGE> 4
SECTION 2. REPRESENTATIONS, WARRANTIES, AND ACKNOWLEDGEMENTS OF SUBSCRIBERS
The Subscriber acknowledges that the Corporation is offering the Shares
in reliance upon the representations, warranties, and other information
presented by the Subscriber herein. The Subscriber undertakes to notify the
Corporation immediately of any changes in any of the representations,
warranties, and other information contained herein. In order to induce the
Corporation to accept the subscription made hereby, the Subscriber hereby
represents, warrants and acknowledges to the Corporation as follows:
2.1 Sophistication. The Subscriber represents that he (i) is an
"Accredited Investor" as defined in Rule 501 of Regulation D under the Act and
shall confirm such by completing the applicable Questionnaire attached hereto
and made a part hereto, (ii) has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of
acquisition of the Shares and of making an informed investment decision with
respect thereto, and (iii) has the net worth required of investors in the
offering and his financial condition is such that he is able to bear and
understands all risks and risk factors of holding the Shares for an indefinite
period of time and losing his entire investment, each of which is more fully
described in the "Investor Suitability Requirements" and "Risk Factors" sections
of the Memorandum.
2.2 Access to Information. The Subscriber acknowledges that he, his
legal counsel, investment advisor or other representatives, if any, have been
given access through meetings with representatives of the Corporation to current
and other information about the Corporation as well as an opportunity to ask
questions of the Corporation's officers and directors about the information to
which he and his representatives have been given access. The Subscriber or his
legal counsel or investment advisor has been given a full opportunity to ask
questions of, and to receive answers from, the Company and its officers and
directors concerning the terms and conditions of the offering and the business
of the Corporation and to obtain additional information necessary to verify the
accuracy of the information concerning the Corporation, or such other
information as desired in order to evaluate an investment in the Shares, and all
such questions have been answered to the full satisfaction of the undersigned.
2.3 Risk Factors. The Subscriber recognizes that the purchase of Shares
hereunder involves a high degree of risk in that (i) the market for the sale of
these Shares is limited and, as such, the Subscriber may not be able to
liquidate his investment; (ii) transferability of these Shares, if at all
possible, is extremely limited; and (iii) in the event of a disposition of these
Shares, Subscriber could sustain the loss of his entire investment. In addition,
the Subscriber recognizes additional risks, including but not limited to, those
set forth in the Memorandum.
2.4 Investment Representation. The Subscriber represents that he is
acquiring the Shares hereunder for his own account and not with a view to
reselling or otherwise distributing such Shares in violation of any federal
securities laws and understands and agrees that the Shares to be issued
hereunder are restricted on transfer and must be held unless they are registered
under the Act or an
-4-
<PAGE> 5
exemption from registration is available, and the Corporation has received an
opinion of counsel, in form and substance satisfactory to it, to such effect. No
assurance can be given that the Corporation will be able to make available to
the public at any time in the future information necessary to enable security
holders to make routine sales of Shares pursuant to Rule 144 under the Act.
2.5 Restrictions on Transfer. Each Subscriber agrees that the Shares
purchased hereunder may only be transferred if registered under the Act or
pursuant to an exemption from such registration requirements. The Subscriber
understands that compliance with an applicable exemption under the Act may be
required for a sale or other disposition of shares that are not registered under
the Act. The Subscriber agrees that the following legend may be placed on any
certificates evidencing the Shares purchased herein:
"The securities represented by the certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
offered for sale, assigned, transferred or otherwise disposed of unless
registered pursuant to the provisions of that Act or an opinion of
counsel to the Company is obtained stating that such disposition is in
compliance with an available exemption from such registration."
Each Subscriber understands that, so long as the legend may remain on
the certificates representing the Shares sold hereby, the Corporation may
maintain appropriate "stop transfer" orders with respect to such shares on its
books and records and with those to whom it may delegate registrar and transfer
functions. Subject to the approval of counsel for the Corporation, which
approval shall not be unreasonably withheld, each Subscriber shall be entitled
to replacement certificates without the legend provided in this paragraph hereof
upon receipt by the Corporation of a favorable opinion from counsel reasonably
satisfactory in form and substance to the Corporation that the removal of such
legend is not in violation of either the Act and the rules and regulations
thereunder or applicable provisions of state securities laws.
2.6 Authority. The Subscriber represents that he has full legal power
and authority to enter into this Subscription Agreement and to purchase the
Shares.
2.7 Valuation of the Shares. The Subscriber understands that the
valuation placed upon the Shares has been determined by negotiations between the
Corporation and the Placement Agent, and does not necessarily bear any
relationship to traditionally accepted criteria of value such as the Company's
asset value, earnings or book value. The Subscriber represents that he has
independently evaluated the fairness of the offering price for the Shares.
2.8 Decision to Invest. In making his decision to purchase the Shares
herein subscribed for, the Subscriber has relied solely upon the information
about the Corporation provided to the Subscriber and upon independent
investigations made by him, or his legal counsel or investment advisor. He is
not relying on any representations or warranties from the Corporation or any of
its
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<PAGE> 6
officers, directors, affiliates, employees or agents other than the information
provided by the Corporation to him in this offering. The Subscriber has
consulted with his own legal counsel, accountant, and investment representative
as to tax and related matters concerning the Corporation and investments
therein; no representations or warranties of any kind are intended or should be
inferred concerning any economic returns or tax related effects which may result
from an investment in the Corporation. No assurances are given that existing tax
laws will not be changed or interpreted adversely to the Subscriber. In
addition, he is not subscribing pursuant hereto for any Shares as a result of or
subsequent to (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or (ii) any seminar or meeting whose attendees, including
the undersigned, had been invited as a result of, subsequent to, or pursuant to,
any of the foregoing.
2.9 Unregistered Securities. The Subscriber understands that the Shares
have not been registered under the Act in reliance upon specific exemptions from
registration thereunder, and understands that it is not anticipated that there
will be any market for resale of the Shares and that it may not be possible for
the undersigned to liquidate an investment in the Shares on an emergency basis.
2.10 No State Review. The Subscriber acknowledges that the Shares are
being sold pursuant to exemptions from the registration requirements of the
state indicated as the Subscriber's state of residence, that no securities
commission or regulatory authority has approved, passed upon, or endorsed the
merits of this Offering, nor is it intended that any such agency will do so.
Any representation to the contrary is unlawful.
2.11 State Residence Status. The Subscriber represents that he is a
resident and domiciliary (not a temporary or transient resident) of the state,
county, and country set forth in the attached Questionnaire, and has no present
intention to become a resident of any other jurisdiction, and all
communications, written or oral, concerning the Shares have been directed to the
Subscriber in, and received by the Subscriber in, such state jurisdiction.
2.12 No Representation Regarding the Corporation's Results of
Operations. There has never been represented, guaranteed, or warranted to the
Subscriber by any broker, the Corporation, its officers, directors or agents, or
employees or any other person, expressly or by implication (i) the percentage of
profits and/or amount of or type of consideration, profit or loss to be
realized, if any, as a result of the Corporation's operations; and (ii) that the
past performance or experience on the part of the management of the Corporation,
or of any other person, will in any way result in profitable operations of the
Corporation.
2.13 Subscription. The Subscriber understands that the Company reserves
the unrestricted right to reject or limit any subscription and to close the
offer at any time.
2.14 Subscriber's Understanding. The Subscriber has read and
understands the written material supplied by the Corporation, including the
Memorandum, and understands the meaning and
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<PAGE> 7
legal consequences of the Agreement and the representations and warranties made
herein. This Agreement contains the complete understanding between Subscriber
and the Corporation and no representative of the Corporation or any other person
has any power or authority to change or alter the terms hereof. This Agreement
is subject to acceptance by the Corporation, which may accept or reject
subscriptions in whole or in part, in its sole discretion, and is not assignable
without the written consent of the Corporation.
2.15 Subscriber's Consent to Merger. The Subscriber acknowledges that
upon receipt of subscriptions to purchase the Minimum Offering the Corporation
will merge with Orbis, Inc., a publicly-held Rhode Island corporation ("Orbis").
The merger will take place immediately prior to the Initial Closing. As part of
the Merger, all of the Corporation's securities will be exchanged for similar
securities of Orbis, on a one-for-one basis. UPON COMPLETION OF THE MERGER,
ORBIS HAS AGREED WITH THE CORPORATION TO CHANGE ITS NAME TO INDUSTRIAL IMAGING
CORPORATION, WHICH SHALL CONTINUE TO OPERATE AND CONDUCT THE BUSINESS OF THE
CORPORATION. ACCORDINGLY, SUBSCRIBERS IN THIS OFFERING WILL RECEIVE STOCK
CERTIFICATES REPRESENTING SHARES OF COMMON STOCK, $.01 PAR VALUE PER SHARE, OF
INDUSTRIAL IMAGING CORPORATION. The exchange of securities and the Merger are
more fully described in the Memorandum, and the Subscriber hereby acknowledges,
consents, and agrees to such transactions.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants to the Subscribers that
as of the date hereof, except as otherwise set forth herein:
3.1 Organization and Corporate Power. The Corporation is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and is qualified to do business as a foreign corporation in
each jurisdiction in which such qualification is required, except where failure
so to qualify would not have a material adverse effect on the Corporation. The
Corporation has all required corporate power and authority to own its property,
to carry on its business as presently conducted or contemplated, to enter into
and perform this Agreement and generally to carry out the transactions
contemplated hereby. The Corporation is not in violation of any term of its
Articles of Organization or its Bylaws, or any material instrument, agreement,
judgment, decree, order, statute, rule or regulation of any federal, state or
local government or agency applicable to the Corporation.
3.2 Authorization. This Agreement, and all documents and instruments
executed pursuant hereto, are legal, valid and binding obligations of the
Corporation, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws applicable to
creditors' rights and remedies and to the exercise of judicial discretion in
accordance with general principles of equity. The execution, delivery and
performance of this Agreement and the issuance of the shares of Common Stock
have been duly authorized by all necessary corporate or other action of the
Corporation.
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<PAGE> 8
SECTION 4. REPRESENTATIONS AND WARRANTIES OF ORBIS, INC., TO BE
KNOWN IN THE FUTURE AS INDUSTRIAL IMAGING CORPORATION
Orbis, Inc. ("Orbis") hereby represents and warrants to the Subscribers
that as of the date hereof, except as otherwise set forth herein:
4.1 Organization and Corporate Power. Orbis is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Rhode Island, and is qualified to do business as a foreign corporation in each
jurisdiction in which such qualification is required, except where failure so to
qualify would not have a material adverse effect on Orbis. Orbis has all
required corporate power and authority to own its property, to carry on its
business as presently conducted or contemplated, to enter into and perform this
Agreement and generally to carry out the transactions contemplated hereby. Orbis
is not in violation of any term of its Articles of Organization or its Bylaws,
or any material instrument, agreement, judgment, decree, order, statute, rule or
regulation of any federal, state or local government or agency applicable to
Orbis.
4.2 Authorization. This Agreement, and all documents and instruments
executed pursuant hereto, are legal, valid and binding obligations of Orbis,
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws applicable to creditors'
rights and remedies and to the exercise of judicial discretion in accordance
with general principles of equity. The execution, delivery and performance of
this Agreement and the issuance of the shares of Common Stock have been duly
authorized by all necessary corporate or other action of Orbis.
4.3 SEC Reports and Financial Statements. Each of Orbis and its
Subsidiaries has filed all required forms, reports and documents with the SEC
since January 1, 1992 (collectively, the "SEC Reports"), each of which has
complied as to form in all material respects with all applicable requirements of
the Securities Act and the Exchange Act. None of the SEC Reports, including,
without limitation, any financial statements or schedules included therein,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements of Orbis included in its Annual
Reports on Form 10-K for each of the two fiscal years ended March 31, 1993 and
1994 and its Quarterly Report on Form 10-Q for its fiscal quarters ended June
30, and September 30, 1995 fairly present, in conformity with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
in the notes thereto), the consolidated financial position of Orbis and its
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended (subject
to normal year-end adjustments and the addition of footnotes in the case of any
unaudited financial statements).
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<PAGE> 9
SECTION 5. REGISTRATION RIGHTS
5.1 Demand Registration Rights.
(a) The then holder(s) (the "Holders") of at least a majority
of the shares sold in this Offering may request in writing one time, at any time
from and after twelve (12) months after the final Closing Date of the Offering
but not later than three (3) years from such date, that the Corporation effect
the registration of the shares. Upon receipt of any such request, the
Corporation shall, as expeditiously as practicable, use its best efforts to file
the registration statement. Upon receipt of any such demand, the Corporation
shall promptly notify all of the Holders that such registration statement will
be filed and that the shares then held by the Holders (the "Registrable Shares")
are eligible to be included in such registration statement at the Holder's
request, which request must be made in writing within twenty (20) days of such
notice. The Corporation will then, as expeditiously as practicable, use its best
efforts to file a registration statement.
(b) The Corporation shall not be required to cause a
registration statement pursuant to this Section 4.1 to become effective prior to
ninety (90) days following the effective date of any other registration
statement filed by the Corporation.
(c) In the case of any registration statement effected
pursuant to this paragraph, the Corporation shall bear all additional
registration and qualification fees and expenses (excluding underwriters'
discounts and commissions). The Holders shall bear the expenses of underwriter's
discounts and commissions pro-rata on the basis of the amount of Registrable
Shares so registered. In addition, each selling Holder shall bear the fees and
costs of any separate counsel it may select.
5.2 Piggyback Registration Rights.
(a) On one occasion, if any, following the Closing that the
Corporation contemplates a public offering (other than an offering on Form S-4
or S-8 or similar form) of shares of its Common Stock to be registered under the
Securities Act, the Corporation shall so notify the Holders in writing of its
intention to do so at least 30 days prior to the filing of a registration
statement in respect of such offering. The Holders must give written notice to
the Corporation, within 10 days of receipt of such notice from the Corporation,
of their desire to have any of the Registrable Shares included in such
registration statement, and may, subject to the provisions of this Section, have
said Registrable Shares included in such registration statement.
Notwithstanding the foregoing, if the managing
underwriter of any such offering, in its sole discretion, determines that the
number of Registrable Shares proposed to be included in the registration
statement and sold by the Holders would materially and adversely affect the
successful marketing of the securities proposed to be registered and sold for
the account of the Corporation, then the number of Registrable Shares to be
offered for the account of the Holders shall be reduced (or, if necessary,
excluded) to the extent necessary to reduce the total amount of the securities
to be included in the offering to the amount recommended by the managing
underwriter. The Corporation shall have the right to designate the managing
underwriter in respect of a public offering pursuant to this paragraph.
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<PAGE> 10
The Corporation shall bear all expenses in connection with the
registration of any such Registrable Shares, but the Corporation shall have no
obligation to pay or otherwise bear any portion of the fees or disbursements of
any special counsel which any Holder may retain in connection with the
registration of the Registrable Shares, or any portion of the underwriter's
commission, discounts and expenses attributable to the Registrable Shares being
offered and sold by the holder or any taxes payable upon sale of the Registrable
Shares.
(b) If at the time of any request to register the Registrable
Shares pursuant to this Section 5.2(b), the Corporation is engaged or has fixed
demonstrable plans to engage within 90 days of the time of the request in an
underwritten public offering (other than on a Form S-4 or S-8) as to which any
Holder may include such Holder's Registrable Shares pursuant to a Section 4 or
is engaged in any other activity which, in the good faith determination of the
Corporation's Board of Directors, would be adversely affected by the requested
registration to the material detriment of the Corporation, then the Corporation
may, at its option, direct that if it effectuates the requested registration,
the Holder shall agree not to publicly sell such registered Registrable Shares
for such period of time as requested by the underwriter managing the public
offering or by the Corporation's Board of Directors, but in any event not to
exceed 90 days from the effectiveness of any such registration statement.
SECTION 6. MISCELLANEOUS PROVISIONS
6.1 Use of Speech. All pronouns contained herein and any variations
thereof, shall be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the parties may require.
6.2 Waiver. No waiver of any right under this Agreement shall be deemed
effective unless contained in a writing signed by the party charged with such
waiver, and no waiver of any right arising from any breach or failure to perform
shall be deemed to be a waiver of any future such right or of any other right
arising under this Agreement.
6.3 Entire Agreement; Modification. This Agreement constitutes the
entire agreement between the parties and supersedes any prior understanding or
agreements concerning the subject matter hereof. This Agreement may be amended,
modified, or terminated only by a written instrument signed by the Corporation
and at least holders of two-thirds (2/3) of the Shares issued to the Subscribers
hereunder.
6.4 Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
6.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without regard to
the conflict of law principles thereof. Subscriber agrees that any disputes
arising with respect to or in connection with this Agreement shall be finally
decided in accordance with the rules of arbitration.
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<PAGE> 11
6.6 Notices. All notices, requests, demands, and communications related
to this Agreement will be deemed given if and when delivered personally or sent
by registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:
If to the
Corporation: Industrial Imaging Corporation.
847 Rogers Street
Lowell, Massachusetts 01852
Attention: Juan J. Amodei, President
With a copy to: O'Connor, Broude & Aronson
950 Winter Street, Suite 2300
Waltham, Massachusetts 02154
Attention: Neil H. Aronson, Esquire
If to the
Subscriber: At the address set forth in the
Questionnaire attached hereto.
or, as to each of the foregoing, at such other address as shall be designated by
the addressee in a written notice to the other parties complying as to delivery
with the terms of this Section 6.6. Notwithstanding anything to the contrary
contained in this Agreement, all notices, requests, demands and other
communications shall be effective when received.
6.7 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives and
successors.
6.8 Headings. Headings contained in this Agreement are only as a matter
of convenience and in no way define, limit, extend, or describe the scope of
this Agreement or the intent of any provisions hereof.
6.9 Unenforceability. If any provision of this Agreement is or becomes
or is deemed invalid, illegal, or unenforceable in any jurisdiction, to the
maximum extent permissible, such provision shall be deemed amended to conform to
applicable laws. If such provision cannot be so amended without materially
altering the intention of the parties, it shall be stricken and, to the extent
possible, the remainder of this Agreement shall remain in full force and effect.
6.10 Assignment. The Subscriber may not assign this Agreement or its
rights hereunder without the Corporation's written consent.
6.11 Multiple Subscribers. If more than one person is signing this
Agreement, each representation, warranty, and undertaking stated herein shall be
the joint and several representation, warranty, and undertaking of each such
person.
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<PAGE> 12
6.12 Indemnification. Subscriber hereby agrees to indemnify and hold
harmless the Corporation, its officers, directors, shareholders, employees,
agents, and attorneys against any and all losses, claims, demands, liabilities,
and expenses (including reasonable legal or other expenses, including reasonable
attorneys' fees) incurred by each such person in connection with defending or
investigating any such claims or liabilities, whether or not resulting in any
liability to such person, to which any such indemnified party may become subject
under the Securities Act, under any other statute, at common law or otherwise,
insofar as such losses, claims, demands, liabilities and expenses (a) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact made by Subscriber and contained in this Subscription Agreement,
or (b) arise out of or are based upon any breach of any representation,
warranty, or agreement made by Subscriber contained herein.
6.13 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document.
6.14 Acceptance of Subscription. The Corporation may accept this
Subscription Agreement at any time for all or any portion of the Shares
subscribed for by executing a copy hereof as provided and notifying Subscriber
within a reasonable time thereafter.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 13
IN WITNESS WHEREOF, the undersigned parties have executed this
Subscription Agreement as a sealed instrument as of the date written below.
Triple I Corporation
By:______________________________________
Juan J. Amodei, President
Orbis, Inc., to be known in the future as
Industrial Imaging Corporation
By:______________________________________
Pasquale Ruggieri
Date:_____________________
NOTE: EACH SUBSCRIBER MUST COMPLETE, SIGN AND RETURN THE
APPLICABLE SIGNATURE PAGE AND INVESTOR QUESTIONNAIRE
PROVIDED ON THE ACCOMPANYING PAGES.
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<PAGE> 1
EXHIBIT 10j
================================================================================
SECURITIES PURCHASE AGREEMENT
BETWEEN
INDUSTRIAL IMAGING CORPORATION
AND
IMPRIMIS INVESTORS LLC
================================================================================
<PAGE> 2
SECURITIES PURCHASE AGREEMENT, dated as of November 12, 1997 (the
"Agreement"), between Industrial Imaging Corporation, a Delaware
corporation (the "Company"), and Imprimis Investors LLC, a
Delaware limited liability company (the "Purchaser").
------------------------------------------------------------------
INTRODUCTION
The Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, (a) 750,000 shares (the "Initial
Shares") of common stock, par value $0.01 per share ("Common Stock"), of the
Company, (b) 2,250,000 shares (the "Subsequent Shares") of Common Stock, (c)
250,000 warrants, substantially in the form of Exhibit A, to purchase shares of
Common Stock (the "Initial Class A Warrants"), (d) 750,000 warrants,
substantially in the form of Exhibit A, to purchase shares of Common Stock (the
"Subsequent Class A Warrants"), (e) 250,000 warrants, substantially in the form
of Exhibit B, to purchase shares of Common Stock (the "Initial Class B
Warrants") and (f) 750,000 warrants, substantially in the form of Exhibit B, to
purchase shares of Common Stock (the "Subsequent Class B Warrants"), in each
case on the terms and conditions set forth in this Agreement. The Initial Shares
and the Subsequent Shares are collectively referred to herein as the "Shares."
The Initial Class A Warrants and the Subsequent Class A Warrants are
collectively referred to herein as the "Class A Warrants." The Initial Class B
Warrants and the Subsequent Class B Warrants are collectively referred to herein
as the "Class B Warrants." The Class A Warrants and the Class B Warrants are
collectively referred to herein as the "Warrants." The Initial Shares, the
Initial Class A Warrants and the Initial Class B Warrants are collectively
referred to herein as the "Initial Securities." The Subsequent Shares, the
Subsequent Class A Warrants and the Subsequent Class B Warrants are collectively
referred to herein as the "Subsequent Securities." The Shares and the Warrants
are collectively referred to herein as the "Securities."
As a condition to the Purchaser's purchasing the Initial
Securities, (i) the Company is amending and restating its By-laws substantially
in the form of Exhibit C (the "By-laws"), (ii) the Company and the Purchaser are
entering into a Registration Rights Agreement, substantially in the form of
Exhibit D (the "Registration Rights Agreement") and (iii) the Company and the
Purchaser are entering into a Small Business Investment Company Letter
Agreement, substantially in the form of Exhibit E (the "SBIC Letter Agreement").
