AMERIGON INCORPORATED
SECURITIES PURCHASE AGREEMENT
MARCH 29, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I. PURCHASE AND SALE OF STOCK AND WARRANTS . . . . . . . . . . . . . 1
1.1 Sale and Issuance of Series A Preferred Stock and Warrants.. . . . 1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . . 2
2.1 Organization, Good Standing and Qualification. . . . . . . . . . . 2
2.2 Capitalization and Voting Rights.. . . . . . . . . . . . . . . . . 2
2.3 Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Valid Issuance of Preferred and Class A Common Stock.. . . . . . . 3
2.6 Consents.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 Offering.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Proprietary Information Agreements.. . . . . . . . . . . . . . . . 5
2.10 Patents and Trademarks.. . . . . . . . . . . . . . . . . . . . . . 5
2.11 Compliance with Other Instruments. . . . . . . . . . . . . . . . . 5
2.12 Agreements; Action. Except as set forth on the Disclosure
Schedules: . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.13 Related-Party Transactions.. . . . . . . . . . . . . . . . . . . . 7
2.14 SEC Documents and Financial Statements.. . . . . . . . . . . . . . 7
2.15 Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.16 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.17 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.18 Environmental and Safety Laws. . . . . . . . . . . . . . . . . . . 9
2.19 Disclosure.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.20 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . 9
2.21 Current Public Information.. . . . . . . . . . . . . . . . . . . . 9
2.22 No General Solicitation. . . . . . . . . . . . . . . . . . . . . . 9
2.23 No Integrated Offering.. . . . . . . . . . . . . . . . . . . . . . 9
2.24 Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . .10
2.25 Title to Property and Assets.. . . . . . . . . . . . . . . . . . .10
2.26 Foreign Corrupt Practices. . . . . . . . . . . . . . . . . . . . .10
2.27 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.28 Employee Benefit Plans.. . . . . . . . . . . . . . . . . . . . . .10
2.29 Labor Agreements and Actions.. . . . . . . . . . . . . . . . . . .11
2.30 Year 2000 Compliance.. . . . . . . . . . . . . . . . . . . . . . .11
2.31 Computer and Communication Infrastructure. . . . . . . . . . . . .11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS . . . . . . . .12
3.1 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . .12
3.2 Purchase Entirely for Own Account. . . . . . . . . . . . . . . . .12
3.3 Accredited Investor. . . . . . . . . . . . . . . . . . . . . . . .12
3.4 Restricted Securities. . . . . . . . . . . . . . . . . . . . . . .12
3.5 Legends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
i
TABLE OF CONTENTS (CONTINUED)
PAGE
ARTICLE IV. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING. . . . . . . . .13
4.1 Representations and Warranties.. . . . . . . . . . . . . . . . . .13
4.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
4.3 Compliance Certificate.. . . . . . . . . . . . . . . . . . . . . .13
4.4 Qualifications.. . . . . . . . . . . . . . . . . . . . . . . . . .13
4.5 Shareholder Approval.. . . . . . . . . . . . . . . . . . . . . . .13
4.6 Certificate of Determination.. . . . . . . . . . . . . . . . . . .13
4.7 Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . .13
4.8 Proceedings and Documents. . . . . . . . . . . . . . . . . . . . .14
4.9 No Material Adverse Effect.. . . . . . . . . . . . . . . . . . . .14
4.10 Proceeding or Litigation.. . . . . . . . . . . . . . . . . . . . .14
4.11 Opinion of Company Counsel.. . . . . . . . . . . . . . . . . . . .14
4.12 Redemption.. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
4.13 Investors' Rights Agreement. . . . . . . . . . . . . . . . . . . .14
4.14 Board of Directors.. . . . . . . . . . . . . . . . . . . . . . . .15
4.15 Loan Documents.. . . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE V. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. . . . . . . .15
5.1 Representations and Warranties.. . . . . . . . . . . . . . . . . .15
5.2 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . .15
