As filed with the Securities and Exchange Commission on August
5, 1998
Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________
STOCKER & YALE, INC.
(Exact name of Registrant as specified in its charter)
Massachusetts 04-2114473
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
____________________
32 Hampshire Road
Salem, New Hampshire 03079
(603) 893-8778
(Address, including zip code and telephone number, including
area code, of Registrant's principal executive offices)
____________________
Mark W. Blodgett
Chairman and Chief Executive Officer
Stocker & Yale, Inc.
32 Hampshire Road
Salem, New Hampshire 03079
(603) 893-8778
(Name, address, including zip code, and telephone number,
including area code of agent for service)
____________________
Copies of all communications should be sent to:
Stuart M. Cable, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
(617) 570-1000
____________________
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration
Statement.
If the only securities being registered on this form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. ( )
If any of the securities being registered on this form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest
reinvestment plans, check the following box. (x)
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. ( )
"
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. ( )
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to Be Registered:
Common Stock, $0.001 par value
Amount to Be Registered:
350,000 Shares
Proposed Maximum Offering Price Per Share(1):
$3.15625
Proposed Maximum Aggregate Offering Price(1):
$1,104,687.50
Amount of Registration Fee:
$326
(1) Based upon the average of the high and low sale prices
reported on the Nasdaq SmallCap Market System on July 29,
1998 and estimated solely for purposes of calculating the
registration fee in accordance with Rule 457(c) under the
Securities Act of 1933.
_________________________
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 5, 1998
Information
contained
herein
is
subject
to
completion or
amendment. A
Registration
Statement
relating to
these
securities has
been filed
with the
Securities and
Exchange
Commission but
has not
yet been
declared
effective.
These
securities may
not be sold
nor may
offers
to buy be
accepted prior
to the time
the
Registration
Statement
becomes
effective.
This
prospectus
shall not
constitute an
offer
to sell
or the
solicitation
of an offer
to buy
nor shall
there
by any
sale of
these
securities in
any State
in which
such offer,
solicitation
or sale
would be
unlawful prior
to registration
or qualification
under the
securities
laws of
any such
State.
PROSPECTUS
350,000
STOCKER & YALE, INC.
Shares of Common Stock
This Prospectus relates to the possible offer and sale from time to
time of up to 350,000 shares (the "Shares") of common stock, par value
$0.001 per share (the "Common Stock"), of Stocker & Yale, Inc. (the
"Company") by certain stockholders of the Company (the "Selling
Stockholders"). The Selling Stockholders may sell the Shares from time
to time in transactions on the Nasdaq SmallCap Market System, in
negotiated transactions or by a combination of these methods, at fixed
prices that may be changed, at market prices at the time of sale, at
prices related to market prices or at negotiated prices. The Selling
Stockholders may effect these transactions by selling the Shares to or
through broker-dealers, who may receive compensation in the form of
discounts or commissions from the Selling Stockholders or from the
purchasers of the Shares for whom the broker-dealers may act as an
agent or to whom they may sell as a principal, or both. See "Selling
Stockholders" and "Plan of Distribution." Each of the Selling
Stockholders reserves the right to accept or reject, in whole or in
part, any proposed purchase of Shares to be made directly or through
agents. The Common Stock of the Company is traded under the symbol
"STKR" on the Nasdaq SmallCap Market. On July 29, 1998, the reported
closing price for the Common Stock on the Nasdaq SmallCap Market was
$3.0625 per share.
The Company will not receive any of the proceeds from the sale of
the Shares. The Company has agreed to bear all of the expenses in
connection with the registration and sale of the Shares (other than
underwriting discounts and selling commissions).
See "Risk Factors" beginning on page 3 for a discussion of certain
factors which should be considered by prospective investors in
purchasing the shares of Common Stock offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Selling Stockholders and any agents or broker-dealers that
participate with the Selling Stockholders in the distribution of Shares
may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and any commission
received by them and any profit on the resale of the Shares may be
deemed to be underwriting commissions or discounts under the Securities
Act. See "Registration Rights" for a description of certain
indemnification arrangements between the Company and the Selling
Stockholders.
The date of this Prospectus is August ___, 1998
<PAGE>
AVAILABLE INFORMATION
No person has been authorized to give any information or to
make any representation not contained or incorporated by reference
in this Prospectus or, if applicable, any accompanying Prospectus
Supplement and, if given or made, such information or
representation must not be relied upon as having been authorized by
the Company or any underwriter, dealer or agent. Neither the
delivery of this Prospectus or any accompanying Prospectus
Supplement nor any sale made hereunder of thereunder shall, under
any circumstances, create an implication that the information
contained herein or in any accompanying Prospectus Supplement is
correct as of any date subsequent to the date hereof or thereof or
that there has been no change in the affairs of the Company since
the date hereof or hereof. Neither this Prospectus nor any
accompanying Prospectus Supplement constitutes an offer to sell or
a solicitation of an offer to buy Shares in any jurisdiction in
which such offer or solicitation is not authorized or in which the
person making such offer or solicitation is not qualified to do so
or to any person to whom it is unlawful to make such offer or
solicitation.
The Company has filed with the Securities and Exchange
Commission (the "Commission"), Washington, D.C. 20549, a
Registration Statement on Form S-3 (No. 333- ) (which
term shall include all amendments, exhibits and schedules thereto)
on Form S-3 under the Securities Act of 1933 (the "Securities Act")
with respect to the shares of Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, to
which Registration Statement reference is hereby made. For further
information with respect to the Company and the securities covered
hereby, reference is made to the Registration Statement and to the
exhibits thereto filed as a part thereof. The Registration
Statement and the exhibits thereto may be inspected and copied at
prescribed rates at the public reference facilities maintained by
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and copies may be
obtained at the prescribed rates from the Public Reference section
of the Commission at its principal office in Washington, D.C. The
Commission also maintains a Web site at http://www.sec.gov
containing reports, proxy and information statements and other
information regarding registrants, including the Company, that are
filed electronically with the Commission. Statements made in this
Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to
each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for
a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such
reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and, in accordance therewith, files proxy statements, reports and
other information with the Commission. Such proxy statements,
reports and other information filed by the Company may be inspected
and copied at prescribed rates at the public reference facilities
maintained by the Commission described above. The Common Stock of
the Company is traded on the Nasdaq SmallCap Market System.
Reports and other information concerning the Company may be
inspected at the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with
the Commission are incorporated in, and made a part of, this
Prospectus by reference as of their respective dates: (1) the
Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997; (2) the Company's Quarterly Report on Form 10-
QSB for the quarter ended March 31, 1998; (3) the Company's Current
Report on Form 8-K, filed on May 27, 1998, as amended by the Form
8-K/A filed on July 27, 1998; and (4) the description of the
Company's common stock, $.001 par value, contained in the Company's
registration statement on Form 10-SB/A dated December 29, 1995,
filed with the Securities and Exchange Commission pursuant to
Section 12 of the Exchange Act and any amendments or reports filed
for the purpose of updating such description.
<PAGE>
Each document filed subsequent to the date of this Prospectus
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and shall be a part
hereof from the date of filing of such document. In addition, all
documents filed with the Commission by the Company pursuant to the
Exchange Act after the date of the initial Registration Statement
and prior to the effectiveness of the Registration Statement shall
be deemed to be incorporated by reference into this Prospectus.
Any statement contained herein or in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein (or in an applicable
Prospectus Supplement) or in any subsequently filed document that
is incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not
be deemed to constitute a part of this Prospectus or any Prospectus
Supplement, except as so modified or superseded.
The Company will furnish without charge to each person,
including any beneficial owner, to whom this Prospectus is
delivered, upon request, a copy of any or all of the documents that
have been incorporated by reference into the Registration Statement
of which this Prospectus is a part, other than exhibits to such
documents. Requests should be addressed to: Stocker & Yale, Inc.,
32 Hampshire Road, Salem, New Hampshire 03079, Attention: Ms.
Susan Sundell (telephone number (603) 893-8778).
<PAGE>
This Prospectus, including the information incorporated herein
by reference, contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. These statements include, among other things,
statements regarding the intent, belief or expectation of Stocker
& Yale, Inc. ("Stocker & Yale" or the "Company") and its directors
and officers with respect to: (i) the Company's strategies for
future growth, both short-term and long-term, (ii) potential
acquisitions or dispositions of other businesses, assets or product
lines, or the integration of any such acquisition into the
Company's operations, (iii) the industrial lighting industry, the
machine tool components and material handling industry, or any
other industries or markets in which the Company's products are
sold, (iv) general economic conditions, (v) trends affecting the
Company's financial condition and results of operations.
Stockholders are cautioned that, while forward-looking statements
reflect the Company's good faith beliefs, they are not guarantees
of future performance and involve known and unknown risks and
uncertainties, and actual results may differ materially from those
in the forward-looking statements as a result of various factors.
The following discussion of risk factors, in addition to other
information contained in this Prospectus and in the documents set
forth under "Available Information" and "Incorporation of Documents
by Reference," identify certain factors that could cause such
differences and that should be considered carefully in evaluating
an investment in the shares of Common Stock offered by this
Prospectus.
RISK FACTORS
Competition
The Company operates in a highly competitive marketplace. The
Company believes that participants in its respective markets
compete primarily on the basis of product characteristics (such as
design, style and functional performance), product quality,
service, brand name recognition and price. Some of the Company's
competitors have greater financial and other resources than the
Company, and the Company's cash flow from operations could be
adversely affected by competitors' new product innovations and
pricing changes made by the Company in response to competition from
existing or new competitors. The level of competition in the
markets in which the Company operates can have a substantial
detrimental effect on the prices that the Company can charge for
its products and, consequently, can adversely impact the Company's
revenues and profitability. The Company's future results will
depend in part on the Company's ability to enhance its existing
products and introduce new products. New product introductions can
be unsuccessful, and successful product introductions can be
displaced by product innovations subsequently introduced or
imitated by competitors. As a result of these and other factors,
there can be no assurance that the Company will successfully
maintain its market position.