<PAGE> 3
The parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
SECTION 1.1. THE SECURITIES. (a) Upon the terms and subject to
the conditions set forth in this Agreement, at the Initial Closing (as defined
in Section 1.3(a)), the Company shall issue and sell to the Purchaser, and the
Purchaser shall purchase from the Company, the Initial Securities, free and
clear of all security interests, liens, pledges, charges, escrows, options,
rights of first refusal, encumbrances, agreements, arrangements, commitments or
other claims of any kind or character (collectively, the "Claims"), except as
imposed by applicable Federal or state securities laws.
(b) Upon the terms and subject to the conditions set forth in
this Agreement, at the Subsequent Closing (as defined in Section 1.3(b)), the
Company shall issue and sell to the Purchaser, and the Purchaser shall purchase
from the Company, the Subsequent Securities, free and clear of all claims,
except as imposed by applicable Federal or state securities laws.
SECTION 1.2. PURCHASE PRICE. (a) In consideration of the issuance
and sale of the Securities by the Company to the Purchaser, the Purchaser shall
pay to the Company $750,000 (the "Initial Purchase Price") in cash on the
Initial Closing Date (as defined in Section 1.3(a)).
(b) In consideration of the issuance and sale of the Subsequent
Securities by the Company to the Purchaser, the Purchaser shall pay to the
Company $2,250,000 (the "Subsequent Purchase Price") in cash on the Subsequent
Closing Date (as defined in Section 1.3(b)).
SECTION 1.3. CLOSING. (a) The closing (the "Initial Closing") for
the purchase of the Initial Securities and the consummation of the transactions
related thereto as contemplated by this Agreement shall take place at the
offices of Howard, Darby & Levin, 1330 Avenue of the Americas, New York, New
York 10019, or such other place or places as the Company and the Purchaser shall
agree, at 10:00 a.m. (Eastern time) on the later of November 12, 1997 and two
business days following the date on which all conditions set forth in Sections
4.1 and 4.2 shall have been satisfied or waived, or such other date and time
agreed to by the Company and the Purchaser (such date, the "Initial Closing
Date").
(b) The closing (the "Subsequent Closing") for the purchase of
the Subsequent Securities and the consummation of the transactions related
thereto as contemplated by this Agreement shall take place at the offices of
Howard, Darby & Levin, 1330 Avenue of the Americas, New York, New York 10019, or
such other place or places as the Company and the Purchaser shall agree, at
10:00 a.m. (Eastern time) on the later of November 21, 1997 and two business
days following the date on which all conditions set forth in Sections 4.3 and
4.4 shall
2
<PAGE> 4
have been satisfied or waived, or such other date and time agreed to by the
Company and the Purchaser (such date, the "Subsequent Closing Date").
SECTION 1.4. DELIVERY AND PAYMENT. (a) At the Initial Closing:
(i) The Company shall deliver to the Purchaser:
(A) one or more duly executed stock certificates
evidencing the Initial Shares issued in the name of the Purchaser
(in the amounts specified by the Purchaser);
(B) one or more duly executed warrant certificates
evidencing the Initial Class A Warrants issued in the name of the
Purchaser (in the amounts specified by the Purchaser);
(C) one or more duly executed warrant certificates
evidencing the Initial Class B Warrants issued in the name of the
Purchaser (in the amounts specified by the Purchaser);
(D) the Registration Rights Agreement duly
executed by the Company;
(E) the SBIC Letter Agreement duly executed by the
Company;
(F) a copy of the Certificate of Incorporation of
the Company (the "Certificate of Incorporation"), certified by
the Secretary of State of the State of Delaware;
(G) a Long Form Certificate of Good Standing of
the Company from the Secretary of State of the State of Delaware;
(H) a Certificate of Good Standing of the Company
from the Secretary of State of each jurisdiction in which the
Company is qualified to do business as a foreign corporation; and
(I) evidence, in form satisfactory to the
Purchaser, that a representative designated by the Purchaser has
been elected to the Board of Directors of the Company and has
been designated a Class III Director as that term is used in the
By-laws.
(J) all other documents, instruments and writings
required by the Purchaser to be delivered to it pursuant to this
Agreement.
(ii) The Purchaser shall deliver to the Company:
(A) an amount equal to the Initial Purchase Price
by wire transfer to the account of the Company;
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<PAGE> 5
(B) the Registration Rights Agreement duly
executed by the
Purchaser; and
(C) all other documents, instruments and writings
required by the Company to be delivered to it pursuant to this
Agreement.
(b) At the Subsequent Closing:
(i) The Company shall deliver to Purchaser:
(A) one or more duly executed stock certificates
evidencing the Subsequent Shares issued in the name of the
Purchaser (in the amounts specified by the Purchaser);
(B) one or more duly executed warrant certificates
evidencing the Subsequent Class A Warrants issued in the name of
the Purchaser (in the amounts specified by the Purchaser);
(C) one or more duly executed warrant certificates
evidencing the Subsequent Class B Warrants issued in the name of
the Purchaser (in the amounts specified by the Purchaser); and
(D) all other documents, instruments and writings
reasonably required by the Purchaser to be delivered by it
pursuant to this Agreement.
(ii) The Purchaser shall deliver to the Company:
(A) an amount equal to the Subsequent Purchase
Price (less the costs and expenses referred to in the second
sentence of Section 3.1 in the amount designated by the Purchaser
to the Company no later than the day before the Subsequent
Closing) by wire transfer to the account of the Company; and
(B) all other documents, instruments and writings
required by the Company to be delivered to it pursuant to this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Purchaser as follows:
(a) ORGANIZATION, STANDING AND POWER. (i) The Company and its
wholly-owned subsidiary, Triple I Corporation (the "Subsidiary"), are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware and have all requisite corporate power and
authority to own, lease and operate their respective properties and
4
<PAGE> 6
to carry on their respective businesses as now being conducted and as currently
proposed to be conducted, subject to any shareholder and Board of Directors
approvals that may be required in the future by the corporate law of the State
of Delaware. The Company and the Subsidiary are duly qualified to do business
and are in good standing in each jurisdiction in which such qualification is
necessary because of the property owned, leased or operated by them or because
of the nature of its business as now being conducted, except for those
jurisdictions where the failure to be so qualified would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the condition (financial or otherwise), operations, business, assets,
liabilities, earnings or prospects of the Company and the Subsidiary taken as a
whole ("Material Adverse Effect"). Each such jurisdiction in which the Company
is qualified as of the date hereof and the Initial Closing Date and the
Subsequent Closing Date is listed on Schedule 2.1(a) of the disclosure schedule
being delivered to the Purchaser simultaneously with the execution of this
Agreement (the "Disclosure Schedule").
(ii) The Company has prior to the execution of this Agreement
delivered to the Purchaser a true and complete copy of the Certificate of
Incorporation. The By-laws, in substantially the form attached hereto as Exhibit
C, have been duly adopted by the Company. The minute books of the Company (which
have been made available for inspection by the Purchaser prior to the date
hereof) are true and complete in all material respects.
(b) AUTHORIZATION; VALID AND BINDING AGREEMENTS. The Company has
all requisite corporate power and authority to execute and deliver this
Agreement, the Registration Rights Agreement, the SBIC Letter Agreement and the
certificates evidencing the Securities and to perform all of its obligations and
undertakings under such agreements and to carry out the transactions
contemplated under such agreements. The execution and delivery of this
Agreement, the Registration Rights Agreement, the SBIC Letter Agreement and the
certificates evidencing the Securities, the performance by the Company of its
obligations under such agreements, and the issuance and sale of the Securities
have been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are necessary to
authorize the execution, delivery or performance by the Company of this
Agreement, the Registration Rights Agreement, the SBIC Letter Agreement or the
certificates evidencing the Securities. This Agreement, the Registration Rights
Agreement, the SBIC Letter Agreement and the certificates evidencing the
Securities have each been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its respective terms subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(c) CAPITALIZATION; EQUITY INTERESTS.
(i) At the Initial Closing, immediately prior to the issuance of
the Securities, the authorized capital stock of the Company consists solely of
(A) 20,000,000 shares of Common Stock, of which 5,672,137 shares are issued and
outstanding; and (B) 1,000,000 shares of preferred stock, par value $0.01 per
share (together with the Common Stock, the "Capital Stock"), of which no shares
are issued and outstanding. The outstanding shares of Capital Stock have been
duly authorized and issued and are fully paid and non-assessable and not subject
to any purchase option or right of first refusal or preemptive, subscription or
similar rights. The Securities have been duly authorized and, when issued in
accordance with this Agreement, will be duly issued, fully paid and
non-assessable and not subject to any purchase option or right of first refusal
or preemptive,
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<PAGE> 7
subscription or similar rights. The shares of Common Stock initially issuable
upon exercise of the Warrants (the "Exercise Shares") have been duly authorized
and reserved for issuance upon exercise and, when issued upon such exercise,
will be duly issued, fully paid and non-assessable and not subject to any
purchase option, or right of first refusal or preemptive, subscription or
similar rights.
(ii) Except for this Agreement and the Warrants, and as
set forth on Schedule 2.1(c) of the Disclosure Schedule, (A) there are no bonds,
debentures, notes or other indebtedness or securities of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which shareholders of the Company may vote, (B)
there are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company is a
party or by which the Company is bound obligating the Company to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of Capital
Stock or other voting securities of the Company or obligating the Company to
issue, grant, extend or enter into any such security, option, warrant, call
right, commitment, agreement, arrangement or undertaking and (C) there are no
outstanding rights, commitments, agreements, arrangements or undertakings of any
kind obligating the Company to repurchase, redeem or otherwise acquire any
shares of Capital Stock or other voting securities of the Company or any
securities of the type described in clauses (A) or (B) above. No dividends on
any shares of Capital Stock have been declared but not yet paid.
(iii) Except for the Subsidiary, the Company does not
have any subsidiaries or own or hold, directly or indirectly, any equity or
other security interests in any corporation, partnership, limited liability
company, joint venture or other entity. The Company is not subject to any
liability for any claim that the Company violated any applicable Federal or
state securities laws in connection with the issuance of Capital Stock or other
securities. There are no restrictions on the transfer of shares of Capital Stock
other than those imposed by relevant state and Federal securities laws. There
are no voting trusts, voting agreements, proxies or other agreements or
instruments with respect to the voting of the Capital Stock to which the Company
is a party, or to the best of the knowledge of any of the Company's officers,
directors or employees (the "Company's Knowledge"), among or between any persons
other than the Company. Except as provided in the Registration Rights Agreement
and in Schedule 2.1(c) of the Disclosure Schedule, no person has the right to
demand or other rights to cause the Company to file any registration statement
under the Securities Act of 1933 (the "Securities Act") relating to any
securities of the Company presently outstanding or any right to participate in
any such registration statement.
(d) CONFLICTS; CONSENTS. The execution and delivery by the
Company of this Agreement, the Registration Rights Agreement, the SBIC Letter
Agreement and the certificates evidencing the Securities, the consummation of
the transactions contemplated hereby and thereby and compliance by the Company
with any of the provisions hereof or thereof does not and will not conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any
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<PAGE> 8
obligation or to loss of a material benefit under, or to any increased,
additional, accelerated or guaranteed rights or entitlement of any person or
entity under, or result in the creation of any Claim on the properties or assets
of the Company or the Subsidiary under, any provision of (i) the certificate of
incorporation or by-laws of the Company or the Subsidiary, (ii) any note, bond,
mortgage, indenture, deed of trust, license, lease, contract, commitment,
agreement, instrument or arrangement to which the Company or the Subsidiary is a
party or by which any of their respective properties or assets are bound, (iii)
any license, franchise, permit or other similar authorization held by the
Company or the Subsidiary or (iv) any judgment, order or decree or statute, law,
ordinance, rule or regulation applicable to the Company or the Subsidiary or
their respective properties or assets.
(e) FINANCIAL INFORMATION.
(i) Set forth on Schedule 2.1(e) of the Disclosure
Schedule are complete and correct copies of (A) the audited balance sheets of
the Company as at September 30, 1994 and 1995 and the related statements of
operations, shareholders' equity and cash flows for the years ended September
30, 1994 and 1995, and the audited balance sheet of the Company as at March 31,
1996 and the related statements of operations, shareholders' equity and cash
flows for the six months ended March 31, 1996, including any notes thereto with
the opinion of Coopers & Lybrand L.L.P., thereon (collectively, the "Audited
Financial Statements") and (B) the unaudited balance sheet of the Company as at
March 31, 1997 and the related statements of operations, shareholders' deficit
and cash flows for the year then ended and the unaudited balance sheet of the
Company as at September 30, 1997, and the related statements of operations,
shareholders' deficit and cash flows for the six months then ended
(collectively, the "Unaudited Financial Statements," and, together with the
Audited Financial Statements, the "Financial Statements"). Except as set forth
on Schedule 2.1(e) of the Disclosure Schedule, the Financial Statements have
been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis and fairly present the financial
condition, results of operations, shareholders' equity and cash flows of the
Company at or for the respective periods then ended, subject, in the case of the
Unaudited Financial Statements, to the absence of footnotes and normal year-end
adjustments.
(ii) All reserves established by the Company are
reflected on the balance sheets contained in the Financial Statements or in the
footnotes to the Financial Statements of the Company and in management's
reasonable estimate are adequate in the aggregate and there are no loss
contingencies that are required to be accrued by Statement of Financial
Accounting Standard No. 5 of the Financial Accounting Standards Board which are
not provided for on such balance sheets. As of the date hereof, except for
liabilities (A) reflected on or reserved against on the balance sheet as of
September 30, 1997 (the "Latest Balance Sheet") (B) set forth on Schedule 2.1(e)
of the Disclosure Schedule, (C) incurred in the ordinary course of the Company's
business and consistent with past practice or (D) contemplated by this
Agreement, the Company and the Subsidiary have no liabilities (absolute,
accrued, fixed, contingent, known, unknown or otherwise) which would be required
by GAAP to be reflected or reserved against on the balance sheet of the Company
and which would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
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<PAGE> 9
(iii) The forecasts and projections previously delivered
to the Purchaser by the Company have been prepared in good faith and on the
basis of assumptions that are fair and reasonable in light of current and
reasonably foreseeable circumstances.
(f) ABSENCE OF CHANGES. Except as set forth on Schedule 2.1(f) of
the Disclosure Schedule, since September 30, 1997, the Company and the
Subsidiary have operated in the ordinary course consistent with past practice
and there has not been:
(i) any event, occurrence or development or state of
circumstances of facts which has had or would reasonably be expected to
have a Material Adverse Effect;
(ii) any payment, discharge or satisfaction of any claim
or obligation of the Company or the Subsidiary or any amendment,
termination or waiver of any rights of value to the Company or the
Subsidiary, except in the ordinary course of business and consistent
with past practice;
(iii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital
stock of the Company or any direct or indirect redemption, purchase or
other acquisition of any such shares;
(iv) any creation of any Claim on, or any assignment or
other disposition of, any property of the Company or the Subsidiary,
except in the ordinary course of business consistent with past practice,
and which Claims, assignments and dispositions together with all other
such Claims, assignments and dispositions would not have a Material
Adverse Effect;
(v) any write-down of the value of any asset of the
Company or the Subsidiary or any write-off as uncollectible of any
accounts or notes receivable or any portion thereof, other than
write-downs or write-offs which in the aggregate do not exceed $25,000;
(vi) any capital expenditure or commitment or addition to
property, plant or equipment of the Company or the Subsidiary,
individually or in the aggregate, in excess of $25,000;
(vii) (A) any change in any bonus, commission, pension,
profit-sharing or other benefit or compensation plan, policy or
arrangement or commitment or (B) any increase in any such compensation,
bonus, commission, pension, profit sharing or other benefit payable now
or in the future to any shareholder, director or officer of the Company
or the Subsidiary, or any Affiliate (as defined in the Securities
Exchange Act of 1934 (the "Exchange Act")) of such person (or, in each
case, the entering into of any agreement to effect the same);
8
<PAGE> 10
(viii) any obligation or liability (whether absolute,
accrued, contingent or otherwise, and whether due or to become due)
incurred by the Company or the Subsidiary, other than obligations
incurred in the ordinary course of business and consistent with past
practice;
(ix) any issuance or sale, or any contract entered into
for the issuance or sale, of any shares of capital stock or securities
convertible into or exercisable for shares of capital stock of the
Company or the Subsidiary;
(x) any cancellation of any debts or claims or any
amendment, termination or waiver of any rights of value to the Company or
the Subsidiary;
(xi) any material damage, destruction or loss (whether or
not covered by insurance) affecting any asset or property of the Company
or the Subsidiary;
(xii) any change in the independent public accountants of
the Company or in the accounting methods or accounting practices
followed by the Company or any change in depreciation or amortization
policies or rates; or
(xiii) any agreement, whether in writing or otherwise, to
take any of the actions specified in the foregoing items (i) through
(xii).
(g) ASSETS, PROPERTY AND RELATED MATTERS; REAL PROPERTY.
(i) Except as set forth on Schedule 2.1(g) of the
Disclosure Schedule, the Company or the Subsidiary has good title to, or a valid
leasehold interest in, as applicable, all of the assets reflected on the
Financial Statements, free and clear of all Claims. To the Company's Knowledge,
such assets (other than inventory) are in good operating condition and repair,
subject to ordinary wear and tear and constitute all of the properties,
interests, assets and rights held for use or used in connection with the
business and operations of the Company or the Subsidiary and constitute all
those necessary to continue to operate the business of the Company or the
Subsidiary, as the case may be, consistent with current and historical practice.
(ii) All leases of real property to which the Company or
the Subsidiary is a party ("Leases") are in writing and in full force and effect
and constitute valid and binding obligations of the Company and, to the
Company's Knowledge, of the other parties thereto, enforceable in accordance
with their respective terms subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles. The
Company or the Subsidiary hold good and valid title to the leasehold interests
under the Leases for the term set forth on Schedule 2.1(g) of the Disclosure
Schedule, free and clear of all Claims. The Company has delivered to the
Purchaser complete and accurate copies of the Leases and the Leases have not
been modified in any material respect, except to the extent that such
modifications are disclosed in a copy delivered to the Purchaser. There exists
no material default, or any event which upon notice or the passage of time, or
both, would give rise to any material default, in the performance of the Company
or, to the Company's Knowledge, by any lessor under any such lease. The Company
has not, and to the Company's Knowledge, no other person has, granted any oral
or
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<PAGE> 11
written right to anyone other than the Company to lease, sublease or otherwise
occupy any of its properties through the end of the applicable lease periods.
(iii) Schedule 2.1(g) of the Disclosure Schedule contains
a description of all of the real property leased by the Company or the
Subsidiary. The Company does not own, and has not previously owned, any real
property.
(h) PATENTS, TRADEMARKS AND SIMILAR RIGHTS.
(i) Set forth on Schedule 2(h) of the Disclosure Schedule is a
true and complete list of the patents, patent applications, trademarks
(registered or unregistered) and service marks (and any applications or
registrations therefor), trade names, corporate names, copyrights, copyright
registrations and other intellectual property that currently exists in written
form owned or filed by, or licensed to, the Company or the Subsidiary or used in
the conduct of the Company's or the Subsidiary's business as presently conducted
("Intellectual Property"). With respect to registered trademarks, Schedule 2(h)
of the Disclosure Schedule sets forth a list of all jurisdictions in which such
trademarks are registered or applied for and all registration and application
numbers. To the Company's Knowledge, the Company has all rights to Intellectual
Property as are used or are necessary in connection with the businesses of the
Company and the Subsidiary as presently conducted, and except as set forth on
Schedule 2(h) of the Disclosure Schedule, the Company owns, or has the right to
use, execute, reproduce, display, perform, modify, enhance, distribute, prepare
derivative works of and sublicense, without payment to any other person or
entity, all Intellectual Property free and clear of all Claims whatsoever. The
consummation of the transactions contemplated hereby will not conflict with,
alter or impair any such right.
(ii) Neither the Company nor the Subsidiary has granted any
options, licenses or agreements of any kind relating to Intellectual Property or
the marketing or distribution thereof. Neither the Company nor the Subsidiary is
bound by or a party to any options, licenses or agreements of any kind relating
to the intellectual property of any other person or entity, except as set forth
in Schedule 2.1(d) of the Disclosure Schedule. The conduct of the business of
the Company and of the Subsidiary as presently conducted does not, to the
Company's Knowledge, violate, conflict with or infringe the intellectual
property of any other person or entity. No claims are pending, or to the
Company's Knowledge, threatened, against the Company or the Subsidiary by any
person or entity with respect to the ownership, validity, enforceability,
effectiveness or use of any Intellectual Property and, during the past three
years, neither the Company nor the Subsidiary has received any communications
alleging that the Company has violated any rights relating to intellectual
property of any person or entity.
(i) INSURANCE. Schedule 2.1(i) of the Disclosure Schedule
contains a description of all insurance policies ("Insurance Policies") that are
currently held by the Company or the Subsidiary, true and complete copies of
which have been delivered to the Purchaser. All Insurance Policies are in the
name of the Company or the Subsidiary, outstanding and in full force and effect
and all premiums due with respect to such policies are currently paid. The
Company has not received notice of cancellation or termination of any such
policy, nor has it been denied or had revoked or rescinded any policy of
insurance, nor borrowed against any such policies. To the Company's Knowledge,
the activities and operations of the Company and
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<PAGE> 12
the Subsidiary have been conducted in a manner so as to conform in all material
respects to all applicable provisions of the Insurance Policies. There are no
claims in the last year for which an insurance carrier has denied or threatened
to deny coverage. The Company or the Subsidiary carries, or is covered by,
insurance with companies the Company believes to be responsible and in such
amounts and covering such risks as is adequate for the conduct of its business
and the value of its properties and as the Company believes is customary for
companies engaged in similar businesses in similar industries.
(j) AGREEMENTS. Schedule 2.1(j) of the Disclosure Schedule
contains a true and complete list or description of all written or oral
contracts, agreements and other instruments ("Contracts") to which the Company
or the Subsidiary is a party (A) relating to indebtedness for money borrowed or
the deferred purchase price of property or services or capital leases in excess
of $10,000, (B) relating to any forward commitments or to other commitments in
excess of $25,000 in any given year, (C) relating to any joint venture,
partnership or limited liability company; (D) relating to the employment or
compensation of any director, officer or shareholder of the Company or the
Subsidiary, or any Affiliate of such companies, (E) relating to the employment
or compensation of any employee, consultant, independent contractor or other
agent of the Company or the Subsidiary, or any Affiliate of such companies,
involving a payment in excess of $10,000 in any given year, (F) relating to the
sale or other disposition of any assets, properties or rights (other than the
sale of inventory), (G) which restricts the Company's or the Subsidiary's
ability to do business in any geographic area or grants to any person exclusive
or similar rights in any line of business or in any geographic area, (I) which
restricts the Company's or the Subsidiary's ability from soliciting employees of
another entity or restricts another entity's ability from soliciting the
Company's or the Subsidiary's employees, (J) relating to the lease of any
machinery, equipment, vehicle or other personal property owned by any other
person or entity, for which the annual rental exceeds $2,500; (K) relating to
the lease of any real or personal property to any other person or entity, for
which the annual rental exceeds $2,500; (L) relating to any advance, loan,
extension of credit or capital contribution to, or other investment in, any
person or entity not in excess of $2,500 in the aggregate; or (M) that is
otherwise material to the business, properties or assets of the Company and
entered into other than in the ordinary course of business. The Company has
provided to the Purchaser true and complete copies of all written Contracts and
true, accurate and complete written summaries of all oral Contracts. Except as
set forth on Schedule 2.1(j) of the Disclosure Schedule, all Contracts are
valid, binding and in full force and effect as to the Company or the Subsidiary,
as the case may be, and neither the Company or the Subsidiary nor, to the
Company's Knowledge, any other party thereto is in breach or violation of, or
default under, any such Contracts in any material respect.