5.3 Qualifications.. . . . . . . . . . . . . . . . . . . . . . . . . .15
5.4 Shareholder Approval.. . . . . . . . . . . . . . . . . . . . . . .15
5.5 Investment Representation. . . . . . . . . . . . . . . . . . . . .15
5.6 Credit Agreement.. . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE VI. OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . .16
6.1 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . .16
6.2 Access to Information. . . . . . . . . . . . . . . . . . . . . . .17
6.3 Other Discussions; Break Up Arrangement. . . . . . . . . . . . . .18
6.4 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . .19
6.5 Shareholders' Meeting. . . . . . . . . . . . . . . . . . . . . . .19
6.6 Public Disclosure. . . . . . . . . . . . . . . . . . . . . . . . .19
6.7 Reasonable Efforts.. . . . . . . . . . . . . . . . . . . . . . . .19
6.8 Board of Directors.. . . . . . . . . . . . . . . . . . . . . . . .19
6.9 Bridge Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
6.10 Notification of Certain Matters. . . . . . . . . . . . . . . . . .20
6.11 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE VII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .20
7.1 Survival.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
7.2 Successors and Assigns.. . . . . . . . . . . . . . . . . . . . . .20
7.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . .21
7.4 Titles and Subtitles.. . . . . . . . . . . . . . . . . . . . . . .21
7.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
ii
TABLE OF CONTENTS (CONTINUED)
PAGE
7.6 Finder's Fee.. . . . . . . . . . . . . . . . . . . . . . . . . . .21
7.7 Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
7.8 Amendments and Waivers.. . . . . . . . . . . . . . . . . . . . . .22
7.9 Severability.. . . . . . . . . . . . . . . . . . . . . . . . . . .22
7.10 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
7.11 Aggregation of Stock.. . . . . . . . . . . . . . . . . . . . . . .22
7.12 Entire Agreement.. . . . . . . . . . . . . . . . . . . . . . . . .22
7.13 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . . .22
iii
TABLE OF CONTENTS (CONTINUED)
SCHEDULE A Schedule of Investors
SCHEDULE B Disclosure Schedules
EXHIBIT A Certificate of Determination
EXHIBIT B Contingent Common Stock Purchase Warrants
EXHIBIT C Investors' Rights Agreement
EXHIBIT D Opinion of Counsel for the Company
EXHIBIT E Share Exchange Agreement
EXHIBIT F Credit Agreement
EXHIBIT G Articles of Incorporation
EXHIBIT H Bylaws
iv
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is made on the 29th day of March,
1999, by and among Amerigon Incorporated, a California corporation (the
"Company"), and the investors listed on SCHEDULE A hereto (each, an "Investor"
and collectively, the "Investors").
THE PARTIES HEREBY AGREE AS FOLLOWS:
ARTICLE I.
PURCHASE AND SALE OF STOCK AND WARRANTS
1.1 SALE AND ISSUANCE OF SERIES A PREFERRED STOCK AND WARRANTS.
(a) The Company shall adopt and file with the Secretary of State
of California on or before the Closing (as defined below) the Certificate of
Determination of Rights, Preferences and Privileges of the Series A Preferred
Stock in the form attached hereto as EXHIBIT A (the "Certificate of
Determination").
(b) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally, to purchase at the Closing and the Company agrees to
sell and issue to each Investor at the Closing, (i) that number of shares of
Company's Series A Preferred Stock, no par value ("Series A Preferred Stock"),
which is convertible into the Company's Class A Common Stock, no par value
("Class A Common Stock") and (ii) Warrants (the "Warrants") to purchase that
number of shares Class A Common Stock (the "Warrant Shares") set forth opposite
each Investor's name on SCHEDULE A hereto for the purchase price set forth
thereon. The Warrants will be subject to the terms and conditions set forth in
the form of Contingent Common Stock Purchase Warrants attached hereto as EXHIBIT
B (the "Stock Purchase Warrants"). The Series A Preferred Stock being purchased
hereunder, the Class A Common Stock issuable upon conversion of such Series A
Preferred Stock, the Warrants and the Warrant Shares are collectively referred
to herein as the "Securities."
