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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES FOR SMALL BUSINESS ISSUERS
Under Section 12 (b) or (g) of The Securities Exchange Act of 1934
APOGEE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3005815
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
129 Morgan Drive 02062
Norwood, Massachusetts (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (781) 551-9450
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.01 Par Value Per Share
--------------------------------------
(Title of Class)
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EXPLANATORY NOTE
Apogee Technology, Inc. ("Apogee" or the "Company") is filing this Form
10-SB Registration Statement to comply with recently enacted rules of the
National Association of Securities Dealers, Inc., which require, among other
things, that the Company become a reporting company with the Securities and
Exchange Commission (the "SEC") under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in order for the Company
to become eligible for listing on the OTC Bulletin Board.
Special Note on Forward Looking Statements
This Form 10-SB contains express or implied forward-looking statements.
The words "believes," "expects," "anticipates," "may," "will," "should,"
"intends," "forecasts," "projects," "plans," "estimates" and similar expressions
identify forward-looking statements. Such statements reflect the current views
of the Company with respect to future events and financial performance or
operations and speak only as of the date the statements are made. Such
forward-looking statements involve risks and uncertainties and readers are
cautioned not to place undue reliance on forward-looking statements. The
Company's actual results may differ materially from such statements. Factors
that cause or contribute to such differences include, but are not limited to,
the Company's limited operating history, unpredictability of operating results,
loss of market share and pressure on prices from competition in various aspects
of its business, the risks of rapid growth, the Company's dependence on key
personnel, uncertainty of product acceptance, inability to timely develop and
introduce new technologies, products and applications, changes in the level of
activity in the audio industry, changes in economic conditions and an inability
to obtain financing, as well as those discussed elsewhere in this Form 10-SB.
Although the Company believes that the assumptions underlying its
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the results
contemplated in such forward-looking statements will be realized. The inclusion
of such forward-looking information should not be regarded as a representation
by the Company or any other person that the future events, plans or expectations
contemplated by the Company will be achieved. The Company undertakes no
obligation to publicly update, review or revise any forward-looking statements
to reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements are
based.
Item 1. DESCRIPTION OF BUSINESS
History
Apogee was organized as a Delaware corporation on July 1, 1987, and
initially operated through its wholly-owned subsidiary, Apogee Acoustics Inc.
("Acoustics"). Acoustics engineered, manufactured and marketed high quality,
high-end patented ribbon loudspeaker systems for use in home audio and video
entertainment systems. This technology was so innovative that a pair of Apogee
loudspeakers is on display at the Smithsonian Museum.
Apogee discontinued its loudspeaker business in 1995 and, since that time,
has focused exclusively on digital amplifier technology development. The Company
initially developed a high efficiency amplifier architecture (US patent
# 5,077,539) that it implemented with analog circuitry. To meet broader future
market appeal, the Company subsequently developed and patented in 1997 a
complete digitally-controlled amplifier design (US patent # 5,617,058) which the
Company trademarked as Direct Digital Amplification or DDX(R).
Most current digital audio systems use analog amplifiers to amplify analog
signals produced by a digital to analog converter or DAC. The problem inherent
with this methodology is that it requires digital signal conversion and analog
amplifiers dissipate over half their power as heat. DDX is an amplifier
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design that utilizes a digital interface and high-efficiency switching
technology. Embedded signal processing is used to convert digital audio data
into Apogee's tri-state output which enables direct control of the power
switching devices. This design significantly increases efficiency over analog
amplifiers and eliminates analog noise problems. Eliminating the need for
digital to analog conversion permits digital audio sources such as CDs and DVDs
to remain digital from source to speakers resulting in clear digital sound.
In August 1999, the Company signed a licensing agreement with ALST
Technical Excellence Center, ("ALST") a strategic partnership between Altec
Lansing Technologies, Inc. ("Altec") and STMicroelectronics. Altec is one of the
world's leaders in sound systems for personal computers and STMicrolectronics
(formerly SGS-THOMSON) designs, develops, manufactures and markets a broad
range of semiconductor products for the telecommunications, computer, consumer
electronics, automotive and industrial markets. In 1999, STMicroelectronics was
the eighth largest semiconductor company in the world. Under this agreement,
Apogee will license its patented DDX intellectual property on a non-exclusive
basis to ALST to develop integrated semiconductor products for the computer,
consumer electronics, automotive and communications markets. ALST will be
responsible for the overall product development and STMicroelectronics will
manufacture and sell products to Altec Lansing and other audio manufacturers.
Apogee will receive a royalty on sales of all products incorporating Apogee's
DDX technology.
A memorandum of understanding ("MOU") between Avio Digital, Inc. ("Avio")
and Apogee was signed in May, 1999. Avio is the developer of high performance
MediaWire home network technology enabling transmission of multiple channel
digital audio and video on one connector or wire. Under the MOU, Avio and Apogee
will exchange and license certain technical information to evaluate the
combining of the Company's DDX technology with Avio's home networking
technologies.
Design of the first part of a two-chip semiconductor DDX product solution,
a Controller device, was completed in late 1999. The second part of that
solution, a Power device, is expected to be available for customer sampling in
the second half of 2000. Development of a network amplifier product for use in
both commercial and home audio was completed in late 1999. Apogee expects to be
marketing and shipping both semiconductor and amplifier products by the second
half of 2000.
Industry Trends and the DDX Advantage
The consumer electronics industry is moving toward development of fully
digital integrated systems. In the audio segment, digital recording and
distribution technology, such as Digital Versatile Discs (DVDs) and digital
networks, have been and are being developed. In the near future, most audio (and
much video) material will be recorded and distributed using digital technology.
With this transition, the consumer is also demanding smaller less complicated
audio systems, thus forcing audio manufacturers to further integrate products.
With more audio channels becoming standardized, such as home theater systems
that utilize six channels, manufacturers are being forced to develop unique
solutions that provide more audio power in smaller spaces.
Current audio amplifier solutions cannot meet the need for digital fully-
integrated systems because they utilize low efficiency analog amplifiers to
boost analog signals produced by a digital audio converter. The designs are not
truly digital and can suffer from analog noise problems and the need for large
heat sinks to dissipate the heat resulting from their poor efficiency. Apogee's
DDX design solves both of these problems. DDX is fully digital so that analog
noise problems are eliminated. Since the signal processing is digital, fully-
integrated designs can be developed to operate at high efficiency. DDX uses
patented switching technology to provide greater efficiency than analog designs
playing music, thereby eliminating external heat sinks and simplifying packaging
and manufacturing. DDX is the first all-digital amplifier solution designed to
be offered on a low cost basis to the audio and communications markets.
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Apogee is developing DDX solutions for the high volume audio markets and
other applications in the communications field that can directly benefit from
the DDX unique design. The company is focusing its initial development efforts
on semiconductor products for the PC multimedia, home audio and automotive
markets. As these products are launched, Apogee will direct its development
efforts towards emerging growth markets such as Internet appliances, network
systems, and communication products. Some of the applications and advantages of
DDX technology in current and future markets, which the Company may pursue in
the future, are summarized as follows:
a) Emerging Markets
With DDX technology, new digital products no longer encumbered by analog
designs will evolve. DDX potential solutions are adaptable to DVD, integrated
digital amplification in Digital TVs, speakers, and digital cable systems. New
technologies such as MP3, digital playback and Internet appliances can be fully
digital with DDX amplifier solutions.
DDX's digital to power architecture can be adopted to secure digital music
playback. As music is distributed digitally, it can easily be copied once it has
been decoded. With DDX, the music decoding can be made so that unsecured digital
data is not available for copy.
b) Traditional Audio Segments
Apogee's high efficiency technology provides audio clarity and cost
effective solutions in many audio applications. In the home audio and PC
multimedia markets, OEM manufacturers will be able to realize efficiencies
through the incorporation of smaller configuration DDX amplifiers in powered
speakers. DDX's smaller and more efficient design will enable car audio designs
to deliver more power in a smaller space. Portable boom boxes, MP3 players and
mobile communication devices will also benefit from longer battery life due to
DDX efficiency.
c) Network Audio
Apogee's digital design is a natural solution for distributed audio on
network systems. With the emergence of home networking applications, such as
Avio Digital's MediaWire and Apple's 1394, DDX can provide low cost audio
solutions. DDX's digital processing can be integrated with network interface
designs to provide consumers with pure digital sound throughout their homes at
lower cost. Audio systems may also be installed in wall or ceiling spaces
without the typical thermal problems associated with analog amplifier
installations. In addition, because of DDX's higher efficiency, more amplifiers
and higher audio output can be achieved in network applications compared with
analog systems operating from a remote power source.
Products
Apogee is developing a range of DDX products to meet the needs of large
and small OEM customers, ranging from DDX logic designs for semiconductor OEMs
to semiconductor and amplifier product solutions.
a) Software Solutions for OEMs
Apogee has developed and is licensing DDX software to meet the needs of
large audio OEMs and semiconductor companies that wish to integrate DDX. Apogee
plans to develop additional audio functions to enhance the marketability of its
DDX technology.
b) Semiconductors
Apogee is developing DDX semiconductor solutions for sale to audio OEMs.
The Company has developed a DDX amplifier chip set consisting of a DDX
Controller device and a DDX Power device. The DDX Controller interfaces to
standard digital audio designs and directly controls the DDX Power device. This
design can provide from 7 to 30 watts per channel of power output. Because of
the device's
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high efficiency, the DDX amplifier can be mounted on a circuit board without an
external heat sink, thus simplifying manufacturing. Apogee plans to develop
additional semiconductor devices at different power levels and with different
performance features to broaden market appeal for its DDX technology.
c) Amplifier Products
Apogee's strategic plan includes the development of amplifier products in
addition to its focus on software licensing solutions utilizing Apogee's DDX
amplifier and digital signal processing technology. Apogee's first amplifier
product was introduced at the Consumer Electronics Show in Las Vegas on January
6-9, 2000. This initial product is a high power network amplifier solution for
commercial applications and high-end audio markets and is the first of a family
of digital amplifiers utilizing DDX technology.
To support customers desiring turnkey OEM solutions, Apogee has developed
an amplifier board solution that can provide from 50 to 100 watts per channel of
power output. This amplifier design includes a digital network interface and is
targeted for digital powered speakers and commercial audio applications. Apogee
is also planning to release its own line of amplifier products that combine DDX
with its audio software processing and systems expertise.
Marketing
The Company's technology is best marketed through a combination of
software licensing and direct sales of semiconductors and amplifier products.
This approach will provide value solutions for both high and low volume audio
OEM and retail customers. Specifically, the following are the marketing
approaches that the Company will be adopting for each business area:
Licensing
The Company is utilizing in-house technical staff to market software
solutions to large semiconductor and audio OEMs. Following the ALST agreement,
the Company has begun negotiations with other parties relating to licensing
arrangements.
Semiconductors
The Company will market its semiconductors under the direction of in-house
personnel utilizing direct marketing techniques and sales representatives in the
U.S. and foreign markets. The Company is also considering partnering with
semiconductor suppliers for the distribution of its DDX products.
Amplifier Products
The Company intends to market its amplifier products on an OEM and retail
basis. Retail marketing and sales will be conducted via the Company's Internet
web site. OEM sales of the Company's amplifier products will be under the
direction of in-house marketing personnel.
Competition
Apogee's DDX is the first all-digital solution targeted towards high
volume, lower cost markets. The audio industry today is characterized by (1)
analog amplifiers known as Class A/B amplifiers and (2) analog high efficiency
designs, known as Class D amplifiers. The industry is moving from analog to
digital format amplifiers in a manner similar to video's move to digital.
To date, there is one other competitive company in the digital arena, albeit in
the high-end, lower volume sector. There are also other companies which have
announced their intent to introduce digital amplifier products.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following Discussion and Analysis of the Company's Financial Condition
and Results of Operations should be read in conjunction with the Company's
Financial Statements and the related Notes included elsewhere in this
Registration Statement. This discussion contains, in addition to historical
statements, forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ significantly from the results discussed
in the forward-looking statements. Factors that could cause or contribute to
such differences include the factors discussed in the section titled "Special
Note on Forward-Looking Statements" as well as other factors in this Apogee
Registration Statement on Form 10-SB.
Introduction
Prior to 1995, the Company was in the business of engineering,
manufacturing and marketing high quality, high-end patented ribbon loudspeaker
systems for use in home audio and video entertainment systems. Since 1995, the
Company's business has shifted to the design and marketing of digital amplifier
technology, DDX(R). The Company has completed development of its first DDX
software, semiconductor and amplifier products and has entered into one
licensing agreement but has not yet begun to generate revenues from the sale of
its DDX products. The Company has incurred net losses of approximately $1.1
million for the year ended December 31, 1999 and just under $1 million for each
of the years ended December 31, 1998 and December 31, 1997. At December 31,
1999, the Company had an accumulated deficit of $7,294,899. These net losses and
accumulated deficit result primarily from the costs associated with the
Company's DDX development efforts. The Company expects to incur additional
losses as it continues to develop new products and expand its marketing efforts.
Selected Consolidated Financial Data
The following selected financial data for the three years ended December
31, 1999 has been derived from the Company's financial statements audited by
Yohalem Gillman & Company LLP, independent accountants.
For the Years Ended December 31,
--------------------------------
1999 1998 1997
---- ---- ----
Statement of Operations Data:
Revenues $ 60,200 $ 61,371 $ 17,375
Costs and expenses 1,094,755 964,258 839,744
Other income (expense) (27,852) (51,214) (114,650)
Net Loss (1,062,407) (954,101) (937,019)
Shares outstanding
- -December 31 4,155,022 3,106,156 1,934,000
Balance Sheet Data:
Total assets 225,508 85,031 97,358
Stockholders' deficiency (636,116) (1,241,625) (1,067,398)
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Results of Operations
Revenues in 1999 were principally derived from initial fees for the ALST
licensing agreement. Revenues for 1998 and 1997 consisted of miscellaneous
consulting work.
Costs and expenses reflect primarily research and development costs
incurred as well as selling, general and administrative costs. Increases in
costs and expenses from 1998 to 1999 consisted of additional spending for
development of the Company's Controller and Power devices, as well as the costs
of hiring additional personnel. A large portion of the increase in costs and
expenses from 1997 to 1998 reflects professional fees accumulated from earlier
litigation and other general corporate work.
The Company has reported net losses for the years 1997 to 1999. In 2000,
the Company will be expanding its commercialization efforts and it expects
operating losses to continue for the foreseeable future.
Liquidity and Capital Resources
Three principal stockholders have, in large part, funded the Company
through personal loans. These loans have been subsequently converted into shares
of the Company's Common Stock through the private placement of the Company's
Common Stock. The Company has also raised operating funds through the private
placement of the Company's Common Stock to nonaffiliated investors and from bank
lines of credit. In December of 1997, the Company received a $250,000 bank line
of credit which was guaranteed by two of its shareholders. This loan was repaid
by these shareholders in March 1999. In May 1999, the Company received an
additional bank financing in the amount of $200,000 which was subsequently
refinanced in February 2000. In 1999, the Company raised $621,668 through the
sale of its Common Stock and Warrants.
As the Company enters the marketing phase with the first of its DDX
products and continues its development work with regard to DDX products in the
pipeline, it will need further funding. The Company has begun a new private
placement of its Common Stock through which it plans to raise approximately
$525,000. To date, approximately $350,000 of these funds have been raised.
There can be no assurance, however, that the Company will be able to raise
the funds that it needs to continue its operations in the long term or that
additional funds will be available to the Company on acceptable terms, if at
all. The continuance of the Company is dependent upon its ability to
successfully develop and market its digital amplifier technology and raise funds
for such purposes.
Year 2000 Compliance
Certain currently installed computer and communications systems and
software products may be unable to recognize and properly process data fields
containing a two digit calendar year. This situation could result in system
failures or miscalculations causing disruptions in the operations of any
business. As a result, many companies' software and computer and communications
systems have been upgraded or replaced to be able to accurately process Year
2000 date-based information.
Apogee has reviewed its internal systems and based, on this review, the
Company does not currently believe that it has material exposure to the Year
2000 issue.
The Company does not anticipate any future problems in connection with
Year 2000 issues The Company's costs to date of remediating Year 2000 issues
have been inconsequential and it expects that any future expenses for its Year
2000 compliance will not be material. The Company has not developed a
contingency plan to address situations that may result if either the Company or
third parties upon whom the Company relies, is unable to achieve Year 2000
readiness.
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Item 3. DESCRIPTION OF PROPERTIES
The company maintains its offices at 129 Morgan Drive, Norwood, MA. The
5,000 square foot area is leased on a month-to-month basis.
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Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of December 31, 1999
concerning the ownership of Common Stock by each Stockholder known by the
Company to be the beneficial owner of more than 5% of its outstanding shares of
Common Stock, each current member of the Board of Directors, each executive
officer, and all directors and executive officers as a group.
SHARES BENEFICIALLY OWNED(1)
Name and Address** Number Percent
- ------------------ ------ -------
Herbert Stein
H.M. Stein Associates 834,450 (2) 19.9%
71 Fairlee Road, Waban, MA 02468
David Spiegel 800,316 (3) 19.1%
600 Mountain Street, Sharon, MA 02067
Leo Spiegel 391,818 9.4%
30 Ashcroft Road, Sharon, MA 02067
Dr. Anton Schrafl 597,000 (4) 14.3%
Schlossbergstrasse 23, Zollikon, Switzerland
Alan Tuck 106,000 (5) 02.5%
Bruce Bishop 15,000 (6) *
David Meyers 36,000 (7) *
All executive officers and directors
As a group (7 persons) 2,780,584 (8) 64.9%
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* Represents beneficial ownership of less than l% of the Company's
outstanding shares of Common Stock.