Dependence on Technology
Certain of the Company's product lines, especially those sold
under the "MFE" brand name and the product lines that the Company
recently acquired in the acquisition of Lasiris, Inc. ("Lasiris"),
compete in a market characterized by ongoing technological
development. The success of these products depends, in part, on
the Company's ability to adapt its products to technological
changes in the industry. In addition, the Company has limited
resources to allocate among its research and development efforts,
and the amount, if any, allocated to any one product line may not
be sufficient to enable the Company to preserve any competitive
advantages which the Company's products may have or to compete with
technological developments by their competitors. There can be no
assurance that the technology used in the Company's products has
not been or will not be superseded by technological innovations.
Uncertainties of Acquisition Strategy
The Company intends, from time to time, to evaluate and
consider potential acquisitions of business or assets to complement
or expand its product lines or business. No assurance can be given
that suitable acquisition candidates can be acquired on acceptable
terms or that future acquisitions, if completed, will be
successful. Future acquisitions by the Company could result in the
incurrence of debt, the potentially dilutive issuance of equity
securities and the incurrence of contingent liabilities and
amortization expenses related to goodwill and other intangible
assets, which could materially adversely affect the Company's
business, operating results and financial condition. The success
of any completed acquisition will depend on the Company's ability
to integrate effectively the acquired business or assets into the
Company. The process of integrating any acquired business or
assets may involve numerous risks, including difficulties in the
assimilation of operations and products, the diversion of
<PAGE>
management's attention from other business concerns, risks of
entering markets in which the Company has limited or no direct
prior experience and the potential loss of key employees of the
acquired businesses. The Company has no present understandings,
commitments or agreements with respect to any acquisition.
History of Losses; Uncertainty of Future Profitability.
The Company has experienced operating losses (before
extraordinary items) during recent fiscal years. The Company may
continue to experience operating losses over the foreseeable
future. The amount of net losses the Company may incur and the
time required by the Company and its ability, if any, to reach or
sustain profitability are uncertain.
Control by Certain Stockholders
The executive officers and directors of the Company
collectively own or control approximately 25.5% of the Company's
Common Stock after giving effect to the possible exchange of the
444,146 shares of Lasiris Holdings, Inc. issued in the recent
acquisition for shares of Common Stock. (See "-Potential Impact of
Shares Eligible for Future Sale"). Accordingly, these persons
will have the ability to control the Company's Board of Directors
and, therefore, the business, policies, executive compensation, and
affairs of the Company. Furthermore, such control could preclude
any unsolicited acquisition of the Company and, consequently,
adversely affect the market price of the Common Stock.
Potential Fluctuations in Quarterly Results
Given the long sales cycle in some of the Company's market
sectors and customers' political and budgetary conditions, revenue
can vary substantially on a monthly and quarterly basis.
Accordingly, the timing and delivery requirements of customers'
orders, particularly in the case of U.S. Government contracts, may
have a material effect on the Company's operations and financial
results during any reporting period.
Risks Associated with Goodwill
Goodwill associated with the acquisition of the Company on June
14, 1989 is being amortized over forty years in the amount of
approximately $269,000 per year. At December 31, 1997, the balance
of goodwill remaining to be amortized was $8,453,0000. This
amortization of goodwill is not deductible for tax purposes,
resulting in income tax provisions that are higher than the
statutory rates. It is likely that for the foreseeable future the
Company's operating results will be adversely impacted by such
goodwill amortization and comparatively high effective tax rates.
If an impairment in the carrying value of the Company's goodwill
should occur, the Company would reduce the carrying amount to its
fair market value and record the amount of that reduction as a
charge to the Company's income. Due to the lengthy remaining
amortization period, there can be no assurance that such a
reduction in realizable value will not occur.
<PAGE>
Risks Associated with International Operations
In December 1997, the Company established Radiant Asiatec Pte
Ltd, an 80%-owned subsidiary for the purpose of distributing and
selling certain of its products in Southeast Asia. With the recent
acquisition of Lasiris, the Company now also has a Canadian
subsidiary which sells products in North America, Europe and Japan.
Thus, the Company is subject to risks associated with operating in
foreign countries, including fluctuations in foreign currency
exchange rates, imposition of limitations on conversion of foreign
currencies into dollars or remittance of dividends and other
payments by foreign subsidiaries, imposition or increase of
withholding and other taxes on remittances and other payments on
foreign subsidiaries, hyperinflation and imposition or increase of
investment and other restrictions by foreign governments. Although
such risks have not historically had a material adverse effect on
the Company, no assurances can be given that such risks will not
have a material adverse effect on the business, results of
operations and financial condition of the Company in the future.
Dependence on Key Personnel
The Company is highly dependent on its senior and middle
management. The loss of key management personnel or an inability
to attract and retain sufficient numbers of qualified management
personnel could materially and adversely affect the Company's
business, results of operations and financial condition.
Risks Associated with Environmental Matters
The Company's operations are subject to federal, state, and
local laws and regulations relating to the storage, handling,
generation, treatment, emission, release, discharge and disposal of
certain substances and wastes. While the Company believes it is in
material compliance with those laws and regulations, there can be
no assurance that the Company will not incur significant costs to
remediate violations thereof or to comply with changes in existing
laws and regulations (or the enforcement thereof). Such costs
could have a material adverse effect on the Company's business,
results of operations, and financial condition.
The Company's Salem, New Hampshire headquarters is currently
the subject of environmental testing and monitoring relating to
soil and groundwater contamination which occurred under prior
ownership. The Company believes that the costs of any required
remediation will be covered by an environmental indemnity obtained
from the seller, John Hancock Mutual Life Insurance Company.
Compliance with environmental laws and regulations in the future
may require additional capital expenditures and the Company expects
that in the foreseeable future such capital expenditures will be
financed by cash flow from operations.
Unpredictability of Patent Protection and Other Intellectual
Property
While the Company has been issued patents with respect to
certain of its products, there can be no assurance that others will
not independently develop similar or superior products or
technologies, duplicate any of the Company's designs, processes or
other intellectual property or design around any processes or
designs on which the Company has or may obtain patents. In
addition, it is possible that third parties may have or acquire
licenses for other technology or designs that the Company may use
or desire to use. As a result, the Company may need to acquire
licenses to use such technology or designs of third parties. There
can be no assurance that any such license would be made available
to the Company on acceptable terms, if at all. The Company also
relies on trade secrets and proprietary information that it seeks
to protect. There can be no assurance that the Company will be
successful in protecting such trade secrets or proprietary
information against unauthorized use by others or disclosure by
persons who have access to them, such as employees of the Company.
<PAGE>
Litigation
The Company is a named defendant in a civil action filed on or
about February 17, 1998, in the Superior Court of Massachusetts,
Essex County. The plaintiff, Dolan-Jenner Industries, Inc.,
alleges that the Company and one of its employees (a former
employee of the plaintiff) have breached or interfered with a non-
competition and non-disclosure agreement and have misappropriated
plaintiff's proprietary information. The plaintiff has sought both
injunctive relief and monetary damages. The Court has denied
plaintiff's request for preliminary injunctive relief finding,
among other things, that the plaintiff has not established a
likelihood of success on the merits of its claims. The Company
believes that it has meritorious defenses to all remaining claims
made by the plaintiff.
Possible Volatility of Stock Price
The market price of the Company's Common Stock may be subject
to significant fluctuation in response to variations in quarterly
operating results and other factors, such as announcements of
product innovations by the Company or its competitors or other
events. Moreover, the stock market has in recent years experienced
significant price and volume fluctuations. These fluctuations
often have been unrelated to the operating performance of the
specific companies whose stocks are traded. Broad market
fluctuations, as well as economic conditions generally and in the
industries in which the Company competes specifically, may
adversely affect the market price of the Company's Common Stock.
Potential Impact of Shares Eligible for Future Sale
Sales of substantial amounts of Common Stock in the public
market could have an adverse effect on the market price of the
Common Stock. In addition to the Shares offered hereby, previously
issued and outstanding shares of Common Stock are currently
eligible for sale subject to the provisions of applicable
securities laws. The Company issued options to purchase shares of
Common Stock in connection with the merger (the "Merger") of the
Company with Brower Exploration, Inc., a Wyoming corporation
("Brower"), which options are currently eligible for exercise. The
Company has also granted options to purchase 123,040 shares of
Common Stock pursuant to its Amended and Restated 1994 Stock Option
Plan and options to purchase 42,000 shares of Common Stock outside
of any plan, all of which are eligible for resale subject to the
provisions of Rule 701 under the Securities Act. In addition, the
Company has filed a registration statement covering the shares of
Common Stock reserved for issuance under the Company's 1996 Stock
Option and Incentive Plan and, accordingly, the 141,040 shares of
Common Stock underlying outstanding options issued under the 1996
Stock Option and Incentive Plan are eligible for sale in the public
market, subject, with respect to affiliates of the Company, to
compliance with applicable Rule 144 limitations. Further, the
Company has issued certain subordinated notes convertible, at the
option of the holder, into 183,051 shares of Common Stock (subject
to adjustment), which, upon conversion, would be eligible for sale
subject to the provisions of Rule 144. Finally, in connection with
the recent acquisition of Lasiris, Lasiris Holdings, Inc., a newly-
formed Canadian subsidiary of the Company, issued 444,146 shares of
its capital stock which are exchangeable for shares of Common Stock
on a one-for-one basis. Upon such an exchange, the shares of
Common Stock so issued would be eligible for sale subject to the
provisions of Rule 144 or other applicable securities laws.