(k) LITIGATION. Except as set forth on Schedule 2.1(k) of the
Disclosure Schedule, there have not been for the past five years, nor are there,
any suits, actions, claims, investigations or legal or administrative or
arbitration proceedings in respect of the Company or the Subsidiary, pending or,
to Company's Knowledge, threatened, whether at law or in equity, or before or by
any Federal, foreign, state or municipal or other governmental department,
commission, board, bureau, agency or instrumentality. Except as set forth on
Schedule 2.1(k) of the Disclosure Schedule, there have not been for the past
five years, nor are there any judgments, decrees, injunctions or orders of any
court, governmental department, commission, agency,
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<PAGE> 13
instrumentality or arbitrator against the Company or the Subsidiary or affecting
any of its assets or properties. There is no lawsuit or claim by the Company or
the Subsidiary pending, or which the Company or the Subsidiary intends or
reasonably expects to initiate, against any other person or entity.
(l) COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS.
(i) Except as set forth on Schedule 2.1(l) of the
Disclosure Schedule, the Company and the Subsidiary, to the Company's Knowledge,
have complied and are in compliance with all Federal, state, local and foreign
laws, ordinances, regulations, interpretations and orders (including those
relating to disposal of materials, environmental protection and occupational
safety and health) applicable to the Company or the Subsidiary or any of their
respective businesses. There are no present or past conditions relating to the
Company or the Subsidiary, or relating to any of the Company's or the
Subsidiary's property or any appurtenances thereto or improvements thereon, that
would reasonably be expected to lead to any material liability against, or have
a Material Adverse Effect for violation of any health or safety laws. The
Company has not received any written communication during the past five years
from any governmental entity that alleges that the Company is not in compliance
in any respect with any applicable Federal, state, local and foreign laws,
ordinances, regulations, interpretations and orders. To the Company's Knowledge,
the Company and the Subsidiary have all Federal, state, local and foreign
governmental licenses and permits necessary to conduct their respective
businesses as presently being conducted. Such licenses and permits are in full
force and effect, no violations are or have been recorded in respect of any
thereof, no proceeding is pending or, to the Company's Knowledge, threatened, to
revoke or limit any thereof, and the Company does not know of any basis for any
such proceeding and the consummation of the transactions contemplated in this
Agreement will not result in the non-renewal, revocation or termination of any
such license or permit. Except as set forth on Disclosure Schedule 2.1(l), the
Company has filed, in a timely manner, all reports required by the rules and
regulations of the Securities and Exchange Commission (the "SEC").
(ii) There are no conditions relating to the Company or
the Subsidiary or relating to the Company's or the Subsidiary's ownership, use
or maintenance of any real property previously owned or operated by the Company
or any of its Affiliates, and the Company does not know or have reason to know
of any such condition in respect of such real property not related to the
ownership, use or maintenance, that could lead to any liability for violation of
any Federal, state, county or local laws, regulations, orders or judgments
relating to pollution or protection of the environment or any other applicable
environmental, health or safety statutes, ordinances, orders, rules, regulations
or requirements. The Company and the Subsidiary have received, handled, used,
stored, treated, shipped and disposed of all hazardous or toxic materials,
substances and wastes (whether or not on its properties or properties owned or
operated by others) in compliance with all applicable environmental, health or
safety statutes, ordinances, orders, rules, regulations or requirements.
(m) LABOR RELATIONS; EMPLOYEES.
(i) Within the last five years, neither the Company nor
the Subsidiary has experienced any labor disputes with, or any work stoppages
by, a group of employees due to labor disagreements and, to the Company's
Knowledge, there is no such dispute or work stoppage threatened against the
Company or the Subsidiary. No employee
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<PAGE> 14
of the Company is represented by any union or collective bargaining agent and,
to the Company's Knowledge, there has been no union organizational effort in
respect of any employees of the Company within the past five years.
(ii) Schedule 2.1(m) of the Disclosure Schedule contains
a list of each pension, retirement, savings, deferred compensation, and
profit-sharing plan and each stock option, stock appreciation, stock purchase,
performance share, bonus or other incentive plan, severance plan, health, group
insurance or other welfare plan, or other similar plan and any "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), under which the Company or the Subsidiary has
any current or future obligation or liability or under which any employee or
former employee (or beneficiary of any employee or former employee) of the
Company or the Subsidiary has or may have any current or future right to
benefits on account of employment with the Company or the Subsidiary (the term
"plan" shall include any contract, agreement, policy or understanding, each such
plan being hereinafter referred to individually as a "Plan"). The Company has
delivered to the Purchaser true and complete copies of (A) each Plan for which a
Plan document exists, (B) the summary plan description for each Plan, (C) the
latest annual report, if any, which has been filed with the Internal Revenue
Service (the "IRS") for each Plan and (D) with respect to any Plan intended to
comply with Section 401(k) of the Internal Revenue Code of 1986 (the "Code"),
copies of calculations for the most recent three Plan years showing such Plan's
compliance with the requirements of Section 401(k)(3) and, if applicable,
401(m)(2) of the Code. Each Plan intended to be tax qualified under Sections
401(a) and 501(a) of the Code is, and has been determined by the IRS to be, tax
qualified under Sections 401(a) and 501(a) of the Code and, since such
determination, no amendment to or failure to amend any such Plan or any other
circumstance adversely affects its tax qualified status. There has been no
prohibited transaction within the meaning of Section 4975 of the Code and
Section 406 of Title I of ERISA with respect to any Plan.
(iii) No Plan is subject to the provisions of Section 412
of the Code or Part 3 of Subtitle B of Title I of ERISA. No Plan is subject to
Title IV of ERISA. During the past five years, neither the Company or the
Subsidiary nor any business or entity then controlling, controlled by, or under
common control with the Company or the Subsidiary contributed to or was obliged
to contribute to an employee pension plan that was subject to Title IV of ERISA.
(iv) There are no actions, claims, lawsuits or
arbitrations (other than routine claims for benefits) pending, or, to the
Company's Knowledge, threatened, with respect to any Plan or the assets of any
Plan, and to the Company's Knowledge, there are no facts which could give rise
to any such actions, claims, lawsuits or arbitrations (other than routine claims
for benefits). Except as described on Schedule 2.1(m) of the Disclosure
Schedule, the Company or the Subsidiary has satisfied all funding, compliance
and reporting requirements for all Plans. With respect to each Plan, the Company
or the Subsidiary has paid all contributions (including employee salary
reduction contributions) and all insurance premiums that have become due and any
such expense accrued but not yet due has been properly reflected in the
Financial Statements.
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(v) No Plan provides or is required to provide, now or in
the future, health, medical, dental, accident, disability, death or survivor
benefits to or in respect of any person beyond termination of employment, except
to the extent required under any state insurance law or under Part 6 of Subtitle
B of Title I of ERISA and under Section 4980(B) of the Code. No Plan covers any
individual other than employees of the Company or the Subsidiary, other than
dependents or spouses of employees under health and child care policies listed
in Schedule 2.1(m) of the Disclosure Schedule and delivered to the Purchaser.
(vi) The consummation of the transactions contemplated by
this Agreement will not (A) entitle any employee of the Company or the
Subsidiary to severance pay or termination benefits or (B) accelerate the time
of payment or vesting, or increase the amount of compensation due to any such
employee or former employee.
(n) RELATED PARTY TRANSACTIONS. Except as set forth on Schedule
2.1(n) of the Disclosure Schedule, no current or former partner, director,
officer, employee or shareholder of the Company or the Subsidiary or any
associate or Affiliate thereof, or any parent, spouse, child, brother, sister or
any other relative with a relationship (by blood, marriage or adoption) of not
more remote than first cousin of any of the foregoing (collectively, "Family
Members"), is presently, or during the 12-month period ending on the date of
this Agreement has been, directly or indirectly (i) a party to any transaction
with the Company (including any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or personal
property from, or otherwise requiring payments to, any such director, officer,
employee or shareholder or such associate) or (ii) to the Company's Knowledge,
the direct or indirect owner of an interest in any corporation, firm,
association or business organization (other than the ownership of less than 2%
of the outstanding capital stock of any publicly traded entity) which is a
present (or potential) competitor, lender, broker or customer of the Company or
the Subsidiary, nor does any member of management or any of their Family Members
receive income from any source other than the Company or the Subsidiary which
relates to the Company's or the Subsidiary's respective businesses or should
properly accrue to the Company or the Subsidiary. Schedule 2.1(n) of the
Disclosure Schedule sets forth a list of all Family Members who are currently
employed or who were employed by the Company or the Subsidiary at any time
during the last three fiscal years together with a description of job, title and
annual salary and bonus for each such person. Neither the Company nor the
Subsidiary has any loans outstanding to any employee, officer, director or
shareholder of the Company or the Subsidiary or to any Family Member.
(o) TAXES. (i) All Federal, state, local and foreign tax returns
and tax reports for periods ending on or prior to the Subsequent Closing Date by
the Company or the Subsidiary have been or will be filed, or a valid request for
extension has been or will be filed with respect thereto, on a timely basis
(including any extensions) with the appropriate governmental agencies in all
jurisdictions in which such returns and reports are required to be filed. All
such returns and reports are and will be true, correct and complete. Except as
described in Schedule 2.1(o) of the Disclosure Schedule, all Federal, state,
local and foreign income, profits, franchise, sales, use, occupation, property,
excise, employment and other taxes (including interest, penalties and
withholdings of tax) due from and payable by the Company or the Subsidiary on or
prior to the
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Subsequent Closing Date have been fully paid on a timely basis. Except as set
forth in Schedule 2.1(o) of the Disclosure Schedule, neither the Company nor the
Subsidiary is currently the beneficiary of any extension of time within which to
file any tax return. No claim has ever been made by an authority in a
jurisdiction where the Company or the Subsidiary does not file tax returns that
it is or may be subject to taxation by that jurisdiction, and neither the
Company nor the Subsidiary has received any notice, or request for information
from any such authority. No issues have been raised with the Company or the
Subsidiary by the IRS or any other taxing authority in connection with any tax
return or report filed by the Company or the Subsidiary and there are no issues
which, either individually or in the aggregate, could result in any liability
for tax obligations of the Company or the Subsidiary relating to periods ending
on or before September 30, 1997 in excess of the accrued liability for taxes
shown on the Financial Statements. No waivers of statutes of limitations have
been given or requested with respect to the Company or the Subsidiary. Neither
the Company nor the Subsidiary is a party to any tax allocation or sharing
agreement, and neither the Company nor the Subsidiary has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was the Company) or has any liability for taxes
of any person (other than the Company and the Subsidiary) under Treasury
Regulation 1.1502-6 (or any similar provision of state, local or foreign law) as
a transferee or successor or by contract or otherwise. No differences exist
between the amounts of the book basis and the tax basis of assets that are not
accounted for by an accrual on the Financial Statements for Federal income tax
purposes. Neither the Company nor the Subsidiary is required to include in
income any adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by the Company, and the IRS has
proposed no adjustment or change in accounting method. Neither the Company nor
the Subsidiary has consented to be treated as a "consenting corporation" as
defined in Section 341(f) of the Code or as a "collapsible corporation" as
defined in Section 341(b) of the Code. Neither the Company nor the Subsidiary is
a party to any agreement, contract or arrangement that would result, separately
or in the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code. All transactions or methods of
accounting that could give rise to an understatement of Federal income tax
(within the meaning of Section 6661 of the Code for tax returns filed on or
before December 31, 1990, and within the meaning of Section 6662 of the Code for
tax returns filed after December 31, 1990) have been adequately disclosed on the
tax returns in accordance with Section 6661(b)(2)(B) of the Code for tax returns
filed on or prior to December 31, 1990, and in accordance with Section
6662(d)(2)(B) of the Code for tax returns filed after December 31, 1990. Neither
the Company nor the Subsidiary is nor has it been a United States real property
holding company (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(ii) of the Code. The Company
and the Subsidiary have complied and will comply with all applicable laws
relating to the payment and withholding of taxes (including withholding and
reporting requirements under Section 1441 through 1464, 3401 through 3406, 6041
and 6049 of the Code and similar provisions under any other laws) and, within
the time and in the manner prescribed by law, have withheld from wages, fees and
other payments and paid over to the proper governmental or regulatory
authorities all amounts required.
(p) DISCLOSURE. No representation, warranty or statement of the
Company contained in this Agreement, or any
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certificate, schedule, annex or other writing furnished to the Purchaser by the
Company or its predecessor pursuant to the Exchange Act, contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statement contained herein or therein, in light of the circumstances under
which they were made, not misleading.
(q) BOOKS AND RECORDS. The books of account, ledgers, order
books, records and documents of the Company accurately and completely reflect
all material information relating to the businesses of the Company and the
Subsidiary, the nature, acquisition, maintenance, location and collection of
each of its assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company.
(r) FEDERAL RESERVE REGULATIONS. Neither the Company nor the
Subsidiary is engaged in the business of extending credit for the purpose of
purchasing or carrying margin securities (within the meaning of Regulation G of
the Board of Governors of the Federal Reserve System), and no part of the
proceeds from the issuance of the Securities will be used to purchase or carry
any margin security or to extend credit to others for the purpose of purchasing
or carrying any margin security or in any other manner which would involve a
violation of any of the regulations of the Board of Governors of the Federal
Reserve System.
(s) INVESTMENT COMPANY ACT. The Company is not an "investment
company" within the meaning of such term under the Investment Company Act of
1940 and the rules and regulations of the SEC thereunder.
(t) SECURITIES ACT. Assuming that the representations and
warranties of the Purchaser contained in Section 2.2(c) are true and correct,
the Company has complied with all applicable Federal and state securities laws
in connection with the issuance and sale of the Securities. Neither the Company
nor anyone acting on its behalf has offered to sell the Securities or similar
securities to, or solicited offers with respect thereto from, or entered into
any preliminary conversations or negotiations relating thereto with, any person,
so as to bring the issuance and sale of such Securities under the registration
provisions of the Securities Act.
(u) BROKERS. Other than International Capital Partners, Inc.
("ICP"), no agent, broker, investment banker, person or firm acting on behalf of
the Company or under the authority of the Company is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from any of the parties in connection with any of the transactions
contemplated by this Agreement.
(v) CONTROL. Officers and directors of the Company beneficially
own, directly or indirectly, in excess of 25% of the issued and outstanding
voting securities of the Company.
SECTION 2.2. REPRESENTATIONS AND WARRANTS BY THE PURCHASER. The
Purchaser represents and warrants to the Company as follows:
(a) ORGANIZATION AND STANDING. The Purchaser is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware.
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(b) AUTHORIZATION; VALID AND BINDING AGREEMENTS. The Purchaser
has full corporate power and authority to enter into this Agreement, the SBIC
Letter Agreement and the Registration Rights Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement, the SBIC Letter Agreement and the Registration Rights Agreement and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary action on the part of the Purchaser
and no other proceedings on the part of the Purchaser are necessary to authorize
the execution, delivery or performance by the Company of this Agreement, the
SBIC Letter Agreement and the Registration Rights Agreement. This Agreement, the
SBIC Letter Agreement and the Registration Rights Agreement have been duly
executed and delivered by the Purchaser, and constitute the valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(c) INVESTMENT REPRESENTATION. The Purchaser is an "accredited
investor" as defined in the rules and regulations of the SEC under the
Securities Act and is acquiring the Securities for its own account for
investment purposes only and not with a view to resale or distribution within
the meaning of the applicable Federal securities laws. The Purchaser's financial
situation is such that it can afford to bear the economic risk of holding the
Securities for an indefinite period of time and suffer complete loss of its
investment. The Purchaser's knowledge and experience in financial and business
matters are such that it is capable of evaluating the merits and risks of its
purchase of the Securities as contemplated by this Agreement.
(d) ACCESS TO INFORMATION. The Purchaser acknowledges that it has
been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities, and the
merits and risks of investing in the Securities; (ii) access to information
about the Company and the Company's financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that such Purchaser believes is necessary to make an informed
investment decision with respect to the investment; PROVIDED that nothing in
this Section 2.2(d) shall reduce the liability of the Company with respect to
the representations and warranties made by the Company in Section 2.1.
(e) RELIANCE. The Purchaser understands and acknowledges the (i)
the Securities to be sold to it hereunder are being offered and sold to it in a
private placement that is exempt from the registration requirements of the
Securities Act and (ii) the availability of such exemption depends in part on,
and the Company will rely upon, the accuracy and truthfulness of, the foregoing
representations and the Purchaser hereby consents to such reliance.
(f) BROKERS. Other than ICP, no agent, broker, investment banker,
person or firm acting on behalf of the Purchaser or under the authority of the
Purchaser is or will be
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entitled to any broker's or finder's fee or any other commission or similar fee
directly or indirectly from any of the parties in connection with any of the
transactions contemplated by this Agreement.
ARTICLE III
ADDITIONAL AGREEMENTS
SECTION 3.1. EXPENSES. The Company shall bear the costs and
expenses incurred by it, the Purchaser and the Shareholders in connection with
the negotiation, execution and delivery of this Agreement and the transactions
contemplated hereby. At the Initial Closing, the Company shall pay to the
Purchaser up to $50,000 of such costs and expenses incurred by the Purchaser. In
addition, the Company shall pay any and all stamp and other documentary taxes
payable or determined to be payable in connection with the issuance of the
Securities and agrees to hold the Purchaser harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
SECTION 3.2. CONDUCT OF BUSINESS. (a) From the date of this
Agreement until the Subsequent Closing Date, the Company shall operate its
business only in the ordinary course of business consistent with past practice.
The Company shall not, until the Subsequent Closing Date, directly or
indirectly, cause or permit any state of affairs, action or omission described
in clauses (i) through (xiii) of Section 2.1(f).
(b) From the Subsequent Closing Date and for so long as the
Purchaser or its transferees (except transferees who acquire the Securities or
Exercise Shares in a transaction not exempt from the registration requirements
of the Securities Act) hold an amount of shares of Capital Stock equal to at
least 10% of the Capital Stock then outstanding, the Company shall not change
its line of business.
SECTION 3.3. FURTHER ASSURANCES. Each party shall use all
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations, to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as practicable and
to ensure that the conditions set forth in Article IV are satisfied, insofar as
such matters are within the control of any of them.
SECTION 3.4. ACCESS AND INFORMATION. From the date of this
Agreement until the first to occur of (i) the Subsequent Closing Date and (ii)
the termination of this Agreement in accordance with Section 6.2, the Company
shall permit the Purchaser and its representatives to make such investigation of
the business, operations and properties of the Company as the Purchaser deems
necessary or desirable in connection with the transactions contemplated by this
Agreement. Such investigation shall include access to the respective directors,
officers, employees, agents and representatives (including legal counsel and
independent accountants) of the Company and the properties, books, records and
commitments of the Company. The Company shall furnish the Purchaser and its
representatives with such financial, operating and other data and information,
and
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copies of documents with respect to the Company or any of the transactions
contemplated by this Agreement, as the Purchaser shall from time to time
reasonably request. Such access and investigation shall be made upon reasonable
notice and at reasonable places and times. Such access and information shall not
in any way affect or diminish any of the representations or warranties
hereunder. Without limiting the foregoing, during such period, the Company shall
keep the Purchaser informed as to the business and operations of the Company and
shall consult with the Purchaser as appropriate. The Purchaser shall keep
confidential all information disclosed to it pursuant to this Section 3.4 and
Section 3.5(v) unless such information was already in the Purchaser's possession
or known to the Purchaser prior to being disclosed or provided to the Purchaser
until the earliest of such time as (a) disclosure may be required by law, (b)
three years from the date of the receipt of such information, (c) such
information becomes publicly available through no action or fault of the
Purchaser and, (d) such information was or is obtained by the Purchaser from a
third party other than in violation of any agreement or law.
SECTION 3.5 REPORTING REQUIREMENTS. For so long as the Purchaser
or its transferees (except transferees who acquire the Purchasers' Capital Stock
in a transaction not exempt from the registration requirements of the Securities
Act), hold an amount of shares of Capital Stock equal to at least 10% of the
Capital Stock then outstanding, the Company shall furnish the following to the
Purchaser:
(i) as soon as practicable after the end of each month
and fiscal quarter, and in any event within 45 days thereafter, copies
of: (A) an unaudited consolidated balance sheet of the Company as at the
end of such month and quarter, (B) unaudited consolidated statements of
operations, shareholders' equity and cash flows of the Company for the
period ending with such month and quarter and setting forth in
comparative form the figures for the corresponding periods in the
preceding fiscal year certified by the chief financial officer of the
Company as complete and correct, and having been prepared in accordance
with GAAP (other than monthly balance sheets and statements of
operations, shareholders' equity and cash flows) subject to the absence
of footnotes and changes resulting from year-end adjustments;
(ii) such financial information (other than the
information described in clause (i) above) as the Company and Purchaser
may agree;
(iii) as soon as practicable after the end of each fiscal
year of the Company, and in any event within 90 days thereafter, copies
of: (i) a consolidated balance sheet of the Company as at the end of
such year, and (ii) consolidated statements of operations, shareholders'
equity and cash flows of the Company for such year, setting forth in
each case in comparative form the corresponding figures for the
preceding fiscal year, together with supporting notes thereto and
accompanied by an opinion thereon of independent accountants of
recognized national standing, together with a summary prepared by the
Company concerning the Company's operations and financial condition;
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(iv) no later than 60 days prior to the end of each
fiscal year of the Company, the proposed annual business plan and budget
(including the capital expenditures and financing plans) of the Company
for the next fiscal year;
(v) promptly after sending, making available, or filing
the same, all reports and financial statements that the Company sends or
makes available to the shareholders of the Company or files with the
SEC; and
(vi) any other information respecting the business,
properties or the condition or operations, financial or otherwise, of
the Company that the Purchaser may from time to time reasonably request,
including, but not limited to, business units analyses, performance
reviews analyses and monthly sales analyses.