** Addresses are given for beneficial owners of more than 5% of the Company's
outstanding stock only.
(1) The number of shares of Common Stock issued and outstanding on December 31,
1999 was 4,155,022. The calculation of percentage ownership of each listed
beneficial owner is based upon the number of shares of Common Stock issued
and outstanding at December 31, 1999, plus shares of Common Stock subject
to options held by such person at December 31, 1999 and exercisable within
60 days thereafter. The persons and entities named in the table have sole
voting and investment power with respect to all shares shown as
beneficially owned by them, except as noted below.
(2) Herbert Stein, a Director of the Company, has sole voting and investment
power with respect to the shares owned by H.M. Stein Associates. Includes
20,000 shares of Common Stock which may be purchased within 60 days of
December 31, 1999 upon the exercise of stock options, 25,000 shares of
Common Stock purchased after December 31, 1999 and 5,000 shares of Common
Stock which may be purchased after December 31, 1999 upon the exercise of
fully vested warrants.
(3) Includes 20,000 shares of Common Stock which may be purchased within 60
days of December 31, 1999 upon the exercise of stock options, 25,000 shares
of Common Stock purchased after December 31, 1999 and 5,000 shares of
Common Stock which may be purchased after December 31, 1999 upon the
exercise of fully vested warrants.
(4) Includes 20,000 shares of Common Stock purchased after December 31, 1999
and 4,000 shares of Common Stock which may be purchased after December 31,
1999 upon the exercise of fully vested warrants.
(5) Includes 2,000 shares of Common Stock which may be purchased within 60 days
of December 31, 1999 upon the exercise of stock options.
(6) Includes 5,000 shares of Common Stock which may be purchased within 60 days
of December 31, 1999 upon the exercise of stock options.
(7) Includes 36,000 shares of Common Stock which may be purchased within 60
days of December 31, 1999 upon the exercise of stock options.
(8) Includes 81,000 shares of Common Stock which may be purchased within 60
days of December 31, 1999 upon the exercise of stock options, 70,000 shares
of Common Stock purchased after December 31, 1999 and 14,000 shares of
Common Stock which may be purchased after December 31, 1999 upon the
exercise of fully vested warrants.
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Item 5. DIRECTORS AND EXECUTIVE OFFICERS
Directors
The names of the Company's current Directors and certain information
regarding each such Director's business experience during the past five years
are set forth below. The Company's Directors are elected by the stockholders at
each annual meeting and serve for one year or until their successors are duly
elected and qualified.
Name Age Position with the Company
---- --- -------------------------
Herbert Stein 71 Chairman of the Board
David Spiegel 43 President and Treasurer
Bruce Bishop 56 Vice Chairman of the Board
and Secretary
Dr. Anton Schrafl 68 Director
Alan Tuck 51 Director
Mr. Herbert M. Stein has served as a Director of the Company since 1996
and as Chairman of the Board since January 2000. Mr. Stein was Chairman of the
Board of Directors of Organogenesis Inc. from 1991 through 1999 and Chief
Executive Officer of Organogenesis from 1987 through 1999.
Mr. David Spiegel has served on the Company's Board of Directors since
1987, as President and Treasurer of the Company since 1995 and as Chairman of
the Board from 1996 to 1999. He is President, Director and owner of Automotive
Galleries Inc., Norwood, MA. David Spiegel is the son of Leo Spiegel.
Mr. Bruce Bishop has served as Vice Chairman of the Board of Directors of
the Company since May, 1999. From 1968 to 1975, Mr. Bishop was a Manager with
Arthur Andersen & Co. and from 1975 to 1997, he was a Vice President of
"Holderbank" Management & Consulting Ltd., the service arm of "Holderbank"
Financiere Glaris AG, a Swiss manufacturer of cement.
Dr. Anton Schrafl has served as a Director of the Company since 1997. He
has been Deputy Chairman of "Holderbank" Financiere Glaris Ltd., since July
1984. He is also a Director of Organogenesis Inc.
Mr. Alan Tuck has served as a Director of the Company since 1998. He is
Chief Strategic Officer of Organogenesis Inc. and a Director of Genzyme
Transgenics Corporation.
Mr. Bishop has been employed as a consultant by the Company since May 1999
in addition to his responsibilities as a Director. He receives compensation from
the Company pursuant to an agreement between the Company and BCL Business
Consultants, Inc. ("BCL"). Mr. Bishop is President of BCL. Mr. Bishop's total
remuneration for consulting from May 1999 through December 31, 1999 was $68,100.
Executive Officers
The names of, and certain information regarding, executive officers of the
Company who are not also directors, are set forth below. The executive officers
serve at the pleasure of the Board of Directors.
Name Age Position with the Company
---- --- -------------------------
Leo Spiegel 75 Executive Vice President, Research
David Meyers 41 Vice President, Business Development
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Mr. Leo Spiegel has served as the Company's Executive Vice President of
Research since 1996. Prior thereto, he was the Chairman of the Board of the
Company from 1987 to 1996. He served as a Director of the Company from its
inception in 1981 until 1996. He is co-founder of the Company. Leo Spiegel is
David Spiegel's father.
Mr. David Meyers was appointed the Company's Vice President, Business
Development in January 2000. Prior to joining the Company in 1996, Mr. Meyers
was a principal engineer with Arinc Research Corporation.
Involvement in Legal Proceedings
To the best of the Company's knowledge, during the past five years, none
of the following occurred with respect to a present or former director or
executive officer of the Company: (1) Any bankruptcy petition filed by or
against any business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years prior to that
time; (2) Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses); (3)
Being subject to any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of any competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities; and (4) Being found
by a court of competent jurisdiction (in a civil action), the SEC or the
Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed, suspended
or vacated.
Item 6. EXECUTIVE COMPENSATION
Compensation of Directors
The Company's policy is to pay no compensation to members of the Board for
attendance at Board meetings or committee meetings.
Directors are eligible to participate in the Company's 1997 Employee,
Director and Consultant Stock Option Plan (the "Plan"). Options to purchase an
aggregate of 35,000 shares of the Company's Common Stock, at an exercise price
of $1.25 per share vesting over five years, were granted under the Plan during
Fiscal 1999 to Mr. Bruce Bishop and Mr. Alan Tuck.
Compensation of Executive Officers
David Spiegel, President of the Company, did not receive any compensation
for Fiscal 1999 for services he rendered to the Company. No other executive
officer of the Company received compensation, including salary and bonus, for
fiscal 1999 exceeding $100,000.
Option Grants in Last Fiscal Year
The Company did not grant any options during Fiscal 1999 to its executive
officers.
Fiscal Year-End Option Values
The following table provides information regarding the value of both
exercisable and unexercisable stock options held by the Company's President as
of December 31, 1999 and the value of "in-the-money" options, which values
represent the positive spread between the exercise price of any such option and
the fiscal year-end value of the Company's Common Stock. No options were
exercised during Fiscal 1999.
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Number of Securities Underlying Value of the Unexercised
Unexercised Options/SARs In-The-Money Options/SARs
at Fiscal Year-End at Fiscal Year-End (1)
-------------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------- ----------- ------------- ----------- -------------
David Spiegel 20,000 30,000 $29,000 $43,500
(1) The value of unexercised in-the-money options at fiscal year end assumes a
fair market value for the Company's Common Stock of $2.00, the closing bid
price per share of the Company's Common Stock as quoted on the National
Quotation Bureau Pink Sheets on December 31, 1999.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 1997, the Company moved to a facility owned by Mr. David Spiegel,
a stockholder of the Company. The Company rents the facility for $3,600 per
month on a month-to-month basis. Rent paid during 1998 and 1999 amounted to
$86,400 in the aggregate. Rentals paid are below market value.
As of May 31, 1997, Mr. Leo Spiegel, Mr. David Spiegel, Mr. Herbert Stein
and Mr. Melvin Ravech (the "Lenders") had loaned the Company a total of
$138,500, $143,500, $165,000 and $22,500, respectively, at an interest rate of
8% per annum (the "1997 Loans"). On June 12, 1997, the Board of Directors of the
Company voted to convert the 1997 Loans into 854,545 shares of Common Stock at a
conversion price of $.55 per share. The 1997 Loans were converted on May
21,1998. Accrued interest on the 1997 Loans totaling $79,188 was waived by the
Lenders.
On December 3, 1997, the Company obtained a $250,000 unsecured bank line
of credit (the "Line of Credit") at an interest rate of prime plus 1.25% (9.75%
at December 31, 1998 and 1997). The Line of Credit was personally guaranteed by
Mr. David Spiegel and Mr. Herbert Stein (the "Guarantors") and was paid off by
the Guarantors on March 31, 1999. On January 12, 1999, the Board of Directors of
the Company voted to issue 100,000 shares of Common Stock to each of the
Guarantors, at a price of $1.25 per share in consideration of repayment of the
Line of Credit by the Guarantors. These shares were issued on August 2, 1999.
Accrued interest on the Line of Credit was paid by the Guarantors.
Between October 1997 and January 1999, Dr. Anton Schrafl, Mr. Alan Tuck,
Mr. Herbert Stein and Mr. David Spiegel loaned the Company a total of $264,750,
$80,000, $100,000 and $100,000, respectively. On January 12, 1999, the Board of
Directors of the Company voted to convert these loans into 457,000 shares of
Common Stock at conversion prices of $.75 to $1.25 per share. These loans were
converted on August 2, 1999.
Between August 1998 and April 1999, Mr. David Spiegel and Mr. Herbert
Stein (the "Director Lenders") loaned the Company an additional total of
$107,332 and $100,000, respectively (the "Additional Loans"). On May 13, 1999,
the Board of Directors of the Company voted to convert the Additional Loans into
165,866 shares of Common Stock at a conversion price of $1.25 per share. The
Additional Loans were converted on August 2, 1999.
Item 8. DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 9,000,000 shares of
Common Stock, $.01 par value per share, and 10,000 shares of Preferred Stock,
$100 par value per share.
Common Stock
As of December 31, 1999, 4,155,022 shares of Common Stock were issued and
outstanding. An additional 149,000 shares of Common Stock may be issued upon the
exercise of outstanding and fully vested options, an additional 32,000 shares of
Common Stock may be issued upon the exercise of outstanding and fully vested
options exercisable within 60 days after December 31, 1999, an additional 10,000
shares of Common Stock may be issued upon the exercise of
- 12 -
<PAGE>
outstanding and fully vested warrants and an additional 44,500 shares of Common
Stock may be issued upon the exercise of fully vested warrants issued within
60 days after December 31, 1999. Holders of Common Stock are entitled to one
vote per share held of record on all matters submitted to a vote of the
Shareholders of the Company. Common Shareholders of the Company do not have the
right to cumulate their votes for the election of directors, which means that
the holders of more than 50 percent of the shares of Common Stock have the power
to elect all of the directors, and in such event the holders of the remaining
shares will not be able to elect any director.
Subject to preferences that are applicable to any outstanding shares of
preferred stock, cash dividends may be paid to the holders of the Common Stock
when and if declared by the Board of Directors out of funds legally available
therefor. The Company has never declared a cash dividend.
All common shares are equal to each other with respect to liquidation
rights. In the event of any liquidation, dissolution or winding up of the
Company, the holders of the Common Stock are entitled to share ratably, share
for share, in the net assets of the Company remaining after payment or provision
for payment of all of the Company's debts and obligations, and after liquidation
payments to holders of outstanding shares of preferred stock, if any. All shares
of Common Stock now outstanding are fully paid and nonassessable, and holders of
the Company's Common Stock have no preferences or rights of conversion,
exchange, preemption or redemption.
Preferred Stock
As of December 31, 1999, there were no shares of the Company's Preferred
Stock outstanding. The Company is authorized by its Amended Certificate of
Incorporation to issue up to 10,000 shares of redeemable Preferred Stock, $100
par value per share. Holders of the Preferred Stock, if any, would be entitled
to receive preferential, non-cumulative dividends, when and if declared by the
Board of Directors out of funds legally available therefor, at a rate of 9% per
annum. The Preferred Stock carries no voting rights, except as required by law.
Preferred Shareholders would be entitled to a liquidation preference over the
holders of Common Stock.
Warrants
As of December 31, 1999, the Company has issued warrants (the "Warrants")
to purchase an aggregate of 10,000 shares of Common Stock to certain persons in
connection with a private placement of the Company's Common Stock. Warrants to
purchase an additional 44,500 shares of Common Stock were issued after December
31, 1999 in connection with this private placement. The Warrants are immediately
exercisable, have an exercise price of $2.50 per share and expire five years
from the date of issuance. The number of shares for which the Warrants are
exercisable is subject to adjustment upon changes in the Company's capital
structure, including stock splits, combinations or dividends and
reclassifications.
Transfer Agent
The American Stock Transfer and Trust Co., 99 Wall Street, New York, New
York, is the transfer agent for the Company's Common Stock.
- 13 -
<PAGE>
PART II
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's Common Stock was listed on the Nasdaq Stock Market (formerly
the National Association of Securities Dealer's Automated Quotation System) from
July 15, 1988 to June 8, 1992 under the symbol APGG. The Common Stock was also
listed on the Boston Stock Exchange under the symbol APG from February 14, 1990
until December 18, 1992.
From June 9, 1992 to September 1, 1999, the Company's Common Stock was
quoted on the Over-the-Counter Bulletin Board (the "OTCBB") of the The Nasdaq
Stock Market, Inc. under the symbol APGT. As of September 1, 1999, the Company's
Common Stock was no longer eligible for quotation on the OTCBB due to the
phase-in implementation of NASD Rule 6530 requiring all OTCBB quoted companies
to report their current financial information to the Securities and Exchange
Commission (the "SEC"). Since September 1, 1999, the Company's Common Stock has
been quoted on the National Quotation Bureau's Pink Sheets (the "Pink Sheets").
Once this Form 10-SB application has been approved by the SEC, it is expected
that the Company's Common Stock will resume quotation on the OTCBB.
Set forth below for the periods specified are the ranges of high and low
closing bid prices for the Common Stock as published by the OTCBB and the Pink
Sheets, as indicated. The bid quotations represent inter-dealer prices, without
adjustment for mark-ups, mark-downs or commissions and do not necessarily
represent actual transactions.
Closing Bid Price
-----------------
Low High
--- ----
1998:
First Quarter 1.1250 1.7500
Second Quarter 0.6250 1.1250
Third Quarter 0.6250 0.9375
Fourth Quarter 0.7500 1.0000
1999:
First Quarter 0.5000 0.7500
Second Quarter 0.7500 3.0625
Third Quarter (on the OTCBB
through September 1, 1999) 0.7500 4.7500
Third Quarter (on the Pink
Sheets from
September 2, 1999) 1.3750 1.5000
Fourth Quarter (on the
Pink Sheets) 1.0000 2.1250
As of December 31, 1999, there were 64 holders of record of the 4,155,022
outstanding shares of Common Stock. As of March 15, 2000, there were
approximately 300 beneficial holders of the Common Stock.
Dividends
The Company has never paid cash dividends and does not plan to pay any
cash dividends in the foreseeable future.
Item 2. LEGAL PROCEEDINGS
The Company is not a party to any litigation in any court and management
is not aware of any contemplated proceedings by any governmental authority
against the Company.
- 14 -
<PAGE>
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not Applicable.
Item 4. RECENT SALES OF UNREGISTERED SECURITIES
Set forth in chronological order is information regarding shares of common
stock issued and options and warrants granted by the Company during the past
three years. Also included is the consideration, if any, received by the Company
for such shares, options and warrants and information relating to the section of
the Securities Act of 1933, as amended (the "Securities Act"), or rule of the
Securities and Exchange Commission under which exemption from registration was
claimed. All of the following securities were sold directly by the Company and
there were no underwriters or selling agents involved in these transactions.
In May 1997, the Company sold and issued 300,000 shares of Common Stock,
in a private placement under Section 4(2) of the Securities Act, to one director
of the Company at a price of $0.50 per share for an aggregate of $150,000.
In June 1997, the Company sold and issued 100,000 shares of Common Stock,
in a private placement under Section 4(2) of the Securities Act, to one investor
at a price of $0.50 per share for an aggregate of $50,000.
The Company's 1997 Employee, Director and Consultant Stock Option Plan
(the "Plan") was approved and adopted by the Company's Board of Directors in May
1997 and by the Company's stockholders in August 1997. In July 1997, in
substitution and cancellation of options to purchase Common Stock of the Company
under the Company's 1989 Stock Plan, the Company granted options under the Plan
to purchase 150,000 shares of Common Stock at an exercise price of $0.50 per
share to three employees of the Company. Additionally, the Company granted
options to purchase 100,000 shares of Common Stock at an exercise price of $0.55
per share under the Plan to two directors/stockholders of the Company. The
issuances of options under the Plan were exempt from registration under the
Securities Act in reliance on Rule 701 promulgated under Section 3(b) of the
Securities Act, as transactions pursuant to compensatory benefit plans as
provided under Rule 701.