Year 2000 Issues
In the conduct of its own operations, the Company relies upon
commercial computer software primarily provided by independent
software vendors. After an analysis of the Company's exposure of
the impact of "year 2000 issues" (i.e., issues that may arose
resulting from computer programs that use only the last two, rather
than all four, digits of the year), the Company believes that such
commercial software is substantially year 2000 compliant and that
such independent vendors will be able to complete such year 2000
compliance in a timely manner and without any material impact on
the Company business, operations or financial condition. In
addition, the Company has completed an upgrade to the Company's
integrated manufacturing software which has brought such software
into year 2000 compliance. However, the Company is subject to year
2000 issues that may affect the economy generally or any customers,
suppliers or others with whom the Company does business and over
whose year 2000 compliance the Company has no control.
<PAGE>
THE COMPANY
Stocker & Yale is a diversified manufacturing company engaged
predominantly in the production of industrial fluorescent and fiber
optic lighting products, thermal printers and recorders, and
machine tool components. The Company operates in two company-owned
facilities in Salem, New Hampshire and Fraser, Michigan.
The Company's Salem Division, located in Salem, New Hampshire,
produces a broad array of inspection and measurement instruments
and accessories, including industrial lighting products, chart
recorders and thermal printers, and military watches and compasses.
The Company's products are used by a variety of participants in
the semiconductor, computer assembly, laboratory, and robotics
fields. The Company's lighting products are sold worldwide through
a network of 125 microscope dealers and machine vision integrators.
Under the "MFE" brand name, the Company also manufactures a range
of thermal printer and recorder products for the test and
measurement market. Further, Stocker & Yale has been a
long-standing manufacturer and distributor of compasses and
supplier of military watches to the U.S. Government, foreign
governments, and the U.S. and foreign civilian market.
For over 50 years, the Company's Stilson/Die-Draulics Division
("SDD Division"), located in Fraser, Michigan, has manufactured a
wide range of machine tool components and material handling
accessories, which are used extensively in the construction and
maintenance of assembly and conveying machinery. The SDD
Division's customers are primarily in the automotive, appliance and
packaging industries. SDD Division products are sold to over 5,000
customers both directly and through 45 worldwide distributors.
During its 50 year history, the Company has built a loyal
customer base and has developed brand names that are well-
recognized within its customers' industries. In recent years, the
Company's product and market diversity have enabled the Company to
generate cash flow sufficient, in part, to substantially reduce
debt and fund increased product research and development. The
Company's long-term goal is to position the Salem Division as a
single source for customers' diverse industrial lighting
requirements, offering an expanded line of lighting products which
will include fluorescent, fiber optic and halogen lighting. The
Company's market research suggests that by offering a more
extensive line of lighting products, the Company may benefit from
customer preference for a single source to fulfill all their
lighting requirements.
Over the last several years, management has focused on
strengthening the Company's balance sheet and has achieved a
significant reduction in the Company's long-term debt. More
recently, management has focused on operational matters. In
September 1995, the Company moved its headquarters to a larger,
more efficient facility in New Hampshire which will better
accommodate any future expansion. During 1997, the Company
introduced several new fluorescent lighting products and over 75
new fiber optic products. In July 1997, the Company commissioned
its state-of-the-art fiber optic drawing tower which enables the
Company to vertically integrate its fiber optic product
manufacturing operations. The Company has built up its engineering
team in order to accelerate product development. The Company has
reorganized its sales department to increase the frequency of
customer contact and to accommodate the Company's growing emphasis
on its lighting business.
As of May 13, 1998, the Company acquired Lasiris, Inc., a
Canadian manufacturer of industrial lasers for the machine vision
and industrial inspection industries. Lasiris was founded in 1985
to offer technical and scientific expertise in lasers, optics, and
holography. Through a number of research and development
contracts, Lasiris began in 1990 to design a wide range of laser
pattern projectors for industrial inspection and machine vision.
Lasiris has consistently invested a significant percentage of its
revenue in research and development and holds a variety of patents
and trademarks. Lasiris operates out of an approximately 20,000
sq. ft. leased facility in Saint-Laurent, outside Montreal, Quebec,
and employs approximately 50 people. The Company intends to
operate Lasiris as a wholly-owned Canadian subsidiary. The
Company's management believes that Lasiris' business fits with the
<PAGE>
Company's corporate strategy to build an industrial lighting
company which offers customers one-stop shopping for industrial
lighting solutions for the industrial inspection market, including
both machine vision and microscopy industries.
RECENT EVENTS
On July 14, 1998, the Company announced that it had signed a
nonbinding letter of intent to sell its Stilson Division to De-Sta-
Co Industries. Subject to the execution of a definitive purchase
and sale agreement and a due diligence review of the Stilson
Division, De-Sta-Co would acquire the assets of Stilson for $3
million cash, assumption of approximately $1 million of operating
liabilities and semi-annual payments of 2% of future Stilson
product line revenues for three years. Although the parties
anticipate consummating the sale on or before September 30, 1998,
there can be no assurance as to when such a transaction would
close, if at all, or as to the definitive terms of such a
transaction.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Shares by the Selling Stockholders.
REGISTRATION RIGHTS
The registration of the Shares pursuant to the Registration
Statement of which this Prospectus is a part will discharge a
portion of the Company's obligations under the terms of a Stock
Purchase Agreement dated May 13, 1998 (the "Stock Purchase
Agreement").
Pursuant to the Stock Purchase Agreement, the Company has
agreed to pay all expenses of registering the Shares (other than
brokerage and underwriting commissions, taxes of any kind and any
legal, accounting and other expenses incurred by a holder
thereunder). The Company also has agreed under the Stock Purchase
Agreement to indemnify each Selling Stockholder and its officers,
directors and other affiliated persons and any person who controls
any Selling Stockholder against losses, claims, damages and
expenses arising under the securities laws in connection with the
Registration Statement or this Prospectus, subject to certain
limitations. In addition, each Selling Stockholder under the Stock
Purchase Agreement severally agreed to indemnify the Company and
its respective directors, officers and any person who controls the
Company against all losses, claims, damages and expenses arising
under the securities laws insofar as such loss, claim, damage or
expense relates to information furnished to the Company by such
Selling Stockholder for use in the Registration Statement or
Prospectus or an amendment or supplement thereto or the failure by
such Selling Stockholder (through no fault of the Company) to
deliver or cause to be delivered this Prospectus or any amendment
or supplement thereto to any purchaser of Shares covered by the
Registration Statement from such Selling Stockholder.
<PAGE>
SELLING STOCKHOLDERS
The Shares are to be offered by and for the respective accounts
of the Selling Stockholders. The following table sets forth the
name and number of shares of Common Stock owned by each Selling
Stockholder to the best knowledge of the Company as of June 30,
1998. The Shares offered by this Prospectus may be offered from
time to time by the Selling Stockholders. Because the Selling
Stockholders may sell all, some or none of the Shares, the Company
has assumed that the Selling Stockholders will sell all of the
Shares for the purposes of determining the number and percentage of
shares of Common Stock that each Selling Stockholder will own upon
completion of the offering to which this Prospectus relates. The
amounts set forth below are based upon information provided by the
Selling Stockholders and are accurate to the best knowledge of the
Company.
Shares of
Common Stock Shares of Shares of
Beneficially Common Stock Common Stock Owned
Owned Offered After the Offering (2)
Selling Stockholder as of 6/30/98 (1) Hereby Number(1) Percent (3)
Mark W. Blodgett (4) 787,324.1 26,500.0 760,824.1 22.2%
Clifford L. Abbey (5) 12,000.0 2,000.0 10,000.0 *
HMK Enterprises, Inc. 10,000.0 10,000.0 ----- *
John M. Nelson (5) 24,000.0 10,000.0 14,000.0 *
Susan Hojer Sundell (6) 20,830.0 500.0 20,330.0 *
Kenneth A. Ribeiro 2,060.0 500.0 1,560.0 *
George A. Fryburg 500.0 500.0 ----- *
Joseph E. Sheehan, III 50,000.0 50,000.0 ----- *
Trust
Zita M. Sheehan - Trust 50,000.0 50,000.0 ----- *
Marcuard Cook & Cie, 150,000.0 150,000.0 ----- *
S.A.
Trust Under the Will 32,500.0 12,500.0 20,000.0 *
of Kenneth R. Berol
FBO John A. Berol
Trust Under the Will 32,500.0 12,500.0 20,000.0 *
of Kenneth R. Berol
FBO David N. Berol
Berol Family Trust 32,500.0 12,500.0 20,000.0 *
Margaret Beattie
Berol Family Trust 30,500.0 12,500.0 18,000.0 *
John Berol
Total 1,234,714.1 350,000.0 884,714.1 25.5%
_________________
* Less than 1%.
(1) Includes options to purchase shares of Common Stock that are
exercisable within 60 days of June 30, 1998.
(2) Assumes that all Shares hereby offered by the Selling
Stockholders are sold.
(3) Based on 2,920,194.6 outstanding shares of Common Stock of the
Company as of June 30, 1998. Options to purchase Common Stock
that are exercisable within 60 days of June 30, 1998 are deemed
outstanding for computing the ownership of each Selling
Stockholder as a percentage of the total number of shares
outstanding, but are not deemed outstanding for computing the
percentage of any other person or group. Does not include the
444,146 shares of Common Stock that may be issued upon exchange
of the shares of Lasiris Holdings, Inc. issued in the recent
acquisition. See "Risk Factors-Potential Impact of Shares
Eligible for Future Sale."