SECTION 3.6. NO SHOPPING. From the date of this Agreement until
the earlier of (i) the Subsequent Closing Date and (ii) the date this Agreement
is terminated in accordance with Section 6.2, the Company and the Subsidiary
shall not, and shall ensure that any directors, officers, agents,
representatives or Affiliates of the Company or the Subsidiary do not, directly
or indirectly, solicit or initiate, enter into or conduct, discussions
concerning, or exchange information (including by way of furnishing information
concerning the Company or the Subsidiary or their respective businesses) or
enter into any negotiations concerning, or solicit, entertain or agree to any
proposals for, (i) a merger, consolidation or other business combination
involving the Company or the Subsidiary, (ii) a sale of any equity interest in
the Company or the Subsidiary, (iii) a sale of a significant portion of business
or assets of the Company or the Subsidiary, (iv) a recapitalization or
restructuring of the Company or the Subsidiary or (v) a transaction similar to
any of the foregoing. In addition, during such time period, the Company shall
not authorize, direct or knowingly permit any officer, shareholder, director,
employee or agent of the Company or the Subsidiary to do any of the foregoing
and the Company shall notify the Purchaser promptly of the identity of any
person who approaches the Company or the Subsidiary with respect to any of the
foregoing, as well as the price and terms of any such proposal, if applicable
SECTION 3.7. PUBLIC ANNOUNCEMENTS No press release or public
announcement related to this Agreement or the transactions contemplated hereby
shall be issued or made without the joint approval of the Purchaser and the
Company, unless required by applicable law or legal process in which case the
Purchaser and the Company shall have the right, to the extent reasonably
practicable, to review and comment on such press release or announcement prior
to publication.
SECTION 3.8. RESERVED SHARES. The Company shall reserve and at
all times keep available, free from preemptive rights, out of its authorized but
unissued stock, a sufficient number of shares of Common Stock to provide for the
issuance of such shares upon the exercise of the Warrants.
SECTION 3.9. PROCEEDS. The proceeds from the sale of the
Securities will be used for the purposes set forth on Schedule 1.
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SECTION 3.10. NOTIFICATION. The Company shall promptly notify the
Purchaser of (i) any notice or other communications from any person or entity
that the consent of such person or entity is or may be required in connection
with the consummation of the transactions contemplated hereby and (ii) any
notice or other communication from any governmental or regulatory agency or
authority in connection with the consummation of the transactions contemplated
hereby.
SECTION 3.11. NEGATIVE COVENANTS. Notwithstanding anything in the
Certificate of Incorporation or the By-laws to the contrary, from and including
the Initial Closing Date to and including the Subsequent Closing Date and after
the Subsequent Closing Date for so long as the Purchaser or its Affliliates hold
an amount of shares of Capital Stock equal to at least 10% of the Capital Stock
then outstanding, then the following actions by the Company or the Subsidiary,
shall require the written consent of the Purchaser (in addition to any
stockholder or Board of Directors approval as may be required by applicable
statute, agreement or otherwise):
(i) the purchase, construction, acquisition, sale, lease,
exchange or disposition of any property or asset, or the
making of any investment, other than in the ordinary course
of business, the purchase price or value of which exceeds
$100,000;
(ii) the entry into any agreement or series of related
agreements, including any agreement to borrow money that,
either individually or collectively, (A) creates a monetary
obligation or a liability greater than $100,000 or (B) grants
a mortgage on, a security interest in, a pledge or otherwise
encumbers, any material asset of the Company or the
Subsidiary;
(iii) the entry into any transaction, including any contract,
agreement or other arrangement providing for the furnishing
of services by, or rental of real or personal property from,
or otherwise requiring payments or the issuance of securities
(including stock options) (or any amendments, modifications
or waivers of any such contract, agreement or arrangement) to
any shareholder (who holds in excess of five percent of the
issued and outstanding voting securities of the Company) or
any officer or director of the Company or the Subsidiary or
any of their respective Affiliates, or any Family Members of
any of the foregoing;
(iv) the initiation by the Company or the Subsidiary of a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or
consent by the
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Company or the Subsidiary to any such relief or to the
appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it,
or a general assignment by the Company or the Subsidiary for
the benefit of creditors, or the failure by the Company or
the Subsidiary generally to pay their respective debts as
they become due, or the taking by the Company or the
Subsidiary of any action to authorize any of the foregoing;
(v) the loan of funds to, or the guaranty of any obligation or
liability of, or the entry into any other agreement,
transaction or arrangement with any, officer, director or
shareholder (who holds in excess of five percent of the
issued and outstanding voting securities of the Company) of
the Company or the Subsidiary or any of their respective
Affiliates or of any Family Members of any of the foregoing
other than the reimbursement of expenses of any such person
in the ordinary course in accordance with the policies of the
Company;
(vi) the merger or the consolidation of the Company or the
Subsidiary with or into another entity or other business
combination or the sale, assignment, lease or other
disposition of all or substantially all of the assets of the
Company or the Subsidiary;
(vii) any issuance of securities or any recapitalization,
restructuring or other reorganization of the Company or the
Subsidiary, including the capitalization of any subsidiaries
of the Company or the Subsidiary, or any repurchase or
redemption of the Company's or the Subsidiary's securities;
(viii) any distributions or dividends, whether in cash,
securities or in property in kind, by the Company to its
stockholders;
(ix) any material changes in accounting policies of the Company
and any removal or appointment of the Company's independent
accountants;
(x) the initiation or settlement of legal, administrative or
other suits or proceedings in the Company's name or in the
Subsidiary's name;
(xi) the establishment or amendment of, or the grant, acceleration
or waiver of any terms or conditions in, or determination or
acceleration pursuant to the terms of, any pension,
retirement, savings, deferred compensation, profit sharing,
benefit or incentive plan or any stock option, stock
appreciation, stock purchase, performance or other similar
plan or any Plan, for any or all current or former employees,
officers or directors of the Company or the Subsidiary or any
of their respective Affiliates or of any Family Member of any
of the foregoing;
(xii) the amendment of the Certificate of Incorporation or
By-laws in any respect;
(xiii) any change in any of the names under which the Company or
the Subsidiary conducts business; or
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(xiv) any other transaction, agreement or arrangement or series
of related transactions, agreements or arrangements that is
material to the business of the Company or the Subsidiary or
to the condition (financial or otherwise), operations,
business, assets, liabilities, earnings or prospects of the
Company or the Subsidiary, taken as a whole, other than sales
of inspection systems in the ordinary course of business
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. CONDITIONS TO OBLIGATIONS OF THE PURCHASER TO EFFECT
THE INITIAL CLOSING. The obligation of the Purchaser to effect the Initial
Closing is subject to the satisfaction of the following conditions unless waived
by the Purchaser:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS; DELIVERIES. (i)
The representations and warranties of the Company contained in Section 2.1 shall
be true and correct in all respects as of the date of this Agreement and as of
the Initial Closing Date as if made on and as of the Initial Closing Date
(except that such representations and warranties made as of a specified date
shall be true and correct as of such date), (ii) the Company shall have
performed and complied with all covenants and agreements required to be
performed or complied with on or prior to the Initial Closing Date and (iii) the
Company shall have made the closing deliveries set forth in Section 1.4 (a)(i).
(b) CONFLICTS; CONSENTS. All permits, consents, approvals,
licenses, orders, authorizations, registrations, declarations, filings and other
actions that are required in connection with the execution, delivery or
performance of this Agreement, the Registration Rights Agreement, the SBIC
Letter Agreement and the certificates evidencing the Securities or the
transactions contemplated hereby and thereby in order to prevent any of the
effects described Section 2.1(d) with respect to any note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, agreement or
arrangement to which the Company or the Subsidiary is a party or by which any of
their respective properties or assets are bound or with respect to any license,
franchise, permit or other similar authorization held by the Company or the
Subsidiary (all of which consents, if any, are set forth on Schedule 4.1(b) of
the Disclosure Schedule) shall have been obtained or taken.
(c) MATERIAL ADVERSE CHANGE. There shall not have been any
material adverse change in the condition (financial or otherwise), operations,
business, assets, liabilities, earnings or prospects of the Company and the
Subsidiary, taken as a whole.
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(d) CERTIFICATES.
(i) The Purchaser shall have received a certificate from
an executive officer of the Company, dated the Initial Closing Date, in
substantially the form of Exhibit F.
(ii) The Purchaser shall have received a certificate of
the Secretary of the Company, dated the Initial Closing Date, in substantially
the form of Exhibit G.
(e) OPINION OF COUNSEL. The Purchaser shall have received the
opinion, dated the Initial Closing Date, of Mintz Levin Cohn Ferris Glovsky and
Popeo PC, counsel to the Company, in substantially the form of Exhibit H.
SECTION 4.2. CONDITIONS OF OBLIGATIONS OF THE COMPANY TO EFFECT
THE INITIAL CLOSING. The obligation of the Company to effect the Initial Closing
are subject to the satisfaction or waiver of the following conditions: (a) the
representations and warranties of the Purchaser contained in Section 2.2 shall
be true and correct in all respects as of the date of this Agreement and as of
the Initial Closing Date as if made on and as of the Initial Closing Date; (b)
the Purchaser shall have performed and complied with all covenants and
agreements required to be performed or complied with on or prior to the Initial
Closing Date; and (c) the Purchaser shall have made the closing deliveries set
forth in Section 1.4(a)(ii).
SECTION 4.3. CONDITIONS TO OBLIGATIONS OF THE PURCHASER TO EFFECT
THE SUBSEQUENT CLOSING. The obligation of the Purchaser to effect the Subsequent
Closing is subject to the satisfaction of the following conditions unless waived
by the Purchaser:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS; DELIVERIES. (i)
The representations and warranties of the Company contained in Section 2.1 shall
be true and correct in all respects as of the date of this Agreement and as of
the Subsequent Closing Date as if made on and as of the Subsequent Closing Date
(except that such representations and warranties made as of a specified date
shall be true and correct as of such date), (ii) the Company shall have
performed and complied with all covenants and agreements required to be
performed or complied with on or prior to the Subsequent Closing Date and (iii)
the Company shall have made the closing deliveries set forth in Section 1.4
(b)(i).
(b) CONFLICTS; CONSENTS. All permits, consents, approvals,
licenses, orders, authorizations, registrations, declarations, filings and other
actions that are required in connection with the execution, delivery or
performance of this Agreement, the Registration Rights Agreement, the SBIC
Letter Agreement and the certificates evidencing the Securities or the
transactions contemplated hereby and thereby in order to prevent any of the
effects described Section 2.1(d) with respect to any note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, agreement or
arrangement to which the Company or the Subsidiary is a party or by which any of
their respective properties or assets are bound or with respect to any license,
franchise, permit or other similar authorization held by the Company or the
Subsidiary (all of which consents, if any, are set forth on Schedule 4.1(b) of
the Disclosure Schedule) shall have been obtained or taken.
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(c) MATERIAL ADVERSE CHANGE. There shall not have been any
material adverse change in the condition (financial or otherwise), operations,
business, assets, liabilities, earnings or prospects of the Company and the
Subsidiary, taken as a whole.
(d) CERTIFICATES.
(i) The Purchaser shall have received a certificate from
an executive officer of the Company, dated the Subsequent Closing Date, in
substantially the form of Exhibit F.
(ii) The Purchaser shall have received a certificate of
the Secretary of the Company, dated the Subsequent Closing Date, in
substantially the form of Exhibit G.
(e) OPINION OF COUNSEL. The Purchaser shall have received the
opinion, dated the Subsequent Closing Date, of Mintz Levin Cohn Ferris Glovsky
and Popeo PC, counsel to the Company, in substantially the form of Exhibit H.
SECTION 4.4. CONDITIONS OF OBLIGATIONS OF THE COMPANY TO EFFECT
THE SUBSEQUENT CLOSING. The obligation of the Company to effect the Subsequent
Closing are subject to the satisfaction or waiver of the following conditions:
(a) the representations and warranties of the Purchaser contained in Section 2.2
shall be true and correct in all respects as of the date of this Agreement and
as of the Subsequent Closing Date as if made on and as of the Subsequent Closing
Date; (b) the Purchaser shall have performed and complied with all covenants and
agreements required to be performed or complied with on or prior to the
Subsequent Closing Date; and (c) the Purchaser shall have made the closing
deliveries set forth in Section 1.4(b)(ii).
ARTICLE V
INDEMNITY
SECTION 5.1. INDEMNIFICATION. (a) The Company indemnifies and
holds harmless the Purchaser and its Affiliates, directors, officers, employees
and other agents and representatives from and against any and all liabilities,
judgments, claims, settlements, losses, damages (including any diminution in
value as appropriate), reasonable fees (including attorneys' and other experts'
fees and disbursements), liens, taxes, penalties, obligations and expenses
(collectively, "Losses") incurred or suffered by any such person or entity
arising from, by reason of or in connection with any misrepresentation or breach
of any representation, warranty or agreement of the Company contained in this
Agreement or any certificate or other document delivered by the Company under
this Agreement. The Company shall indemnify and hold harmless the Purchaser and
its Affiliates, directors, officers, employees and other agents and
representatives from and against any and all Losses incurred or suffered by the
Purchaser, arising from, by reason of or in connection with any third party
claim or action, or potential or threatened claim or action, related to this
Agreement and the transactions contemplated hereby.
(b) The Company shall not have any liability under Section 5.1(a)
unless the aggregate of all Losses relating thereto for which the Company would,
but for this Section 5.1(b), be liable exceeds $50,000, in which case the
Purchaser shall be entitled to all Losses regardless of
25
<PAGE> 27
the limitation set forth in this sentence. The limitation on liability set forth
in the immediately preceding sentence shall not apply (i) in the event of fraud,
intentional misrepresentation or intentional breach or (ii) in the case of any
representation or warranty set forth in Section 2.1(c) or Section 2.1(o).
(c) The Purchaser indemnifies and holds harmless the Company and
its Affiliates, directors, officers, employees and other agents and
representatives, from and against any and all Losses incurred or suffered by any
such person or entity arising from, by reason of or in connection with any
misrepresentation or breach of any representation, warranty or agreement of the
Purchaser contained in this Agreement or any certificate or other document
delivered by the Purchaser under this Agreement.
(d) In case any claim or litigation which might give rise to any
obligation of a party under the indemnity and reimbursement provisions of this
Agreement (each an "Indemnifying Party") shall come to the attention of the
party seeking indemnification hereunder (the "Indemnified Party"), the
Indemnified Party shall notify in writing promptly the Indemnifying Party of the
existence, nature and amount of potential loss. Failure to give such notice
shall not affect the rights of the Indemnified Party, except to the extent that
the Indemnifying Party shall have been materially prejudiced by such failure.
The Indemnifying Party shall be entitled to participate in and, if (i) such
claim can properly be resolved by money damages alone and the Indemnifying Party
has the financial resources to pay such damages and (ii) the Indemnifying Party
admits that this indemnity fully covers the claim or litigation, the
Indemnifying Party shall be entitled to direct the defense of any claim at its
expense, but such defense shall be conducted by legal counsel reasonably
satisfactory to the Indemnified Party. No Indemnifying Party shall be liable to
an Indemnified Party for any settlement of any action or claim without the
consent of the Indemnifying Party; provided that the Indemnifying Party shall
not unreasonably withhold its consent to any such settlement. No Indemnifying
Party shall, except with the consent of the Indemnified Party, consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability and equitable claims in
response to such claim or litigation.
(e) The Indemnifying Party shall only be obligated to indemnify
and hold harmless the Indemnified Party for Losses for which a notice of claim
is given within the applicable survival period as set forth in Section 6.6.
SECTION 5.2. NO ELECTION. Nothing contained in this Article V, or
elsewhere in this Agreement, shall be deemed an election of remedies under this
Agreement or limit in any way the liability of any party under any other
agreement to which such party is a party relating to this Agreement or the
transactions contemplated by this Agreement.
26
<PAGE> 28
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. ENTIRE AGREEMENT. This Agreement and the schedules
and exhibits hereto contain the entire agreement among the parties with respect
to the transactions contemplated by this Agreement and supersede all prior
agreements or understandings among the parties.
SECTION 6.2. TERMINATION. (a) This Agreement shall terminate on
the earliest to occur of any of the following events:
(i) the mutual written agreement of the Purchaser and the
Company;
(ii) by written notice of the Purchaser or the Company to
the other party, if the Subsequent Closing shall not have occurred prior
to the close of business on November 25, 1997;
(iii) by written notice of the Purchaser to the Company,
if the Company shall have materially breached any of its
representations, warranties or agreements contained in this Agreement;
or
(iv) by written notice of the Company to the Purchaser,
if the Purchaser shall have materially breached any of its
representations, warranties or agreements contained in this Agreement.
(b) Nothing in this Section shall relieve any party of any
liability for a breach of this Agreement prior to its termination, except that
if this Agreement terminates in accordance with Section 6.2(a) and the Purchaser
receives reimbursement of its costs and expenses in accordance with Section 3.1,
then this Agreement shall terminate without any further liability. Except as
aforesaid, upon the termination of this Agreement, all rights and obligations of
the parties under this Agreement shall terminate, except their obligations under
Section 3.1, Section 3.4 and Section 3.7.
SECTION 6.3. DESCRIPTIVE HEADINGS; CERTAIN INTERPRETATIONS. (a)
Descriptive headings are for convenience only and shall not control or affect
the meaning or construction of any provision of this Agreement.
(b) Whenever any party makes any representation, warranty or
other statement to such party's knowledge, such party will be deemed to have
made due inquiry into the subject matter of such representation, warranty or
other statement.
(c) Except as otherwise expressly provided in this Agreement, the
following rules of interpretation apply to this Agreement: (i) the singular
includes the plural and the plural includes the singular; (ii) "or" and "any"
are not exclusive and "include" and "including" are not limiting; (iii) a
reference to any agreement or other contract includes permitted supplements and
27
<PAGE> 29
amendments; (iv) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder; (v) a reference to a
person includes its permitted successors and assigns; (vi) a reference to GAAP
refers to United States GAAP; and (vii) a reference in this Agreement to an
Article, Section, Exhibit or Schedule is to the Article, Section, Exhibit or
Schedule of this Agreement.
SECTION 6.4. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing and sufficient if
delivered personally or sent by telecopy (with confirmation of receipt) or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company: Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
Attention: Juan J. Amodei
Telecopy: (508) 441-0122
With a copy to: Mintz Levin Cohn Ferris Glovsky
and Popeo PC
One Financial Center
Boston, Massachusetts 02111
Attention: Neil H. Aronson
Telecopy: (617) 542-2241
If to the Purchaser: Imprimis Investors LLC
c/o Wexford Management LLC
411 West Putnam Avenue
Greenwich, Connecticut 06830
Attention: Frank S. Plimpton
Telecopy: (203) 862-7451
With a copy to: Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
Attention: Michael B. Hopkins
Telecopy: (212) 841-1010
or to such other address or telecopy number as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Each such notice, request or communication shall be effective when received or,
if given by mail, when delivered at the
28
<PAGE> 30
address specified in this Section or on the fifth business day following the
date on which such communication is posted, whichever occurs first.
SECTION 6.5. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 6.6. SURVIVAL. Unless otherwise expressly provided
herein, all representations and warranties, agreements and covenants contained
in this Agreement or in any document delivered pursuant to this Agreement or in
connection with this Agreement shall survive both the Initial Closing and the
Subsequent Closing and shall remain in full force and effect until the third
anniversary of the Subsequent Closing Date, except for (i) the representations
and warranties and agreements contained in Sections 2.1(c), (l)(ii),
(m)(ii)-(iv) and (o) and Sections 3.2(b), 3.5, 3.7, 3.8 and 3.11, and (ii) in
the case of fraud, intentional misrepresentation or intentional breach, any
representation or warranty, shall remain in full force and effect until the
expiration of the applicable statute of limitations, or, in the case of a third
party claim, 30 days after the expiration of the applicable statute of
limitations, taking into account any extensions thereof. Neither the period of
survival nor the liability of the Company with respect to the representations
and warranties shall be reduced by any investigation made at any time by or on
behalf of the Purchaser.
SECTION 6.7. BENEFITS OF AGREEMENT. All of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. This Agreement
is for the sole benefit of the parties hereto and not for the benefit of any
third party.
SECTION 6.8. AMENDMENTS AND WAIVERS. No modification, amendment
or waiver of any provision of, or consent required by, this Agreement, nor any
consent to any departure herefrom, shall be effective unless it is in writing
and signed by the parties hereto. Such modification, amendment, waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
SECTION 6.9. ASSIGNMENT. This Agreement and the rights and
obligations hereunder shall not be assignable or transferable by any party
hereto without the prior written consent of the other party; PROVIDED that
notwithstanding the foregoing, the Purchaser may assign this Agreement and the
rights and obligations hereunder, in whole or in part, to an Affiliate. Any
instrument purporting to make an assignment in violation of this Section shall
be void. All covenants, agreements, representations, warranties and undertakings
in this Agreement made by and on behalf of any party hereto shall bind and inure
to the benefit of the successors and permitted assigns of such party.
SECTION 6.10. ENFORCEABILITY. It is the desire and intent of the
parties hereto that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
29
<PAGE> 31
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
SECTION 6.11. SPECIFIC ENFORCEMENT. Each party expressly agrees
that the other party will be irreparably damaged if this Agreement is not
specifically enforced. Upon a breach or threatened breach of the terms,
covenants or conditions of this Agreement, the non-breaching party shall in
addition to all other remedies, be entitled to a temporary or permanent
injunction, without any showing of any actual damage, or a decree for specific
performance, in accordance with the provision hereof.
SECTION 6.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).
SECTION 6.13. CONSENT TO JURISDICTION. EACH OF THE PURCHASER AND
THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION
OF ANY FEDERAL OR STATE COURT OF NEW YORK SITTING IN NEW YORK CITY AND
IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE LITIGATED
EXCLUSIVELY IN SUCH COURTS. EACH OF THE PURCHASER AND THE COMPANY AGREES NOT TO
COMMENCE ANY LEGAL PROCEEDING RELATED HERETO EXCEPT IN SUCH COURT. EACH OF THE
PURCHASER AND THE COMPANY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING IN ANY SUCH
COURT AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT
TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 6.14. RESTRICTIVE LEGEND
(a) SHARES AND EXERCISE SHARES. Each certificate representing the
Shares, the Exercise Shares or other securities issued in respect of the
Warrants purchased hereunder upon any conversion or stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall be stamped or
otherwise imprinted with the following legend:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR
APPLICABLE STATE SECURITIES LAWS AND INSTEAD ARE BEING ISSUED
PURSUANT TO EXEMPTIONS CONTAINED IN SAID LAWS. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED UNLESS (1)
A REGISTRATION STATEMENT WITH RESPECT TO SUCH SHARES
30
<PAGE> 32
SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF 1933, (2) SUCH
SHARES ARE TRANSFERRED PURSUANT TO RULE 144, OR ANY SUCCESSOR
RULE, UNDER SUCH ACT OR (3)INDUSTRIAL IMAGING CORPORATION SHALL
HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT NO VIOLATION OF SUCH ACT OR SIMILAR STATE ACTS WILL BE
INVOLVED IN SUCH TRANSFER."