1.2 CLOSING.
The purchase and sale of the Series A Preferred Stock and the
Warrants being purchased hereunder shall take place at the offices of
O'Melveny & Xxxxx LLP, 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
at 10:00 A.M., on June 2, 1999, or at such other time and place as the
Company and the Investors mutually agree upon orally or in writing (which
time and place are designated as the "Closing"). At the Closing, the Company
shall deliver to each Investor a certificate representing the Series A
Preferred Stock and duly executed Stock Purchase Warrants representing the
Warrants that such Investor is purchasing against payment of the purchase
price therefor by bank cashier's check, wire transfer, cancellation of
indebtedness or any combination thereof. In the event that payment by an
Investor is made, in whole or in part, by cancellation of indebtedness, then
such Investor shall surrender to the Company for cancellation at the Closing
any evidence of such indebtedness or shall execute an instrument of
cancellation in form and substance acceptable to the Company. In addition,
at the Closing the Company shall deliver to any Investor choosing to pay any
part of the purchase price of the
Series A Preferred Stock and Warrants by cancellation of indebtedness, a
check in the amount of any interest accrued on such indebtedness through the
Closing.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedules to this Agreement (the
"Disclosure Schedules"), each such schedule being numbered to correspond to the
section of this Agreement to which it applies, the Company hereby represents and
warrants to each Investor that:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has the requisite corporate power to own
its properties and carry on its business as presently conducted. The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which it has employees, maintains offices, leases or owns
real property or is otherwise required to be so qualified, except where the
failure to be so qualified would not have a Material Adverse Effect (as
defined below). For purposes of this Agreement, "Material Adverse Effect"
shall mean any event, circumstance or condition pertaining to the Company's
business, assets, liabilities or operations that, individually or in the
aggregate, is, or could reasonably be expected to be, materially adverse to
the business, operations, assets or liabilities (including without limitation
contingent liabilities), employee relationships, customer or supplier
relationships, prospects, projected results of operations or cash flow for
the years ending December 31, 1999, 2000 or 2001, or the condition (financial
or otherwise) of the Company.
2.2 CAPITALIZATION AND VOTING RIGHTS. The authorized capital of
the Company consists, or will consist immediately prior to the Closing, of:
(a) PREFERRED STOCK. 5,000,000 shares of Preferred Stock, no
par value (the "Preferred Stock"), of which 9,000 shares have been designated
Series A Preferred Stock and up to all of which will be sold pursuant to this
Agreement. The rights, privileges and preferences of the Series A Preferred
Stock will be as stated in the Company's Certificate of Determination. No other
series of Preferred Stock has been designated and, except for the shares of
Series A Preferred Stock being sold pursuant to this Agreement, no shares of
Preferred Stock are, or will be at the Closing, outstanding.
(b) COMMON STOCK. 20,000,000 shares of Class A Common Stock,
of which 2,510,088 shares are issued and outstanding, and 600,000 shares of
Class B Common Stock, no par value ("Class B Common Stock"), none of which
are issued and outstanding as of the date hereof. The Class A Common Stock
and Class B Common Stock are together referred to herein as "Common Stock."
The holders of the Class B Common Stock and the number of shares held by such
shareholders are set forth on the Disclosure Schedules.
(c) The outstanding shares of Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities.
(d) Except for (i) the conversion privileges of the Series A
Preferred Stock to be issued under this Agreement, (ii) the rights provided in
the Investors' Rights
2
Agreement, (iii) currently outstanding options to purchase 210,169 shares of
Class A Common Stock granted to consultants or employees pursuant to the
Company's Stock Option Plans (the "Option Plans") listed on the Disclosure
Schedules, and (iv) the options, warrants or rights set forth on the
Disclosure Schedules, there are not outstanding any options, warrants, rights
(including conversion or preemptive rights) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock or securities
convertible into or exercisable for shares of capital stock. In addition to
the aforementioned options, the Company has reserved an additional 52,848
shares of its Class A Common Stock for purchase upon exercise of options to
be granted in the future under the Option Plans. All such shares of capital
stock issuable pursuant to the rights or agreements set forth in this Section
2.2(d) will be, upon issuance, duly and validly issued, fully paid and
nonassessable. The Company is not a party or subject to any agreement or
understanding, and, to the Company's knowledge, there is no agreement or
understanding between any persons and/or entities, which affects or relates
to the voting or giving of written consents with respect to any security or
by a director of the Company.