(4) Includes 691,630.8 shares owned directly and 19,600 owned
indirectly through the Helen W. Blodgett Trust, of which Mark
W. Blodgett is a trustee. Total also includes 62,534 shares
subject to options exercisable within 60 days, and 13,559.3
shares which may be acquired by the Helen W. Blodgett Trust
within 60 days pursuant to 7.25% Convertible Subordinated Notes
due May 1, 2001. Total excludes 145,507.2 shares owned by the
Blodgett 1989 Family Trust, of which Mr. Blodgett is the
settlor. Mr. Blodgett disclaims beneficial ownership of the
shares held by the Blodgett 1989 Family Trust and the Helen W.
Blodgett Trust.
(5) Includes 9,000 shares subject to options exercisable within 60
days of June 30, 1998.
(6) Includes 19,000 shares subject to options exercisable within 60
days of June 30, 1998.
<PAGE>
The relationships of certain of the Selling Stockholders to the
Company are as follows:
Name Relationship
Mark W. Blodgett Chairman of the Board of Directors and
Chief Executive Officer
Clifford L. Abbey Director
HMK Enterprises, Inc. Steven E. Karol, a Director of the
Company, is President andChief Executive
Officer of HMK Enterprises, Inc.
John M. Nelson Director
Susan Hojer Sundell Senior Vice President-Finance and Treasurer
Kenneth A. Ribeiro Vice President-Engineering, Salem Division
George A. Fryburg Senior Vice President and General Manager,
Salem Division
PLAN OF DISTRIBUTION
Shares of Common Stock covered hereby may be offered and sold
from time to time by the Selling Stockholders. The Selling
Stockholders will act independently of the Company in making
decisions with respect to the timing, manner and size of each sale.
Such sales may be made in transactions on the Nasdaq SmallCap
Market or otherwise at prices related to the then current market
price or in negotiated transactions. The Selling Stockholders may
also make private sales either directly or through a broker or
brokers. The Shares may be sold by one or more of the following
methods: (a) purchases by the broker-dealer as principal and
resale by such broker or dealer for its account pursuant to this
Prospectus; (b) ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and (c) block trades in which
the broker-dealer so engaged will attempt to sell the Shares as
agent, but may position and resell a portion of the block as
principal to facilitate the transaction. In effecting sales,
broker-dealers engaged by the Selling Stockholders may arrange for
other broker-dealers to participate. Broker-dealers will receive
commissions or discounts from the Selling Stockholders in amounts
to be negotiated immediately prior to the sale.
In offering the shares of Common Stock covered hereby, the
Selling Stockholders and any broker-dealers who execute sales for
the Selling Stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales,
and any profits realized by the Selling Stockholders and the
compensation of such broker-dealer may be deemed to be underwriting
discounts and commissions under the Securities Act.
In order to comply with the securities laws of certain states,
if applicable, the Shares may be sold only through registered or
licensed brokers or dealers.
Until the distribution of the Shares is completed, rules of
the Commission may limit the ability of any underwriters and
selling group members to bid for and purchase the Common Stock. As
an exception to these rules, underwriters are permitted to engage
in certain transactions that stabilize the price of the Common
Stock. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Common
Stock.
If any underwriters create a short position in the Shares in
connection with the offering, i.e., if they sell more Shares than
are set forth on the cover page of this Prospectus, the
underwriters may reduce that short position by purchasing shares of
Common Stock in the open market.
The lead underwriters may also impose a penalty bid on certain
other underwriters participating in the offering and selling group
members. This means that if the lead underwriters purchase shares
of Common Stock in the open market to reduce the underwriters short
position or to stabilize the price of the Common Stock, they may
reclaim the amount of any selling concession from the underwriters
and selling group members who sold those Shares as part of the
offering.
<PAGE>
In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price
of the security to be higher than it might be in the absence of
such purchases. The imposition of a penalty bid might also have an
effect on the price of a security to the extent that it were to
discourage resale of the security before the distribution is
completed.
The Company does not make any representation or prediction as
to the direction or magnitude of any effect that the transactions
described above might have on the price of the Common Stock. In
addition, the Company does not make any representation that
underwriters will engage in such transactions or that such
transactions, once commenced, will not be discontinued without
notice.
The Company has agreed to indemnify each Selling Stockholder
against any liabilities, under the Securities Act or otherwise,
arising out of or based upon any untrue or alleged untrue statement
of a material fact in the Registration Statement or this Prospectus
or by any omission of a material fact required to be stated therein
except to the extent that such liabilities arise out of or are
based upon any untrue or alleged untrue statement or omission in
any information furnished in writing to the Company by the Selling
Stockholder expressly for use in the Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. All expenses
incident to the offering and sale of the Shares (other than
brokerage and underwriting commissions and taxes of any kind and
any legal, accounting and other expenses incurred by the Selling
Stockholders) shall be paid by the Company.
EXPERTS
The consolidated financial statements incorporated in this
Prospectus by reference to the Annual Report on Form 10-KSB for the
year ended December 31, 1997, to the extent of and for the periods
indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants; as indicated in their reports
with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
LEGAL MATTERS
The validity of the issuance of the Shares offered hereby will
be passed upon for the Company by its counsel, Goodwin, Procter &
Hoar LLP, Boston, Massachusetts.
<PAGE>
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations in connection with
this offering other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as
having been authorized by the Company or any other person. This
Prospectus does not constitute an offer to sell or a solicitation of an offer
to buy any securities other than the shares of Common Stock to which
it relates or an offer to, or a solicitation of, any person in
any jurisdiction where such an offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the
Company or that information contained herein is correct as
of any time subsequent to the date hereof.
TABLE OF CONTENTS
Page
Available Information 2
Incorporation of Certain
Documents by Reference 2
Risk Factors 4
The Company 8
Recent Events 9
Use of Proceeds 9
Registration Rights 9
Selling Stockholders 10
Plan of Distribution 11
Legal Matters 12
Experts 12
350,000 Shares
STOCKER & YALE, INC.
COMMON STOCK
PROSPECTUS
August ___, 1998
<PAGE>
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the approximate amount of the
fees and expenses (other than underwriting commissions and
discounts) anticipated to be paid by the Company in connection with
the issuance and distribution of the Securities.
SEC Registration Fee $ 326
Legal Fees and Expenses 19,000
Accounting Fees and Expenses 5,000
Placement Fees & Expenses 77,000
Transfer and Agency Fees 250
Miscellaneous 750
Total $ 102,326
Item 15. Indemnification of Directors and Officers.
The Company is a Massachusetts corporation. Reference is made
to Chapter 156B, Section 13 of the Massachusetts Business
Corporation Law (the "MBCL"), which enables a corporation in its
original articles of organization or an amendment thereto to
eliminate or limit the personal liability of a director for
monetary damages for violations of the director's fiduciary duty,
except (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Sections 61 and 62 of the MBCL
(providing for liability of directors for authorizing illegal
distributions and for making loans to directors, officers and
certain stockholders) or (iv) for any transaction from which a
director derived an improper personal benefit. The Company has
adopted such provisions in its Articles of Organization.
Reference also is made to Chapter 156B, Section 67 of the MBCL,
which provides that a corporation may indemnify directors,
officers, employees and other agents and persons who serve at its
request as directors, officers, employees or other agents of
another organization or who serve at its request in any capacity
with respect to any employee benefit plan, to the extent specified
or authorized by the articles of organization, a by-law adopted by
the stockholders or a vote adopted by the holders of a majority of
the shares of stock entitled to vote on the election of directors.
Such indemnification may include payment by the corporation of
expenses incurred in defending a civil or criminal action or
proceeding in advance of the final disposition of such action or
proceeding, upon receipt of an undertaking by the person
indemnified to repay such payment if he shall be adjudicated to be
not entitled to indemnification under Section 67, which undertaking
may be accepted without reference to the financial ability of such
person to make repayment. Any such indemnification may be provided
although the person to be indemnified is no longer an officer,
director, employee or agent of the corporation or of such other
organization or no longer serves with respect to any such employee
benefit plan. No indemnification shall be provided, however, for
any person with respect to any matter as to which he shall have
been adjudicated in any proceeding not to have acted in good faith
in the reasonable belief that his action was in the best interest
of the corporation or to the extent that such matter relates to
service with respect to any employee benefit plan, in the best
interests of the participants or beneficiaries of such employee
benefit plan.
The Company and its directors and officers do not currently
carry liability insurance.
<PAGE>
Item 16. Exhibits.
Exhibit
No. Description
* 4.1 Form of Stock Purchase Agreements dated as of May 13,
1998, between the Company and the Selling Stockholders
* 5.1 Opinion of Goodwin, Procter & Hoar LLP
* 23.1 Consent of Arthur Andersen LLP
23.2 Consent of Goodwin, Procter & Hoar LLP (included in
Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
_______________
* Filed herewith.
Item 17. Undertakings.
A. The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent post-
effective amendment thereof) which, individually
or in the aggregate, represent a fundamental
change in the information set forth in the
Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
registration statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the information required to be included in
a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the
Commission by the Registrant under the Exchange Act.
2. That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time to be
the initial bona fide offering thereof.
3. To remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
<PAGE>
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant
to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers
or persons controlling the Registrant pursuant to the
foregoing provisions, the Registrant has been informed that
in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of
Salem, State of New Hampshire, on August 3, 1998.