(b) WARRANTS. Each certificate representing the Warrants
purchased hereunder shall be stamped or otherwise imprinted with the following
legend:
"THESE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR
APPLICABLE STATE SECURITIES LAWS AND INSTEAD ARE BEING ISSUED
PURSUANT TO EXEMPTIONS CONTAINED IN SAID LAWS. THE WARRANTS
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED UNLESS (1)
A REGISTRATION STATEMENT WITH RESPECT TO SUCH WARRANTS AND THE
SHARES UNDERLYING SUCH WARRANTS SHALL BE EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, (2) SUCH WARRANTS ARE TRANSFERRED
PURSUANT TO RULE 144, OR ANY SUCCESSOR RULE, UNDER SUCH ACT OR
(3) INDUSTRIAL IMAGING CORPORATION SHALL HAVE RECEIVED AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO IT THAT NO VIOLATION OF
SUCH ACT OR SIMILAR STATE ACTS WILL BE INVOLVED IN SUCH
TRANSFER."
SECTION 6.15. RESTRICTIONS ON TRANSFERABILITY. The Company shall
not be required to register the transfer of any Securities or Exercise Shares on
the books of the Company unless: (i) such securities have been registered under
applicable Federal and state securities laws, (ii) such shares are being
transferred pursuant to Rule 144, or any successor rule, under the Securities
Act or (iii) the Company shall have been provided with an opinion of counsel
reasonably satisfactory to it to the effect that the proposed transfer is exempt
from the registration requirement of the Securities Act and the relevant state
securities laws.
SECTION 6.16. GENERAL. All Exhibits, Schedules and Disclosure
Schedules are hereby incorporated by reference and made a part of this
Agreement.
31
<PAGE> 33
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be duly executed and delivered as of the day and year first above written.
INDUSTRIAL IMAGING CORPORATION
By:
-----------------------------------
Name:
Title:
IMPRIMIS INVESTORS LLC
By:
-----------------------------------
Name:
Title:
32
<PAGE> 34
TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE OF THE SHARES
<TABLE>
<CAPTION>
<S> <C>
SECTION 1.1. The Securities......................................................................2
SECTION 1.2. Purchase Price......................................................................2
SECTION 1.3. Closing.............................................................................2
SECTION 1.4. Delivery and Payment................................................................3
</TABLE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
<TABLE>
<CAPTION>
<S> <C>
SECTION 2.1. Representations and Warranties of the Company.......................................4
(a) Organization, Standing and Power........................................................4
(b) Authorization; Valid and Binding Agreements.............................................5
(c) Capitalization; Equity Interests........................................................5
(d) Conflicts; Consents.....................................................................7
(e) Financial Information...................................................................7
(f) Absence of Changes......................................................................8
(g) Assets, Property and Related Matters; Real Property....................................10
(h) Patents, Trademarks and Similar Rights.................................................11
(i) Insurance..............................................................................11
(j) Agreements.............................................................................12
(k) Litigation.............................................................................12
(l) Compliance; Governmental Authorizations................................................13
(m) Labor Relations; Employees.............................................................14
(n) Related Party Transactions.............................................................15
(o) Taxes..................................................................................15
(p) Disclosure.............................................................................17
(q) Books and Records......................................................................17
(r) Federal Reserve Regulations............................................................17
(s) Investment Company Act.................................................................17
(t) Securities Act.........................................................................17
(u) Brokers................................................................................17
(v) Control................................................................................16
SECTION 2.3. Representations and Warranties by the Purchasers..................................18
(a) Organization and Standing..............................................................18
(b) Authorization; Valid and Binding Agreements............................................18
</TABLE>
i
<PAGE> 35
<TABLE>
<S> <C>
(c) Investment Representation..............................................................18
(d) Access to Information..................................................................19
(e) Reliance...............................................................................17
(f) Brokers................................................................................17
</TABLE>
ARTICLE III
ADDITIONAL AGREEMENTS
<TABLE>
<S> <C>
SECTION 3.1. Expenses...........................................................................19
SECTION 3.2. Conduct of Business................................................................19
SECTION 3.3. Further Assurances.................................................................20
SECTION 3.4. Access and Information.............................................................20
SECTION 3.5. Reporting Requirements.............................................................20
SECTION 3.6. No Shopping........................................................................22
SECTION 3.7. Public Announcements...............................................................22
SECTION 3.8. Reserved Shares....................................................................22
SECTION 3.9. Proceeds...........................................................................22
SECTION 3.10 Notification.......................................................................23
SECTION 3.11 Negative Covenants.................................................................20
</TABLE>
ARTICLE IV
CONDITIONS PRECEDENT
<TABLE>
<S> <C>
SECTION 4.1. Conditions to Obligations of the Purchaser to effect the Initial Closing...........25
(a) Representations and Warranties; Covenants; Deliveries..................................25
(b) Conflicts; Consents....................................................................19
(c) Material Adverse Change................................................................20
(d) Certificates...........................................................................26
(e) Opinion of Counsel.....................................................................26
SECTION 4.2. Conditions of Obligations of the Company to effect the Subsequent Closing..........26
SECTION 4.3 Conditions to Obligations of the Purchaser to effect the Subsequent Closing.........23
(a) Representations and Warranties; Covenants; Deliveries..................................23
(b) Conflicts; Consents....................................................................23
(c) Material Adverse Change................................................................24
(d) Certificates...........................................................................24
</TABLE>
ii
<PAGE> 36
<TABLE>
<S> <C>
(e) Opinion of Counsel.....................................................................24
SECTION 4.4 Conditions of Obligations of the Company to effect the Subsequent Closing...........24
</TABLE>
ARTICLE V
INDEMNITY
<TABLE>
<S> <C>
SECTION 5.1. Indemnification....................................................................28
SECTION 5.2. No Election........................................................................29
</TABLE>
ARTICLE VI
MISCELLANEOUS
<TABLE>
<S> <C>
SECTION 6.1. Entire Agreement...................................................................30
SECTION 6.2. Termination........................................................................30
SECTION 6.3. Descriptive Headings; Certain Interpretations......................................30
SECTION 6.4. Notices............................................................................31
SECTION 6.5. Counterparts.......................................................................32
SECTION 6.6. Survival...........................................................................32
SECTION 6.7. Benefits of Agreement..............................................................32
SECTION 6.8. Amendments and Waivers.............................................................32
SECTION 6.9. Assignment.........................................................................32
SECTION 6.10. Enforceability....................................................................33
SECTION 6.11. Specific Enforcement..............................................................33
SECTION 6.12. Governing Law.....................................................................33
SECTION 6.13. Consent to Jurisdiction...........................................................34
SECTION 6.14. Restrictive Legend................................................................34
SECTION 6.15. Restrictions on Transferability...................................................35
SECTION 6.16. General...........................................................................26
EXHIBITS
Exhibit A Form of Class A Warrants
Exhibit B Form of Class B Warrants
Exhibit C Form of By-laws
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of SBIC Letter Agreement
Exhibit F Form of Officer's Certificate of the Company
</TABLE>
iii
<PAGE> 37
<TABLE>
<CAPTION>
<S> <C>
Exhibit G Form of Secretary's Certificate of the Company
Exhibit H Form of Opinion of Mintz Levin Cohn Ferris Glovsky and Popeo PC
SCHEDULE
Schedule 1 Use of Proceeds
</TABLE>
iv
<PAGE> 1
EXHIBIT 10k
THESE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR APPLICABLE STATE
SECURITIES LAWS AND INSTEAD ARE BEING ISSUED PURSUANT TO EXEMPTIONS CONTAINED IN
SAID LAWS. THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT TO SUCH WARRANTS AND THE SHARES
UNDERLYING SUCH WARRANTS SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF 1933,
(2) SUCH WARRANTS ARE TRANSFERRED PURSUANT TO RULE 144, OR ANY SUCCESSOR RULE,
UNDER SUCH ACT OR (3) INDUSTRIAL IMAGING CORPORATION SHALL HAVE RECEIVED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT NO VIOLATION OF SUCH ACT
OR SIMILAR STATE ACTS WILL BE INVOLVED IN SUCH TRANSFER.
WARRANT NO. A-1
WARRANT
TO PURCHASE SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE,
OF
INDUSTRIAL IMAGING CORPORATION
THIS IS TO CERTIFY THAT IMPRIMIS INVESTORS LLC, or such holder's
registered assigns (the "Investor"), is the owner of 250,000 Warrants (as
defined below), each of which entitles the registered holder thereof to purchase
from INDUSTRIAL IMAGING CORPORATION, a Delaware corporation (the "Company"), one
fully paid, duly authorized and nonassessable share of Common Stock, par value
$0.01 per share, of the Company (the "Common Stock"), at any time or from time
to time on or before 5:00 p.m., New York City time, on November 12, 2002, at an
exercise price of $1.00 per share (the "Exercise Price"), all on the terms and
subject to the conditions hereinafter set forth.
The number of shares of Common Stock issuable upon exercise of each
such Warrant (the "Number Issuable"), which is initially one (1) share, is
subject to adjustment from time to time pursuant to the provisions of Section 2
of this Warrant Certificate. The Warrants evidenced by this certificate are part
of a series of Class A
<PAGE> 2
Warrants being issued by the Company on the Issue Date (the "Warrants"). The
execution and delivery of this Warrant Certificate is a condition precedent to
the obligations of the Investor under the Securities Purchase Agreement, dated
as of November 12, 1997, between the Investor and the Company.
Capitalized terms used herein but not otherwise defined shall have the
meanings given them in Section 12 hereof.
Section 1. EXERCISE OF WARRANT. (a) The Warrants evidenced hereby may
be exercised, in whole or in part, by the registered holder hereof at any time
or from time to time on or before 5:00 p.m., New York City time, on November 12,
2002, upon delivery to the Company at the principal executive office of the
Company in the United States of America, of (i) this Warrant Certificate, (ii) a
written notice stating that such holder elects to exercise all or some portion
of the Warrants evidenced hereby in accordance with the provisions of this
Section 1 and specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued and (iii)
payment of the Exercise Price for the shares of Common Stock issuable upon
exercise of such Warrants, which shall be payable either (A) by a certified or
official bank check payable to the order of the Company or (B) in the manner
prescribed in Section 1(e), at the holder's option (collectively, the "Warrant
Exercise Documentation").
(b) As promptly as practicable, and in any event within five Business
Days after receipt of the Warrant Exercise Documentation, the Company shall
deliver or cause to be delivered (a) certificates representing the number of
validly issued, fully paid and nonassessable shares of Common Stock specified in
the Warrant Exercise Documentation, (b) if applicable, cash in lieu of any
fraction of a share, as hereinafter provided, and (c) if less than the full
number of Warrants evidenced hereby are being exercised, a new Warrant
Certificate or Certificates, of like tenor, for the number of Warrants evidenced
by this Warrant Certificate, less the number of Warrants then being exercised.
Such exercise shall be deemed to have been made at the close of business on the
date of delivery of the Warrant Exercise Documentation so that the Person
entitled to receive shares of Common Stock upon such exercise shall be treated
for all purposes as having become the record holder of such shares of Common
Stock at such time. No such surrender shall be effective to constitute the
Person entitled to receive such shares as the record holder thereof while the
transfer books of the Company for the Common Stock are closed for any purpose
(but not for any period in excess of five days); but any such surrender of this
Warrant Certificate for exercise during any period while such books are so
closed shall become effective for exercise immediately upon the reopening of
such books, as if the exercise had been made on the date the Warrant Exercise
Documentation was received and for the Number Issuable of Common Stock specified
in the Warrant Exercise Documentation and at the Exercise Price.
(c) The Company shall pay all expenses in connection with, and all
taxes and other governmental charges (other than income taxes of the holder)
that may
2
<PAGE> 3
be imposed in respect of, the issue or delivery of any shares of Common Stock
issuable upon the exercise of the Warrants evidenced hereby. The Company shall
not be required, however, to pay any tax or other charge imposed in connection
with any transfer involved in the issue of any certificate for shares of Common
Stock in any name other than that of the registered holder of the Warrants
evidenced hereby.
(d) In connection with the exercise of any Warrants evidenced hereby,
no fractions of shares of Common Stock shall be issued, but in lieu thereof the
Company shall pay a cash adjustment in respect of such fractional interest in an
amount equal to such fractional interest multiplied by the Current Market Price
per share on the Business Day which next precedes the day of exercise. If more
than one such Warrant shall be exercised by the holder thereof at the same time,
the number of full shares of Common Stock issuable on such exercise shall be
computed on the basis of the total number of Warrants so exercised.
(e) In addition to the method of payment set forth in Section
1(a)(iii) and in lieu of any cash payment required thereunder, the registered
holder shall have the right to exercise the Warrants in full or in part by
surrendering the Warrant Certificate in the manner specified in Section 1 in
exchange for the number of shares of Common Stock equal to the quotient derived
from dividing (i) the excess of (A) the product of (I) the Number Issuable of
Common Stock as to which Warrants are being exercised and (II) the Current
Market Price per share, over (B) the product of (y) the Number Issuable of
Common Stock as to which Warrants being exercised and (z) the Exercise Price, by
(ii) the Current Market Price per share.
(f) In the event of a sale of all or substantially all of the
Company's assets for cash, the Warrants shall be deemed exercised in accordance
with the provisions of this Section 1 as of date of the consummation of such
sale and the holder hereof shall be entitled to pay the Exercise Price in the
manner prescribed in Section 1(a)(iii) or Section 1(d), at its option.
Section 2. ADJUSTMENTS.
(a) ADJUSTMENT OF NUMBER ISSUABLE. The Number Issuable shall be
subject to adjustment from time to time as follows:
(i) In case the Company shall at any time or from time to time
after the Issue Date:
(A) pay a dividend or make a distribution on the
outstanding shares of Common Stock in capital stock of the Company;
(B) subdivide the outstanding shares of Common Stock into
a larger number of shares; or
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<PAGE> 4
(C) combine the outstanding shares of Common Stock into a
smaller number of shares;
then, and in each such case (other than a dividend or distribution
received by or set aside for the benefit of the holder pursuant to
Section 2(c) hereof), the Number Issuable in effect immediately prior
to such event shall be adjusted (and any other appropriate actions
shall be taken by the Company) so that the holder of any Warrant
evidenced hereby thereafter exercised shall be entitled to receive the
number of shares of Common Stock or other securities of the Company
which such holder would have owned or had been entitled to receive upon
or by reason of any of the events described above, had such Warrant
been exercised immediately prior to the happening of such event. An
adjustment made pursuant to this clause (i) shall become effective
retroactively (x) in the case of any such dividend or distribution, to
a date immediately following the close of business on the record date
for the determination of holders of shares of Common Stock entitled to
receive such dividend or distribution, or (y) in the case of any such
subdivision or combination to the close of business on the date upon
which such corporate action becomes effective.
(ii) If after the Issue Date, the Company shall at any time or
from time to time issue or sell (x) shares of Common Stock or (y)
securities convertible into or exchangeable for shares of Common Stock,
or any options, warrants or other rights to acquire shares of Common
Stock (other than (A) shares of Common Stock issued upon exercise of
the Warrants outstanding on the Issue Date, (B) shares of Common Stock
issued pursuant to an employee stock option plan, stock bonus plan or
other incentive compensation plan or award, each as approved by the
Company's Board of Directors that, in the aggregate with all other
shares of Common Stock issued pursuant to any such plans (whether or
not approved by the Company's Board of Directors) constitute no more
than five percent of the issued and outstanding Common Stock, and (C)
shares of Common Stock issued as a result of adjustments made under
agreements related to shares described in clauses (A) and (B)) at a
price per share that is less than the Current Market Price per share of
Common Stock then in effect as of the record date or issue date, as the
case may be, referred to in the following sentence (the "RELEVANT
DATE") (treating the price per share of Common Stock, in the case of
the issuance of any security convertible or exchangeable or exercisable
into Common Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable into Common Stock
plus any additional consideration payable (without regard to any
anti-dilution adjustments) upon the conversion, exchange or exercise of
such security into Common Stock divided by (y) the number of shares of
Common Stock initially underlying such convertible, exchangeable or
exercisable security), in each case, other than issuances or sales for
which an adjustment is made pursuant to another paragraph of this
Section 2, then, and in each such case, the Number Issuable then in
effect shall be adjusted by multiplying the Number Issuable in effect
on the day immediately prior to the
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<PAGE> 5
Relevant Date by a fraction, (1) the numerator of which shall be the
sum of the number of shares of Common Stock, on a fully diluted basis,
outstanding on the Relevant Date, plus the number of additional shares
of Common Stock issued or to be issued (or the maximum number into
which such convertible or exchangeable securities initially may convert
or exchange or for which such options, warrants or other rights
initially may be exercised), and (2) the denominator of which shall be
the sum of the number of shares of Common Stock, on a fully diluted
basis, outstanding on the Relevant Date, plus the number of shares of
Common Stock which the aggregate consideration (plus the aggregate
amount of any additional consideration initially payable upon
conversion or exchange of such convertible or exchangeable securities
or exercise of such options, warrants or other rights) for the total
number of such additional shares of Common Stock so issued (or into
which such convertible or exchangeable securities may convert or
exchange or for which such options, warrants or other rights may be
exercised) would purchase at the Current Market Price per share of
Common Stock on the Relevant Date. Such adjustment shall be made
whenever such shares, securities, options, warrants or other rights are
issued, and shall become effective retroactively to a date immediately
following the close of business (x) in the case of an issuance to the
stockholders of the Company, as such, on the record date for the
determination of stockholders entitled to receive such shares,
securities, options, warrants or other rights and (y) in all other
cases, on the date (the "ISSUE DATE") of such issuance; PROVIDED, that
if any convertible or exchangeable securities, options, warrants, or
other rights (or any portions thereof) which shall have given rise to
an adjustment pursuant to this Section 2(a)(ii) shall have expired or
terminated without the exercise thereof and/or if by reason of the
terms of such convertible or exchangeable securities, options, warrants
or other rights there shall have been an increase or increases, with
the passage of time or otherwise, in the Number Issuable, then the
Number Issuable hereunder shall be readjusted (but to no greater extent
than originally adjusted) on the basis of (A) eliminating from the
computation any additional shares of Common Stock corresponding to such
convertible or exchangeable securities, options, warrants or other
rights as shall have expired or terminated, (B) treating the additional
shares of Common Stock, if any, actually issued or issuable pursuant to
the previous exercise of such convertible and exchangeable securities,
options, warrants, or other rights as having been issued for the
consideration actually received and receivable therefor and (C)
treating any of such convertible or exchangeable securities, options,
warrants or other rights which remain outstanding as being subject to
exercise or conversion. Solely for purposes of this clause (ii), (I)
Common Stock shall include the Common Stock, par value $0.01 per share,
of the Company and each other class of capital stock of the Company
that does not have a preference over any other class of capital stock
of the Company as to dividends or upon liquidation, dissolution or
winding up of the Company and, in each case, shall include any other
class of capital stock of the Company into which such stock is
reclassified or reconstituted and (II) if the provisions of any
securities convertible into or exchangeable for shares of
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<PAGE> 6
Common Stock or options, warrants or other rights to acquire shares of
Common Stock are amended after the date of issuance so as to reduce the
applicable conversion price, exchange price or exercise price such
amendment shall be deemed to be a new issuance of such securities.
(iii) In case the Company shall at any time or from time to time
after the Issue Date distribute to any holder of shares of its Common
Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the resulting or
surviving corporation and the Common Stock is not changed or exchanged)
cash, evidences of indebtedness of the Company or another issuer,
securities of the Company or another issuer or other assets (excluding
dividends or other distributions of shares of Common Stock or other
capital stock for which adjustment in the Number Issuable is made under
Section 2(a)(i) or dividends or other distributions received by or set
aside for the benefit of the holders of Common Stock pursuant to
Section 2(c) below) or rights or warrants to subscribe for or purchase
securities of the Company (excluding those in respect of which
adjustment in the Number Issuable is made pursuant to Section
2(a)(ii)), then, and in each such case, the Number Issuable then in
effect shall be adjusted by multiplying the Number Issuable in effect
immediately prior to the date of such distribution by a fraction (x)
the numerator of which shall be the Current Market Price per share on
the record date referred to below and (y) the denominator of which
shall be such Current Market Price per share less the then Fair Market
Value (as determined in good faith by the Board of Directors of the
Company, a certified resolution with respect to which shall be mailed
to the holder of the Warrants evidenced hereby) of the portion of the
cash, evidences of indebtedness, securities or other assets so
distributed or of such subscription rights or warrants applicable to
one share of Common Stock (but such denominator shall in no event be
zero). Such adjustment shall be made whenever any such distribution is
made and shall become effective retroactively to a date immediately
following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.
(iv) In case the Company at any time or from time to time shall
take any action which could have a dilutive effect on the number of
shares of Common Stock that may be issued upon exercise of the
Warrants, other than an action described in any of Section 2(a)(i)
through 2(a)(iii), inclusive, or Section 2(b), then, the Number
Issuable shall be adjusted in such manner and at such time as the Board
of Directors of the Company reasonably determines to be equitable under
the circumstances (such determination to be evidenced in a resolution,
a certified copy of which shall be mailed to the holder of the Warrants
evidenced hereby).
(v) Notwithstanding anything herein to the contrary, no
adjustment under this Section 2(a) need be made to the Number Issuable
unless such adjustment would require an increase or decrease of at
least 1% of the
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<PAGE> 7
Number Issuable then in effect. Any lesser adjustment shall be carried
forward and shall be made at the time of and together with the next
subsequent adjustment, which, together with any adjustment or
adjustments so carried forward, shall amount to an increase or decrease
of at least 1% of such Number Issuable. Any adjustment to the Number
Issuable carried forward and not theretofore made shall be made
immediately prior to the exercise of any Warrants pursuant hereto.
(vi) The Company promptly shall deliver to each registered
holder of Warrants at least ten Business Days prior to effecting any
transaction which would result in an increase or decrease in the Number
Issuable pursuant to this Section 2(a) a notice thereof, together with
a certificate, signed by the Chief Executive Officer or a
Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Company, setting forth in
reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the increased or
decreased Number Issuable then in effect following such adjustment.