In April 1998, the Company sold and issued 80,000 shares of Common Stock
in a private placement under Section 4(2) of the Securities Act to one investor
at a price of $1.25 per share for an aggregate of $100,000.
In May 1998, the Company issued 854,545 shares of Common Stock in a
private placement under Section 4(2) of the Securities Act to four persons,
including two directors/stockholders and one executive officer/stockholder of
the Company, upon conversion of an aggregate of $470,000 of loans made by these
persons to the Company, at a conversion price of $0.55 per share.
In May 1998, in accordance with the terms of an Order and Final Judgement
entered on March 31, 1998 by the Court of Chancery of the State of Delaware (the
"Court") pursuant to the terms and conditions set forth in a Stipulation and
Settlement dated December 24, 1997 and filed with the Register in Chancery on
December 29, 1997, the Company sold and issued 235,611 shares of Common Stock in
a private placement under Section 4(2) of the Securities Act to certain existing
stockholders of the Company at a price of $0.55 per share for an aggregate of
$129,586, and issued 2,000 shares of Common Stock to plaintiff's counsel, in
partial payment of attorneys fees awarded by the Court in connection with the
Stipulation and Settlement.
- 15 -
<PAGE>
In January 1999, the Company granted options to purchase 10,000 shares of
Common Stock under the Plan at an exercise price of $1.25 per share to one
director of the Company.
During the first quarter of 1999, the Company sold 723,666 shares of
Common Stock in a private placement under Section 4(2) of the Securities Act to
directors/stockholders and one executive officer/stockholder of the Company at
prices of $.75 and $1.25 per share. The Company received as consideration
$85,000 in cash, the conversion of $529,750 of existing stockholder debt and the
repayment by two of the directors/stockholders of the Company's $250,000 line of
credit.
During the second quarter of 1999, the Company sold 275,200 shares of
Common Stock in a private placement under Section 4(2) of the Securities Act to
directors/stockholders of the Company at a price of $1.25 per share. The Company
received as consideration $236,668 in cash and $107,332 as conversion of
existing stockholder debt.
In May 1999, the Company granted options to purchase an aggregate of
40,000 shares of Common Stock under the Plan at an exercise price of $1.25 per
share to four employees and one director of the Company.
During the fourth quarter of 1999 and through January 2000, the Company
sold, in a private placement under Section 4(2) of the Securities Act, 272,500
units (the "Units"), each unit consisting of one (1) share of Common Stock and
one warrant to purchase one-fifth (1/5) of a share of Common Stock (the
"Warrant" or "Warrants"), for an aggregate purchase price of $545,000 ($2.00 per
Unit), including the conversion of $50,000 in stockholder debt, to certain
investors, including directors/stockholders of the Company. The Warrants which
expire five years from the date of issuance are immediately exercisable at an
initial exercise price of $2.50 per share.
During the first quarter of 2000, the Board of Directors of the Company
authorized a new private placement in the amount of $525,000 for 175,000 shares
of Common Stock at $3.00 per share. To date, approximately $350,000 of these
funds have been raised.
Item 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Amended Certificate of Incorporation (the "Charter")
provides that the Company shall indemnify to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law ("DGCL"), as amended from
time to time, each person who is or was one of our directors or officers and the
heirs, executors and administrators of such a person. In addition, the Company's
Bylaws provide that any expenses, including attorneys' fees, incurred by a
person who is or was one of our directors or officers, in connection with
defending any such proceeding in advance of its final disposition may be paid by
the Company as authorized by the Board of Directors; provided, however, that an
advancement of expenses incurred by an indemnitee in his capacity as a director
or officer shall be made only upon delivery to the Company of an undertaking by
or on behalf of such indemnitee, to repay all amounts so advanced, if it shall
ultimately be determined that such indemnitee is not entitled to be indemnified
for such expenses.
Section 145 of the DGCL provides that a corporation has the power to
indemnify any director or officer, or former director or officer, 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, other than an action by or in the right of the corporation, by
reason of the fact that such director or officer or former director or officer
is or was a director, officer, employee or agent of the corporation, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by them in connection with such
action, suit or proceeding, if such person shall have acted in good faith and in
a manner reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding,
provided that such person had no reasonable cause to believe his or her conduct
was unlawful, except that, if such action shall
- 16 -
<PAGE>
be in the right of the corporation, no such indemnification shall be provided as
to any claim, issue or matter as to which such person shall have been judged to
have been liable to the corporation unless and to the extent that the Court of
Chancery of the State of Delaware, or any court in which such suit or action was
brought, shall determine upon application that, in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
Article Nine of the Charter eliminates the liability of the directors of
the Company to the fullest extent authorized by Section 102(b)(7) of the DGCL.
In addition, the Bylaws provide that the Company shall indemnify any 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, including an action by the Company or in the Company's right,
by reason of the fact that he is or was one of our directors, officers,
employees or agents, or is or was serving at our request as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any and all liabilities and expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to our best interests, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
- 17 -
<PAGE>
PART F/S
- 18 -
<PAGE>
APOGEE TECHNOLOGY, INC.
AND SUBSIDIARY
FINANCIAL STATEMENTS
DECEMBER 1999, 1998 AND 1997
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
TABLE OF CONTENTS
================================================================================
Page
Independent Auditor's Report 1
Consolidated Financial Statements
Balance Sheets 2
Statements of Operations and Accumulated Deficit 3
Statements of Cash Flows 4
Notes to Financial Statements 5
<PAGE>
Independent Auditor's Report
Board of Directors
Apogee Technology, Inc.
We have audited the accompanying consolidated balance sheets of Apogee
Technology, Inc. and subsidiary as of December 31, 1999, 1998 and 1997 and the
related consolidated statements of operations and accumulated deficit, and cash
flows for each of the years then ended. These consolidated 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 consolidated financial position of Apogee Technology,
Inc. and subsidiary as of December 31, 1999, 1998 and 1997 and the results of
its operations and its cash flows for each of the years then ended in conformity
with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has negative working capital, a
stockholders' deficiency, recurring losses, and in recent years had no
operations (other than development) or any significant current income, all of
which raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also discussed in Note 1. The
viability of the Company is dependent upon its ability to successfully develop
and market its digital amplifier technology applications and raise sufficient
funds for such purposes. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Yohalem Gillman & Company LLP
New York, New York
February 19, 2000
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998 1997
-----------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash $ 2,629 $ -.- $ -.-
Accounts receivable 50,558 -.- 8,429
Prepaid expenses 13,304 18,660 12,035
Subscriptions receivable 100,000 -.- -.-
----------- ----------- -----------
Total current assets 166,491 18,660 20,464
----------- ----------- -----------
Equipment, at cost, net of accumulated
depreciation of $64,011, $47,043 and $34,663 30,459 33,284 54,496
----------- ----------- -----------
Other assets
Digital Amplifier patent, net of amortization
of $41,764, $31,399 and $24,340 28,558 33,087 22,398
----------- ----------- -----------
$ 225,508 $ 85,031 $ 97,358
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Bank line of credit $ 200,000 $ 250,000 $ 250,000
Bank overdraft -.- 3,560 9,862
Accounts payable and accrued expenses 294,927 242,862 125,781
Loans payable - stockholders 295,168 788,250 663,500
Accrued interest - stockholders 51,529 34,100 79,188
Subscription deposit 20,000 -.- -.-
Current portion of other liabilities -.- 7,884 13,874
----------- ----------- -----------
Total current liabilities 861,624 1,326,656 1,142,205
----------- ----------- -----------
Other liabilities
Capitalized lease obligations -
net of current portion -.- -.- 7,884
Loan payable - financing company -
net of current portion -.- -.- 14,667
----------- ----------- -----------
-.- -.- 22,551
----------- ----------- -----------
Total liabilities 861,624 1,326,656 1,164,756
----------- ----------- -----------
Stockholders' deficiency
Common stock, $.01 par value;
9,000,000 shares authorized, 4,155,022, 3,106,156,
and 1,934,000 issued and outstanding in 1999, 1998 and
1997, respectively 41,550 31,061 19,340
Common stock subscribed (165,000 shares) 330,000 -.- -.-
Additional paid-in capital 6,287,233 4,959,806 4,191,653
Accumulated deficit (7,294,899) (6,232,492) (5,278,391)
----------- ----------- -----------
Total stockholders' deficiency (636,116) (1,241,625) (1,067,398)
----------- ----------- -----------
$ 225,508 $ 85,031 $ 97,358
=========== =========== ===========
</TABLE>
================================================================================
See accompanying notes and independent auditor's report.
- 2 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
================================================================================
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998 1997
-----------------------------------------
<S> <C> <C> <C>
Revenues
Development agreement $ 32,000 $ -.- $ -.-
Consulting income 28,200 61,371 17,375
----------- ----------- -----------
60,200 61,371 17,375
----------- ----------- -----------
Costs and Expenses
Research and development 658,200 580,020 464,565
Selling, general and administrative 436,555 344,523 361,076
Consulting costs -.- 39,715 14,103
----------- ----------- -----------
1,094,755 964,258 839,744
----------- ----------- -----------
Loss before other income (expense) (1,034,555) (902,887) (822,369)
----------- ----------- -----------
Other income (expense)
Interest expense - stockholders (17,429) (34,100) (38,651)
Interest expense - other (10,103) (24,600) (8,469)
(Loss) gain on disposal of assets (320) 6,255 -.-
Miscellaneous income -.- 1,231 470
Write-off of officer/stockholder receivable -.- -.- (68,000)
----------- ----------- -----------
(27,852) (51,214) (114,650)
----------- ----------- -----------
Net loss (1,062,407) (954,101) (937,019)
Accumulated deficit - beginning of year (6,232,492) (5,278,391) (4,341,372)
----------- ----------- -----------
Accumulated deficit - end of year $(7,294,899) $(6,232,492) $(5,278,391)
=========== =========== ===========
Basic and diluted (loss)
per common share $ (0.30) $ (0.35) $ (0.52)
=========== =========== ===========
</TABLE>
================================================================================
See accompanying notes and independent auditor's report.
- 3 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998 1997
-----------------------------------------
<S> <C> <C> <C>
Cash flows from operations
Net loss $(1,062,407) $ (954,101) $ (937,019)
Adjustments to reconcile net loss to net cash
used in operating activities
(Loss) gain on disposal of assets 320 (6,255) -.-
Write-off of officer/stockholder advances -.- -.- 68,000
Accrued interest - stockholders 17,429 34,100 38,651
Depreciation and amortization 27,513 29,819 27,352
Change in operating assets and liabilities:
Accounts receivable (50,558) 8,429 (8,429)
Prepaid expenses 5,356 (6,625) (6,447)
Accounts payable and accrued expenses 52,065 117,081 70,632
----------- ----------- -----------
Net cash used in operating activities (1,010,282) (777,552) (747,260)
----------- ----------- -----------
Cash flows from investing activities
Purchases of equipment (14,643) (10,248) (14,745)
Patent costs (5,836) (17,748) (7,543)
----------- ----------- -----------
Net cash used in investing activities (20,479) (27,996) (22,288)
----------- ----------- -----------
Cash flows from financing activities
Proceeds from line of credit 200,000 -.- 250,000
Proceeds from issuance of common stock 421,668 230,686 200,000
Net proceeds of loans from stockholders 194,000 594,750 320,500
Stock subscription deposits 200,000 -.- -.-
Other capital contributions 29,166 -.- -.-
(Decrease) increase in bank overdraft (3,560) (6,302) 9,717
Repayments of capital lease obligations (7,884) (13,298) (7,360)
Repayment of loan payable to financing company -.- (288) (3,309)
----------- ----------- -----------
Net cash provided by financing activities 1,033,390 805,548 769,548
----------- ----------- -----------
Increase in cash 2,629 -.- -.-
Cash - beginning -.- -.- -.-
----------- ----------- -----------
Cash - ending $ 2,629 $ -.- $ -.-
=========== =========== ===========
</TABLE>
================================================================================
See accompanying notes and independent auditor's report.
- 4 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
================================================================================
1. Nature of Operations and Basis of Presentation
The Company is engaged in the development and design of digital amplifier
technology. The Company is presently focused on computer based audio and
entertainment media applications derived from its all-digital amplifier
circuitry design trademarked as Direct Digital Amplification (DDX).
The financial statements include the accounts of Apogee Technology, Inc.
("Technology"), and its wholly owned subsidiary, DUBLA, Inc. (collectively
the "Company"). All significant intercompany transactions and accounts have
been eliminated.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. However, the Company has negative
working capital, a stockholders' deficiency, recurring losses and in recent
years, had no operations (other than development) or any significant
current income, all of which raise substantial doubt about its ability to
continue as a going concern. The Company plans to raise capital to
commercialize and license its digital amplifier technology. The viability
of the Company is dependent upon its ability to successfully develop and
market the aforementioned applications for its digital amplifier technology
and raise sufficient funds for such purposes. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
2. Summary of Significant Accounting Policies
Property, Equipment and Leasehold Improvements
Major replacements and betterments of equipment are capitalized. Cost of
normal maintenance and repairs is charged to expense as incurred.
Depreciation and amortization of property, equipment and leasehold
improvements is provided under accelerated methods over their estimated
useful lives (5 years).
Patents
Costs incurred to register and obtain patents are capitalized and amortized
on a straight-line basis over their estimated lives.
Research and Development
Costs for research and development are expensed as incurred.
================================================================================
- 5 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
================================================================================
2. Summary of Significant Accounting Policies (continued)
Use of Estimates in Financial Statements
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. Bank Line of Credit
In December 1997, the Company obtained a $250,000 unsecured line of credit
with the Boston Private Bank, all of which was outstanding as of December
31, 1998 and 1997. The line was personally guaranteed by two directors of
the Company, and was repaid by the directors in March 1999 (see Notes 5 and
13).
In May 1999, the Company obtained a collateralized loan from Boston Private
Bank in the amount of $200,000. The loan calls for monthly payments of
interest only and bears a variable interest rate of prime plus 1.0% for an
initial rate of 8.75% per annum. The loan is due either on demand, or at
maturity, which was extended to January 20, 2000 from the original maturity
date of November 20, 1999. The revised interest rate in effect at December
31, 1999 was 9.5% per annum. The loan is secured by all business assets and
personally guaranteed by a director of the Company.
On February 7, 2000, the Company refinanced the note on similar terms of
prime plus 1% and monthly payments of interest only with the principal
balance due at maturity. The principal balance, interest rate, and maturity
date are $200,000, 9.75%, and January 1, 2001, respectively.
4. Loans Payable - Stockholders
Loans from officers and directors amounted to $295,168, $788,250 and
$663,500 at December 31, 1999, 1998 and 1997, respectively. These loans
bear interest at 8% per annum. During 1999 and 1998, stockholder debt of
$637,083 and $470,000, respectively, was converted to stock, and in 1999,
$50,000 was converted to a deposit toward a private placement offering
which remained outstanding at December 31, 1999 (see Notes 5 and 13). In
1998, accrued interest totaling $79,188 which related to the $470,000 of
stockholder loans converted to common stock was waived by those
stockholders (see Note 6).
At December 31, 1999, 1998 and 1997, accrued interest payable on
stockholder loans amounted to $51,529, $34,100 and $79,188, respectively
(see Note 6).
================================================================================
- 1 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
================================================================================
5. Equity
Below are the changes in the capital stock and additional paid-in capital
accounts:
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in
Preferred Stock (B) Common Stock Subscribed Capital
--------------------- ---------------------- ----------------------- ----------
Shares Dollars Shares Dollars Shares Dollars Dollars
-------- ---------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1997 1,630 $ 163,000 1,534,000 $ 15,340 -.- $ -.- $3,832,653
Shares issued in May 1997 (A) -.- -.- 300,000 3,000 -.- -.- 147,000
Shares issued in June 1997 (A) -.- -.- 100,000 1,000 -.- -.- 49,000
Preferred stock
surrendered on May 1997 (B) (1,630) (163,000) -.- -.- -.- -.- 163,000
-------- ---------- --------- ---------- ---------- ---------- ----------
Balance - December 31, 1997 -.- -.- 1,934,000 19,340 -.- -.- 4,191,653
Shares issued in
April 1998 (C) -.- -.- 80,000 800 -.- -.- 99,200
Shares issued as part of
litigation settlement
plaintiff's legal
costs in May 1998 (D) -.- -.- 2,000 20 -.- -.- 1,080
Shares issued pursuant
to litigation settlement
in May 1998 (D) -.- -.- 235,611 2,356 -.- -.- 127,230
Conversion of stockholder
debt to common
stock in May 1998 (E) -.- -.- 854,545 8,545 -.- -.- 461,455
Waiver of interest
on stockholder
debt in May 1998 (F) -.- -.- -.- -.- -.- -.- 79,188
-------- ---------- --------- ---------- ---------- ---------- ----------
Balance - December 31, 1998 -.- -.- 3,106,156 31,061 -.- -.- 4,959,806
-------- ---------- --------- ---------- ---------- ---------- ----------
</TABLE>
================================================================================
- 2 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
================================================================================
5. Equity (continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in
Preferred Stock (B) Common Stock Subscribed Capital
--------------------- ---------------------- ----------------------- ----------
Shares Dollars Shares Dollars Shares Dollars Dollars
-------- ---------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares issued
August 1999 (G) -.- $ -.- 723,666 $ 7,237 -.- $ -.- $ 857,513
Shares issued
September 1999 (H) -.- -.- 275,200 2,752 341,248
Subscriptions received
September through
December 1999 (I) -.- -.- -.- -.- 215,000 430,000 -.-
Shares issued
October 1999 (J) -.- -.- 50,000 500 (50,000) (100,000) 99,500
Contributions by directors (K) -.- -.- -.- -.- -.- -.- 29,166
-------- ---------- --------- ---------- ---------- ---------- ----------
Balance - December 31, 1999 -.- $ -.- 4,155,022 $ 41,550 165,000 $ 330,000 $6,287,233
======== ========== ========= ========== ========== ========== ==========
</TABLE>
(A) In May 1997 and June 1997, the Company issued 300,000 and 100,000
shares, respectively, of the Company's common stock at a price of
$.50 per share to outside investors.
