EXHIBIT 10.11
STOCK AND WARRANT PURCHASE
AGREEMENT
STOCK AND WARRANT PURCHASE AGREEMENT
(this “ Agreement ”), dated as of
August 16, 2005, by and between StockerYale, 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 $2,500,000 of its shares (the “ Shares
”) of Common Stock (as defined below) at the price per share
of Common Stock negotiated with each purchaser and warrants (the
“ Warrants ”) to purchase such number of shares
of Common Stock of the Company as is equal to one-quarter of the
number of Shares sold by the Company, 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 and Warrants 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 . The
following terms have the meanings indicated:
“ Business Day ”
shall mean 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 ”
shall mean the Common Stock, par value $0.001 per share, of the
Company.
“ Investors ”
shall mean all of the purchasers of Shares and Warrants sold in the
Private Placement.
“ Person ” shall
mean 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.
“ Total Purchase Price
” shall mean the aggregate purchase price for all of the
Shares and Warrants sold in the Private Placement.
2. Purchase of Common Stock and
Warrants . 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, (a) at $0.80 per share of Common Stock (the
“ Per Share Purchase Price ”), 625,000 shares of
Common Stock (the “ Investor Shares ”), and
(b) warrants (the “ Investor
Warrants ”) to purchase an aggregate of 156,250
shares of Common Stock, which Investor Warrants shall be
exercisable for a period of five years at an exercise price of
$1.17 per share. The aggregate purchase price for the Investor
Shares and the Investor Warrants shall be $500,000 (the “
Aggregate Purchase Price ”).
3. Deliveries at Closing
.
(a) Deliveries by the
Investor . At the Closing of the transactions contemplated
hereby, the Investor shall deliver to the Company the
following:
(1) the Aggregate Purchase Price by
wire transfer of immediately available funds to an account
designated by the Company as set forth on Annex V
hereto, which funds will be delivered to the Company in
consideration of the Investor Shares and Investor Warrants issued
at the closing of the transaction contemplated hereby;
(2) an executed Investor
Questionnaire in the form attached as Annex I
;
(3) an executed Managed Account
Representation Letter in the form attached as Annex II
, if the Investor is acting on behalf of a managed account in the
purchase of the Investor Shares and Investor Warrants;
and
(4) a completed Registration
Statement Questionnaire in the form attached as
Annex III .
(b) Deliveries by the Company
. At the Closing of the transactions contemplated hereby, the
Company shall deliver to the Investor one or more certificates
representing the Investor Shares and the Investor Warrants
registered in the name of the Investor or its nominee(s), as the
Investor has specified in writing to the Company.
4. Representations, Warranties,
Covenants and Agreements .
(a) Investor Representations,
Warranties and Covenants . The Investor represents, warrants
and agrees as follows:
(1) The Company has offered and made
available to the Investor a Confidential Offering Memorandum dated
as of July 27, 2005 (the “ Memorandum ”)
containing information regarding the Company and the Private
Placement. The Investor has declined to accept the Memorandum in
connection with its investment. 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 Investor Shares and Investor Warrants, and
has consulted with its advisors concerning the proposed investment
in the Company. The Investor is intentionally making the
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investment in the Public Placement
knowing that there may be material non-public information regarding
the Company of which the Investor is not aware. The Investor is
generally aware of the Company’s business affairs and
financial condition and has acquired sufficient information about
the Company, its management, financial condition, business and
operations and substantial risks associated with the investment in
the Private Placement to reach an informed and knowledgeable
decision to acquire the Investor Shares and Investor Warrants. The
Investor understands that an investment in the Company involves a
high degree of risk and the Investor is knowingly assuming all such
risks relating to its investment.
(2) The Investor has decided to
invest in the Investor Shares and Investor Warrants 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 and
Warrants.
(3) The Investor represents that the
Investor (or, if applicable, each managed account on whose behalf
the Investor Shares and Investor Warrants are being purchased by
such Investor) 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 in 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 and Investor Warrants are being purchased) has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and numerous substantial risks of
an investment in the Investor Shares and Investor Warrants, is
capable of making an informed investment decision and can bear the
economic risk of loss of the entire investment in the Investor
Shares and Investor Warrants being purchased.
(4) The Investor understands and
expressly acknowledges and agrees that none of the Investor Shares,
Investor Warrants or shares issuable upon exercise of the Investor
Warrants (collectively, “ Warrant Shares ”) have
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 an exemption from the
registration requirements of the Securities Act and Applicable
State Law is available, in each case to the extent permitted by the
terms of this Agreement.
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(5) The Investor understands and
agrees that the Investor Warrants and all certificates representing
the Investor Shares and Warrant Shares shall bear a legend which
will be substantially in the form of the following:
“THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ ACT ”), OR ANY APPLICABLE STATE SECURITIES OR
“BLUE SKY” LAWS (“ APPLICABLE STATE LAW
”). THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED,
TRANSFERRED OR HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE ACT
OR APPLICABLE STATE LAW RELATING TO DISPOSITION OF
SECURITIES.”