(vii) Notwithstanding anything contrary contained in this Section
2(a), the Company shall be entitled to make such upward adjustments in
the Number Issuable, in addition to those otherwise required by this
Section 2(a), as the Board of Directors of the Company in their
discretion shall determine to be advisable in order that any stock
dividend, subdivision or combination of shares, distribution of rights
or warrants to purchase stock or securities, or distribution of
securities convertible into or exchangeable for Common Stock, hereafter
made by the Company to its shareholders shall not be taxable; provided,
HOWEVER, that any such adjustment shall be made, as nearly as
practicable, in a manner which treats all holders of Warrants with
similar protections on an equal basis.
(b) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE OF ASSETS. In case of any capital reorganization or reclassification or
other change of outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another Person (other than a consolidation or
merger in which the Company is the resulting or surviving person and which does
not result in any reclassification or change of outstanding Common Stock), or in
case of any sale or other disposition to another Person of all or substantially
all of the assets of the Company (any of the foregoing, a "Transaction"), the
Company, or such successor or purchasing Person, as the case may be, shall
execute and deliver to each holder of the Warrants evidenced hereby, at least
ten Business Days prior to effecting any of the foregoing Transactions, a
certificate that the holder of each such Warrant then outstanding shall have the
right thereafter to exercise such Warrant into the kind and amount of shares of
stock or other securities (of the Company or another issuer) or property or cash
receivable upon such Transaction by a holder of the number of shares of Common
Stock into which such Warrant could have been exercised immediately prior to
such Transaction. Such certificate shall provide for
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<PAGE> 8
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 2 and shall contain other terms
identical to the terms hereof. If, in the case of any such Transaction, the
stock, other securities, cash or property receivable thereupon by a holder of
Common Stock includes stock, securities, other property or cash of a Person
other than the successor or purchasing Persons and other than the Company, in
connection with such Transaction, then such certificate also shall be executed
by such Person, and such Person shall, in such certificate, specifically assume
the obligations of such successor or purchasing Person and acknowledge its
obligations to issue such stock, securities, other property or cash to holders
of the Warrants upon exercise thereof as provided above. The provisions of this
Section 2(b) similarly shall apply to successive Transactions.
(c) SPECIAL DISTRIBUTIONS. If the holder so elects by sending a
Special Notice to the Company, in the event that the Company shall declare a
dividend or make any other distribution (including, without limitation, in cash,
in capital stock (which shall include, without limitation, any options, warrants
or other rights to acquire capital stock) of the Company, whether or not
pursuant to a shareholder rights plan, "poison pill" or similar arrangement) in
other securities, property or assets, to holders of Common Stock (a "Special
Distribution"), then the Board of Directors shall set aside the amount of such
dividend or distribution that any holder of Warrants would have been entitled to
receive had it exercised such Warrants prior to the record date for such
dividend or distribution. Upon the exercise of a Warrant evidenced hereby, the
holder shall be entitled to receive, such dividend or distribution that such
holder would have received had such Warrant been exercised immediately prior to
the record date for such dividend or distribution. Prior to any Special
Distribution described in this Section 2(c), the Company shall as provided in
Section 4 hereof notify each holder (not less than ten Business Days prior to
the occurrence of each Special Distribution) of its intent to make such Special
Distribution and the holder, if it elects to have such distribution set aside
the amount thereof rather than have an adjustment to the Number Issuable as
provided in Section 2(a)(i), 2(a)(ii) or 2(a)(iii), shall notify the Company by
sending a Special Notice prior to the date of any such Special Distribution.
Section 3. REDEMPTION. The Company shall not have any right to redeem
any of the Warrants evidenced hereby.
Section 4. NOTICE OF CERTAIN EVENTS. In case at any time or from time
to time the holders of the Warrants evidenced hereby are entitled to notice
pursuant to the terms of Section 2, such notice shall provide (a) the date on
which a record is to be taken for the purpose of such dividend, distribution,
subdivision, combination or issuance of shares of Common Stock, securities
convertible into or exchangeable for shares of Common Stock or options, warrants
or other rights, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution,
subdivision, combination, shares of Common Stock, securities convertible into or
exchangeable for shares of Common Stock or options, warrants or other rights,
are to be determined, (b) the issue date (as defined in Section 2(a)(ii) hereof)
or (c) the date
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<PAGE> 9
on which such Transaction, dissolution, liquidation or winding up is expected to
become effective.
Section 5. CERTAIN COVENANTS. The Company covenants and agrees that all
shares of capital stock of the Company which may be issued upon the exercise of
the Warrants evidenced hereby will be duly authorized, validly issued and fully
paid and nonassessable. The Company shall at all times reserve and keep
available for issuance upon the exercise of the Warrants, such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the exercise of all outstanding Warrants, and shall take
all action required to increase the authorized number of shares of Common Stock
if at any time there shall be insufficient authorized but unissued shares of
Common stock to permit such reservation or to permit the exercise of all
outstanding Warrants. The Company shall prepare and file, and cooperate with the
holder of this Warrant so that it may prepare and file, in each case within five
Business Days of a request by such holder, notification and report forms in
compliance with the HSR Act, and shall otherwise fully comply with the
requirements of the HSR Act, to the extent required in connection with the
exercise of the Warrant. The Company shall bear all of its own expenses and all
of its own out of pocket expenses (including reasonable attorneys' fees, charges
and expenses) and filing fees of such holder in connection with any such
preparation and filing.
Section 6. REGISTERED HOLDER. The person in whose name this Warrant
Certificate is registered shall be deemed the owner hereof and of the Warrants
evidenced hereby for all purposes.
Section 7. TRANSFER OF WARRANTS. Any transfer of the rights represented
by this Warrant Certificate shall be effected by the surrender of this Warrant
Certificate, along with the form of assignment attached hereto, properly
completed and executed by the registered holder hereof, at the principal
executive office of the Company in the United States of America; PROVIDED that
(a) a registration statement with respect to the Warrants proposed for transfer,
and with respect to the shares of Common Stock underlying such Warrants, shall
be effective under the Securities Act, (b) the Warrants are transferred pursuant
to Rule 144 under the Securities Act or (c) the Company shall have received an
opinion of counsel reasonably satisfactory to it that no violation of such act
or similar state acts will be involved in such transfer. Thereupon, the Company
shall issue in the name or names specified by the registered holder hereof and,
in the event of a partial transfer, in the name of the registered holder hereof,
a new Warrant Certificate or Certificates evidencing the right to purchase such
number of shares of Common Stock as shall be equal to the number of shares of
Common Stock then purchasable hereunder.
Section 8. DENOMINATIONS. The Company covenants that it will, at its
expense, promptly upon surrender of this Warrant Certificate at the principal
executive office of the Company in the United States of America, execute and
deliver to the registered holder hereof a new Warrant Certificate or
Certificates in denominations
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<PAGE> 10
specified by such holder for an aggregate number of Warrants equal to the number
of Warrants evidenced by this Warrant Certificate.
Section 9. REPLACEMENT OF WARRANTS. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant Certificate and, in the case of loss, theft or destruction, upon
delivery of an indemnity reasonably satisfactory to the Company (in the case of
an institutional investor, its own unsecured indemnity agreement shall be deemed
to be reasonably satisfactory), or, in the case of mutilation, upon surrender
and cancellation thereof, the Company will issue a new Warrant Certificate of
like tenor for a number of Warrants equal to the number of Warrants evidenced by
this Warrant Certificate.
Section 10. GOVERNING LAW. THIS WARRANT CERTIFICATE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISIONS).
Section 11. RIGHTS INURE TO REGISTERED HOLDER. The Warrants evidenced
by this Warrant Certificate will inure to the benefit of and be binding upon the
registered holder thereof and the Company and their respective successors and
permitted assigns. This Warrant Certificate shall be for the sole benefit of the
registered holder thereof. Nothing in this Warrant Certificate shall be
construed to give the registered holder hereof any rights as a holder of shares
of Common Stock until such time, if any, as the Warrants evidenced by this
Warrant Certificate are exercised in accordance with the provisions hereof.
Section 12. DEFINITIONS. For the purposes of this Warrant Certificate,
the following terms shall have the meanings indicated below:
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"COMMON STOCK" shall have the meaning assigned to such term in the
Preamble hereof.
"COMPANY" shall have the meaning assigned to such term in the Preamble
hereof.
"CURRENT MARKET PRICE" per share shall mean, on any date specified
herein for the determination thereof, (a) if the Common Stock is then listed on
a national securities exchange, designated as a Nasdaq Stock Market security or
quoted in the over-the-counter-market by a member firm of the NYSE, the average
daily Market Price of the Common Stock for those days during the period of 15
days, ending on such date, on
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which the national securities exchanges were open for trading, and (b) if the
Common Stock is not then so listed, designated or quoted, the Market Price on
such date.
"EXERCISE PRICE" shall have the meaning assigned to such term in the
Preamble hereof.
"FAIR MARKET VALUE" shall mean the amount which a willing buyer, under
no compulsion to buy, would pay a willing seller, under no compulsion to sell,
in an arm's-length transaction.
"HSR ACT" shall mean the Hart Scott Rodino Anti-Trust Improvements Act
of 1976, and the rules and regulations of the Federal Trade Commission
promulgated thereunder.
"INVESTOR" shall have the meaning assigned to such term in the Preamble
hereof.
"ISSUE DATE" shall mean November 12, 1997.
"MARKET PRICE" shall mean, per share of Common Stock, on any date
specified herein: (a) if the Common Stock is listed on any national securities
exchange or is designated as a Nasdaq Stock Market security, the last trading
price of the Common Stock on such date as reported in the Wall Street Journal;
or (b) if the Common Stock is not so listed or designated, the average of the
reported closing bid and ask prices of the Common Stock in the
over-the-counter market, on such date as reported by any member firm of the NYSE
selected by the Company; or (c) if none of (a) or (b) is applicable, the Fair
Market Value per share determined in good faith by the Board of Directors of the
Company which shall be deemed to be Fair Market Value unless holders of at least
50% of Common Stock issued or issuable upon exercise of the Warrants request
that the Company obtain an opinion of a nationally recognized investment banking
firm chosen by the Company (who shall bear the expense) and reasonably
acceptable to such requesting holders of the Warrants, in which event the Fair
Market Value shall be as determined by such investment banking firm.
"NUMBER ISSUABLE" shall have the meaning given it in the Preamble
hereof.
"NYSE" shall mean the New York Stock Exchange, Inc.
"PERSON" shall mean any individual, corporation, limited liability
company, partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"RELEVANT DATE" shall have the meaning assigned to such term in Section
2(a)(ii) hereof.
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"SECURITIES ACT" shall mean the Securities Act of 1933.
"SPECIAL DISTRIBUTION" shall have the meaning assigned to such term in
Section 2(c) hereof.
"SPECIAL NOTICE" shall mean the notice sent by a holder to the Company
indicating its preference to have any Special Distribution set aside for its
benefit upon exercise of the Warrant.
"TRANSACTION" shall have the meaning assigned to such term in
Section 2(b) hereof.
"WARRANTS" shall have the meaning assigned to such term in the Preamble
hereof.
"WARRANT EXERCISE DOCUMENTATION" shall have the meaning given it in
Section 1 hereof.
Section 13. NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be
sufficient if delivered personally or sent by telecopy (with confirmation of
receipt) or by registered or certified mail, postage prepaid, return receipt
requested, (a) if to the holder of a Warrant, at such holder's last known
address or telecopy number appearing on the books of the Company; and (b) if to
the Company, at its principal executive office, or the telecopy number of such
office, in the United States, or such other address or telecopy number as the
party to whom notice is to be given may have furnished to the other party. Each
such notice, request or communication shall be effective when received or, if
given by mail, when delivered at the address specified in this Section or on the
fifth Business Day following the date on which such communication is posted,
whichever occurs first.
Section 14. SHARE LEGEND. Each certificate representing shares of
Common Stock or any other securities issued upon exercise of this Warrant shall
bear the following legend unless such shares or other securities have been
registered under the Securities Act and any applicable state securities laws:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR APPLICABLE
STATE SECURITIES LAWS AND INSTEAD ARE BEING ISSUED PURSUANT TO EXEMPTIONS
CONTAINED IN SAID LAWS. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT SHALL BE EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, (B) SUCH SHARES ARE TRANSFERRED PURSUANT TO RULE 144, OR
ANY SUCCESSOR RULE, UNDER SUCH ACT OR (C) INDUSTRIAL IMAGING CORPORATION SHALL
HAVE
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RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT NO VIOLATION
OF SUCH ACT OR SIMILAR STATE ACTS WILL BE INVOLVED IN SUCH TRANSFER."
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed as of the Issue Date.
INDUSTRIAL IMAGING CORPORATION
By: __________________________
Name:
Title:
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[Form of Assignment Form]
[To be executed upon assignment of Warrants]
The undersigned hereby assigns and transfers this Warrant Certificate
to ________________________ whose Social Security Number or Tax ID Number is
___________________ and whose record address is ________________________________
_____________________________________, and irrevocably appoints ________________
as agent to transfer this security on the books of the Company. Such agent may
substitute another to act for such agent.
Signature:
______________________________________
Date: ___________________________
<PAGE> 16
THESE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR APPLICABLE STATE
SECURITIES LAWS AND INSTEAD ARE BEING ISSUED PURSUANT TO EXEMPTIONS CONTAINED IN
SAID LAWS. THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT TO SUCH WARRANTS AND THE SHARES
UNDERLYING SUCH WARRANTS SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF 1933,
(2) SUCH WARRANTS ARE TRANSFERRED PURSUANT TO RULE 144, OR ANY SUCCESSOR RULE,
UNDER SUCH ACT OR (3) INDUSTRIAL IMAGING CORPORATION SHALL HAVE RECEIVED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT NO VIOLATION OF SUCH ACT
OR SIMILAR STATE ACTS WILL BE INVOLVED IN SUCH TRANSFER.
WARRANT NO. B-1
WARRANT
TO PURCHASE SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE,
OF
INDUSTRIAL IMAGING CORPORATION
THIS IS TO CERTIFY THAT IMPRIMIS INVESTORS LLC, or such holder's
registered assigns (the "Investor"), is the owner of 250,000 Warrants (as
defined below), each of which entitles the registered holder thereof to purchase
from INDUSTRIAL IMAGING CORPORATION, a Delaware corporation (the "Company"), one
fully paid, duly authorized and nonassessable share of Common Stock, par value
$0.01 per share, of the Company (the "Common Stock"), at any time or from time
to time on or before 5:00 p.m., New York City time, on November 12, 2002, at an
exercise price of $2.00 per share (the "Exercise Price"), all on the terms and
subject to the conditions hereinafter set forth.
The number of shares of Common Stock issuable upon exercise of each
such Warrant (the "Number Issuable"), which is initially one (1) share, is
subject to adjustment from time to time pursuant to the provisions of Section 2
of this Warrant Certificate. The Warrants evidenced by this certificate are part
of a series of Class B Warrants being issued by the Company on the Issue Date
(the "Warrants"). The execution and delivery of this Warrant Certificate is a
condition precedent to the
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obligations of the Investor under the Securities Purchase Agreement, dated as of
November 12, 1997, between the Investor and the Company.
Capitalized terms used herein but not otherwise defined shall have the
meanings given them in Section 12 hereof.
Section 1. EXERCISE OF WARRANT. (a) The Warrants evidenced hereby may
be exercised, in whole or in part, by the registered holder hereof at any time
or from time to time on or before 5:00 p.m., New York City time, on November 12,
2002, upon delivery to the Company at the principal executive office of the
Company in the United States of America, of (i) this Warrant Certificate, (ii) a
written notice stating that such holder elects to exercise all or some portion
of the Warrants evidenced hereby in accordance with the provisions of this
Section 1 and specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued and (iii)
payment of the Exercise Price for the shares of Common Stock issuable upon
exercise of such Warrants, which shall be payable either (A) by a certified or
official bank check payable to the order of the Company or (B) in the manner
prescribed in Section 1(e), at the holder's option (collectively, the "Warrant
Exercise Documentation").
(b) As promptly as practicable, and in any event within five Business
Days after receipt of the Warrant Exercise Documentation, the Company shall
deliver or cause to be delivered (a) certificates representing the number of
validly issued, fully paid and nonassessable shares of Common Stock specified in
the Warrant Exercise Documentation, (b) if applicable, cash in lieu of any
fraction of a share, as hereinafter provided, and (c) if less than the full
number of Warrants evidenced hereby are being exercised, a new Warrant
Certificate or Certificates, of like tenor, for the number of Warrants evidenced
by this Warrant Certificate, less the number of Warrants then being exercised.
Such exercise shall be deemed to have been made at the close of business on the
date of delivery of the Warrant Exercise Documentation so that the Person
entitled to receive shares of Common Stock upon such exercise shall be treated
for all purposes as having become the record holder of such shares of Common
Stock at such time. No such surrender shall be effective to constitute the
Person entitled to receive such shares as the record holder thereof while the
transfer books of the Company for the Common Stock are closed for any purpose
(but not for any period in excess of five days); but any such surrender of this
Warrant Certificate for exercise during any period while such books are so
closed shall become effective for exercise immediately upon the reopening of
such books, as if the exercise had been made on the date the Warrant Exercise
Documentation was received and for the Number Issuable of Common Stock specified
in the Warrant Exercise Documentation and at the Exercise Price.
(c) The Company shall pay all expenses in connection with, and all
taxes and other governmental charges (other than income taxes of the holder)
that may be imposed in respect of, the issue or delivery of any shares of Common
Stock issuable upon the exercise of the Warrants evidenced hereby. The Company
shall not be required,
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<PAGE> 18
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of Common Stock in any name
other than that of the registered holder of the Warrants evidenced hereby.
(d) In connection with the exercise of any Warrants evidenced hereby,
no fractions of shares of Common Stock shall be issued, but in lieu thereof the
Company shall pay a cash adjustment in respect of such fractional interest in an
amount equal to such fractional interest multiplied by the Current Market Price
per share on the Business Day which next precedes the day of exercise. If more
than one such Warrant shall be exercised by the holder thereof at the same time,
the number of full shares of Common Stock issuable on such exercise shall be
computed on the basis of the total number of Warrants so exercised.
(e) In addition to the method of payment set forth in Section
1(a)(iii) and in lieu of any cash payment required thereunder, the registered
holder shall have the right to exercise the Warrants in full or in part by
surrendering the Warrant Certificate in the manner specified in Section 1 in
exchange for the number of shares of Common Stock equal to the quotient derived
from dividing (i) the excess of (A) the product of (I) the Number Issuable of
Common Stock as to which Warrants are being exercised and (II) the Current
Market Price per share, over (B) the product of (y) the Number Issuable of
Common Stock as to which Warrants being exercised and (z) the Exercise Price, by
(ii) the Current Market Price per share.
(f) In the event of a sale of all or substantially all of the
Company's assets for cash, the Warrants shall be deemed exercised in accordance
with the provisions of this Section 1 as of date of the consummation of such
sale and the holder hereof shall be entitled to pay the Exercise Price in the
manner prescribed in Section 1(a)(iii) or Section 1(d), at its option.
Section 2. ADJUSTMENTS.
(a) ADJUSTMENT OF NUMBER ISSUABLE. The Number Issuable shall be
subject to adjustment from time to time as follows:
(i) In case the Company shall at any time or from time to time
after the Issue Date:
(A) pay a dividend or make a distribution on the
outstanding shares of Common Stock in capital stock of the Company;
(B) subdivide the outstanding shares of Common Stock into
a larger number of shares; or
(C) combine the outstanding shares of Common Stock into a
smaller number of shares;
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<PAGE> 19
then, and in each such case (other than a dividend or distribution
received by or set aside for the benefit of the holder pursuant to
Section 2(c) hereof), the Number Issuable in effect immediately prior
to such event shall be adjusted (and any other appropriate actions
shall be taken by the Company) so that the holder of any Warrant
evidenced hereby thereafter exercised shall be entitled to receive the
number of shares of Common Stock or other securities of the Company
which such holder would have owned or had been entitled to receive upon
or by reason of any of the events described above, had such Warrant
been exercised immediately prior to the happening of such event. An
adjustment made pursuant to this clause (i) shall become effective
retroactively (x) in the case of any such dividend or distribution, to
a date immediately following the close of business on the record date
for the determination of holders of shares of Common Stock entitled to
receive such dividend or distribution, or (y) in the case of any such
subdivision or combination to the close of business on the date upon
which such corporate action becomes effective.