(B) The $100 par value 9% preferred stock is non-voting, non-cumulative,
non-convertible, and is redeemable at the election of the Board of
Directors of the Company.
In May 1997, the owners of the 1,630 issued and outstanding shares of
preferred stock surrendered and contributed their shares to the
Company. The carrying amount of the preferred stock was credited to
additional paid-in capital.
(C) In April 1998, an outside investor purchased 80,000 shares of the
Company's common stock at a market price of $1.25 per share.
(D) See Note 8.
(E) Pursuant to a resolution of the Board of Directors of June 12, 1997,
and subsequently approved by majority assent of shareholders at the
Annual Meeting of August 15, 1997, shareholder loans totaling
$470,000 were converted into 854,545 shares of common stock at a
price of $.55 per share in May 1998 (see Note 4).
================================================================================
- 3 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
================================================================================
5. Equity (continued)
(F) See Note 4.
(G) In August 1999, the Company issued a total of 723,666 shares (644,000
shares at $1.25 per share and 79,666 shares at $.75 per share) in
consideration for subscription receipts of $864,750 pursuant to a
private placement authorized January 1999 (see below).
(H) In September 1999, the Company issued 275,200 shares at $1.25 per share
pursuant to a private placement subscription authorized May 1999 (see
below).
(I) In the fourth quarter of 1999, the Company received subscriptions
totaling $430,000 to purchase 215,000 units in conjunction with the
$545,000 private placement (see below).
(J) In October 1999, the Company issued 50,000 shares at $2.00 per share
and warrants to purchase 10,000 shares at $2.50 per share for a
subscription received in conjunction with the $545,000 private
placement (see below).
(K) In 1999, two directors of the Company contributed amounts to the
Company to reimburse it for prior years' interest costs incurred to
finance operations.
Private Placements
In January 1999, the Company completed a private placement of stock that
originally commenced in 1998, of 723,666 shares of common stock. The
Company received $85,000 in cash, converted stockholder debt of $529,750
and repayment of $250,000 bank debt by two directors (see Notes 3 and 13).
In May 1999, the Company completed a private placement of 275,000 shares of
common stock. The Company received $236,668 in cash deposits and converted
stockholder debt of $107,332.
In September 1999, the Company authorized a private placement in the amount
of $545,000 for 272,500 units at $2.00 per unit. Each unit represents a
subscription for one share of common stock at $2.00 per share and one
warrant to purchase one-fifth of a share of common stock at $2.50 per
share. The warrants expire 5 years from the date of subscription. Of the
$545,000 private placement, 50,000 units were subscribed for and issued for
$100,000. Additional subscriptions totaling $330,000 to purchase 165,000
units were received. Proceeds received in 1999 were $180,000 together with
conversion of $50,000 in stockholder loans. The remaining $100,000 was
received in January 2000. As of December 31, 1999, there were 57,500
unsubscribed units in the amount of $115,000 (see Note 14).
In 1999, the Company received a $20,000 deposit toward a future stock
placement offer.
================================================================================
- 4 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
================================================================================
6. Related Party Transactions
From January through March 1997, certain administrative costs, such as
office expenses, were provided by a related party at no cost to the
Company.
During 1994 and 1995, the Company advanced $68,000 to a former
officer/stockholder of the Company. The advances were recorded as a
receivable on the books of the Company but in 1997 were authorized for
write-off by the Board of Directors in recognition of additional
compensation to that officer.
In April 1997, the Company moved to a facility owned by a stockholder of
the Company. The Company rents the facility on a month-to-month basis for
$3,600 per month. Rent paid during 1999, 1998 and 1997 amounted to $43,200,
$43,200 and $30,600, respectively.
The Company accrued $17,429, $34,100 and $38,651 of interest expense on
stockholder loan balances for the years 1999, 1998, and 1997, respectively.
In 1998, $79,188 of accrued interest on stockholder loans was waived and
contributed to capital (see Notes 4 and 5).
7. Development and License Agreements
The Company derived substantially all its revenue in 1997 as consulting
fees under a development agreement with a major electronics manufacturer
which provided funding to produce a working prototype of its amplifier
circuitry in exchange for a license agreement to produce devices using the
Company's patented design. These agreements were terminated in March 1997.
In May 1999, the Company entered into a Memorandum of Understanding with
Avio Digital, Inc. ("Avio") to exchange and license certain technical
information in order to evaluate the capability of the Company's patented
digital audio amplifier technology ("DDX") with Avio's home networking
technology.
In August 1999, the Company signed a licensing agreement with ALST
Excellence Center, ("ALST") a strategic partnership between Altec Lansing
Technologies, Inc. ("Altec") and STMicroelectronics. Under this agreement,
the Company will license its patented DDX intellectual property on a
non-exclusive basis to develop integrated semiconductor products for the
computer, consumer electronics, automotive and communications markets. ALST
will be responsible for the overall product development and
STMicroelectronics will manufacture and sell products to Altec Lansing and
other audio manufacturers. The Company will receive a royalty on sales of
all products incorporating the Company's DDX technology.
During 1999, the Company's revenue of $60,200 represents an initial license
fee of $32,000 and consulting fees of $28,200 under the ALST agreement.
================================================================================
- 5 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
================================================================================
7. Development and License Agreements (continued)
In June 1999, the Company entered into an agreement with a semiconductor
manufacturer, which calls for them to design and develop the semiconductor
circuitry for a power amplifier chip using the Company's patented
technology, and to manufacture these chips for sale to the Company. In
accordance with the contract, the Company agrees to pay the manufacturer a
program fee of $196,000, payable in installments at each phase of
completion. The agreement provides for termination fees based on phase of
completion should the contract be canceled. The agreement also specifies
that the Company commits to an annual minimum purchase of $253,500 over the
term of the agreement, which is 3 years from the effective date (above).
8. Stockholder Litigation
In August 1997, a stockholder initiated an action against the Company and
certain directors and officers, alleging, among other matters, that
valuations attributed to certain stock transactions were inappropriate. The
Company proposed a settlement in December 1997 which was accepted and
judged final in March of 1998. The settlement dismissed all claims against
the Company and its directors and officers. In exchange, the Company
offered to all stockholders, exclusive of the defendants, the right to
subscribe to purchase 2 shares of common stock for each 5 shares held at a
price of $.55 per share, up to a maximum of 400,000 shares. Pursuant to the
settlement, stockholders subscribed to a total of 235,611 shares of common
stock which were Company issued in May 1998. In addition, the Company paid
the plaintiffs' attorneys $15,000, plus expenses and 2,000 shares of the
Company's common stock.
9. Stock Options
In May 1997, the Company adopted a new incentive stock option plan ("ISO")
for key employees, directors and consultants. The Company's board of
directors authorized a maximum of 300,000 shares of common stock for
issuance under the plan. Pursuant to the plan, the board may grant options
to key employees, directors, or consultants at its discretion. Options
granted under the plan to less than 10% and greater than 10% stockholders,
are to be for 100% and 110%, respectively, of the fair value of the common
stock on the date of the grant, and expire 10 and 5 years, respectively,
from the date of the grant. There is no vesting provision contained in the
plan.
================================================================================
- 6 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
================================================================================
9. Stock Options (continued)
The Company has adopted only the disclosure provisions of Financial
Accounting Standard No. 123, "Accounting for Stock-Based Compensation"
(FAS 123). It applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations in accounting for its plans and
does not recognize compensation expense for its stock-based compensation
plans other than for restricted stock. If the Company had elected to
recognize compensation expense based upon the fair value at the grant date
for awards under these plans consistent with the methodology prescribed by
FAS 123, the Company's net loss would not have significantly changed.
The fair value of each option grant is estimated on the date of grant using
the minimum value method with an expected life of five or ten years using
risk-free rates ranging from 5.21% to 6.63% (zero-coupon U.S. Government
issues with a five or ten year maturity).
A summary of the status of the Company's stock options as of December 31,
1999, 1998 and 1997, and changes during the year ending on that date is
presented below.
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ -------- ------ -------- ------- --------
Outstanding beginning of year 250,000 $0.52 250,000 $0.52 -.- $ -.-
Granted 50,000 $1.25 -.- -.- 250,000 0.52
Expired -.- -.- -.-
------- ------- -------
Outstanding at end of year 300,000 $0.64 250,000 $0.52 250,000 $0.52
======= ======= =======
Weighted average fair value of
options granted during year $ 0.71 $ -.- $ 0.32
======= ======= =======
Options exercisable at December 31 139,000 80,000 30,000
======= ======= =======
</TABLE>
In July 1997, the Company issued options under the 1997 plan to certain
employees to purchase a total of 150,000 shares at a price of $.50 per
share. These options vest 20% at issue, and an additional 20% at each
subsequent January until 100% at January 2001. These options were granted
in substitution and cancellation of their rights pursuant to the 1989 plan.
In July 1997, the Company granted to two directors of the Company options
under the 1997 plan to purchase 50,000 shares each, at a price of $.55 per
share. These options vest 20% per year over five years from the grant date.
In January 1999, the Board of Directors of the Company granted 10,000
options at $1.25 per share to a director. These options vest 20% per year
over five years from the grant date.
In May 1999, the board granted 40,000 options, at $1.25 per share to 4
employees and a director. These options vest 20% per year commencing from
the grant date.
In addition to the 1997 plan, in December 1990, the Board granted to an
outside consultant a nonqualified option for 10,000 shares at a price of
$2.50 per share, under the 1989 stock option plan, which expires ten years
from the date of grant. These options remain outstanding as of December 31,
1999, 1998 and 1997. There were no other options outstanding as of
December 31, 1999, 1998 and 1997.
10. Earnings (Loss) Per Common Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share". SFAS
No. 128 replaced the calculation of primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings
per share, basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. Diluted earnings per share is
computed similarly to the way fully diluted earnings per share was computed
pursuant to Accounting Principles Board Opinion No. 15. Earnings (loss) per
share amounts for all years have been presented to conform to SFAS No. 128.
Basic and diluted loss per common share are computed by dividing net loss
by the weighted average number of shares of common stock outstanding during
each year, as well as common shares subscribed for which the cash has been
received by the end of the year, which totaled 3,525,667, 2,722,104 and
1,792,333 shares for 1999, 1998 and 1997, respectively. The assumed
exercise of outstanding warrants and stock options for diluted loss per
common share was not applicable because their effect was antidilutive.
================================================================================
- 7 -
<PAGE>
APOGEE TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
================================================================================
11. Employee Retirement 401(k) Plan
In September 1997, the Company established a 401(k) retirement plan for the
benefit of its employees. The plan imposes no contribution requirement or
liability upon the Company. Plan participation is voluntary and
unconditional to all employees over 18 and plan contributions are
discretionary to the limits allowed by the Internal Revenue Code and are
immediately 100% vested. There were no employer contributions during 1999,
1998 and 1997.
12. Tax Loss Carryforwards
The Company has federal net operating loss carryforwards at December 31,
1999, totaling approximately $9,200,000, respectively, expiring through the
year 2019.
The Company's net losses result in no current tax benefit. The deferred tax
assets arising from net operating loss carryforwards amounted to
approximately $1,700,000, $1,500,000 and $1,300,000 at December 31, 1999,
1998 and 1997, respectively, and were fully offset by a valuation allowance
as required by Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes.
13. Supplemental Cash Flow Information
Interest paid during 1999, 1998 and 1997 amounted to $9,876, $24,600 and
$8,469, respectively.
Supplemental Disclosure of Noncash Financing and Investing Activities
The Company financed purchases of equipment costing $28,542 in 1997. In
1998, the Company sold certain financed equipment to a former employee for
$14,667, the balance of the underlying loan which was assumed by the former
employee.
In 1999 and 1998, stockholder loans totaling $637,082 and $470,000,
respectively, were converted to capital and an additional $50,000 of loans
were converted in 1999 to deposits toward private placement subscriptions
(see Notes 4 and 5).
In March 1999, the outstanding bank debt of $250,000 was repaid by two
directors of the Company, in consideration of which the directors received
credit toward subscriptions for 200,000 shares of common stock valued at
$1.25 per share (see Notes 3 and 5).
14. Subsequent Events
In January 2000, the Company received $115,000 of the remaining
subscriptions, completing the September 1999 $545,000 private placement
(see Note 5). In February 2000, the remaining 222,500 shares and warrants
were issued.
In January 2000, the Company approved a new private placement in the amount
of $525,000 for 175,000 units at $3.00 per unit.
================================================================================
- 8 -
<PAGE>
PART III
Item 1. Index to Exhibits Page
3.1 Certificate of Incorporation
3.2 Amendment of Certificate of Incorporation
3.3 Restated By-Laws
10.1 Form of 1999 Stock and Warrant Subscription Agreement
10.2 Form of 1999 Warrant to purchase shares of common stock
of the Registrant
10.3 Form of 2000 Stock Subscription Agreement
Item 2. Description of Exhibits
The following documents are filed as part of this report:
3.1 Certificate of Incorporation
3.2 Amendment of Certificate of Incorporation
3.3 Restated By-Laws
10.1 Form of 1999 Stock and Warrant Subscription Agreement
10.2 Form of 1999 Warrant to purchase shares of common stock
of the Registrant
10.3 Form of 2000 Stock Subscription Agreement
================================================================================
- 1 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
APOGEE TECHNOLOGY, INC.
Date: March 31, 2000
---------------
By: /s/ David Spiegel
-------------------------------
David Spiegel, President
================================================================================
- 2 -
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
Apogee Technology, Inc.
----------
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the "corporation")
is
Apogee Technology, Inc.
SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 229 South State
Street, City of Dover, County of Kent; and the name of the registered agent of
the corporation in the State of Delaware at such address is The Prentice-Hall
Corporation System, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is Three Million Ten Thousand (3,010,000), consisting of
Ten Thousand (10,000) shares of Preferred Stock all of the par value of One
Hundred Dollars ($100.00) each, and Three Million (3,000,000) shares of Common
Stock all of the par value of One Cent ($.01) each.
The designations, preferences, privileges and voting powers or restrictions
or qualifications of the shares of each class are as follows:
The holders of the shares of Preferred Stock shall be entitled to receive,
and the corporation shall be bound to pay thereon, preferential non cumulative
dividends, as and when declared by the Board of Directors, out of the annual net
profits of the corporation or out of its net assets in excess of its capital, as
determined pursuant and subject to the provisions of the General Corporation Law
of the State of Delaware, at the rate of nine per centum (9%) per share per
annum in respect of each share of Preferred Stock, payable during each calendar
year on such days and dates as shall be determined by the Board of Directors of
the corporation, before any dividends shall be declared or paid upon or set
apart for the holders of the shares of Common Stock.
<PAGE>
After full dividends for the then current year shall have been declared
or paid upon or set apart for the holders of the shares of Preferred Stock, as
hereinbefore provided, additional dividends may be declared or paid or set apart
during such year. Such additional dividends, if declared, shall be paid
exclusively to the holders of the shares of Common Stock, share and share alike.
The corporation, through its Board of Directors, and conformable with
Section 243 of the Delaware Corporation Law, may redeem the whole or any part of
the Preferred Stock at the price of One Hundred Dollars ($100.00) per share plus
all declared and unpaid dividends. No redemption of Preferred Stock shall be
authorized by the Board of Directors until at least two years after the issuance
of such Preferred Stock. The notice of such redemption shall be mailed not less
than thirty (30) days prior to the date upon which the Stock is to be redeemed
to each holder of stock so to be redeemed at his address as it appears on the
books of the corporation. In the event that less than all of the outstanding
Preferred Stock of the corporation is to be redeemed, the amount to be redeemed
and the method of effecting such redemption may be determined by the Board of
Directors. On and after the date fixed for such redemption, the holders of the
shares so called for redemption shall cease to be entitled to any further
dividends and the respective holders thereof shall have no right or interest
thereon or therein, by reason of the ownership of such shares, except to receive
the said redemption price, as a debt without interest, upon presentation and
surrender of their certificates therefor. Shares so redeemed shall not be
reissued.
In the event of any liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, the holders of the shares of
Preferred Stock shall be entitled to receive out of the assets of the
corporation (whether from capital or surplus or both) the par amount of their
Preferred shares plus any declared and unpaid dividends before any distribution
shall be made to the holders of the shares of Common Stock; thereafter, the
holders of the shares of Common Stock shall be entitled to receive, share and
share alike, all of the remaining assets. If, upon such liquidation, dissolution
or winding up of the corporation, the assets of the corporation shall be
insufficient to permit the payment in full to the holders of the shares of
Preferred Stock of the amount distributable as aforesaid, then the entire assets
of the corporation shall be distributed ratably among the holders of the shares
of Preferred Stock. The foregoing provisions of this paragraph shall not,
however, be deemed to require the distribution of assets among the holders of
the shares of Preferred Stock and the holders of the shares of Common Stock in
the event of a consolidation, merger, lease or sale, which does not in fact
result in the liquidation or winding up of the enterprise.