STOCKER & YALE, INC.
By: /s/ Mark W. Blodgett
Mark W. Blodgett
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, each of the undersigned
officers and directors of Stocker & Yale, Inc. hereby severally
constitutes Mark W. Blodgett his or her true and lawful attorney
with full power to her, to sign for the undersigned and in his or
her name in the capacity indicated below, the Registration
Statement filed herewith and any and all amendments to said
Registration Statement, and generally to do all such things in his
or her name and in his or her capacity as an officer or director to
enable Stocker & Yale, Inc. to comply with the provisions of the
Securities Act of 1933, and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming his or her
signature as it may be signed by his or her said attorney, or any
of them, to said Registration Statement and any and all amendments
thereto.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Mark W. Blodgett
Mark W. Blodgett
Chairman of the Board of Directors and Chief
Executive Officer
August 5, 1998
(Principal Executive Officer)
/s/ James Bickman
James Bickman
President and Director
August 5, 1998
/s/ Alex W. Blodgett
Alex W. Blodgett
Director
August 5, 1998
/s/ Clifford Abbey
Clifford Abbey
Director
August 5, 1998
/s/ Steven E. Karol
Steven E. Karol
Director
August 5, 1998
/s/ John M. Nelson
John M. Nelson
Director
August 5, 1998
/s/ Susan H. Sundell
Senior Vice President-Finance and Treasurer
August 5, 1998
Susan H. Sundell
(Principal Financial and Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
* 4.1 - Form of Stock Purchase Agreement dated as of May 13,
1998, between the Company and each of the Selling
Stockholders
* 5.1 - Opinion of Goodwin, Procter & Hoar LLP
* 23.1 - Consent of Arthur Andersen LLP
23.2 - Consent of Goodwin, Procter & Hoar LLP (included in
Exhibit 5.1)
24.1 - Power of Attorney (included on signature page)
_________________
*Filed herewith.
<PAGE>
EXHIBIT 4.1
FORM OF
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated May 13,
1998, by and between Stocker & Yale, Inc., a Massachusetts
corporation (the "Company"), and the investor named on the
signature page hereof (the "Investor").
W I T N E S S E T H
WHEREAS, the Company is offering for sale up to 350,000
shares (the "Shares") of its Common Stock (as defined below) at
the price of $3.50 per share (the "Per Share Purchase Price"),
pursuant to a Private Placement Memorandum dated May 1, 1998 (the
"Memorandum"), this transaction generally being herein referred
to as the "Private Placement"; and
WHEREAS, the Investor desires to purchase from the Company
shares of Common Stock on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for good and valuable
consideration the receipt of which is hereby acknowledged, the
parties agree as follows:
1. Definitions. Unless specifically defined herein,
capitalized terms used herein have the meaning ascribed to such
terms in the Memorandum except that, unless the context requires
otherwise, the following terms have the meanings indicated:
"Business Day" means any day except Saturday, Sunday and any
day which shall be in Boston, Massachusetts a legal holiday or a
day on which banking institutions are authorized or required by
law or other government action to close.
"Common Stock" means the Common Stock, par value $0.001 per
share, of the Company.
"Investor Shares" shall mean the shares of Common Stock
subscribed for hereunder by the Investor, together with any
shares of Common Stock issued in respect of such shares pursuant
to a dividend or distribution, stock split, recapitalization, or
similar transaction.
"Person" means any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or
instrumentality thereof.
"Placement Agent" means J.E. Sheehan & Co.
<PAGE>
2. Purchase of Common Stock; Subsequent Sale.
(a) Purchase.
(1) Subject and pursuant to the terms and
conditions set forth in this Agreement, the Company agrees that
it will issue and sell to the Investor and the Investor agrees
that it will purchase from the Company, at the Per Share Purchase
Price, __________ Shares (the "Investor Shares") for an
aggregate purchase price of $_______ (the "Aggregate Purchase
Price"). The Shares are being offered pursuant to the
Memorandum.
(2) The Company proposes to enter into a similar
form of Stock Purchase Agreement with other investors (the "Other
Investors"). The Investor and the Other Investors are
hereinafter referred to collectively as the "Investors."
(3) The Investor understands that the Company
will notify it whether this subscription has been accepted or
rejected. The Investor further understands and agrees that the
Company reserves the right to accept or reject subscriptions (in
whole or in part), and that this subscription may be accepted or
rejected by the Company (in whole or in part) at any time for any
reason whatsoever, as it shall deem necessary or appropriate.
(b) The Investor acknowledges and agrees that the
Aggregate Purchase Price delivered herewith shall be held in
escrow by Goodwin, Procter & Hoar LLP, as escrow agent (the
"Escrow Agent"), until the consummation of the Pending Lasiris
Acquisition (as defined in the Memorandum). If the Pending
Lasiris Acquisition is not consummated for any reason, the
offering contemplated by the Memorandum and the issuance and sale
of Shares contemplated hereby shall be terminated and the Company
shall cause the Escrow Agent to return to the Investor the entire
Aggregate Purchase Price paid hereunder, together with any
interest thereon.
(c) Subsequent Sale. During the period beginning on
the date hereof and continuing until the Closing, the Investor
will not offer, sell, contract to sell or otherwise dispose of,
or bid for, purchase, contract to purchase or otherwise acquire,
any shares of Common Stock or interests therein without the prior
written consent of the Company.
3. Representations, Warranties, Covenants and Agreements.
The Investor represents, warrants and agrees as
follows:
(1) The Investor has received and reviewed a copy
of the Memorandum, and all appendices and supplements (if any)
thereto, relating to the Shares and understands that no Person
has been authorized to give any information or to make any
representations that were not contained in the Memorandum, and
the Investor has not relied on any such other information or
representations in making a decision to purchase the Investor
Shares. The Investor has had access to such financial and other
information and has had the opportunity to ask questions and
receive answers as deemed necessary in respect of the decision to
purchase the Shares, and has consulted with advisors concerning
the proposed investment in the Company. The Investor understands
that an investment in the Company involves a high degree of risk
for the reasons, among others, set forth under the caption "RISK
FACTORS" in the Memorandum.
<PAGE>
(2) The Investor has made an investigation as to
whether or not to invest in the Shares and, in making the
decision to so invest, is not in any way relying on the fact that
any other Person has decided to invest in the Shares.
(3) The Investor represents that the Investor
(or, if applicable, each managed account on whose behalf the
Investor Shares are being purchased by such Investor) is a
sophisticated investor or is an "accredited investor" as defined
in Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act"), as certified by the Investor pursuant to the
Investor Questionnaire attached hereto as Annex I. The Investor
further represents that the Investor (or, if applicable, each
managed account on whose behalf the Investor Shares are being
purchased) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and
risk of an investment in the Shares and can bear the economic
risk of loss of the entire investment in the Shares being
purchased.
(4) The Investor understands and expressly
acknowledges and agrees that none of the Shares has been, or will
be, registered or qualified under the Securities Act, or under
any applicable securities laws of any State of the United States
("Applicable State Law") and therefore may not be offered, sold,
transferred, assigned, pledged, hypothecated or otherwise
disposed of, directly or indirectly, unless subsequently
registered or qualified under the Securities Act and under
Applicable State Law or unless any exemptions from the
registration requirements of the Securities Act and Applicable
State Law are available, in each case to the extent permitted by
the terms of this Agreement.
(5) The Investor understands and agrees that all
certificates representing the Investor Shares shall bear a legend
which will be substantially in the form of the following:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND SUCH SECURITIES MAY NOT BE
OFFERED, SOLD, PLEDGED, TRANSFERRED OR
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT
PURSUANT TO (1) A REGISTRATION STATEMENT WITH
RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE
UNDER SUCH ACT OR (2) RULE 144 OR 144A UNDER
SUCH ACT OR ANY OTHER AVAILABLE EXEMPTION
FROM REGISTRATION UNDER SUCH ACT RELATING TO
DISPOSITION OF SECURITIES."
<PAGE>
(6) The Investor (or, if applicable, each managed
account on whose behalf the Investor Shares are being purchased
by the Investor) will acquire the Investor Shares pursuant to
this Agreement for its own account for investment and not with a
view to, or in connection with, the resale or distribution
thereof or in any arrangement or understanding with any other
persons regarding the distribution of such Shares in violation of
the Securities Act.
(7) The Investor hereby covenants and agrees with
the Company not to make any sale of the Investor Shares without
causing the prospectus delivery requirement under the Securities
Act to be satisfied or otherwise complying with the Securities
Act, and the Investor acknowledges and agrees that the Shares are
not transferable on the books of the Company unless the
certificate submitted to the transfer agent evidencing the
Investor Shares is accompanied by (1) a separate certificate (i)
in the form of Annex V hereto, (ii) executed by an officer of, or
other authorized person designated by, the Investor, and (iii) to
the effect that (A) the Investor Shares have been sold in
accordance with a registration statement pursuant to Section 7
and (B) the requirement of delivering a current prospectus has
been satisfied; or (2) an opinion of counsel reasonably
satisfactory to the Company stating that registration is not
required under the Securities Act. The Investor acknowledges
that there may be times when the Company may suspend the use of
the prospectus forming a part of a registration statement in the
event and during such period pending negotiations relating to, or
consummation of, a transaction or the occurrence of any other
event that would require additional disclosure of material
information by the Company in the registration statement (as to
which the Company has a bona fide business purpose for preserving
confidentiality) that would make it impractical or inadvisable to
cause the registration statement to be filed or to become
effective or to amend or supplement the registration statement or
which otherwise renders the Company unable to comply with the
Securities and Exchange Commission (the "Commission")
requirements. In such event, the Company may suspend the use of
such prospectus until such time as an amendment to such
registration statement has been filed by the Company and declared
effective by the Commission, or until such time as the Company
has filed an appropriate report with the Commission pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); provided, however, that such suspension shall not be for a
period of more than 30 consecutive trading days during any one
(1) suspension period or more than 60 trading days in any one (1)
year period. The Investor hereby covenants and agrees that it
will not sell any Investor Shares pursuant to said prospectus
during the period commencing at the time at which the Company
gives the Investor written notice of the suspension of the use of
said prospectus and ending the earlier of 30 consecutive trading
days after such notice or the date on which the Company gives the
Investor written notice that the Investor may thereafter effect
sales pursuant to said prospectus.