(ii) If after the Issue Date, the Company shall at any time or
from time to time issue or sell (x) shares of Common Stock or (y)
securities convertible into or exchangeable for shares of Common Stock,
or any options, warrants or other rights to acquire shares of Common
Stock (other than (A) shares of Common Stock issued upon exercise of
the Warrants outstanding on the Issue Date, (B) shares of Common Stock
issued pursuant to an employee stock option plan, stock bonus plan or
other incentive compensation plan or award, each as approved by the
Company's Board of Directors that, in the aggregate with all other
shares of Common Stock issued pursuant to any such plans (whether or
not approved by the Company's Board of Directors) constitute no more
than five percent of the issued and outstanding Common Stock, and (C)
shares of Common Stock issued as a result of adjustments made under
agreements related to shares described in clauses (A) and (B)) at a
price per share that is less than the Current Market Price per share of
Common Stock then in effect as of the record date or issue date, as the
case may be, referred to in the following sentence (the "RELEVANT
DATE") (treating the price per share of Common Stock, in the case of
the issuance of any security convertible or exchangeable or exercisable
into Common Stock as equal to (x) the sum of the price for such
security convertible, exchangeable or exercisable into Common Stock
plus any additional consideration payable (without regard to any
anti-dilution adjustments) upon the conversion, exchange or exercise of
such security into Common Stock divided by (y) the number of shares of
Common Stock initially underlying such convertible, exchangeable or
exercisable security), in each case, other than issuances or sales for
which an adjustment is made pursuant to another paragraph of this
Section 2, then, and in each such case, the Number Issuable then in
effect shall be adjusted by multiplying the Number Issuable in effect
on the day immediately prior to the Relevant Date by a fraction, (1)
the numerator of which shall be the sum of the number of shares of
Common Stock, on a fully diluted basis, outstanding on the
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<PAGE> 20
Relevant Date, plus the number of additional shares of Common Stock
issued or to be issued (or the maximum number into which such
convertible or exchangeable securities initially may convert or
exchange or for which such options, warrants or other rights initially
may be exercised), and (2) the denominator of which shall be the sum of
the number of shares of Common Stock, on a fully diluted basis,
outstanding on the Relevant Date, plus the number of shares of Common
Stock which the aggregate consideration (plus the aggregate amount of
any additional consideration initially payable upon conversion or
exchange of such convertible or exchangeable securities or exercise of
such options, warrants or other rights) for the total number of such
additional shares of Common Stock so issued (or into which such
convertible or exchangeable securities may convert or exchange or for
which such options, warrants or other rights may be exercised) would
purchase at the Current Market Price per share of Common Stock on the
Relevant Date. Such adjustment shall be made whenever such shares,
securities, options, warrants or other rights are issued, and shall
become effective retroactively to a date immediately following the
close of business (x) in the case of an issuance to the stockholders of
the Company, as such, on the record date for the determination of
stockholders entitled to receive such shares, securities, options,
warrants or other rights and (y) in all other cases, on the date (the
"ISSUE DATE") of such issuance; PROVIDED, that if any convertible or
exchangeable securities, options, warrants, or other rights (or any
portions thereof) which shall have given rise to an adjustment pursuant
to this Section 2(a)(ii) shall have expired or terminated without the
exercise thereof and/or if by reason of the terms of such convertible
or exchangeable securities, options, warrants or other rights there
shall have been an increase or increases, with the passage of time or
otherwise, in the Number Issuable, then the Number Issuable hereunder
shall be readjusted (but to no greater extent than originally adjusted)
on the basis of (A) eliminating from the computation any additional
shares of Common Stock corresponding to such convertible or
exchangeable securities, options, warrants or other rights as shall
have expired or terminated, (B) treating the additional shares of
Common Stock, if any, actually issued or issuable pursuant to the
previous exercise of such convertible and exchangeable securities,
options, warrants, or other rights as having been issued for the
consideration actually received and receivable therefor and (C)
treating any of such convertible or exchangeable securities, options,
warrants or other rights which remain outstanding as being subject to
exercise or conversion. Solely for purposes of this clause (ii), (I)
Common Stock shall include the Common Stock, par value $0.01 per share,
of the Company and each other class of capital stock of the Company
that does not have a preference over any other class of capital stock
of the Company as to dividends or upon liquidation, dissolution or
winding up of the Company and, in each case, shall include any other
class of capital stock of the Company into which such stock is
reclassified or reconstituted and (II) if the provisions of any
securities convertible into or exchangeable for shares of Common Stock
or options, warrants or other rights to acquire shares of Common Stock
are amended after the date of issuance so as to reduce the applicable
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<PAGE> 21
conversion price, exchange price or exercise price such amendment shall
be deemed to be a new issuance of such securities.
(iii) In case the Company shall at any time or from time to time
after the Issue Date distribute to any holder of shares of its Common
Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the resulting or
surviving corporation and the Common Stock is not changed or exchanged)
cash, evidences of indebtedness of the Company or another issuer,
securities of the Company or another issuer or other assets (excluding
dividends or other distributions of shares of Common Stock or other
capital stock for which adjustment in the Number Issuable is made under
Section 2(a)(i) or dividends or other distributions received by or set
aside for the benefit of the holders of Common Stock pursuant to
Section 2(c) below) or rights or warrants to subscribe for or purchase
securities of the Company (excluding those in respect of which
adjustment in the Number Issuable is made pursuant to Section
2(a)(ii)), then, and in each such case, the Number Issuable then in
effect shall be adjusted by multiplying the Number Issuable in effect
immediately prior to the date of such distribution by a fraction (x)
the numerator of which shall be the Current Market Price per share on
the record date referred to below and (y) the denominator of which
shall be such Current Market Price per share less the then Fair Market
Value (as determined in good faith by the Board of Directors of the
Company, a certified resolution with respect to which shall be mailed
to the holder of the Warrants evidenced hereby) of the portion of the
cash, evidences of indebtedness, securities or other assets so
distributed or of such subscription rights or warrants applicable to
one share of Common Stock (but such denominator shall in no event be
zero). Such adjustment shall be made whenever any such distribution is
made and shall become effective retroactively to a date immediately
following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.
(iv) In case the Company at any time or from time to time shall
take any action which could have a dilutive effect on the number of
shares of Common Stock that may be issued upon exercise of the
Warrants, other than an action described in any of Section 2(a)(i)
through 2(a)(iii), inclusive, or Section 2(b), then, the Number
Issuable shall be adjusted in such manner and at such time as the Board
of Directors of the Company reasonably determines to be equitable under
the circumstances (such determination to be evidenced in a resolution,
a certified copy of which shall be mailed to the holder of the Warrants
evidenced hereby).
(v) Notwithstanding anything herein to the contrary, no
adjustment under this Section 2(a) need be made to the Number Issuable
unless such adjustment would require an increase or decrease of at
least 1% of the Number Issuable then in effect. Any lesser adjustment
shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment,
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<PAGE> 22
which, together with any adjustment or adjustments so carried forward,
shall amount to an increase or decrease of at least 1% of such Number
Issuable. Any adjustment to the Number Issuable carried forward and not
theretofore made shall be made immediately prior to the exercise of any
Warrants pursuant hereto.
(vi) The Company promptly shall deliver to each registered
holder of Warrants at least ten Business Days prior to effecting any
transaction which would result in an increase or decrease in the Number
Issuable pursuant to this Section 2(a) a notice thereof, together with
a certificate, signed by the Chief Executive Officer or a
Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Company, setting forth in
reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the increased or
decreased Number Issuable then in effect following such adjustment.
(vii) Notwithstanding anything contrary contained in this Section
2(a), the Company shall be entitled to make such upward adjustments in
the Number Issuable, in addition to those otherwise required by this
Section 2(a), as the Board of Directors of the Company in their
discretion shall determine to be advisable in order that any stock
dividend, subdivision or combination of shares, distribution of rights
or warrants to purchase stock or securities, or distribution of
securities convertible into or exchangeable for Common Stock, hereafter
made by the Company to its shareholders shall not be taxable; provided,
HOWEVER, that any such adjustment shall be made, as nearly as
practicable, in a manner which treats all holders of Warrants with
similar protections on an equal basis.
(b) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE OF ASSETS. In case of any capital reorganization or reclassification or
other change of outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another Person (other than a consolidation or
merger in which the Company is the resulting or surviving person and which does
not result in any reclassification or change of outstanding Common Stock), or in
case of any sale or other disposition to another Person of all or substantially
all of the assets of the Company (any of the foregoing, a "Transaction"), the
Company, or such successor or purchasing Person, as the case may be, shall
execute and deliver to each holder of the Warrants evidenced hereby, at least
ten Business Days prior to effecting any of the foregoing Transactions, a
certificate that the holder of each such Warrant then outstanding shall have the
right thereafter to exercise such Warrant into the kind and amount of shares of
stock or other securities (of the Company or another issuer) or property or cash
receivable upon such Transaction by a holder of the number of shares of Common
Stock into which such Warrant could have been exercised immediately prior to
such Transaction. Such certificate shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 2 and shall contain other terms identical to the terms hereof.
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<PAGE> 23
If, in the case of any such Transaction, the stock, other securities, cash or
property receivable thereupon by a holder of Common Stock includes stock,
securities, other property or cash of a Person other than the successor or
purchasing Persons and other than the Company, in connection with such
Transaction, then such certificate also shall be executed by such Person, and
such Person shall, in such certificate, specifically assume the obligations of
such successor or purchasing Person and acknowledge its obligations to issue
such stock, securities, other property or cash to holders of the Warrants upon
exercise thereof as provided above. The provisions of this Section 2(b)
similarly shall apply to successive Transactions.
(c) SPECIAL DISTRIBUTIONS. If the holder so elects by sending a
Special Notice to the Company, in the event that the Company shall declare a
dividend or make any other distribution (including, without limitation, in cash,
in capital stock (which shall include, without limitation, any options, warrants
or other rights to acquire capital stock) of the Company, whether or not
pursuant to a shareholder rights plan, "poison pill" or similar arrangement) in
other securities, property or assets, to holders of Common Stock (a "Special
Distribution"), then the Board of Directors shall set aside the amount of such
dividend or distribution that any holder of Warrants would have been entitled to
receive had it exercised such Warrants prior to the record date for such
dividend or distribution. Upon the exercise of a Warrant evidenced hereby, the
holder shall be entitled to receive, such dividend or distribution that such
holder would have received had such Warrant been exercised immediately prior to
the record date for such dividend or distribution. Prior to any Special
Distribution described in this Section 2(c), the Company shall as provided in
Section 4 hereof notify each holder (not less than ten Business Days prior to
the occurrence of each Special Distribution) of its intent to make such Special
Distribution and the holder, if it elects to have such distribution set aside
the amount thereof rather than have an adjustment to the Number Issuable as
provided in Section 2(a)(i), 2(a)(ii) or 2(a)(iii), shall notify the Company by
sending a Special Notice prior to the date of any such Special Distribution.
Section 3. REDEMPTION. The Company shall not have any right to redeem
any of the Warrants evidenced hereby.
Section 4. NOTICE OF CERTAIN EVENTS. In case at any time or from time
to time the holders of the Warrants evidenced hereby are entitled to notice
pursuant to the terms of Section 2, such notice shall provide (a) the date on
which a record is to be taken for the purpose of such dividend, distribution,
subdivision, combination or issuance of shares of Common Stock, securities
convertible into or exchangeable for shares of Common Stock or options, warrants
or other rights, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution,
subdivision, combination, shares of Common Stock, securities convertible into or
exchangeable for shares of Common Stock or options, warrants or other rights,
are to be determined, (b) the issue date (as defined in Section 2(a)(ii) hereof)
or (c) the date on which such Transaction, dissolution, liquidation or winding
up is expected to become effective.
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Section 5. CERTAIN COVENANTS. The Company covenants and agrees that all
shares of capital stock of the Company which may be issued upon the exercise of
the Warrants evidenced hereby will be duly authorized, validly issued and fully
paid and nonassessable. The Company shall at all times reserve and keep
available for issuance upon the exercise of the Warrants, such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the exercise of all outstanding Warrants, and shall take
all action required to increase the authorized number of shares of Common Stock
if at any time there shall be insufficient authorized but unissued shares of
Common stock to permit such reservation or to permit the exercise of all
outstanding Warrants. The Company shall prepare and file, and cooperate with the
holder of this Warrant so that it may prepare and file, in each case within five
Business Days of a request by such holder, notification and report forms in
compliance with the HSR Act, and shall otherwise fully comply with the
requirements of the HSR Act, to the extent required in connection with the
exercise of the Warrant. The Company shall bear all of its own expenses and all
of its own out of pocket expenses (including reasonable attorneys' fees, charges
and expenses) and filing fees of such holder in connection with any such
preparation and filing.
Section 6. REGISTERED HOLDER. The person in whose name this Warrant
Certificate is registered shall be deemed the owner hereof and of the Warrants
evidenced hereby for all purposes.
Section 7. TRANSFER OF WARRANTS. Any transfer of the rights represented
by this Warrant Certificate shall be effected by the surrender of this Warrant
Certificate, along with the form of assignment attached hereto, properly
completed and executed by the registered holder hereof, at the principal
executive office of the Company in the United States of America; PROVIDED that
(a) a registration statement with respect to the Warrants proposed for transfer,
and with respect to the shares of Common Stock underlying such Warrants, shall
be effective under the Securities Act, (b) the Warrants are transferred pursuant
to Rule 144 under the Securities Act or (c) the Company shall have received an
opinion of counsel reasonably satisfactory to it that no violation of such act
or similar state acts will be involved in such transfer. Thereupon, the Company
shall issue in the name or names specified by the registered holder hereof and,
in the event of a partial transfer, in the name of the registered holder hereof,
a new Warrant Certificate or Certificates evidencing the right to purchase such
number of shares of Common Stock as shall be equal to the number of shares of
Common Stock then purchasable hereunder.
Section 8. DENOMINATIONS. The Company covenants that it will, at its
expense, promptly upon surrender of this Warrant Certificate at the principal
executive office of the Company in the United States of America, execute and
deliver to the registered holder hereof a new Warrant Certificate or
Certificates in denominations specified by such holder for an aggregate number
of Warrants equal to the number of Warrants evidenced by this Warrant
Certificate.
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<PAGE> 25
Section 9. REPLACEMENT OF WARRANTS. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant Certificate and, in the case of loss, theft or destruction, upon
delivery of an indemnity reasonably satisfactory to the Company (in the case of
an institutional investor, its own unsecured indemnity agreement shall be deemed
to be reasonably satisfactory), or, in the case of mutilation, upon surrender
and cancellation thereof, the Company will issue a new Warrant Certificate of
like tenor for a number of Warrants equal to the number of Warrants evidenced by
this Warrant Certificate.
Section 10. GOVERNING LAW. THIS WARRANT CERTIFICATE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISIONS).
Section 11. RIGHTS INURE TO REGISTERED HOLDER. The Warrants evidenced
by this Warrant Certificate will inure to the benefit of and be binding upon the
registered holder thereof and the Company and their respective successors and
permitted assigns. This Warrant Certificate shall be for the sole benefit of the
registered holder thereof. Nothing in this Warrant Certificate shall be
construed to give the registered holder hereof any rights as a holder of shares
of Common Stock until such time, if any, as the Warrants evidenced by this
Warrant Certificate are exercised in accordance with the provisions hereof.
Section 12. DEFINITIONS. For the purposes of this Warrant Certificate,
the following terms shall have the meanings indicated below:
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"COMMON STOCK" shall have the meaning assigned to such term in the
Preamble hereof.
"COMPANY" shall have the meaning assigned to such term in the Preamble
hereof.
"CURRENT MARKET PRICE" per share shall mean, on any date specified
herein for the determination thereof, (a) if the Common Stock is then listed on
a national securities exchange, designated as a Nasdaq Stock Market security or
quoted in the over-the-counter market by a member firm of the NYSE, the average
daily Market Price of the Common Stock for those days during the period of 15
days, ending on such date, on which the national securities exchanges were open
for trading, and (b) if the Common Stock is not then so listed, designated or
quoted, the Market Price on such date.
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<PAGE> 26
"EXERCISE PRICE" shall have the meaning assigned to such term in the
Preamble hereof.
"FAIR MARKET VALUE" shall mean the amount which a willing buyer, under
no compulsion to buy, would pay a willing seller, under no compulsion to sell,
in an arm's-length transaction.
"HSR ACT" shall mean the Hart Scott Rodino Anti-Trust Improvements Act
of 1976, and the rules and regulations of the Federal Trade Commission
promulgated thereunder.
"INVESTOR" shall have the meaning assigned to such term in the Preamble
hereof.
"ISSUE DATE" shall mean November 12, 1997.
"MARKET PRICE" shall mean, per share of Common Stock, on any date
specified herein: (a) if the Common Stock is listed on any national securities
exchange or is designated as a Nasdaq Stock Market security, the last trading
price of the Common Stock on such date as reported in the Wall Street Journal;
or (b) if the Common Stock is not so listed or designated, the average of the
reported closing bid and ask prices of the Common Stock in the
over-the-counter-market, on such date as reported by any member firm of the NYSE
selected by the Company; or (c) if none of (a) or (b) is applicable, the Fair
Market Value per share determined in good faith by the Board of Directors of the
Company which shall be deemed to be Fair Market Value unless holders of at least
50% of Common Stock issued or issuable upon exercise of the Warrants request
that the Company obtain an opinion of a nationally recognized investment banking
firm chosen by the Company (who shall bear the expense) and reasonably
acceptable to such requesting holders of the Warrants, in which event the Fair
Market Value shall be as determined by such investment banking firm.
"NUMBER ISSUABLE" shall have the meaning given it in the Preamble
hereof.
"NYSE" shall mean the New York Stock Exchange, Inc.
"PERSON" shall mean any individual, corporation, limited liability
company, partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"RELEVANT DATE" shall have the meaning assigned to such term in Section
2(a)(ii) hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933.
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<PAGE> 27
"SPECIAL DISTRIBUTION" shall have the meaning assigned to such term in
Section 2(c) hereof.
"SPECIAL NOTICE" shall mean the notice sent by a holder to the Company
indicating its preference to have any Special Distribution set aside for its
benefit upon exercise of the Warrant.
"TRANSACTION" shall have the meaning assigned to such term in Section
2(b) hereof.
"WARRANTS" shall have the meaning assigned to such term in the Preamble
hereof.
"WARRANT EXERCISE DOCUMENTATION" shall have the meaning given it in
Section 1 hereof.
Section 13. NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be
sufficient if delivered personally or sent by telecopy (with confirmation of
receipt) or by registered or certified mail, postage prepaid, return receipt
requested, (a) if to the holder of a Warrant, at such holder's last known
address or telecopy number appearing on the books of the Company; and (b) if to
the Company, at its principal executive office, or the telecopy number of such
office, in the United States, or such other address or telecopy number as the
party to whom notice is to be given may have furnished to the other party. Each
such notice, request or communication shall be effective when received or, if
given by mail, when delivered at the address specified in this Section or on the
fifth Business Day following the date on which such communication is posted,
whichever occurs first.
Section 14. SHARE LEGEND. Each certificate representing shares of
Common Stock or any other securities issued upon exercise of this Warrant shall
bear the following legend unless such shares or other securities have been
registered under the Securities Act and any applicable state securities laws:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR APPLICABLE
STATE SECURITIES LAWS AND INSTEAD ARE BEING ISSUED PURSUANT TO EXEMPTIONS
CONTAINED IN SAID LAWS. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT SHALL BE EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, (B) SUCH SHARES ARE TRANSFERRED PURSUANT TO RULE 144, OR
ANY SUCCESSOR RULE, UNDER SUCH ACT OR (C) INDUSTRIAL IMAGING CORPORATION SHALL
HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT NO
VIOLATION OF SUCH ACT OR SIMILAR STATE ACTS WILL BE INVOLVED IN SUCH TRANSFER."
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed as of the Issue Date.
INDUSTRIAL IMAGING CORPORATION
By: _______________________________
Name:
Title:
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<PAGE> 29
[Form of Assignment Form]
[To be executed upon assignment of Warrants]
The undersigned hereby assigns and transfers this Warrant Certificate
to _______________________ whose Social Security Number or Tax ID Number is
_________________ and whose record address is __________________________________
_____________________________________, and irrevocably appoints ________________
as agent to transfer this security on the books of the Company. Such agent may
substitute another to act for such agent.
Signature:
______________________________________
Date: ___________________________
<PAGE> 1
EXHIBIT 101
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT, dated as of November 12, 1997
(the "Agreement"), between Industrial Imaging Corporation, a
Delaware corporation (the "Company"), and Imprimis Investors
LLC (the "Investor").
-----------------------------------------------------------
The Company and the Investor have entered into the Securities
Purchase Agreement, dated as of November 12, 1997 (the "Securities Purchase
Agreement"), pursuant to which, among other things, the Company is selling to
the Investor shares of Common Stock, par value $0.01 per share (the "Common
Stock"), of the Company, and warrants that may be exercised for shares of Common
Stock (the "Warrants").
The execution and delivery of this Agreement by the Company is a
condition precedent to the obligations of the Investor under the Securities
Purchase Agreement.
In consideration of the foregoing, the covenants and obligations
set forth below, the parties agree as follows:
1. REGISTRATION ON REQUEST.
(a) REQUEST. Subject to the limitations set forth in Section
1(b), at any time more than 180 days after the date hereof, a Holder or Holders
(as defined in Section 9(b)) may require on up to two occasions, upon written
notice to the Company, the Company to effect the registration under the
Securities Act of 1933 (the "Securities Act") of all or part of the Registrable
Securities (as defined in Section 9(b)) held by such requesting Holder or
Holders (each, an "Initiating Holder"). The Company promptly shall give notice
of such requested registration to all other Holders of Registrable Securities
who are entitled pursuant to Section 2 to join in such registration and,
thereupon, the Company shall use its best efforts to effect, on the earliest
possible date, the registration under the Securities Act for public sale (in
accordance with the method of disposition specified in the notice from the
requesting Holders), of the Registrable Securities that the Company has been
requested to register by such Initiating Holder or Holders and the other
Registrable Securities that the Company has been requested to register by the
Holders thereof by written notice given to the Company within 20 days after the
giving of such notice by the Company.
(b) LIMITATIONS. The Company shall not be required to effect a
registration pursuant to Section 1(a):
(i) within 90 days after the effective date of a registration
statement (a "Registration Statement") filed by the Company with the Securities
and Exchange Commission (the "Commission") for a public offering and sale of
equity securities of the Company (other than a registration of securities
pursuant to a Registration Statement on Form S-8 or Form S-4 or
<PAGE> 2
any successor form thereto, any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation or any registration statement relating solely to employee stock
option, stock purchase, benefit or similar plans (a "Special Registration
Statement")), provided that the Company shall use its best efforts to achieve
effectiveness of a registration requested hereunder promptly following such 90
day period if such request is made during such 90 day period; and
(ii) on more than two occasions; it being understood and
agreed that a registration effected under Section 2 shall not be counted as a
registration under this Section.
(c) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 1 shall not be deemed to have been effected, and shall
not be deemed a requested registration for purposes of Section 1(a) and Section
1(b), (i) unless a Registration Statement covering all Registrable Securities
specified in the notices from the Initiating Holders has become effective and
remained effective in compliance with the provisions of the Securities Act with
respect to the disposition of all of such Registrable Securities covered by such
Registration Statement until the earlier of such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Registration
Statement, (ii) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason not
attributable to the Initiating Holders or (iii) if the conditions to closing
specified in the underwriting agreement, if any, entered into in connection with
such registration are not satisfied or waived, other than by reason of a failure
on the part of the Initiating Holders.
(d) PRIORITY IN REQUESTED REGISTRATION. So long as the Initiating
Holders hold at least 25% of the Registrable Securities issued to all Holders on
the date of this Agreement, the Company shall have the right to include in any
Registration Statement initiated by a Holder pursuant to this Section 1, for
sale in accordance with the method of disposition specified by the requesting
Holders, Common Stock to be sold by the Company for its own account. If, in the
good-faith judgment of the managing underwriter of any underwritten offering the
inclusion of all of the Registrable Securities requested for inclusion pursuant
to this Section 1 and the Common Stock proposed to be sold by the Company for
its own account would adversely affect the successful marketing of the proposed
offering, then the number of shares of Common Stock to be included in the
offering shall be reduced to the required level, FIRST, by excluding Common
Stock to be sold by the Company for its own account and SECOND, by reducing the
participation of such Initiating Holders and other Holders in such offering pro
rata among such Initiating Holders and other Holders, based upon the amount of
Registrable Securities owned by such Initiating Holders and other Holders.
Except for Special Registration Statements and other registrations required
under Section 1, the Company will not cause any other registration statement
with respect to its Registrable Securities for its own account to become
effective less than 120 days after the effective date of any registration
requested pursuant to this Section 1.