Except as otherwise required by law, the entire voting power shall be
vested in the holders of the shares of Common Stock and the holders of the
shares of Preferred Stock shall have no voting power and shall not have the
right to participate in any meeting of stockholders and shall not be entitled to
any notice of any such meeting and shall not be considered stockholders for the
purpose of any election, meeting, consent or waiver of notice, under the
provisions of any law now in force or which may hereafter be enacted.
2
<PAGE>
FIFTH: The name and the mailing address of the incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
N. S. Truax 229 South State Street, Dover, Delaware 19901
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of 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 and to
any reorganization of this corporation as consequence 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.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and regulation
of the powers of the corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
fixed by, or in the manner provided in, the By-Laws. The phrase "whole
Board" and the phrase "total number of directors" shall be deemed to have
the same meaning, to wit, the total number of directors which the
corporation would have if there were no vacancies. No election of directors
need be by written ballot.
2. After the original or other By-Laws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and, after the corporation has received any payment for any of
its stock, the power to adopt, amend, or repeal the By-Laws of the
corporation may be exercised by the Board of Directors of the corporation;
provided, however, that any provision for the classification of directors
of the corporation for staggered terms pursuant to the provisions of
subsection (d) of Section 141 of the General Corporation Law of the State
of Delaware shall be set forth in an initial By-Law or in a By-Law adopted
by the stockholders entitled to vote of the corporation unless provisions
for such classification shall be set forth in this certificate of
incorporation.
3
<PAGE>
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever
the corporation shall be authorized to issue more than one class of stock,
no outstanding share of any class of stock which is denied voting power
under the provisions of the certificate of incorporation shall entitle the
holder thereof to the right to vote at any meeting of stockholders except
as the provisions of paragraph (2) of subsection (b) of section 242 of the
General Corporation Law of the State of Delaware shall otherwise require;
provided, that no share of any such class which is otherwise denied voting
power shall entitle the holder thereof to vote upon the increase or
decrease in the number of authorized share of said class.
NINTH: The personal liability of the directors of the corporation is hereby
eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of
Section 102 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ELEVENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
Signed on July 1, 1987.
-------------------------------
N.S. Truax
Incorporator
4
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF
APOGEE TECHNOLOGY, INC.
(FILED JULY 1, 1987, RECORDED IN
STATE OF DELAWARE, CORPORATION RECORD T,
BOOK 106, PAGE 25)
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is: Apogee Technology, Inc.
2. The Certificate of Incorporation of the Corporation is hereby
amended by striking out the first (1st) paragraph of Article "Fourth"
thereof and by substituting in lieu of said first (1st) paragraph of
Article Fourth the following paragraph:
"FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is Nine Million Ten Thousand
(9,010,000), consisting of Ten Thousand (10,000) shares of Preferred
Stock all of the par value of One Hundred Dollars ($100.00) each, and
Nine Million (9,000,000) shares of Common Stock all of the par value
of One Cent ($.0l) each."
3. The amendment of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of
the General Corporation Law of the State of Delaware by resolution of the
Board of Directors on March 30, 1990, and by majority vote at the Annual
Meeting of Stockholders entitled to vote held on May 16, 1990.
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IN WITNESS WHEREOF, Apogee Technology, Inc. has duly caused this
Certificate of Amendment of Certificate of Incorporation to be duly executed by
Jason Bloom, President, and attested by Lewis P. Aronson, Secretary, this 20th
day of June, 1990.
APOGEE TECHNOLOGY, INC.
By:
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Jason Bloom, President
ATTEST:
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Lewis P. Aronson, Secretary
COMMONWEALTH OF MASSACHUSETTS
County of Norfolk, ss. June 20, 1990
Then personally appeared before me Jason Bloom, President of Apogee
Technology, Inc. who acknowledged the execution of the foregoing as his free act
and deed and the free act and deed of the corporation, and he further
acknowledged that the facts stated above are true.
------------------------------
Notary Public
My Commission Expires:
2
<PAGE>
EXHIBIT 3.3
APOGEE TECHNOLOGY, INC.
BY-LAWS
ARTICLE I
OFFICES
Section 1.1 Registered Office.
The registered office of the Corporation in the State of Delaware shall be
located at the principal place of business of the corporation or individual
acting as the Corporation's registered agent in the State of Delaware.
Section 1.2. Other Offices.
The Corporation may have other offices, either within or without the State
of Delaware, at such place or places as the Board of Directors of the
Corporation from time to time may designate or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1 Date, Time, and Place.
All meetings of stockholders of the Corporation shall be held on such date
and at such time and place, either within or without the State of Delaware, as
shall be stated in the written notice of the meeting or in a duly executed
written waiver of notice of the meeting.
Section 2.2 Annual Meetings.
Annual meetings of stockholders of the Corporation for the election of
directors to the Board of Directors of the Corporation and for the transaction
of such other business as may properly come before the meeting shall be held on
such date and at such time and place, either within or without the State of
Delaware, as shall be designated by the Board of Directors and stated in the
written notice of the meeting or in a duly executed written waiver of notice of
the meeting.
Section 2.3 Special Meetings.
Special meetings of stockholders of the Corporation for any purpose or
purposes, unless otherwise prescribed by the Certificate of Incorporation or
these By-laws, may be called by the Board of Directors or the President or
Chairman of the Board of Directors and shall be called by the President,
Chairman of the Board of Directors, or the Secretary at the written request of
stockholders holding a majority of the shares of the
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Corporation's issued and outstanding common stock and entitled to vote at such
meeting. Such written request shall state the purpose or purposes for which the
special meeting is called. The place, date and time of a special meeting shall
be fixed by the Board of Directors or the officer calling the meeting and shall
be stated in the written notice of such meeting, which notice shall state the
purpose or purposes for which the meeting is called. Business transacted at a
special meeting shall be confined to the purpose or purposes stated in the
written notice of meeting and matters germane thereto.
Section 2.4 Notice of Meetings.
Written notice of any. meeting of stockholders of the Corporation shall be
given to each stockholder of record entitled to vote at such meeting, in the
manner prescribed by Section 6.1 of these By-laws, not less than ten (10) nor
more than sixty (60) days prior to the date of the meeting, except that where
the matter to be acted upon at the meeting is a merger or consolidation of the
Corporation, or sale, lease, or exchange of all or substantially all of the
Corporation's assets, such notice shall be given not less than twenty (20) nor
more than sixty (60) days prior to such meeting.
Section 2.5 Stockholder List.
The Secretary or other officer in charge of the stock ledger of the
Corporation shall prepare and make, at least ten (10) days prior to a meeting of
stockholders, a complete list of stockholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares of stock of the Corporation registered in the name of each
stockholder. Such list shall be open to examination by any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten (10) days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list also shall be produced and kept at the place and time of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 2.6 Voting Rights.
In order that the Corporation may determine the stockholders entitled to
notice of, and to vote at, a meeting of stockholders or at any adjournment(s)
thereof or to express consent or dissent to corporate action in writing without
a meeting, the Board of Directors may fix a record date in the manner prescribed
by Section 9.1 of these By-laws. Each stockholder entitled to vote, at a meeting
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for such
stockholder by proxy in the manner prescribed by Section
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2.7 of these By-laws. Except as specifically provided otherwise by the General
Corporation Law of State of Delaware, the Certificate of Incorporation, or these
By-laws, each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting
shall be entitled to the vote for each share of stock registered in such
stockholder's name on the books and records of the Corporation as of the record
date.
Section 2.7 Proxies.
Each proxy shall be in writing and shall be executed by the stockholder
giving the proxy or by such stockholder's duly authorized attorney. No proxy
shall be voted or acted upon after three (3) years from its date, unless the
proxy expressly provides for a longer period. Unless and until voted, every
proxy shall be revocable at the pleasure of the person who executed it or of his
legal representative or assigns, except in those cases where an irrevocable
proxy permitted by the General Corporation Law of the State of Delaware shall
have been given.
Section 2.8 Quorum and Adjournment(s) of Meetings.
Except as specifically provided otherwise by the General Corporation law of
the State of Delaware, the Certificate of Incorporation, or these By-laws, a
majority of the aggregate number of shares of common stock issued and
outstanding and entitled it vote, present in person or represented by proxy,
shall constitute a quorum for the transaction of business at a meeting of
stockholders. If such majority shall not be present in person or represented by
proxy at a meeting of stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn the
meeting from time to time until holders of the requisite number of shares of
stock entitled to vote at the meeting shall be present in person or represented
by proxy. When a meeting of stockholders is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place of such
adjourned meeting are announced at the meeting at which the adjournment is
taken. At any such adjourned meeting at which a quorum shall be present in
person or represented by proxy, stockholders may transact any business that
might have been transacted at the meeting as originally noticed, but only those
stockholders entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment(s) thereof. If the adjournment is for more
than thirty (30) 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 at the meeting.
Section 2.9 Required Vote.
Except as specifically provided otherwise by the General
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Corporation Law of the State of Delaware, the Certificate of Incorporation, or
these By-laws, the affirmative vote of a majority of the shares of common stock
present in person or represented by proxy at a meeting of stockholders at which
a quorum is present and entitled to vote on the subject matter (including, but
not limited to, the election of directors to. the Board of Directors) shall be
the act of the stockholders with respect to the matter voted upon.
Section 2.10 Action Without Meeting.
Notwithstanding contrary provisions of these By-laws covering notices and
meetings, any action required or permitted. to be taken at any annual or special
meeting of stockholders of the Corporation may be taken without a meeting,
without prior notice and without a vote if a consent in writing, setting forth
the action, so taken, shall be signed by the holders of shares of stock issued
and outstanding and entitled to vote on the subject matter having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting of stockholders at which all such shares of stock entitled
to vote thereon pare present and voted. Prompt notice of the taking of corporate
or other action by stockholders without a meeting by less than unanimous
written consent of stockholders shall be given to those stockholders who have
not consented in writing.
ARTICLE III
DIRECTORS
Section 3.1 Board of Directors.
The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors. The Board of Directors may exercise
all such powers of the Corporation and do all such lawful acts and things on its
behalf as are not by the General Corporation Law of the State of Delaware, the
Certificate of Incorporation or these By-Laws directed or required to be
exercised or done by stockholders.
Section 3.2 Number, Election, and Tenure.
The first Board of Directors shall consist of five (5) members. Thereafter,
the number of directors which shall constitute the whole Board of Directors of
the Corporation shall be fixed from time to time by resolution of the Board of
Directors. In no event shall the total number of directors which shall
constitute the whole Board of Directors be fixed by the Board of Directors at
less than one (1) or more than ten (10). The Board of Directors shall not at any
time decrease the total number of directors which shall constitute the whole
Board of Directors if to do so would shorten the term of any incumbent director.
With the exception of the first Board of Directors, which shall be elected by
the incorporator(s) of the Corporation,
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and except as provided otherwise in these By-laws, directors shall be elected
office until the annual meeting of stockholders next succeeding at the annual
meeting of stockholders. Each director shall hold office until the annual
meeting of stockholders next succeeding his election or appointment and until
his successor is elected and qualified or until his earlier resignation or
removal.
Section 3.3 Resignation and Removal.
Any director, or member of a committee of the Board of Directors, may
resign at any time upon written notice to the Board of Directors, or the
President. Unless specified otherwise in the notice, such resignation shall take
effect upon receipt of the notice by the Board of Directors or the President, or
Chairman of the Board of Directors. The acceptance of a resignation shall not be
necessary to make it effective. Any director may be removed, either with or
without cause, as provided by the General Corporation Law of the State of
Delaware.
Section 3.4. Vacancies and Newly-Created Directorships.
Vacancies occurring for any reason and newly-created directorships
resulting from an increase in the authorized number of directors which shall
constitute the whole Board of Directors, as fixed pursuant to Section 3.2 of
these By-laws, may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director, and any director
so chosen shall hold office until the annual meeting of stockholders next
succeeding his election or appointment and until his successor shall be elected
and qualified or until his earlier resignation or removal.
Section 3.5 Compensation.
Each director on the Board of Directors and on any committee thereof shall
receive for services rendered as a director and committee member such reasonable
compensation as may be fixed from time to time by the Board of Directors, the
directors and committee members also may be paid their expenses, if any, in
attending meetings of the Board of Directors or any committee thereof. Nothing
in these By-laws shall be construed to preclude any director from serving the
Corporation in any other capacity as an officer, agent, or otherwise and
receiving compensation therefor.
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1 Date, Time and Place.
Meetings of the Board of Directors shall be held on
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such date and at such time and place, either within or without the State of
Delaware, as shall be determined by the Board of Directors pursuant to these
By-laws.
Section 4.2. Annual Meetings.
After the annual meeting of stockholders, the newly-elected Board of
Directors may hold a meeting, on such date and at such time and place as shall
be determined by the Board of Directors; for the purpose of organization,
election of officers, and such other business that may properly come before the
meeting. Such meeting may be held without notice.
Section 4.3 Regular Meetings.
Regular meetings of the Board of Directors may be held without notice on
such date and at such time and place as shall be determined from time to time by
the Board of Directors.
Section 4.4. Special Meetings.
Special meetings of the Board of Directors may be held at anytime upon the
call of the President, Chairman of the Board of Directors, or the Secretary by
means of oral, telephonic, written, telegraphic, written telegraphic, cable, or
other similar notice; duly given, delivered sent, or mailed to each director in
the manner prescribed by Section 6.1 of these By-laws, not less than two (2)
days prior to such meeting. Special meetings of the Board of Directors may be
held at any time without notice if all of the directors are present or if those
directors not present waive notice of the meeting in writing either before or
after the date of the meeting.
Section 4.5 Quorum.
Except as specifically provided otherwise by the General Corporation Law of
the State of Delaware, a majority of the whole Board of Directors, as fixed
pursuant to Section 3.2 of these By-Laws, shall constitute a quorum for the
transaction of business at a meeting of the Board of Directors. If a quorum
shall not be present at a meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 4.6 Required Vote.
Except as specifically provided otherwise by the General Corporation law of
the State of Delaware, the affirmative vote of a majority of the directors
present at a meeting of the Board of Directors at which a quorum is present
shall be the act of the Board of Directors with respect to the matter voted
upon.
Section 4.7 Action Without Meeting.
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Any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting if
all members of the Board of Directors or committee thereof, as the case may be,
consent thereto in writing and such writing is filed with the minutes of
proceedings of the Board of Directors or committee thereof.
Section 4.8 Telephone Meetings.
Members of the Board of Directors or any committee thereof may participate
in a meeting of the Board of Directors or committee thereof; as the case may be,
by means of conference, telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other.
Participation it a meeting by such means shall constitute presence in person at
such meeting.
ARTICLE V
COMMITTEES OF THE BOARD OF DIRECTORS
Section 5.1 Designation and Powers.
The Board of Directors may designate one or more committees from time to
time in its discretion, by resolution passed by the affirmative vote of a
majority of the whole Board of Directors, as fixed pursuant to Section 3.2 of
these By-laws. Each committee shall consist of one or more of the directors on
the Board of Directors. The Board of Directors 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. In the absence of
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all of the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation and may authorize the corporate 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 or these By-laws, adopting an agreement of merger
or consolidation, or recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets, a
dissolution of the Corporation or a revocation of a dissolution; and, unless the
resolution of the Board of Directors, these By-laws or the Certificate of
Incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock of the
Corporation or any class or series of stock. Each committee shall keep regular
minutes of its meetings and shall report the same to the Board of
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Directors when requested to do so.
ARTICLE VI
NOTICES
Section 6.1 Delivery of Notice.
Notices to stockholders and, except as permitted below, to directors shall
be in writing and may be delivered by mail or by messenger. Notice by mail shall
he deemed to be given at the time when such notice is deposited in a United
States post office or letter box, enclosed in a post-paid sealed wrapper, and
addressed to a stockholder or director at his respective address appearing on
the books and records of the Corporation, unless such stockholder or director
shall have filed with the Secretary a written request that notices intended for
such stockholder or director be mailed or delivered to some other address, in
which case the notice shall be mailed to or delivered at the address designated
in such request. Notice by messenger shall be deemed to be given when such
notice is delivered to the address of a stockholder or director as specified
above. Notices to directors also may be given orally in person or by telephone,
or by telex, telegram, cable, or other similar means, or by leaving the notice
at the residence or usual place of business of a director.
Notice by oral communication, telex, telegram, cable, or other similar
means shall be deemed to be given upon dispatch of such notice. Notice by
messenger shall be deemed to be given when such notice is delivered to a
director's residence or usual place of business. Notice to the Corporation shall
be deemed to be given upon actual receipt of such notice by the Corporation.
Section 6.2 Waiver of Notice.
Whenever notice is required to be given by the General Corporation Law of
the State of Delaware, the Certificate of Incorporation, or these By-laws, a
written waiver of notice, signed by the person entitled thereto, whether before
or after the time stated in the notice, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends the meeting for the express purpose of
objecting at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of
stockholders, Board of Directors, or committee of the Board of Directors need be
specified in any written waiver of notice.
ARTICLE VII
OFFICERS
Section 7.1 Officers.