(8) The execution and delivery of this Agreement
by the Investor and the performance of this Agreement and the
consummation by the Investor or the Investor's advisory clients,
as the case may be, of the transactions contemplated hereby have
been duly authorized by all necessary (corporate, in the case of
a corporation) action of the Investor and, if applicable, the
Investor's advisory clients; and this Agreement, when duly
executed and delivered by the Investor, will constitute a valid
and legally binding instrument, enforceable in accordance with
its terms against the Investor or any of the Investor's advisory
clients, as the case may be, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law)
and except as the indemnification and contribution agreements of
the Investor in Section 7(d) hereof may be legally unenforceable.
<PAGE>
(9) The Investor represents that:
(A) If the Investor is a corporation, it is
a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
with full power and authority (corporate and other) to perform
its obligations under this Agreement. The person executing this
Agreement on behalf of the Investor is authorized to act for the
Investor in subscribing for the Shares.
(B) If the Investor is a corporation acting
in an advisory capacity, it is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with full power and authority
(corporate and other) to act on behalf of its advisory clients
under this Agreement.
(C) If the Investor is a trust, the trustee
thereunder has been duly appointed as trustee of such Investor
with full power and authority to act on behalf of such Investor
and to perform the obligations of such Investor under this
Agreement. Furthermore, the trustee under such trust has
independently determined that the purchase of the Investor Shares
is a suitable investment for such trust as authorized by the
terms thereof and applicable laws and regulations.
(D) If the Investor is a limited partnership, it is a limited
partnership duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, with full
power and authority to perform its obligations under this Agreement.
(E) If the Investor is a limited partnership acting in an advisory
capacity, it is a limited partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its organization, with full power and authority to act on behalf
of its advisory clients under this Agreement.
(F) If the Investor is a corporation, partnership, trust or other
form of business entity, the execution and delivery of this Agreement
will not contravene or result in a default under any provision of
existing law or regulations to which the Investor is subject, the
provisions of its trust instrument, charter, by-laws or other governing
documents or any indenture, mortgage or other agreement or
instrument to which it is a party or by which it is bound and
does not require on its part any approval, authorization, license
or filing from or with any foreign, federal, state or municipal
board or agency which has not been obtained or duly made.
<PAGE>
(G) If the Investor is an individual, the Investor has full power
and authority to perform its obligations under this Agreement.
(10) The Investor agrees to complete and execute and return to the
Company (a) the Investor Questionnaire attached as Annex I to this
Agreement if the Investor is investing in Shares as an "accredited
investor;" (b) if the Investor is acting on behalf of a managed
account in the purchase of any Investor Shares, the Managed Accounts
Representation Letter attached as Annex II to this Agreement; and (c)
the Registration Statement Questionnaire attached as Annex IV, in each
case together with an executed signature page to this Agreement.
The Investor represents and warrants that the answers thereto are true
and correct as of the date hereof and will be true and correct as of
the effective date of the Registration Statement (as defined in
Section 7). The Investor further represents and warrants that it
is not purchasing the Investor Shares on behalf of any managed
account other than as listed in the Managed Account Representation
Letter.
(11) The Investor has not entered into any contracts, arrangements,
understandings or relationships (written or otherwise) with any other
Person or Persons (other than the Company) with respect to any
securities of the Company (including but not limited to transfer
or voting of any of the securities, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies)
or the operations, management or control of the Company; the Investor
is not bound together, under common control with, in a common
enterprise with, or otherwise acting in concert with, any other Person
or Persons in connection with the transactions contemplated by this
Agreement; and the Investor does not own any securities of the
Company which are pledged or otherwise subject to a contingency
the occurrence of which would give another Person voting power or
investment power over such securities.
(12) Except as otherwise set forth in Annex III:
(i) as of the date hereof, the Investor did not beneficially own
any shares of Common Stock; and (ii) as of the date of this
Agreement, the Investor does not beneficially own any shares of
Common Stock.
(13) No state, federal or foreign regulatory approvals, permits,
licenses or consents or other contractual or legal obligations are
required for the Investor to enter into this Agreement or otherwise
purchase the Investor Shares.
(b) The Company hereby represents, warrants and agrees
as follows:
(1) The Company and each of its subsidiaries has been duly organized
and is validly existing in good standing under the laws of the
jurisdiction of its organization, with full power and authority
(corporate and other) to perform its obligations under this Agreement.
(2) The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary
action of the Company; and this Agreement, when duly executed and
delivered by the Investor, will constitute a valid and legally binding
instrument of the Company enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (regardless of
whether the issue of enforceability is considered in a proceeding in
equity or at law) and except as the indemnification and contribution
agreements of the Company in Section 7(d) hereof may be legally
unenforceable.
<PAGE>
(3) The Investor Shares have been duly authorized by the Company,
and when issued and delivered by the Company against payment therefore
as contemplated hereby and in accordance with the terms of the Memorandum,
the Investor Shares will be validly issued, fully paid and nonassessable.
(4) The execution and delivery of this Agreement, the consummation by
the Company of the transactions herein contemplated and the compliance
by the Company with the terms hereof do not and will not violate the
Articles of Incorporation of the Company, or the By-Laws of the Company,
or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of
their properties or assets are subject, or any applicable statute
or any order, judgment, decree, rule or regulation of any court
or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
assets; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the valid
authorization, execution, delivery and performance by the Company
of this Agreement, the issue of the Investor Shares or the
consummation by the Company of the other transactions
contemplated by this Agreement, except for such consents,
approvals, authorizations, registrations or qualifications as may
be required under Federal or state securities or "blue sky" laws
or, with respect to requirements applicable to the Investor.
(5) The information contained in the following documents, which the
Company has furnished to the Purchaser, taken as a whole, does not
contain any untrue statement of material fact or omit to state any
material fact necessary in order to make the statements therein not
misleading as of the respective final dates of the documents.
(A) the Company's Annual Report to Stockholders on Form 10-KSB for
the fiscal year ended December 31, 1997 (without exhibits);
(B) Notice to Shareholders and Proxy Statement for its Annual Meeting
of Shareholders held May 5, 1998.
(6) There has been no material adverse change in the financial condition
or business or results of operations of the Company since December 31, 1997.
<PAGE>
(7) Except as disclosed in the documents referred to in paragraph (5) above,
there is no action, suit, proceeding, inquiry or investigation before or
by any court, public board or body pending or, to the knowledge of the
Company or any of its subsidiaries, threatened against or affecting the
Company or any of its subsidiaries, wherein an unfavorable decision,
ruling or finding would have a material adverse effect on the properties,
business, condition (financial or other), results of operations
or prospects of the Company and its subsidiaries taken as a whole
or the transaction contemplated by this Stock Purchase Agreement
or any of the documents contemplated hereby or which would
adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations
under this Stock Purchase Agreement or any of such other documents.
(c) Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and
warranties made by the Company and the Investor herein and in the
certificates for the Investor Shares delivered pursuant hereto
shall survive the execution of this Agreement, the delivery to
the Investor of the Investor Shares being purchased and the
payment therefor.
4. Closing Conditions. The respective obligations of the
Investor and the Company, as the case may be, to consummate the
purchase and sale of the Investor Shares shall be subject, in the
discretion of the Company or the Investor, as the case may be, to
the following conditions, any or all of which may be waived, in
whole or in part, by the parties hereto, to the extent permitted
by applicable law:
(a) All representations and warranties and other statements of the
other party contained herein are, at and as of the Closing
(as defined below), true and correct in all material respects and the
other party shall have performed all of its obligations theretofore
to be performed in all material respects.
(b) The Pending Lasiris Acquisition shall be consummated substantially
in the manner described in the Memorandum.