(6) The Investor (or, if applicable,
each managed account on whose behalf the Investor Shares and
Investor Warrants are being purchased by the Investor) will acquire
the Investor Shares and Investor Warrants 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 Investor Shares and Investor Warrants. The
Investor hereby covenants and agrees that, during the six month
period following the Closing, the Investor shall execute a lockup
agreement, containing a restriction on the sale of Investor Shares,
Investor Warrants and Warrant Shares for a period terminating on
the earlier of the ninetieth day following closing of a primary
offering by the Company or the six month anniversary of the
Closing, and other standard terms and conditions, with any
requesting underwriter participating in a primary offering (as
defined in Section 5(a)(1) below).
(7) The Investor hereby covenants
and agrees with the Company not to, directly or indirectly, sell,
offer, contract or grant any option to sell (including without
limitation any short sale), pledge, transfer, establish a
“put equivalent position” as such term is defined by
Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended
(the “ Exchange Act ”), or otherwise dispose of
any Investor Shares, Investor Warrants, Warrant Shares, options or
warrants to acquire Investor Shares, or securities exchangeable or
exercisable for or convertible into Investor Shares owned either of
record or beneficially (as defined in Rule 13d-3 under the Exchange
Act) by the Investor or publicly announce the Investor’s
intention to do any of the foregoing or enter into any swap or
other arrangement that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of the Investor
Shares, the Investor Warrants and the Warrants Shares, prior to the
date on which the Registration Statement (as defined in
Section 5(a)(2)) is declared effective (other than in
connection with a sale pursuant to a registration statement
effected under Section 5(a)(1) hereof).
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(8) The Investor hereby covenants
and agrees with the Company not to make any sale of the Investor
Shares, the Investor Warrants or the Warrant 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 Investor Shares, the
Investor Warrants and the Warrant Shares are not transferable on
the books of the Company unless the certificate submitted to the
transfer agent evidencing the Investor Shares, the Investor
Warrants or the Warrant Shares (as applicable) is accompanied by
(a) 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, the
Investor Warrants or the Warrant Shares have been sold in
accordance with a registration statement pursuant to Section 5
hereof and (B) the requirement of delivering a current
prospectus has been satisfied; or (b) an opinion of counsel
reasonably satisfactory to the Company stating that an exemption
from registration is available under the Securities Act. The
Investor acknowledges and agrees that, notwithstanding anything
else in this Agreement to the contrary, there may be times when the
Company may suspend the use of the prospectus forming a part of a
registration statement (or otherwise render the registration
statement unavailable) in the event that, and during such period
as, pending negotiations relating to, or consummation of, a
transaction, or the occurrence of any other event, would require
additional disclosure of material information by the Company in the
registration statement and the Company determines that disclosing
such information would (x) adversely affect the Company,
(y) 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
(z) otherwise render the Company unable to comply with the
requirements of the Securities and Exchange Commission (the “
Commission ”). In such event, subject to the last
sentence of this Section 4(a)(8), 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
Exchange Act. The Investor hereby covenants and agrees that it will
not sell any Investor Shares, Investor Warrants or Warrant 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 date on
which the Company gives the Investor written notice that the
Investor may thereafter effect sales pursuant to said prospectus.
Anything herein to the contrary notwithstanding, the Company does
not have the right to suspend the use of such prospectus for a
period of more than sixty (60) business days per suspension
and the Company may not exercise this right to suspend the use of
such prospectus more than two times in any twelve month
period.
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(9) 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.
(10) 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. If the
Investor is a limited liability company, it is a limited liability
company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with full power
and authority (limited liability company and other) to perform its
obligations under this Agreement. If the Investor is any other form
of business entity, it is duly organized or formed, validly
existing and in good standing under the laws of its jurisdiction of
organization, with full power and authority to perform its
obligations under this Agreement.
(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. If the Investor is a limited liability
company acting in an advisory capacity, it is a limited liability
company 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
and Investor Warrants is a suitable investment for such trust as
authorized by the terms thereof and applicable laws and
regulations.
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(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) The execution and delivery of
this Agreement and the performance by the Investor of the
transactions contemplated hereby have been duly authorized by all
necessary corporate or other action of the Investor.
(G) If the Investor is a
corporation, limited liability company, 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.
(H) If the Investor is an
individual, the Investor has full power and authority to perform
its obligations under this Agreement.
(11) The Investor agrees to complete
and execute and return to the Company (a) the Investor
Questionnaire attached as Annex I to this Agreement
representing that the Investor is investing in the Investor Shares
and Investor Warrants as an “accredited investor;”
(b) if the Investor is acting on behalf of a managed account
in the purchase of any Investor Shares and Investor Warrants, the
Managed Accounts Representation Letter attached as Annex II
to this Agreement; and (c) the Registration Statement
Questionnaire attached as Annex III , 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 5). If any of the answers provided by the Investor in
the questionnaires change prior to the effective date of the
Registration Statement, the Investor will provide the Company with
prompt written notice of such changes. The Investor further
represents and warrants that it is not purchasing the Investor
Shares and Investor Warrants on behalf of any managed account other
than as listed in the Managed Account Representation
Letter.
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(12) 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 or a limited partner/member or affiliate of Investor,
which in any case shall not violate any securities laws) 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 (other than a limited
partner/member or affiliate of Investor, which in any case shall
not violate any securities laws) 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.
(13) Except as otherwise set forth
in Annex III , as of the date hereof, the Investor does not
beneficially own any shares of Common Stock.
(14) No state, federal or foreign
regulatory approvals, permits, licenses or consents or other
contractual or legal obliga