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At its annual meeting, or at such other meeting as it may determine, or by
unanimous written consent of the directors without meeting, the Board of
Directors shall elect a Chairman of the Board of Directors, a President, a
Treasurer and a Secretary, and may elect one or more Vice Presidents, Assistant
Treasurers, Assistant Secretaries, and such other officers as the Board of
Directors from time to time may designate or the business of the Corporation may
require. No executive officer need be a member of the Board of Directors. Any
number of offices may be held by the same person.
Section 7.2 Other Officers and Agents
The Board of Directors also may elect such other officers and agents as the
Board of Directors from time to time may determine to be advisable. Such
officers and agents shall serve for such terms, exercise such powers, and
perform such duties as shall be specified from time to time by the Board of
Directors.
Section 7.3 Tenure, Resignation, Removal, and Vacancies.
Each officer of the Corporation shall hold his office until his successor
is elected and qualified or until his earlier resignation or removal except that
if the term of office of any officer elected pursuant to Section 7.2 of these
By-laws shall have been fixed by the Board of Directors, such person shall cease
to hold such office no later than the date of expiration of such term,
regardless of whether any other person shall have been elected or appointed to
succeed him. Any officer elected by the Board of Directors may be removed at any
time, with or without cause, by the Board of Directors provided that any such
removal shall be without prejudice to the rights, if any, of the officer so
employed under any employment contract or other agreement with the Corporation.
Any officer may resign at any time upon written notice to the Board of Directors
or the President. Unless specified otherwise in the notice, such resignation
shall take effect upon receipt of the notice by the Board of Directors or the
President. The acceptance of the resignation shall not be necessary to make if
effective. Any vacancy occurring in any office of the Corporation by death,
resignation, removal, or otherwise shall be filled by the Board of Directors and
such successor or successors shall hold office for such term as may be specified
by the Board of Directors.
Section 7.4 Compensation.
The salaries or other compensation of all officers and agents of the
Corporation shall be fixed from time to time by the Board of Directors.
Section 7.5 Authority and Duties.
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All officers and agents, as between themselves and the Corporation, shall
have such authority and perform such duties in the management of the Corporation
as may be provided in these By-Laws and as generally pertain or are necessarily
incidental to the particular office or agency. In addition to the powers and
duties hereinafter specifically prescribed for certain officers of the
Corporation, the Board of Directors from time to time may impose or confer upon
any of the officers such additional duties and powers as the Board of Directors
may see fit, and the Board of Directors from time to time may impose or confer
any or all of the duties and powers hereinafter specifically prescribed for any
officer or officers. The Board of Directors may give general authority to any
officer to affix the corporate seal of the Corporation and to attest the
affixing by his signature.
Section 7.6 The Chairman of the Board of Directors.
The Chairman of the Board of Directors shall be the chief executive officer
of the Corporation, shall have general and active management, supervision and
control of the business of the Corporation, shall preside at all meetings of
stockholders and of the Board of Directors, and shall see that all resolutions
and orders of the Board of Directors are carried into effect. He shall report
from time to time to the Board of Directors all matters within his knowledge
which the interest of the Corporation may require to be brought to the attention
of the Board of Directors. The Chairman shall have the general powers and duties
of supervision and management usually vested in the office of Chairman of the
Board of Directors of a corporation and shall exercise such powers and perform
such duties as generally pertain or are necessarily incidental to his office and
shall have such other powers and perform such other duties as may be
specifically assigned to him from time to time by the Board of Directors. Except
as the Board of Directors shall authorized the execution thereof in some other
manner, he, along with the President shall execute bonds, mortgages, and other
contracts for and on behalf of the Corporation and shall cause the corporate
seal of the Corporation to be affixed to any instrument requiring it, and when
so affixed the seal shall be attested by the signature of the Secretary of the
Treasurer or an Assistant Secretary or an Assistant Treasurer.
Section 7.7 The President.
The President shall have, in the absence or disability of the Chairman of
the Board of Directors, general and active management, supervision and control
of the business of the Corporation and, in the absence or disability of the
Chairman, shall preside at all meetings of Stockholders and of the Board of
Directors. He shall see that all resolutions and orders of the Board of
Directors are carried into effect. He shall report from time to time to the
Board of Directors all matters within his knowledge which the interest of the
Corporation may require to be brought to the attention of the Board of
Directors. The
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President shall, subject to the powers conferred upon the Chairman of the Board
of Directors, have the general powers and duties of supervision and management
usually vested in the office of President of a Corporation and shall execute
such powers and perform such duties as generally pertain or are necessarily
incidental to his office and shall have such other powers and perform such other
duties as may be specifically assigned to him from time to time by the Chairman
of the Board of Directors. Except as the Board of Directors shall authorized the
execution thereof in some other manner, he, along with the Chairman of the Board
of Directors, shall execute bonds, mortgages, and other contracts for and on
behalf of the Corporation and shall cause the corporate seal of the Corporation
to be affixed to any instrument requiring it and when so affixed the seal shall
be attested by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
Section 7.8 The Vice President(s).
The Vice President, or if there are more than one, the Vice Presidents,
shall perform such duties as may be specifically assigned to them from time to
time by the Board of Directors Chairman, or the President and shall exercise
such powers as the Board of Directors from time to time may prescribe. In case
of the absence or disability of the Chairman or the President and if the Board
of Directors or the Chairman or President has so authorized, the Vice President,
or if there are more than one Vice President, such Vice President as the Board
of Directors or the Chairman or President shall designate, shall perform the
duties of the office of the President. Any Vice President shall have general
authority to affix the seal of the Corporation to any instrument requiring it,
and to attest the affixing by his signature.
Section 7.9 The Treasurer.
The Treasurer shall have the charge and custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books and records belonging to the Corporation. He shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors or any officer of the Corporation authorized by the Board of Directors
to make such designation. The Treasurer shall exercise such powers and perform
such duties as generally pertain or are necessarily incidental to his office and
shall perform such other duties as may be specifically assigned to him from time
to time by the Board of Directors, the Chairman or the President and shall
exercise such other powers as the Board of Directors from time to time may
prescribe. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, the Chairman or the President, taking proper
vouchers for such disbursement. He shall render to the Chairman and the Board
Directors (at its regular and special
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meetings), or whenever any of them may request it, an account of all of his
transaction as Treasurer and of the financial condition of the Corporation. If
required by the Board of Directors, he shall give the Corporation a bond in such
sum and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement,
or removal from office, of all books, papers, vouchers, moneys, and other
property of whatever kind in his possession or under his control belonging to
the Corporation.
Section 7.10 The Assistant Treasurer(s).
The Assistant Treasurer, or if there are more than one, the Assistant
Treasurers, shall perform such duties as may be specifically assigned to them
from time to time by the Board of Directors, Chairman or the President. In case
of the absence or disability of the Treasurer, and if the Board of Directors or
the Chairman has so authorized, the Assistant Treasurer or if there are more
than one Assistant Treasurer, such Assistant Treasurer as the Board of Directors
or the Chairman shall designate, shall perform the duties of the office of the
Treasurer.
Section 7.11 The Secretary.
The Secretary shall attend all meetings of the Board of Directors and all
meetings of stockholders and record all votes and record the proceedings of such
meetings in a book to be kept for that purpose. He shall perform like duties for
any committees of the Board of Directors when required or requested. He shall
give, or cause to be given, notice of all meetings of stockholders and, when
necessary, of the Board of Directors. The Secretary shall exercise such powers
and perform such duties as generally pertain or are necessarily incidental to
his office and shall perform such other duties as may be specifically assigned
to him from time to time by the Board of Directors or the Chairman and shall
exercise such other powers as the Board of Directors from time to time may
prescribe. The Secretary shall have custody of the corporate seal of the
Corporation and he, or an Assistant Secretary, shall have authority to affix the
corporate seal to any instrument requiring it, and when so affixed it shall be
attested by his signature or by the signature of an Assistant Secretary.
Section 7.12 The Assistant Secretary(ies).
The Assistant Secretary, or if there are more than one, the Assistant
Secretaries, shall perform such duties as may be specifically assigned to them
from time to time by the Board of Directors or the Chairman and shall exercise
such powers as the Board of Directors from time to time may prescribe. In case
of absence or disability or the Secretary and if the Board of Directors or the
Chairman has so authorized, the Assistant
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Secretary, or if there are more than one Assistant Secretaries, such Assistant
Secretary as the Board of Directors of the Chairman shall designate, shall
perform the duties of the office of the Secretary.
ARTICLE VIII
CERTIFICATES OF STOCK
Section 8.1 Form and Signature.
The stock certificates representing shares of stock of the Corporation
shall be in such form or forms not inconsistent with the Certificate of
Incorporation and these By-laws as the Board of Directors shall approve from
time to time. Stock certificates shall be numbered, the certificates for the
shares of stock of each class to be numbered consecutively, and shall be entered
in the books and records of the Corporation as such certificates are issued. No
certificate shall be issued for any share until the consideration therefor has
been fully paid. Stock certificates shall exhibit the holder's name, certify the
class of stock and the number of shares in such class of stock owned by the
holder, and shall be signed by (a) the Chairman of the Board of Directors or the
President or a Vice President, and (b) the Treasurer, Assistant Treasurer, the
Secretary or an Assistant Secretary. Any or all of the signatures on a stock
certificate may be facsimiles. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed on a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, such certificate may be issued by the Corporation with
the same effect as if he were such officer, transfer agent or registrar at the
date of issuance.
Section 8.2 Lost, Stolen, or Destroyed Certificates.
The Board of Directors may direct that a new stock certificate be issued in
place or any certificate theretofore issued by the Corporation which is alleged
to have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the person, or his legal representative, claiming the certificate of
stock to be lost, stolen, or destroyed. When authorizing such issuance of a new
certificate, the Board of Directors, in its discretion and as a condition
precedent to the issuance thereof, may require the owner of the lost, stolen, or
destroyed certificate, or his legal representative, to advertise the same in
such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as the Board of Directors shall direct as
indemnity against any claim that may be made against the Corporation, any
transfer agent, or any registrar on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of such new certificate.
Section 8.3 Registration of Transfer.
<PAGE>
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Shares of stock of the Corporation shall be transferable only upon the
Corporation's books by the holders thereof in person or by their duly authorized
attorney or legal representatives, and upon such transfer the old certificates
shall be surrendered to the Corporation by delivery thereof to the person in
charge of the stock and transfer books and ledgers of the Corporation, or to
such other person as the Board of Directors may designate. Upon surrender to the
Corporation of a certificate for shares, duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, the Corporation
shall issue a new certificate to the person entitled thereto, cancel the old
certificate, and record the transaction on its books.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Record Date.
In order that the Corporation may determine the stockholders entitled to
notice of, and to vote at, a meeting of stockholders, or to express consent or
dissent to corporate action in writing without meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion, or
exchange of stock, or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date which shall not be more than sixty
(60) nor less than ten (10) days prior to the date of such meeting or more than
sixty (60) days prior to any other action. A determination of stockholders of
record entitled to notice of and to vote at, a meeting of stockholders shall
apply to any adjournment(s) of such meeting; provided that, the Board of
Directors may fix a new record date for the adjourned meeting.
Section 9.2 Registered Stockholders.
Except as specifically provided otherwise by the General Corporation Law of
the State of Delaware, the Corporation shall be entitled to recognize the
exclusive right of a person registered on its books and records as the owner of
shares of stock of the Corporation to receive dividends and to vote as such
owner, shall be entitled to hold such person liable for calls and assessments,
and shall be bound to recognize any equitable or other claim to, or interest in,
such stock on the part of any other person, whether or not the Corporation shall
have express or other notice thereof.
Section 9.3 Dividends.
The Board of Directors, from time to time in its sole and absolute
discretion, may declare and pay dividends upon the shares of the Corporation's
capital stock out of funds legally
<PAGE>
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available therefor. Before declaring or paying any dividend, the Board of
Directors may set aside out of any funds of the Corporation available for
dividends such sum or sums as the Board of Directors, from time to time in its
absolute discretion shall think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the Board of Directors
shall think conducive to the interests of the Corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in which it was
created.
Section 9.4 Checks and Notes.
All checks and drafts on the bank accounts of the Corporation, all bills of
exchange and promissory notes of the Corporation, and all acceptances,
obligations, and other instruments for the payment of money drawn, signed, or
accepted by the Corporation shall be signed or accepted, as the case may be, by
such officer or officers, agent or agents, and in such manner as shall be
thereunto authorized from time to time by the Board of Directors or by officers
of the Corporation designated by the Board of Directors to make such
authorization.
Section 9.5 Fiscal Year.
The fiscal year of the Corporation shall commence on and end on such dates
as shall be fixed by resolution of the Board of Directors.
Section 9.6 Corporate Seal.
The corporate seal shall be circular in form and shall have inscribed
thereon the name of the Corporation, the year of its organization, and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed, affixed, or otherwise reproduced.
Section 9.7 Voting of Securities of Other Issuers.
In the event that the Corporation shall own and/or have power to vote any
securities (including, but not limited to, shares of stock) of any other issuer,
such securities shall be voted by such person or persons, to such extent, and in
such manner as may be determined by the Board of Directors.
Section 9.8 Transfer Agents.
The Board of Directors may make such rules and regulations as it may deem
expedient concerning the issuance, transfer, and registration of securities
(including, but not limited to, stock) of the Corporation. The Board of
Directors may appoint one or more transfer agents and/or one or more registrars
and may require all stock certificates and other certificates evidencing
securities of the Corporation to bear the
<PAGE>
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signature of either or both.
Section 9.9 Books and Records.
Except as specifically provided otherwise by the General Corporation Law of
the State of Delaware, the books and records of the Corporation shall be kept
at the principal executive offices of the Corporation.
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnification of Directors, Officers, Employees and Agents.
To the extent not prohibited by applicable law, the Corporation shall
indemnify and hold harmless any 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 (including
an action, suit or proceeding, by or in the right of the Corporation) by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, from and against any and all liability and
expenses (including attorneys' fees), and judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he 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, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 10.2 Determination of Right to Indemnification.
Any indemnification under Section 10.1 of these By-laws (except
indemnification in connection with the successful defense; on the merits or
otherwise, of any action, suit or proceeding or any claim, issue or matter
therein, or except indemnification ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 10.1
<PAGE>
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of these By-laws. Such determination shall be made (1) by the Board of Directors
of the Corporation by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders of the Corporation.
Section 10.3 Advances.
Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article X of these By-laws.
Section 10.4 Exclusivity.
The indemnification provided by this Article X of these By-laws shall not
be deemed exclusive of any other rights to which those seeking indemnification
may be entitled under any agreement, resolution, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
Section 10.5 Insurance.
The Corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article X of these By-laws or otherwise.
ARTICLE XI
AMENDMENTS TO THESE BY-LAWS
Section 11.1 By the Stockholders.
These By-laws may be amended or repealed in whole or in part and new
By-laws may be adopted by the affirmative vote of the stockholders holding a
majority of the shares of the
<PAGE>
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Corporation's issued and outstanding common stock entitled to vote on such
matter.
Section 11.2 By the Board of Directors.
These By-laws may be amended or repealed in whole or in part and new
By-laws may be adopted by unanimous written consent of the directors on the
Board of Directors without a meeting or by the affirmative vote of a majority of
the whole Board of Directors at a meeting at which a quorum is present.
ARTICLE XII
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
Section 12.1 By the Stockholders.
Any amendment to the Certificate of Incorporation shall require the
affirmative vote of the stockholders holding a majority of the shares of the
Corporation's issued and outstanding common stock entitled to vote on such
matter.
<PAGE>
EXHIBIT 10.1
APOGEE TECHNOLOGY, INC.
STOCK SUBSCRIPTION AGREEMENT
Apogee Technology, Inc.
129 Morgan Avenue
Norwood, MA 02760
Ladies and Gentlemen:
Subject to the terms and conditions set forth below, the undersigned
hereby offers to purchase from Apogee Technology, Inc., a Delaware corporation
(the "Company"), ____ units (the "Securities"), each unit consisting of one (1)
share of the Company's Common Stock, par value $.01 per share, and a right to
purchase one-fifth (1/5) of a share of Common Stock, for the aggregate purchase
price of $______ in cash ($2.00 per unit), which accompanies this Agreement.
Attached hereto is a form of warrant which will be issued to the undersigned to
evidence the aggregate rights to be received along with the unit shares.
In connection with the execution of this Agreement and to induce the
Company to sell the Securities to the undersigned, the undersigned hereby
represents, warrants and agrees as follows:
1. Accredited Investor. I am an "accredited investor" as such term is
defined in Regulation D under the Securities Act of 1933, as amended (the
"Securities Act"), for the following reason (Please initial one or more):
___ My individual income was in excess of $200,000 in each of the past
two years, or my joint income with my spouse was in excess of
$300,000 in each of those years, and I reasonably expect my income
to reach the same level in the current year.
___ My individual net worth or joint net worth with my spouse exceeds
$1,000,000.
___ The undersigned is a trust, corporation or partnership with total
assets in excess of $5,000,000, not formed for the specific purpose
of acquiring the Securities, whose purchase of the Securities will
be directed by a person whose knowledge and experience in financial
and business matters is such that he or she is capable of evaluating
the merits and risks of the investment in the Securities.
___ The undersigned is an entity in which all of the equity owners are
accredited investors.