5. Subscription and Method of Payment.
(a) The undersigned shall have delivered or cause to
have been delivered in cash, by certified or bank check or by
wire transfer of immediately available funds to Goodwin, Procter
& Hoar LLP, as the designated escrow agent (the "Escrow Agent"),
US $________________ (the "Escrow Amount") to be held by the
Escrow Agent; provided, however, that the Placement Agent may
retain during the period that the Escrow Amount is held in escrow
an amount of cash equal to its placement commission in an amount
equal to 6.0% of the Escrow Amount, subject to the sentence
immediately prior to the last sentence of this paragraph. The
Company shall reimburse the Placement Agent for up to $3,500 of
expenses incurred in connection with the transactions
contemplated hereby either by (i) requesting that the Placement
Agent retain such amount out of funds wired into escrow by the
Placement Agent, or (ii) in the event of the termination of the
transactions contemplated hereby, by delivery of such amount to
the Placement Agent by check or by wire transfer of immediately
available funds. Subject to the terms and conditions of this
Agreement, if the Company delivers an Officer's Certificate
executed by the President of the Company certifying as to the
satisfaction of the conditions in Section 4 hereof (a "Closing
Certificate") on or prior to 5:00 p.m., Eastern time, on the
Termination Date (as defined in Section 6 below), the Escrow
Agent, within five business days after such delivery, shall
release to the Company the Escrow Amount, less any amounts
distributed to the Placement Agent, together with any interest
earned on the Escrow Amount during the period held by the Escrow
Agent, against delivery of the Investor Shares to the Investors
by the Company. The effective date of the purchase and sale of
the Investor Shares shall be immediately before the effective
time of the Pending Lasiris Acquisition (the "Closing" or
"Closing Date"). If the Escrow Agent does not receive a Closing
Certificate on or prior to 5:00 p.m., Eastern time,
<PAGE>
on the Termination Date, (i) the Escrow Agent, within two business days
following the Termination Date, shall deliver to the Investor the
Escrow Amount (less amounts retained by the Placement Agent) and,
provided the applicable tax and withholding information in the
next sentence has been delivered, any interest earned on the
Escrow Amount during the period held by the Escrow Agent, and
(ii) the Placement Agent shall deliver to the Investor an amount
in cash equal to its placement commission to the extent necessary
to ensure that each Investor receives the refund of the full
purchase price paid by such Investor in respect of the Investor
Shares. Prior to the receipt of any accrued interest, the
Investor agrees to provide all applicable tax and withholding
information reasonably requested by the Company.
(b) At the Closing, the Investor Shares to be purchased by the Investor
hereunder, registered in the name of the Investor or its nominees, as
the Investor may specify at least three Business Days prior to the
Closing, shall be delivered by or on behalf of the Company to the
Investor, for the Investor's account, against release by the Escrow
Agent of the Aggregate Purchase Price therefor in immediately
available funds in the form of one or more federal funds checks or a wire
transfer to an account designated by the Company.
6. Termination.
(a). The respective obligations of the Investor and the
Company to consummate the purchase and sale of the Shares shall
terminate on the earlier of (i) the date on which the Company
notifies the Investor in writing that the Company has made a good
faith determination that the conditions in Section 4 cannot be
satisfied by the Termination Date (as defined below) or (ii) May
30, 1998 (the "Termination Date").
(b) The Company and Investor hereby agree that any
termination of this Agreement pursuant to clause (a) hereof
(other than termination in the event of a breach of this
Agreement or as a result of a misrepresentation contained in any
of the statements made herein by the Investor) shall be without
liability of the Company or the Investor.
7. Registration of the Shares; Compliance with the
Securities Act.
(a) Registration Rights; Registration Procedures and
Expenses.
(1) If at any time or times after the date hereof, the Company shall
determine or be required to register any shares of its Common Stock
for sale under the Securities Act (whether in connection with a public
offering of securities by the Company (a "primary offering"), a public
offering of securities by stockholders of the Company (a "secondary
offering") or both), but not in connection with a registration
effected solely to implement an employee benefit plan or a
transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable, the Company
shall:
<PAGE>
(i) Promptly give written notice thereof to each of the Investors.
(ii) Use reasonable efforts to effect the registration under the
Securities Act of all Investor Shares (but not any other shares)
which such Investors request to be registered in a writing delivered
to the Company within 20 days after such Investors' receipt of the
notice referred to above, subject to subparagraph (iii) below.
(iii) In the case of the registration of shares of Common Stock by
the Company in connection with an underwritten public offering,
(i) the Company shall not be required to include any Investor
Shares in such underwriting unless the Investors thereof accept the
terms of the underwriting as agreed upon between the Company and
the underwriter or underwriters selected by it, and (ii) if the
underwriter(s) determines that marketing factors require a limitation
on the number of Investor Shares to be offered, the Company shall not
be required to register Investor Shares of the Investors in excess
of the amount, if any, of shares of the capital stock which the
principal underwriter of such underwritten offering shall
reasonably and in good faith agree to include in such offering in
excess of any amount to be registered for the Company, and in the
event of any such limitation the number of Investor Shares of any
Investor requesting inclusion in such registration shall be based
upon the relative holdings of Common Stock of all Investors
requesting such registration (and if any Investor would thus be
entitled to include more Investor Shares than such Investor
requested to be registered, the excess shall be allocated among
other requesting Investors pro rata based upon their relative
holdings of Common Stock). All expenses relating to the
registration and offering of Investor Shares pursuant to this
Section 7(a)(1) shall be borne by the Company, except that the
Investors shall bear underwriting and selling commissions
attributable to their Investor Shares being registered and any
transfer taxes on shares being sold by such Investors.
(2) The Company shall:
(a) Prepare and file with the Commission
within sixty (60) days of the Closing a registration statement
(the "Registration Statement") to enable the sale of the Investor
Shares by the Investor from time to time through the automated
quotation system of the Nasdaq SmallCap Market or in
privately-negotiated transactions or otherwise.
(b) Use reasonable efforts, subject to receipt of necessary
information from the Investor, to cause the Registration
Statement to become effective as soon as possible after filing
thereof.
(c) Promptly prepare and file with the Commission such amendments
and supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to keep the
Registration Statement effective for a period not exceeding the
third anniversary of the Closing, or such shorter period which
will terminate on the earlier of the date when (i) the Shares
held by the Investor may be sold without registration under the
Securities Act or (ii) all of the Shares covered by such
Registration Statement have been sold pursuant to such Registration
Statement or otherwise.
<PAGE>
(d) Promptly furnish to the Investor with respect to the Investor
Shares registered under the Registration Statement (and to
each underwriter, if any, of such Investor Shares) such number
of copies of the Registration Statement and any amendment or
supplement thereto and of prospectuses and preliminary prospectuses
in conformity with the requirements of the Securities Act and such
other documents as the Investor may reasonably request, in order to
keep the Investor apprised of the progress of the registration
process and to facilitate the public sale or other disposition of
all or any of the Investor Shares by the Investor.
(e) Promptly file documents required of the Company for customary
"blue sky" clearance in states specified in writing by the Investor
and reasonably required by the Investor in order to resell its
Investor Shares; provided, however, that the Company shall not be
required to qualify to do business or consent to service of process
in any jurisdiction in which it is not now so qualified or has not
so consented.
(f) Promptly inform the Investor when any stop order by the Commission
has been issued with respect to the Investor Shares and use its best
efforts to promptly cause such stop order to be withdrawn.
(g) Bear all expenses in connection with the procedures in subparagraphs
(a) through (i) of this Section 7(a)(2) and the registration of the
Investor Shares pursuant to the Registration Statement, other than fees
and expenses, if any, of counsel or other advisors to the Investor,
provided that the Company shall pay the reasonable fees and expenses
of one counsel to the Investors purchasing Shares in the Private
Placement.
(h) Take such other actions as may reasonably be necessary to effect
the registration of the resale of the Investor Shares in accordance
with the terms of this Agreement and to allow such Investor Shares
to trade in the same market system or exchange where the Company's
Common Stock then trades.
(i) File the reports required to be filed by it under the Securities
Act and the Exchange Act (or, if the Company is not required to file
such reports, it will, upon the request of any holder of Investor Shares,
make publicly available other information so long as necessary to permit
sales under Rule 144 under the 1933 Act), all to the extent required from
time to time to enable the Investor to sell Investor Shares without
registration under the Securities Act within the limitations provided
by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission; provided, however, that nothing in this
Agreement shall require the Company to file reports under the
Securities Act or the Exchange Act, to register any of its securities
under the Exchange Act, or to make publicly available any information
concerning the Company at any time when it is not required by law or
by any agreement by which it is bound to do any of the foregoing.
<PAGE>
A questionnaire related to the Registration Statement to be
completed by the Investor is attached hereto as Annex IV.
(b) Intentionally Omitted.
(c) Transfer of Shares. The Investor agrees not to
effect any disposition of the Shares or the right to purchase the
Shares that would constitute a sale within the meaning of the
Securities Act except as contemplated in Sections 7(a)(1)and(2)
or pursuant to an exemption from registration under the
Securities Act. The Investor agrees to promptly notify the
Company of any changes in the information set forth in any
registration statement regarding the Investor Shares or the
Investor.
(d) Indemnification and Contribution. For the purpose
of this Section 7(d):
(1) The term "Selling Shareholder" shall include
the Investor, officers, directors, trustees, or any affiliate of
such Investor and each person, if any, who controls the Selling
Shareholder within the meaning of the Securities Act;
(2) The term "Registration Statement" shall
include (i) the Registration Statement and any final prospectus,
exhibit, supplement or amendment included in or relating to the
Registration Statement and (ii) any registration statement filed
in connection with Section 7(a)(i) and any final prospectus,
exhibit, supplement or amendment included in or relating to such
registration statement; and
(3) The term "untrue statement" shall include any
untrue statement or alleged untrue statement, or any omission or
alleged omission to state in the Registration Statement a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
The Company agrees to indemnify and hold harmless each
Selling Shareholder from and against any losses, claims, damages
or liabilities to which such Selling Shareholder may become
subject (under the Securities Act or otherwise) insofar as such
losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon
any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading or arise out of any failure by the Company to fulfill
any undertaking included in the Registration Statement and the
Company will reimburse such Selling Shareholder for any
reasonable legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action,
proceeding or claim, provided, however, that the Company shall
not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, any
such untrue statement or omission made in such Registration
Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such
Selling Shareholder specifically for use in preparation of the
Registration Statement, or the failure of such Selling
Shareholder to comply with the covenants and agreements contained
in Sections 3(a) and 7(c) hereof respecting sale of the Shares or
any statement or omission in any prospectus that is corrected or
made not misleading in any subsequent prospectus that was
delivered to the Investor prior to the pertinent sale or sales by
the Investor.