(e) SELECTION OF UNDERWRITERS. If the proposed method of
disposition is an underwriting, the Initiating Holders holding a majority of the
Registrable Securities to be sold in
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<PAGE> 3
such offering may designate the managing underwriter of such offering, which
underwriter shall be reasonably acceptable to the Company. Whenever a requested
registration is for an underwritten offering, only securities which are to be
included in the underwriting may be included in the registration unless the
managing underwriter consents otherwise.
2. INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If at any time and
from time to time the Company proposes to register any shares of its capital
stock under the Securities Act, whether or not for sale for its own account, on
a form and in the manner that would permit registration of Registrable
Securities for the sale to the public under the Securities Act, the Company will
give written notice to all Holders of its intention to do so. Upon the written
request of a Holder given within 20 days after the giving of any such notice by
the Company, the Company will use its best efforts to cause to be included in
such Registration Statement all of the Registrable Securities so requested for
inclusion by Holders. If the Registration Statement is to cover, in whole or in
part, any underwritten distribution, the Company shall use its best efforts to
cause the Registrable Securities requested for inclusion pursuant to this
Section to be included in the underwriting on the same terms and conditions
(including any lock-up) as the shares otherwise being sold through the
underwriters.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If, in the good faith
judgment of the managing underwriter of any underwritten offering, the inclusion
of all of the Registrable Securities requested for inclusion pursuant to this
Section 2 would adversely affect the successful marketing of the proposed
offering, then the number of shares of capital stock and Registrable Securities,
if any, to be included in such registration shall be reduced, such reduction
shall be applied, FIRST, by excluding (on a pro rata basis) capital stock of the
Company to be sold by persons other than the Holders and Registrable Securities
proposed to be sold by all Holders and SECOND, by excluding shares of capital
stock to be sold by the Company for its own account. Notwithstanding the
foregoing provisions, the Company may withdraw any registration statement
referred to in this Section 2 without incurring any liability to Holders of
Registrable Securities.
3. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Section 1 or 2 to effect the registration of
Registrable Securities under the Securities Act, the Company will, at its
expense, as expeditiously as possible:
(i) prepare and, in any event within 40 days after a request
for registration has been given to the Company, file with the Commission a
Registration Statement with respect to such Registrable Securities and use its
best efforts to cause such Registration Statement to become effective; provided
that the Company may discontinue any registration of its securities which is
being effected pursuant to Section 2 at any time prior to the effective date of
the Registration Statement;
(ii) prepare and file with the Commission such amendments and
supplements to any Registration Statement referred to in clause (i) of this
Section 3 and the prospectus used in connection therewith as may be necessary to
keep such Registration
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<PAGE> 4
Statement effective for a period not in excess of 180 days (except with respect
to any Registration Statement filed pursuant to Rule 415 under the Securities
Act if the Company is eligible to file a Registration Statement on Form S-3, in
which case the Company shall use its best efforts to keep such Registration
Statement effective and updated until such time as all of the Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the Holder or Holders set forth in such Registration Statement)
and to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such Registration Statement
during such period in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such Registration Statement; provided
that before filing a Registration Statement or prospectus, or any amendments or
supplements thereto, the Company will furnish to one counsel selected by the
Holders holding a majority of the Registrable Securities covered by such
Registration Statement to represent all Holders of Registrable Securities
covered by such Registration Statement, copies of all documents proposed to be
filed, which documents will be subject to the review of such counsel;
(iii) furnish to each seller of such Registrable
Securities such number of copies of any Registration Statement referred to in
clause (i) of this Section 3 and of each amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
included in such Registration Statement (including each preliminary prospectus
and summary prospectus), and any other prospectus filed under Rule 424 under the
Securities Act in conformity with the requirements of the Securities Act, and
such other documents as such seller may reasonably request;
(iv) use its best efforts to register or qualify such
Registrable Securities covered by any Registration Statement referred to in
clause (i) of this Section 3 under such other securities or blue sky laws of
such jurisdictions as each seller shall reasonably request, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller, except that the Company shall not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction where, but for the requirements of this
clause (iv), it would not be obligated to be so qualified or to consent to
general service of process in any such jurisdiction;
(v) use its best efforts to cause such Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such Registrable
Securities;
(vi) cause representatives of the Company to participate
in any "road show" or "road shows" reasonably requested by any underwriter of an
underwritten or "best efforts" offering of any Registrable Securities;
(vii) notify each seller of any such Registrable
Securities covered by a Registration Statement, at any time when a prospectus
relating thereto is required to be delivered
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<PAGE> 5
under the Securities Act, of the Company's becoming aware that the prospectus
included in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the request of any such seller,
prepare and furnish to such seller a reasonable number of copies of an amended
or supplemental prospectus as may be necessary so that, as thereafter delivered
to the sellers of such Registrable Securities, such prospectus shall not include
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
in the light of the circumstances then existing;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable (but not more than eighteen
months) after the effective date of the Registration Statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the Securities
Act and the rules and regulations promulgated thereunder;
(ix) use its best efforts to list such Registrable
Securities on any securities exchange or automated quotation system on which
securities of the same class are then listed, if such Registrable Securities are
not already so listed and if such listing is then permitted under the rules of
such exchange or system, and to provide a transfer agent and registrar for such
Registrable Securities covered by a Registration Statement not later than the
effective date of such Registration Statement;
(x) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions as sellers
of a majority of such Registrable Securities or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities;
(xi) obtain a "cold comfort" letter or letters from the
Company's independent public accountants in customary form and covering matters
of the type customarily covered by "cold comfort" letters as the seller or
sellers of a majority of such Registrable Securities shall reasonably request;
(xii) obtain an opinion of counsel for the Company in
customary form and covering matters of the type customarily covered in opinions
of issuer's counsel as the seller or sellers of a majority of such Registration
Securities shall reasonably request; and
(xiii) make available for inspection by any seller of
such Registrable Securities covered by a Registration Statement, by any
underwriter participating in any disposition to be effected pursuant to such
Registration Statement and by any attorney, accountant or other agent retained
by any such seller or any such underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and cause
all of the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such Registration Statement.
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<PAGE> 6
4. EXPENSES. With respect to each registration effected pursuant
to Section 1 or 2, all Registration Expenses (defined below) in connection with
such registration and the public offering in connection therewith shall be borne
by the Company; provided that security holders participating in any such
registration shall bear their pro rata share of the underwriting discounts and
selling commissions (on the basis of the number of Registrable Securities of
each such person included in such registration) and 50% of the fees and
disbursements in excess of $200,000 described in clauses (vi) and (vii) of the
immediately succeeding sentence; provided, further that the Company shall not be
obligated to bear any Registration Expenses with respect to any registration
effected pursuant to Section 1 after the second anniversary hereof.
"Registration Expenses" shall mean any and all expenses incident to performance
of or compliance with this Agreement, including, without limitation, (i) all
registration and filing fees of the Commission, or the National Association of
Securities Dealers, Inc., (ii) all fees and expenses of complying with
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities), (iii) all printing, messenger and delivery expenses, (iv) all fees
and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange or automated quotation system pursuant to
Section 3(ix), (v) the fees and disbursements of counsel for the Company and of
its independent public accountants, including the expenses of any special audits
and/or "cold comfort" letters required by or incident to such performance and
compliance, (vi) the reasonable fees and disbursements of one counsel selected
by the Holders of a majority of the Registrable Securities being registered to
represent all Holders of the Registrable Securities being registered in
connection with each such registration, (vii) any fees and disbursements of
underwriters customarily paid by the issuers or sellers of securities, including
fees and disbursements of counsel for the underwriters, but excluding
underwriting discounts and commissions, (viii) liability insurance if the
Company so desires or if the underwriters so require, and (ix) the reasonable
fees and expenses of any special experts retained by the Company in connection
with the requested registration.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of a
registration of any Registrable Securities pursuant to Section 1 or 2, the
Company will indemnify and hold harmless each Holder of such Registrable
Securities included in a Registration Statement pursuant to the provisions of
this Agreement and any underwriter (as defined in the Securities Act) of such
Registrable Securities, and their respective Affiliates, and each of their
successors from and against, and will reimburse such Holder, underwriter and
Affiliate with respect to, any and all claims, actions, demands, losses,
damages, liabilities, costs and expenses to which such Holder, underwriter or
Affiliate may become subject under the Securities Act or otherwise, including,
without limitation, the reasonable fees and expenses of legal counsel (including
those incurred in connection with any claim for indemnity hereunder) insofar as
such claims, actions, demands, losses, damages, liabilities, costs or expenses
(or actions, or proceedings, whether commenced or threatened in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such Registration Statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or
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<PAGE> 7
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading or arise out of any violation by the Company of
any rule or regulation under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration; provided that the Company will not
be liable in any case to the extent, but only to the extent, that any such
claim, action, demand, loss, damage, liability, cost or expense arises out of or
is based upon an untrue statement or omission made in reliance upon and in
strict conformity with information furnished by such Holder or such underwriter
in writing specifically for use in the preparation thereof. This indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Holder, underwriter or Affiliate and shall survive the transfer
of such securities by such Holder or such underwriter.
(b) INDEMNIFICATION BY THE HOLDERS. Each Holder of Registrable
Securities, severally and not jointly, which Registrable Securities are included
in a registration pursuant to the provisions of this Agreement, will indemnify
and hold harmless the Company, each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who signs
the Registration Statement including such Registrable Securities, each director
of the Company, each underwriter and any person who controls the underwriter and
each of their successors from and against, and will reimburse the Company and
such officer, director, underwriter or controlling person with respect to, any
and all claims, actions, demands, losses, damages, liabilities, costs or
expenses to which the Company or such officer, director, underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such claims, actions, demands, losses, damages, liabilities, costs or
expenses arise out of or are based upon any untrue statement of any material
fact contained in such Registration Statement, any prospectus contained therein
or any amendment or supplement thereto, or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading; provided that such Holder will be liable in any
such case to the extent, but only to the extent, that any such claim, action,
demand, loss, damage, liability, cost or expense arises out of or is based upon
an untrue statement or omission made in reliance upon and in strict conformity
with written information furnished by such Holder specifically for use in the
preparation thereof. The liability of each Holder under this Section shall be
limited to the proportion of any such claim, action, demand, loss, damage,
liability, cost or expense which is equal to the proportion that the public
offering price of the Registrable Securities sold by such Holder under such
registration statement bears to the total offering price of all securities sold
thereunder, but not, in any event, to exceed the proceeds received by such
Holder from the sale of Registrable Securities covered by such Registration
Statement. This indemnity shall survive the transfer of such securities by such
Holder and the underwriter.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by a party to
be indemnified pursuant to the provisions of Section 5(a) or 5(b) (an
"indemnified party") of notice of the commencement of any action involving the
subject matter of the foregoing indemnity provisions, such indemnified party
will, if a claim thereof is to be made against the indemnifying party pursuant
to the provisions of Section 5(a) or 5(b), notify the indemnifying party of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve it
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<PAGE> 8
from any liability which it may have to an indemnified party otherwise than
under this Section and shall not relieve the indemnifying party from liability
under this Section unless, and to the extent, such indemnifying party is
prejudiced by such omission. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after the notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of this Section 5(a) and 5(b) for any legal expense subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided that, if the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it that are different from or additional to
those available to the indemnifying party or if the interests of the indemnified
party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred. No indemnifying party shall be liable to an
indemnified party for any settlement of any action or claim without the consent
of the indemnifying party and no indemnifying party may unreasonably withhold
its consent to any such settlement. No indemnifying party will, except with the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability and equitable claims in respect to such claim or litigation.
(d) CONTRIBUTION. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder exercising rights under this Agreement or any underwriter
makes a claim for indemnification pursuant to this Section but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section provides for indemnification in such
case, or (ii) contribution under the Securities Act may be required on the part
of any such Holder or underwriter, as the case may be, in circumstances for
which indemnification is provided under this Section 5, then, and in each such
case, the Company on the one hand and such Holder or underwriter, as the case
may be, on the other, will contribute to the aggregate claims, actions, demands,
losses, damages, liabilities, costs or expenses to which they may be subject
(after contribution from others) in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and of the Holder of
Registrable Securities or the underwriter, as the case may be, on the other, in
connection with the statements or omissions that resulted in such claims,
actions, demands, losses, damages, liabilities, costs or expenses, as well as
any other relevant equitable considerations. The relative fault of the Company
on the one hand and of the Holder of Registrable Securities or the underwriter,
as the case may be, on the other, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged
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<PAGE> 9
omission to state a material fact relates to information supplied by the Company
on the one hand or by the Holder of Registrable Securities or the underwriter,
as the case may be, on the other, and each party's relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission; provided that, in any such case, (A) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation and (B) no such Holder or
underwriter will be required to contribute any amount in excess of the proceeds
received by such Holder or underwriter, as the case may be, from the sales of
Registrable Securities covered by the Registration Statement.
(e) OTHER INDEMNIFICATION. Notwithstanding the foregoing, to the
extent that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
6. REPORTING REQUIREMENTS UNDER SECURITIES EXCHANGE ACT OF 1934.
(a) EXCHANGE ACT REPORTING. The Company shall keep effective its
registration under Section 12 of the Securities Exchange Act of 1934 (the
"Exchange Act"), and shall timely file such information, documents and reports
as the Commission may require or prescribe under the Exchange Act. The Company
shall timely file such information, documents and reports as the Commission may
require or prescribe under Section 13 of the Exchange Act.
(b) FURNISHING INFORMATION TO HOLDERS. The Company shall
forthwith upon request furnish any Holder of Registrable Securities (a) a
written statement by the Company that it has complied with such reporting
requirements, (b) a copy of the most recent Form 10-K or Form 10-Q filed by the
Company and a copy of the most recent annual or quarterly report of the Company
distributed to its shareholders, and (c) such other reports and documents filed
by the Company with the Commission as such Holder may reasonably request in
availing itself of an exemption for the sale of Registrable Securities without
registration under the Securities Act.
(c) RULE 144 AND FORM S-3. The Company acknowledges and agrees
that the purposes of the requirements contained in this Section 6 are (i) to
enable any such Holder to comply with the current public information requirement
contained in paragraph (c) of Rule 144 under the Securities Act should such
Holder ever wish to dispose of any of the securities of the Company acquired by
it without registration under the Securities Act in reliance upon Rule 144 (or
any other similar or successor exemptive provision), and (ii) to qualify the
Company for the use of registration statements on Form S-3. In addition, the
Company shall take such other measures and file such other information,
documents and reports as shall hereafter be required by the Commission as a
condition to the availability of Rule 144 under the Securities Act (or any
similar or successor exemptive provision hereafter in effect) and the use of
Form S-3. The Company also covenants to use its best efforts, to the extent that
it is reasonably within its power to do so, to qualify for the use of Form S-3.
From and after the effective date of the first Registration Statement filed by
the Company, the Company agrees to use its best efforts to facilitate and
expedite transfers of Registrable Securities pursuant to Rule 144 under the
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<PAGE> 10
Securities Act (or any similar or successor exemptive provision hereafter in
effect), which efforts shall include timely instructions to its transfer agent
to expedite such transfers of Registrable Securities.
7. SHAREHOLDER INFORMATION. The Company may require each Holder
of Registrable Securities as to which any registration is to be effected
pursuant to this Agreement to furnish the Company in a timely manner such
information with respect to such Holder and the distribution of such Registrable
Securities as the Company may from time to time reasonably request in writing
and as shall be required by law or by the Commission.
8. SPECIFIC ENFORCEMENT. All of the parties acknowledge that the
parties will be irreparably damaged in the event that this Agreement is not
specifically enforced. Upon a breach or threatened breach of the terms,
covenants or conditions of this Agreement by any of the parties hereto, the
other parties shall, in addition to all other remedies, be entitled to a
temporary or permanent injunction, without showing any actual damage, or a
decree for specific performance, in accordance with the provisions of this
Agreement.
9. DESCRIPTIVE HEADINGS; DEFINITIONS; CERTAIN INTERPRETATIONS.
(a) Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
(b) As used in this Agreement, the following terms shall have the
following respective meanings:
"Affiliate" shall mean (a) any person or entity directly or
indirectly controlling, controlled by or under common control with another
person or entity; (b) any person or entity owning or controlling 10% or more of
the outstanding voting securities of such other person or entity; (c) any
partner, officer, director, employee or shareholder of such entity or any
parent, spouse, child, brother, sister or other relative with a relationship (by
blood, marriage or adoption) not more remote than first cousin of any of the
foregoing; or (d) any liquidating trust, trustee or other similar person or
entity for any such person or entity.
"Holder" shall mean (a) the Investor and (b) any other person to
which the rights of registration under this Agreement have been transferred or
assigned by the Investor or its transferees.
"Registrable Securities" shall mean (a) shares of Common Stock
(including shares issuable or issued upon the exercise of any Warrants or the
exercise of any other exchange, conversion or similar right), (b) any securities
issued in respect of any such shares by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger or
consolidation or reorganization and (c) Warrants; provided that, such securities
shall cease to be Registrable Securities when such securities have been sold to
or through a broker or dealer or underwriter in a public distribution or a
public securities transaction.
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(c) Except as otherwise expressly provided in this Agreement, the
following rules of interpretation apply to this Agreement: (i) the singular
includes the plural and the plural includes the singular; (ii) "or" or "any" are
not exclusive and "include" and "including" are not limiting; (iii) a reference
to any agreement or other contract includes permitted supplements and
amendments; (iv) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder; (v) a reference to a
person includes its successors and assigns; and (vi) a reference in this
Agreement to a Section is to the Section of this Agreement.
10. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing and sufficient if delivered personally
or sent by telecopy (with confirmation of receipt) or by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
If to the Company: Industrial Imaging Corporation
One Lowell Research Center
847 Rogers Street
Lowell, Massachusetts 01852
Attention: Juan J. Amodei
Telecopy: (508) 441-0122
With a copy to: Mintz Levin Cohn Ferris Glovsky and Popeo PC
One Financial Center
Boston, Massachusetts 02111
Attention: Neil H. Aronson
Telecopy: (617) 542-2241
If to the Investor: Imprimis Investors LLC
c/o Wexford Management LLC
411 West Putnam Avenue
Greenwich, Connecticut 06830
Attention: Frank S. Plimpton
Telecopy: (203) 862-7451
With a copy to: Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
Attention: Michael B. Hopkins
Telecopy: (212) 841-1010
or to such other address or telecopy number as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Each such notice, request or communication shall be effective when received or,
if given by mail, when delivered at the address specified in this Section or on
the fifth business day following the date on which such communication is posted,
whichever occurs first.
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11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
12. BENEFITS OF AGREEMENT. All of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. This Agreement is for the
sole benefit of the parties hereto and not for the benefit of any third party.
13. ENFORCEABILITY. It is the desire and intent of the parties
hereto that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).
15. CONSENT TO JURISDICTION. EACH OF THE COMPANY AND THE HOLDER
HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF ANY
FEDERAL AND STATE COURT IN NEW YORK SITTING IN NEW YORK CITY AND IRREVOCABLY
AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE LITIGATED EXCLUSIVELY
IN SUCH COURTS. EACH OF THE COMPANY AND THE HOLDER AGREES NOT TO COMMENCE ANY
LEGAL PROCEEDING RELATED HERETO OR THERETO EXCEPT IN SUCH COURT. EACH OF THE
COMPANY AND THE HOLDER IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING IN ANY SUCH
COURT AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT
TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
16. WAIVERS; AMENDMENTS. No waiver of any right hereunder by any
party shall operate as a waiver of any other right, or of the same right with
respect to any subsequent occasion for its exercise, or of any right to damages.
No waiver by any party of any breach of this Agreement shall be held to
constitute a waiver of any other breach or a continuation of the same breach.
All remedies provided by this Agreement are in addition to all other remedies
provided by law. This Agreement may not be amended except by a writing executed
by the Company and by Holders holding at least 51% of the Registrable
Securities; provided that the
12
<PAGE> 13
provisions of this Section 16 may not be amended unless such amendment is
executed by each Holder.
17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. The Investor's rights are assignable to any assignee or
transferee of all or a portion of the Registrable Securities held by the
Investor. In addition, and whether or not any express assignment shall have been
made, the provisions of this Agreement which are for the benefit of the parties
hereto other than the Company shall also be for the benefit of and enforceable
by any subsequent Holder of any Registrable Securities, subject to the
provisions contained herein.
18. TERMINATION. This Agreement shall terminate upon the earliest
to occur of the following events:
(a) termination by mutual written agreement of the Investor and
the Company;
(b) all Registrable Securities have been sold to or through a
broker or dealer or underwriter in a public distribution or public securities
transaction; or
(c) the fourth anniversary of the date hereof.
19. ENTIRE AGREEMENT. This Agreement contains the entire
agreement among the parties with respect to the transactions contemplated by
this Agreement and supersedes all prior agreements or understandings among the
parties.
20. CONFIDENTIALITY. The Investor and any subsequent Holder
agrees that it shall keep confidential all information disclosed to it pursuant
to Section 3(xiii), unless such information was already in the Purchaser's
possession or known to the Purchaser prior to being disclosed or provided to the
Purchaser, until the earliest of such time as (a) disclosure may be required by
law, (b) three years from the date of receipt of such information, (c) such
information becomes publicly available through no action or fault of the
Purchaser, and (d) such information was or is obtained by the Purchaser from a
third party other than where such information was obtained in breach of contract
or in violation of law.
13
<PAGE> 14
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
INDUSTRIAL IMAGING CORPORATION
By:
-------------------------------------
Name:
Title:
IMPRIMIS INVESTORS LLC
By:
-------------------------------------
Name:
Title:
14
<PAGE> 1
EXHIBIT 21
----------
SUBSIDIARIES OF THE REGISTRANT
The sole subsidiary of the registrant is Triple I Corporation, a Delaware
corporation, which also does business under the name "AOI International, Inc."
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> MAR-31-1996
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 62,103
<SECURITIES> 0
<RECEIVABLES> 493,778
<ALLOWANCES> 0
<INVENTORY> 1,877,979
<CURRENT-ASSETS> 2,487,258
<PP&E> 157,236
<DEPRECIATION> (122,980)
<TOTAL-ASSETS> 2,594,279
<CURRENT-LIABILITIES> 4,179,185
<BONDS> 450,000
0
0
<COMMON> 5,931,263
<OTHER-SE> (7,966,169)
<TOTAL-LIABILITY-AND-EQUITY> 2,594,279
<SALES> 1,823,576
<TOTAL-REVENUES> 1,823,576
<CGS> 1,609,987
<TOTAL-COSTS> 1,609,987
<OTHER-EXPENSES> 2,018,886
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 89,257
<INCOME-PRETAX> (1,894,554)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,894,554)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,894,554)
<EPS-PRIMARY> (.44)
<EPS-DILUTED> 0
</TABLE>