___ Other (Please specify): ___________________________________________
2. Experience and Suitability. I am qualified by my knowledge and
experience in financial and business matters to evaluate the merits and risks of
an investment in the Securities and to make an informed decision relating
thereto. I have the financial capability for making the
<PAGE>
investment and protecting my interests, and I can afford a complete loss of the
investment. The investment is a suitable one for me.
3. No Need for Liquidity. I am aware that I will be unable to liquidate my
investment readily in case of an emergency and that the Securities being
purchased may have to be held for an indefinite period of time. My overall
commitment to investments which are not readily marketable is not excessive in
view of my net worth and financial circumstances and the purchase of the
Securities will not cause such commitment to become excessive. In view of such
facts, I acknowledge that I have adequate means of providing for my current
needs, anticipated future needs and possible contingencies and emergencies and
have no need for liquidity in the investment in the Securities. I am able to
bear the economic risk of this investment.
4. Opportunity to Investigate. Prior to the execution of this Agreement,
my advisors and I have had the opportunity to ask questions of, and receive
answers from, representatives of the Company concerning the terms and conditions
of this transaction, and the finances, operations, business and prospects of the
Company. My advisors and I have also had the opportunity to obtain additional
information necessary to verify the accuracy of information furnished about the
Company. Accordingly, I have independently evaluated the risks of purchasing the
Securities, and I am satisfied that I have received information with respect to
all matters which I consider material to my decision to make this investment.
5. Investment Purpose. I am acquiring the Securities for my own account
for the purpose of investment and not with a view to, or for resale in
connection with, the distribution thereof, nor with any present intention of
distributing or selling the Securities. I understand that the Securities have
not been registered under the Securities Act or the securities laws of any
state, and I hereby agree not to make any sale, transfer or other disposition of
any such Securities unless either (i) the Securities first shall have been
registered under the Securities Act and all applicable state securities laws, or
(ii) an exemption from such registration is available, and the Company has
received such documents and agreements from me and the transferee as the Company
requests at such time.
6. Legends. I understand that until the Securities have been registered
under the Securities Act and applicable state securities laws each certificate
representing such securities shall bear a legend substantially similar to the
following:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws, have been acquired for investment, and
may not be sold, pledged, hypothecated or otherwise transferred
unless a registration statement under the Act and applicable state
law is in effect with regard thereto or unless an exemption from
such registration is available.
7. No Regulatory Approval of Merits. I understand that neither the
Securities and
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<PAGE>
Exchange Commission nor the commissioner or department of securities or attorney
general of any state has passed upon the merits or qualifications of, nor
recommended nor approved, the Securities. Any representation to the contrary is
a criminal offense.
8. Independent Advice. I understand that I am urged to seek independent
advice from my professional advisors relating to the suitability for me of an
investment in the Company in view of my overall financial needs and with respect
to the legal and tax implications of such an investment.
9. Indemnification. I understand the meaning and legal consequences of
this Agreement and agree to indemnify and hold harmless the Company and each
director and officer thereof from and against any and all loss, damage or
liability due to or arising out of a breach of any representation, warranty or
agreement of the undersigned contained in this Agreement.
10. Authority and Noncontravention. The execution and performance hereof
violates no order, judgment, injunction, agreement or controlling document to
which the undersigned is a party or by which the undersigned is bound. If an
organization, (i) the undersigned is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it has been formed;
(ii) the undersigned has the right and power under its organizational
instruments to execute, deliver and perform its obligations hereunder; and (iii)
this Agreement has been duly authorized by all necessary action on the part of
all officers, directors, partners, stockholders and trustees and will not
violate any agreement to which the undersigned is a party; and (iv) the
individual executing and delivering this Agreement has the requisite right,
power, capacity and authority to do so on behalf of the organization. The
undersigned has not been organized for the purpose of subscribing for the
Securities.
11. Duration. I understand that I may not cancel, terminate or revoke this
Agreement or any agreement made by me hereunder and that this Agreement shall
survive my death or disability and shall be binding upon my heirs, executors,
administrators, successors and assigns.
12. Further Assurances. Within ten (10) days after receipt of a written
request from the Company, I agree to provide such information and to execute and
deliver such documents as reasonably may be necessary to comply with any and all
laws and ordinances to which the Company is subject.
13. Miscellaneous.
(a) Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i) delivered
by hand, (ii) made by telex, telecopy or facsimile transmission, (iii)
sent by overnight courier, or (iv) sent by registered mail, return receipt
requested, postage prepaid.
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<PAGE>
If to the undersigned:
To the address designated in Section 14 hereof.
If to the Company:
To the address set forth at the top of this Agreement.
All notices, requests, consents and other communications hereunder shall
be deemed to have been given either (i) if by hand, at the time of the
delivery thereof to the receiving party at the address of such party set
forth above, (ii) if made by telex, telecopy or facsimile transmission, at
the time that receipt thereof has been acknowledged by electronic
confirmation or otherwise, (iii) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier
service, or (iv) if sent by registered mail, on the 5th business day
following the day such mailing is made.
(b) Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly
set forth in this Agreement shall affect, or be used to interpret, change
or restrict, the express terms and provisions of this Agreement.
(c) Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by
the parties hereto.
(d) Waivers and Consents. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such
terms or provisions. No such waiver or consent shall be deemed to be or
shall constitute a waiver or consent with respect to any other terms or
provisions of this Agreement, whether or not similar. Each such waiver or
consent shall be effective only in the specific instance and for the
purpose for which it was given, and shall not constitute a continuing
waiver or consent.
(e) Assignment. This Agreement may not be transferred or assigned
without the prior written consent of the Company and any such transfer or
assignment shall be made only in accordance with applicable laws and any
such consent.
(f) Benefit. All statements, representations, warranties, covenants
and agreements in this Agreement shall be binding on the parties hereto
and shall inure to the benefit of the respective successors and permitted
assigns of each party hereto. Nothing in this Agreement shall be construed
to create any rights or obligations except among the
- 4 -
<PAGE>
parties hereto, and no person or entity shall be regarded as a third-party
beneficiary of this Agreement.
(g) Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed
by the law of the State of Delaware, without giving effect to the conflict
of law principles thereof.
(h) Jurisdiction and Service of Process. Any legal action or
proceeding with respect to this Agreement shall be brought in the courts
of the Commonwealth of Massachusetts or of the United States of America
for the Eastern District of Massachusetts. By execution and delivery of
this Agreement, each of the parties hereto accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. Each of the parties hereto irrevocably consents
to the service of process of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by certified mail,
postage prepaid, to the party at its address set forth in Section 13 (a)
hereof.
(i) Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unenforceable in any respect, then
such provision shall be deemed limited to the extent that such court deems
it enforceable, and as so limited shall remain in full force and effect.
In the event that such court shall deem any such provision, or portion
thereof, wholly unenforceable, the remaining provisions of this Agreement
shall nevertheless remain in full force and effect .
(j) Interpretation. The parties hereto acknowledge and agree that:
(i) each party and its or his counsel has reviewed the terms and
provisions of this Agreement; (ii) the rule of construction to the effect
that any ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to the parties
hereto and not in favor of or against any party, regardless of which party
was generally responsible for the preparation of this Agreement. Whenever
used herein, the singular number shall include the plural, the plural
shall include the singular, the use of any gender shall include all
persons.
(k) Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect the meaning or construction of any of
the terms or provisions hereof.
(l) No Waiver of Rights, Powers and Remedies. No failure or delay by
a party hereto in exercising any right, power or remedy under this
Agreement, and no course of dealing between the parties hereto, shall
operate as a waiver of any such right, power or remedy of the party. No
single or partial exercise of any right, power or remedy under
- 5 -
<PAGE>
this Agreement by a party hereto, nor any abandonment or discontinuance of
steps to enforce any such right, power or remedy, shall preclude such
party from any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The election of any remedy by a
party hereto shall not constitute a waiver of the right of such party to
pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving
such notice or demand to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the party
giving such notice or demand to any other or further action in any
circumstances without such notice or demand.
(m) Survival of Representations and Warranties. All representations
and warranties made by the parties hereto in this Agreement or in any
other agreement, certificate or instrument provided for or contemplated
hereby, shall survive (i) the execution and delivery hereof, (ii) any
investigations made by or on behalf of the parties and (iii) the closing
of the transaction contemplated hereby, and shall remain in full force and
effect for a period of three years following the date of such closing.
(n) 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.
(o) No Broker or Finder. Each of the parties hereto represents and
warrants to the other that no broker, finder or other financial consultant
has acted on its behalf in connection with this Agreement or the
transactions contemplated hereby in such a way as to create any liability
on the part of the other. Each of the parties hereto agrees to indemnify
and save the other harmless from any claim or demand for commission or
other compensation by any broker, finder, financial consultant or similar
agent claiming to have been employed by or on behalf of such party and to
bear the cost of legal expenses incurred in defending against any such
claim.
(p) Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. I am purchasing the Securities as follows (please check as
appropriate):
_____ individually _____ in trust
_____ joint tenants _____ as a partnership
_____ tenants in common _____ other: ____________________
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<PAGE>
Name:___________________________________________________
Telephone:______________________________________________
Home Address:___________________________________________
City:___________________________________ State:_________
Zip:____________________________________________________
Business:_______________________________________________
Address:________________________________________________
City:___________________________________ State:_________
Zip:____________________________________________________
Business Telephone:_____________________________________
Communications should be sent to (please check one): ____ business or
____ home address
Federal Income Tax I.D. No. (Social Security Number for Individual
Investors):
________________________
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<PAGE>
15. Under penalties of perjury, I certify that:
A. The number shown above is my correct Taxpayer Identification
Number;
B. I am not subject to backup withholding either because I have not
been notified by the Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or the
IRS has notified me that I am no longer subject to backup withholding.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as a
sealed instrument as of this ___th day of ______________, 1999.
(For Co-owners, if applicable)
__________________________________ __________________________________
Investor Signature Investor signature
__________________________________ __________________________________
Print Name Print Name
***************************************************************
The foregoing subscription for Securities of Apogee Technology, Inc. is hereby
accepted.
APOGEE TECHNOLOGY, INC.
By:________________________________________
David Spiegel, President
DATE:______________________________________
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<PAGE>
EXHIBIT 10.2
For the Purchase
of _________ shares of
Common Stock
No. W-1999-__
WARRANT FOR THE PURCHASE OF
SHARES OF COMMON STOCK
OF
APOGEE TECHNOLOGY, INC.
(A Delaware Corporation)
VOID AFTER 5:00 P.M., EASTERN STANDARD TIME, ON DECEMBER 15, 2009
Apogee Technology, Inc., a Delaware corporation (the "Company") hereby
certifies that Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., or its
registered assigns (the "Registered Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company, at any time or from time to time
on or before the earlier of December 15, 2009 at not later than 5:00 p.m.
(Boston, Massachusetts time) and the termination of this Warrant as provided in
Section 9 below, __________ shares of Common Stock, $.01 par value, of the
Company ("Common Stock"), at a purchase price of $2.50 per share. The number of
shares purchasable upon exercise of this Warrant, and the purchase price per
share, each as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Stock" and the "Purchase
Price," respectively.
1. Exercise.
(a) This Warrant may be exercised by the Registered Holder, in whole
or in part, by surrendering this Warrant, with the purchase form appended hereto
as Exhibit I duly executed by such Registered Holder, at the principal office of
the Company, or at such other office or agency as the Company may designate,
accompanied by payment in full, in lawful money of the United States, of the
Purchase Price payable in respect of the number of shares of Warrant Stock
purchased upon such exercise.
(b) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in subsection
1(a) above. At such time, the person or persons in whose name or names any
certificates for Warrant Stock shall be issuable upon such exercise as provided
in subsection 1(c) below shall be deemed to have become the holder or holders of
record of the Warrant Stock represented by such certificates.
(c) As soon as practicable after the exercise of this Warrant in
full or in part, and in any event within 10 days thereafter, the Company at its
expense will cause to be issued in
<PAGE>
the name of, and delivered to, the Registered Holder, or, subject to the
terms and conditions hereof, as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full
shares of Warrant Stock to which such Registered Holder shall be entitled upon
such exercise plus, in lieu of any fractional share to which such Registered
Holder would otherwise be entitled, cash in an amount determined pursuant to
Section 3 hereof, and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of shares of Warrant Stock equal (without
giving effect to any adjustment therein) to the number of such shares called for
on the face of this Warrant minus the number of such shares purchased by the
Registered Holder upon such exercise as provided in subsection 1(a) above.
2. Adjustments.
(a) If outstanding shares of the Company's Common Stock shall be
subdivided into a greater number of shares or a dividend in Common Stock shall
be paid in respect of Common Stock, the Purchase Price in effect immediately
prior to such subdivision or at the record date of such dividend shall
simultaneously with the effectiveness of such subdivision or immediately after
the record date of such dividend be proportionately reduced. If outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
Purchase Price in effect immediately prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
increased. When any adjustment is required to be made in the Purchase Price, the
number of shares of Warrant Stock purchasable upon the exercise of this Warrant
shall be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.
(b) If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a change in par value
or a subdivision or combination as provided for in subsection 2(a) above), then,
as part of any such reorganization or reclassification, lawful provision shall
be made so that the Registered Holder of this Warrant shall have the right
thereafter to receive upon the exercise hereof the kind and amount of shares of
stock or other securities or property which such Registered Holder would have
been entitled to receive if, immediately prior to any such reorganization or
reclassification, such Registered Holder had held the number of shares of Common
stock which were then purchasable upon the exercise of this Warrant. In any such
case, appropriate adjustment (as reasonably determined by the Board of Directors
of the Company) shall be made in the application of the provisions set forth
herein with respect to the rights and interests thereafter of the Registered
Holder of this Warrant such that the provisions set forth in this Section 2
(including provisions with respect to adjustment of the Purchase Price) shall
thereafter be applicable, as nearly as is reasonably practicable, in relation to
any shares of stock or other securities or property thereafter deliverable upon
the exercise of this Warrant.
2
<PAGE>
(c) When any adjustment is required to be made in the Purchase
Price, the Company shall promptly mail to the Registered Holder a certificate
setting forth the Purchase Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Such certificate shall also
set forth the kind and amount of stock or other securities or property into
which this Warrant shall be exercisable following the occurrence of any of the
events specified in subsection 2(a) or (b) above.
3. Fractional Shares. The Company shall not be required upon the exercise
of this Warrant to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the mean between the low bid and high asked
prices of the Warrant Stock on the over-the-counter market as reported by the
Nasdaq Stock Market or the closing market price of the Warrant Stock on a
national securities exchange on the trading day immediately prior to the date of
exercise, whichever is applicable, or if neither is applicable, then on the
basis of the then market value of the Warrant Stock as shall be reasonably
determined by the Board of Directors of the Company.
4. Limitation on Sales, etc. Each holder of this Warrant acknowledges that
this Warrant and the Warrant Stock have not been registered under the Securities
Act of 1933, as now in force or hereafter amended, or any successor legislation
(the "Act"), and agrees not to sell, pledge, distribute, offer for sale,
transfer or otherwise dispose of this Warrant or any Warrant Stock issued upon
its exercise in the absence of (a) an effective registration statement under the
Act as to this Warrant or such Warrant Stock and registration or qualification
of this Warrant or such Warrant Stock under any applicable Blue Sky or state
securities law then in effect, or (b) an opinion of counsel, satisfactory to the
Company, that such registration and qualification are not required.
Without limiting the generality of the foregoing, unless the offering and
sale of the Warrant Stock to be issued upon the particular exercise of the
Warrant shall have been effectively registered under the Act, the Company shall
be under no obligation to issue the shares covered by such exercise unless and
until the Registered Holder shall have executed an investment letter in form and
substance satisfactory to the Company, including a warranty at the time of such
exercise that it is acquiring such shares for its own account, for investment
and not with a view to, or for sale in connection with, the distribution of any
such shares, in which event the Registered Holder shall be bound by the
provisions of the following legend or a legend in substantially similar form
which shall be endorsed upon the certificate(s) evidencing the Warrant Stock
issued pursuant to such exercise:
"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by any
person, including a pledgee, in the absence of an effective
registration statement for the shares under the Securities Act of
1933, as amended, or an opinion of counsel satisfactory to the
Company that an exemption from registration is then available."
3
<PAGE>
In addition, without limiting the generality of the foregoing, the Company
may delay issuance of the Warrant Stock until completion of any action or
obtaining of any consent, which the Company deems necessary under any applicable
law (including without limitation state securities or "blue sky" laws).
5. Liquidating Dividends. If the Company pays a dividend or makes a
distribution on the Common Stock payable otherwise than in cash out of earnings
or earned surplus (determined in accordance with generally accepted accounting
principles) except for a stock dividend payable in shares of Common Stock (a
"Liquidating Dividend"), then the Company will pay or distribute to the
Registered Holder of this Warrant, upon the exercise hereof, in addition to the
Warrant Stock purchased upon such exercise, the Liquidating Dividend which would
have been paid to such Registered Holder if it had been the owner of record of
such shares of Warrant Stock immediately prior to the date on which a record is
taken for such Liquidating Dividend or, if no record is taken, the date as of
which the record holders of Common Stock entitled to such dividends or
distribution are to be determined.