<PAGE>
The Investor agrees to indemnify and hold harmless the
Company (and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, each officer of
the Company who signs the Registration Statement and each
director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer,
director or controlling person) may become subject (under the
Securities Act or otherwise), insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect
thereof) arise out of, or are based upon, any failure to comply
with the covenants and agreements contained in Sections 3(a) and
7(c) hereof respecting sale of the Shares, or any untrue
statement of a material fact contained in the Registration
Statement on the effective date thereof if such untrue statement
was made in reliance upon and in conformity with written
information furnished by or on behalf of the Investor
specifically for use in preparation of the Registration
Statement, provided, however, that such Investor shall not be
liable in any such case to the extent that the Investor has
furnished in writing to the Company information expressly for use
in such Registration Statement or any amendment thereof or
supplement thereto which corrected or made not misleading
information previously furnished to the Company prior to the
filing of the Registration Statement, and if thereafter, has
notified the Company of such information immediately upon its
occurrence or the Investor's knowledge of its occurrence. The
Investor will reimburse the Company (or such officer, director or
controlling person), as the case may be, for any legal or other
expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim. In no
event shall the liability of the Investor hereunder be greater in
amount than the dollar amount of the proceeds received by such
Investor upon the sale of the Shares giving rise to such
indemnification obligation.
<PAGE>
Promptly after receipt by any indemnified person of a notice
of a claim or the beginning of any action in respect of which
indemnity is to be sought against an indemnifying person pursuant
to this Section 7(d), such indemnified person shall notify the
indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought
against an indemnified person and such indemnifying person shall
be entitled to participate therein, and, to the extent it shall
wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified person. After notice from the
indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be
liable to such indemnified person for any legal expenses
subsequently incurred by such indemnified person in connection
with the defense thereof, provided, however, that if there exists
or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified
person, for the same counsel to represent both the indemnified
person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its
own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the
fees and expenses of more than one separate counsel for all
indemnified parties.
If the indemnification provided for in this Section 7(d)
from the indemnifying person is unavailable to an indemnified
person hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then the indemnifying
person, in lieu of indemnifying such indemnified person, shall
contribute to the amount paid or payable by such indemnified
person as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying person and indemnified persons
in connection with the actions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such
indemnifying person and indemnified persons shall be determined
by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a
material fact, has been made by, or relates to information
supplied by, such indemnifying person or indemnified persons, and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in this
Section 7(d), any reasonable legal or other fees or expenses
reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 7(d),
no Investor shall be required to contribute any amount in excess
of the dollar amount of the proceeds received by such Investor
upon the sale of the Shares giving rise to such contribution
obligation. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) Termination of Conditions and Obligations. The
conditions precedent imposed by Section 4 or this Section 7 upon
the transferability of the Investor Shares shall cease and
terminate as to any particular number of the Investor Shares when
such Investor Shares shall have been effectively registered under
the Securities Act and sold or otherwise disposed of in
accordance with the intended method of disposition set forth in
the registration statement covering such Investor Shares or at
such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are
not reasonably necessary in order to comply with the Securities
Act.
<PAGE>
(f) Information Available. So long as a registration
statement is effective covering the resale of the Investor
Shares, the Company will furnish to the Investor:
(1) As soon as practicable after available (but
in the case of the Company's Annual Report to Shareholders,
within one hundred twenty (120) days after the end of each fiscal
year of the Company), one copy of (i) its Annual Report to
Shareholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted
accounting principles by a national firm of certified public
accountants), (ii) if not included in substance in the Annual
Report to Shareholders, its Annual Report on Form 10-KSB or
equivalent form, (iii) its Quarterly Reports to Shareholders,
(iv) if not included in substance in its Quarterly Reports to
Shareholders, its quarterly reports on Form 10-QSB or equivalent
form, and (v) a full copy of the particular registration
statement covering the Shares (the foregoing, in each case,
excluding exhibits);
(2) Upon the reasonable request of the Investor, all exhibits
excluded by the parenthetical to subparagraph (i) of this
Section 7(f) and all other information that is made available
to shareholders; and
(3) Upon the reasonable request of the Investor, an adequate number
of copies of the prospectuses to supply to any other party requiring
such prospectuses; and the Company, upon the reasonable request of
the Investor, will meet with the Investor or a representative thereof
at the Company's headquarters to discuss all information relevant for
disclosure in the registration statement covering the Investor
Shares and will otherwise cooperate with any Investor conducting
an investigation for the purpose of reducing or eliminating such
Investor's exposure to liability under the Securities Act,
including the reasonable production of information at the
Company's headquarters.
8. Miscellaneous.
(a) This Agreement shall be binding upon, and shall
inure solely to the benefit of, each of the parties hereto, and
each of their respective heirs, executors, administrators,
successors and permitted assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement.
The Investor may not assign any of its rights or obligations
hereunder to any other person or entity without the prior written
consent of the Company.
(b) The Investor agrees that it may not terminate or
revoke this Agreement or any agreement, offer or commitment made
hereunder.
(c) This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter
hereof and may be amended only by written execution by both
parties.
(d) THIS AGREEMENT SHALL BE ENFORCED, GOVERNED AND
CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS, WITHOUT GIVING EFFECT TO ITS
CONFLICTS OF LAWS PRINCIPLES. FURTHERMORE, EACH INVESTOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES OF AMERICA
FOR THE DISTRICT OF MASSACHUSETTS IN ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT.
<PAGE>
(e) Time is of the essence with respect to all provisions of this
Agreement.
(f) By executing this Agreement below, the Investor
agrees to be bound by all of the terms, provisions, warranties,
covenants and conditions contained herein. Upon acceptance by
the Company, this Agreement shall be binding on both parties
hereto.
(g) All notices, requests, consents and other communication
hereunder shall be in writing, shall be mailed by first class
registered or certified mail, or nationally recognized overnight
express courier postage prepaid, and shall be deemed given when
so mailed and shall be delivered as addressed as follows:
(h) if to the Company, to:
Stocker & Yale, Inc.
32 Hampshire Road
Salem, New Hampshire 03079
Attn: Susan H. Sundell
with a copy mailed to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attn: Stuart M. Cable, Esq.
or to such other person at such other place as the Company shall
designate to the Investor in writing; and
if to the Investor, at its address as set forth at the end of
this Agreement, or at such other address or addresses as may have
been furnished to the Company in writing.
(i) The headings of the various sections of this
Agreement have been inserted for convenience of reference only
and shall not be deemed to be part of this Agreement.
(j) This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one in the same
agreement.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
STOCKER & YALE, INC.
By:
Name:
Title:
Accepted and Agreed as of the date
first above written:
Name of Investor (Print)
By:
Name:
Title
Address:
Telephone:
Facsimile:
Nominee (name in which Investor
Shares are to be registered, if
different than name of Investor)
Address of Nominee:
Taxpayer I.D. Number:
(if acquired in the name of a
nominee, the taxpayer I.D.
number of such nominee)
(continued on next page)
<PAGE>
Designated Bank
Address
ABA No.
Account No.
Attention
EACH INVESTOR EXECUTING THESE PURCHASE
AGREEMENT SIGNATURE PAGES ON BEHALF OF ONE OR
MORE MANAGED ACCOUNTS SHOULD PROVIDE THE NAME
OF, AND FOREGOING INFORMATION WITH RESPECT
TO, EACH SUCH MANAGED ACCOUNT.
<PAGE>
ESCROW AGENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Escrow Agent confirms its
undertakings under Section 5 of this Agreement.
GOODWIN, PROCTER & HOAR LLP
By:
<PAGE>
PLACEMENT AGENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Placement Agent confirms its
undertakings under Section 5 of this Agreement.
J.E. SHEEHAN & CO., INCORPORATED
By:
Name:
Title:
<PAGE>
EXHIBIT 5.1
[Letterhead of Goodwin, Procter & Hoar LLP]
August 5, 1998
Stocker & Yale, Inc.
32 Hampshire Road
Salem, New Hampshire 03079
Ladies and Gentlemen:
This opinion is furnished in our capacity as counsel to Stocker
& Yale, Inc., a Massachusetts corporation (the "Company"), in
connection with the registration, pursuant to the Securities Act of
1933 (the "Securities Act"), of 350,000 shares (the "Shares") of
common stock, par value $0.001 per share, of the Company.
In connection with rendering this opinion, we have examined the
Articles of Organization and the Bylaws of the Company, each as
amended to date; such records of the corporate proceedings of the
Company as we have deemed material; a registration statement on
Form S-3 under the Securities Act relating to the Shares and the
prospectus contained therein; and such other certificates,
receipts, records and documents as we considered necessary for the
purposes of this opinion.
We are attorneys admitted to practice in The Commonwealth of
Massachusetts. We express no opinion concerning the laws of any
jurisdiction other than the laws of the United States of America
and The Commonwealth of Massachusetts.
Based upon the foregoing, we are of the opinion that the Shares
are duly authorized, legally issued, fully paid and nonassessable
by the Company under the Massachusetts Business Corporation Law.
The foregoing assumes that all requisite steps will be taken to
comply with the requirements of the Securities Act and applicable
requirements of state laws regulating the offer and sale of
securities.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to our firm
under the caption "Legal Matters" in the Prospectus.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE>
EXHIBIT 23.1
Consent of Independent Accountants
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our
reports dated March 6, 1998 (except for the matters discussed in
Notes 6 and 11, for which the date is March 27, 1998) included in
Stocker & Yale, Inc.'s Form 10-KSB for the year ended December 31,
1997 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
August 5, 1998