6. Notices of Record Date, etc. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, or to receive any right to subscribe for or
purchase any shares of stock of any class or any other securities, or to receive
any other right, or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving entity), or any
transfer of all or substantially all of the assets of the Company, or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will mail or
cause to be mailed to the Registered Holder of this Warrant a notice specifying,
as the case may be, (i) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (ii) the effective date on
which such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such other
stock or securities at the time deliverable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be mailed at least ten (10) days
prior to the record date or effective date for the event specified in such
notice.
7. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such shares of Warrant Stock
4
<PAGE>
and other stock, securities and property, as from time to time shall be issuable
upon the exercise of this Warrant.
8. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
9. Termination In Certain Events
In the event of a sale of substantially all the assets of the Company or a
merger or consolidation of the Company with or into any other entity (other than
a merger the sole purpose of which is to change the state of incorporation of
the Company) or a dissolution or the adoption of a plan of liquidation of the
Company, this Warrant shall terminate on the effective date of such sale,
merger, consolidation, dissolution or adoption (the "Effective Date") and become
null and void, provided, however, that if this Warrant shall not have otherwise
terminated or expired, the Registered Holder hereof shall have the right until
5:00 p.m Eastern Standard time on the day immediately prior to the Effective
Date to exercise its rights hereunder to the extent not previously exercised.
10. Transfers, etc.
(a) The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. Any Registered Holder may
change its, his or her address as shown on the warrant register by written
notice to the Company requesting such change.
(b) This Warrant shall not be transferable by the Registered Holder
and shall be exercisable only by the Registered Holder. Without the prior
written consent of the Company, the Warrant shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Any attempted transfer,
assignment, pledge, hypothecation or other disposition of the Warrant or of any
rights granted hereunder contrary to the provisions of this Paragraph, or the
levy of any attachment or similar process upon the Warrant or such rights, shall
be null and void.
(c) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder of this Warrant as the
absolute owner hereof for all purposes; provided, however, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
11. Mailing of Notices, etc. All notices and other communications from the
Company to the Registered Holder of this Warrant shall be mailed by first-class
certified or registered mail, postage prepaid, to the address furnished to the
Company in writing by the last Registered
5
<PAGE>
Holder of this Warrant who shall have furnished an address to the Company in
writing. All notices and other communications from the Registered Holder of this
Warrant or in connection herewith to the Company shall be mailed by first-class
certified or registered mail, postage prepaid, to the Company at its offices at
129 Morgan Drive, Norwood, Massachusetts 02062, or such other address as the
Company shall so notify the Registered Holder.
12. No Rights as Stockholder. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
13. Change or Waiver. Any term of this Warrant may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought.
14. Headings. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.
15. Governing Law. This Warrant will be governed by and construed in
accordance with the laws of the State of Delaware.
Apogee Technology, Inc.
By ____________________________________
[Corporate Seal] David Spiegel, President
ATTEST:
____________________________
6
<PAGE>
EXHIBIT I
PURCHASE FORM
To: Apogee Technology, Inc.
129 Morgan Drive
Norwood, MA 02062 Dated:
The undersigned pursuant to the provisions set forth in the attached
Warrant (No. ______), hereby irrevocably elects to purchase ______ shares of the
Common Stock (the "Common Stock") covered by such Warrant and herewith makes
payment of $ ____, representing the full purchase price for such shares at the
price per share provided for in such Warrant.
The undersigned is aware that the Common Stock has not been registered
under the Securities Act of 1933, as amended (the "1933 Act") or any state
securities laws. The undersigned understands that the reliance by the Company on
exemptions under the 1933 Act is predicated in part upon the truth and accuracy
of the statements of the undersigned in this Purchase Form.
The undersigned represents and warrants that (1) it has been furnished
with all information which it deems necessary to evaluate the merits and risks
of the purchase of the Common Stock; (2) it has had the opportunity to ask
questions concerning the Common Stock and the Company and all questions posed
have been answered to its satisfaction; (3) it has been given the opportunity to
obtain any additional information it deems necessary to verify the accuracy of
any information obtained concerning the Common Stock and the Company; and (4) it
has such knowledge and experience in financial and business matters that it is
able to evaluate the merits and risks of purchasing the Common Stock and to make
an informed investment decision relating thereto.
The undersigned hereby represents and warrant that it is purchasing the
Common Stock for its own account for investment and not with a view to the sale
or distribution of all or any part of the Common Stock.
The undersigned understands that because the Common Stock has not been
registered under the 1933 Act, it must continue to bear the economic risk of the
investment for an indefinite time and the Common Stock cannot be sold unless the
Common Stock is subsequently registered under applicable federal and state
securities laws or an exemption from such registration is available.
The undersigned agrees that it will in no event sell or distribute or
otherwise dispose of all or any part of the Common Stock unless (1) there is an
effective registration statement under the 1933 Act and applicable state
securities laws covering any such transaction involving the Common Stock or (2)
the Company receives an opinion of its legal counsel (concurred in by legal
counsel for the Company) stating that such transaction is exempt from
registration or the Company otherwise satisfies itself that such transaction is
exempt from registration.
7
<PAGE>
The undersigned consents to the placing of a legend on its certificate for
the Common Stock stating that the Common Stock has not been registered and
setting forth the restriction on transfer contemplated hereby and to the placing
of a stop transfer order on the books of the Company and with any transfer
agents against the Common Stock until the Common Stock may be legally resold or
distributed without restriction.
The undersigned understands that at the present time Rule 144 of the
Securities and Exchange Commission (the "SEC") may not be relied on for the
resale or distribution of the Securities. The undersigned understands that the
Company has no obligation to the undersigned to register the Common Stock with
the SEC and has not represented that it will register the Common Stock.
The undersigned has considered the Federal and state income tax
implications of the exercise of the Warrant and the purchase and subsequent sale
of the Common Stock.
____________________________
Dated: _____________________
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<PAGE>
EXHIBIT 10.3
APOGEE TECHNOLOGY, INC.
STOCK SUBSCRIPTION AGREEMENT
Apogee Technology, Inc.
129 Morgan Avenue
Norwood, MA 02760
Ladies and Gentlemen:
Subject to the terms and conditions set forth below, the undersigned
hereby offers to purchase from Apogee Technology, Inc., a Delaware corporation
(the "Company"), _____ shares of the Company's Common Stock, par value $.01 per
share (the "Shares"), for the aggregate purchase price of $______ in cash ($3.00
per share), which accompanies this Agreement.
In connection with the execution of this Agreement and to induce the
Company to sell the Securities to the undersigned, the undersigned hereby
represents, warrants and agrees as follows:
1. Accredited Investor. I am an "accredited investor" as such term is
defined in Regulation D under the Securities Act of 1933, as amended (the
"Securities Act"), for the following reason (Please initial one or more):
___ My individual income was in excess of $200,000 in each of the past
two years, or my joint income with my spouse was in excess of
$300,000 in each of those years, and I reasonably expect my income
to reach the same level in the current year.
___ My individual net worth or joint net worth with my spouse exceeds
$1,000,000.
___ The undersigned is a trust, corporation or partnership with total
assets in excess of $5,000,000, not formed for the specific purpose
of acquiring the Securities, whose purchase of the Securities will
be directed by a person whose knowledge and experience in financial
and business matters is such that he or she is capable of evaluating
the merits and risks of the investment in the Securities.
___ The undersigned is an entity in which all of the equity owners are
accredited investors.
___ Other (Please specify): ___________________________________________
2. Experience and Suitability. I am qualified by my knowledge and
experience in financial and business matters to evaluate the merits and risks of
an investment in the Securities and to make an informed decision relating
thereto. I have the financial capability for making the investment and
protecting my interests, and I can afford a complete loss of the investment. The
investment is a suitable one for me.
<PAGE>
3. No Need for Liquidity. I am aware that I will be unable to liquidate my
investment readily in case of an emergency and that the Securities being
purchased may have to be held for an indefinite period of time. My overall
commitment to investments which are not readily marketable is not excessive in
view of my net worth and financial circumstances and the purchase of the
Securities will not cause such commitment to become excessive. In view of such
facts, I acknowledge that I have adequate means of providing for my current
needs, anticipated future needs and possible contingencies and emergencies and
have no need for liquidity in the investment in the Securities. I am able to
bear the economic risk of this investment.
4. Opportunity to Investigate. Prior to the execution of this Agreement,
my advisors and I have had the opportunity to ask questions of, and receive
answers from, representatives of the Company concerning the terms and conditions
of this transaction, and the finances, operations, business and prospects of the
Company. My advisors and I have also had the opportunity to obtain additional
information necessary to verify the accuracy of information furnished about the
Company. Accordingly, I have independently evaluated the risks of purchasing the
Securities, and I am satisfied that I have received information with respect to
all matters which I consider material to my decision to make this investment.
5. Investment Purpose. I am acquiring the Securities for my own account
for the purpose of investment and not with a view to, or for resale in
connection with, the distribution thereof, nor with any present intention of
distributing or selling the Securities. I understand that the Securities have
not been registered under the Securities Act or the securities laws of any
state, and I hereby agree not to make any sale, transfer or other disposition of
any such Securities unless either (i) the Securities first shall have been
registered under the Securities Act and all applicable state securities laws, or
(ii) an exemption from such registration is available, and the Company has
received such documents and agreements from me and the transferee as the Company
requests at such time.
6. Legends. I understand that until the Securities have been registered
under the Securities Act and applicable state securities laws each certificate
representing such securities shall bear a legend substantially similar to the
following:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws, have been acquired for investment, and
may not be sold, pledged, hypothecated or otherwise transferred
unless a registration statement under the Act and applicable state
law is in effect with regard thereto or unless an exemption from
such registration is available.
7. No Regulatory Approval of Merits. I understand that neither the
Securities and Exchange Commission nor the commissioner or department of
securities or attorney general of any state has passed upon the merits or
qualifications of, nor recommended nor approved, the
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<PAGE>
Securities. Any representation to the contrary is a criminal offense.
8. Independent Advice. I understand that I am urged to seek independent
advice from my professional advisors relating to the suitability for me of an
investment in the Company in view of my overall financial needs and with respect
to the legal and tax implications of such an investment.
9. Indemnification. I understand the meaning and legal consequences of
this Agreement and agree to indemnify and hold harmless the Company and each
director and officer thereof from and against any and all loss, damage or
liability due to or arising out of a breach of any representation, warranty or
agreement of the undersigned contained in this Agreement.
10. Authority and Noncontravention. The execution and performance hereof
violates no order, judgment, injunction, agreement or controlling document to
which the undersigned is a party or by which the undersigned is bound. If an
organization, (i) the undersigned is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it has been formed;
(ii) the undersigned has the right and power under its organizational
instruments to execute, deliver and perform its obligations hereunder; and (iii)
this Agreement has been duly authorized by all necessary action on the part of
all officers, directors, partners, stockholders and trustees and will not
violate any agreement to which the undersigned is a party; and (iv) the
individual executing and delivering this Agreement has the requisite right,
power, capacity and authority to do so on behalf of the organization. The
undersigned has not been organized for the purpose of subscribing for the
Securities.
11. Duration. I understand that I may not cancel, terminate or revoke this
Agreement or any agreement made by me hereunder and that this Agreement shall
survive my death or disability and shall be binding upon my heirs, executors,
administrators, successors and assigns.
12. Further Assurances. Within ten (10) days after receipt of a written
request from the Company, I agree to provide such information and to execute and
deliver such documents as reasonably may be necessary to comply with any and all
laws and ordinances to which the Company is subject.
13. Miscellaneous.
(a) Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i) delivered
by hand, (ii) made by telex, telecopy or facsimile transmission, (iii)
sent by overnight courier, or (iv) sent by registered mail, return receipt
requested, postage prepaid.
If to the undersigned:
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<PAGE>
To the address designated in Section 14 hereof.
If to the Company:
To the address set forth at the top of this Agreement.
All notices, requests, consents and other communications hereunder shall
be deemed to have been given either (i) if by hand, at the time of the
delivery thereof to the receiving party at the address of such party set
forth above, (ii) if made by telex, telecopy or facsimile transmission, at
the time that receipt thereof has been acknowledged by electronic
confirmation or otherwise, (iii) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier
service, or (iv) if sent by registered mail, on the 5th business day
following the day such mailing is made.
(b) Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly
set forth in this Agreement shall affect, or be used to interpret, change
or restrict, the express terms and provisions of this Agreement.
(c) Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by
the parties hereto.
(d) Waivers and Consents. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such
terms or provisions. No such waiver or consent shall be deemed to be or
shall constitute a waiver or consent with respect to any other terms or
provisions of this Agreement, whether or not similar. Each such waiver or
consent shall be effective only in the specific instance and for the
purpose for which it was given, and shall not constitute a continuing
waiver or consent.
(e) Assignment. This Agreement may not be transferred or assigned
without the prior written consent of the Company and any such transfer or
assignment shall be made only in accordance with applicable laws and any
such consent.
(f) Benefit. All statements, representations, warranties, covenants
and agreements in this Agreement shall be binding on the parties hereto
and shall inure to the benefit of the respective successors and permitted
assigns of each party hereto. Nothing in this Agreement shall be construed
to create any rights or obligations except among the parties hereto, and
no person or entity shall be regarded as a third-party beneficiary of this
Agreement.
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<PAGE>
(g) Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed
by the law of the State of Delaware, without giving effect to the conflict
of law principles thereof.
(h) Jurisdiction and Service of Process. Any legal action or
proceeding with respect to this Agreement shall be brought in the courts
of the Commonwealth of Massachusetts or of the United States of America
for the Eastern District of Massachusetts. By execution and delivery of
this Agreement, each of the parties hereto accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. Each of the parties hereto irrevocably consents
to the service of process of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by certified mail,
postage prepaid, to the party at its address set forth in Section 13 (a)
hereof.
(i) Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unenforceable in any respect, then
such provision shall be deemed limited to the extent that such court deems
it enforceable, and as so limited shall remain in full force and effect.
In the event that such court shall deem any such provision, or portion
thereof, wholly unenforceable, the remaining provisions of this Agreement
shall nevertheless remain in full force and effect .
(j) Interpretation. The parties hereto acknowledge and agree that:
(i) each party and its or his counsel has reviewed the terms and
provisions of this Agreement; (ii) the rule of construction to the effect
that any ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to the parties
hereto and not in favor of or against any party, regardless of which party
was generally responsible for the preparation of this Agreement. Whenever
used herein, the singular number shall include the plural, the plural
shall include the singular, the use of any gender shall include all
persons.
(k) Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect the meaning or construction of any of
the terms or provisions hereof.
(l) No Waiver of Rights, Powers and Remedies. No failure or delay by
a party hereto in exercising any right, power or remedy under this
Agreement, and no course of dealing between the parties hereto, shall
operate as a waiver of any such right, power or remedy of the party. No
single or partial exercise of any right, power or remedy under this
Agreement by a party hereto, nor any abandonment or discontinuance of
steps to enforce any such right, power or remedy, shall preclude such
party from any other or
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<PAGE>
further exercise thereof or the exercise of any other right, power or
remedy hereunder. The election of any remedy by a party hereto shall not
constitute a waiver of the right of such party to pursue other available
remedies. No notice to or demand on a party not expressly required under
this Agreement shall entitle the party receiving such notice or demand to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the party giving such notice or
demand to any other or further action in any circumstances without such
notice or demand.
(m) Survival of Representations and Warranties. All representations
and warranties made by the parties hereto in this Agreement or in any
other agreement, certificate or instrument provided for or contemplated
hereby, shall survive (i) the execution and delivery hereof, (ii) any
investigations made by or on behalf of the parties and (iii) the closing
of the transaction contemplated hereby, and shall remain in full force and
effect for a period of three years following the date of such closing.
(n) 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.
(o) No Broker or Finder. Each of the parties hereto represents and
warrants to the other that no broker, finder or other financial consultant
has acted on its behalf in connection with this Agreement or the
transactions contemplated hereby in such a way as to create any liability
on the part of the other. Each of the parties hereto agrees to indemnify
and save the other harmless from any claim or demand for commission or
other compensation by any broker, finder, financial consultant or similar
agent claiming to have been employed by or on behalf of such party and to
bear the cost of legal expenses incurred in defending against any such
claim.
(p) Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. I am purchasing the Securities as follows (please check as
appropriate):
_____ individually _____ in trust
_____ joint tenants _____ as a partnership
_____ tenants in common _____ other: ____________________
Name:___________________________________________________
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<PAGE>
Telephone:______________________________________________
Home Address:___________________________________________
City:___________________________________ State:_________
Zip:____________________________________________________
Business:_______________________________________________
Address:________________________________________________
City:___________________________________ State:_________
Zip:____________________________________________________
Business Telephone:_____________________________________
Communications should be sent to (please check one): ____ business or
____ home address
Federal Income Tax I.D. No. (Social Security Number for Individual
Investors):
________________________
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15. Under penalties of perjury, I certify that:
A. The number shown above is my correct Taxpayer Identification
Number;
B. I am not subject to backup withholding either because I have not
been notified by the Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or the
IRS has notified me that I am no longer subject to backup withholding.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as a
sealed instrument as of this ___th day of ______________, 2000.
(For Co-owners, if applicable)
__________________________________ __________________________________
Investor Signature Investor signature
__________________________________ __________________________________
Print Name Print Name
***************************************************************
The foregoing subscription for Securities of Apogee Technology, Inc. is hereby
accepted.
APOGEE TECHNOLOGY, INC.
By:________________________________________
David Spiegel, President
DATE:______________________________________