2.3 SUBSIDIARIES. Except as set forth on the Disclosure
Schedules, the Company does not presently own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity. Except as set forth on the Disclosure Schedules, the
Company is not a participant in any joint venture, partnership, or similar
arrangement.
2.4 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the Stock Purchase
Warrants, and the Investors' Rights Agreement (attached hereto as Exhibit C),
the performance of all obligations of the Company hereunder and thereunder,
and the authorization (or reservation for issuance), sale and issuance of the
Series A Preferred Stock and the Warrants being sold hereunder, the Class A
Common Stock issuable upon conversion of the Series A Preferred Stock and the
Warrant Shares has been taken or will be taken prior to the Closing. This
Agreement, the Stock Purchase Warrants, and the Investors' Rights Agreement
constitute valid and legally binding obligations of the Company, enforceable
in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally,
and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
2.5 VALID ISSUANCE OF PREFERRED AND CLASS A COMMON STOCK. The
Series A Preferred Stock that is being purchased by the Investors hereunder
is duly authorized and, when issued, sold and delivered in accordance with
the terms of this Agreement for the consideration expressed herein, will be
duly and validly issued, fully paid and nonassessable and will be free of
liens, claims, and encumbrances of the Company and of restrictions on
transfer, other than restrictions on transfer under applicable state and
federal securities laws. The Class A Common Stock issuable upon conversion
of the Series A Preferred Stock purchased under this Agreement is duly
authorized and reserved for issuance and, upon issuance in accordance with
the terms of the Certificate of Determination, will be duly and validly
issued, fully paid and nonassessable and will be free of liens, claims and
encumbrances of the Company and of restrictions on transfer, other than
restrictions on transfer under applicable state and federal securities laws.
The Warrants are duly authorized and, upon issuance in accordance with the
terms of this Agreement,
3
will be validly issued, fully paid and nonassessable, and will be free of
liens, claims and encumbrances of the Company and of restrictions on
transfer, other than restrictions on transfer under applicable state and
federal securities laws. The Warrant Shares are duly authorized and reserved
for issuance, and, upon exercise of the Warrants in accordance with the terms
thereof, will be validly issued, fully paid and nonassessable, and will be
free of liens, claims, and encumbrances of the Company and of restrictions on
transfer, other than restrictions on transfer under applicable state and
federal securities laws.
2.6 CONSENTS. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated
by this Agreement, except for: (i) the filing of a Notice of Transaction
pursuant to Section 25102(f) of the California Corporate Securities Law of
1968, as amended, and the rules thereunder, which filing will be effected
within the time prescribed by law; (ii) the filing of a Form D pursuant to
Regulation D under the Securities Act of 1933, as amended (the "Securities
Act"), which filing will be effected within the required statutory period;
(iii) the filing and distribution of a proxy statement pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") with respect to the special meeting of shareholders to be held to
approve this Agreement and the transactions and agreements contemplated
hereby; (iv) such other filings required pursuant to applicable federal and
state securities laws and blue sky laws, which filings will be effected
within the required statutory period; (v) the approval of this Agreement and
the transactions and agreements contemplated hereby by the requisite vote of
the Company's shareholders; (vi) the consents set forth on the Disclosure
Schedules; and (vii) the filing of an Application for the Listing of
Additional Shares with Nasdaq.
2.7 OFFERING. Subject to the truth and accuracy of each Investor's
representations set forth in Section 3 of this Agreement, the offer, sale and
issuance of the Series A Preferred Stock and the Warrants as contemplated by
this Agreement are exempt from the registration requirements of the
Securities Act , and the qualification or registration requirements of
applicable state securities laws. Neither the Company nor any authorized
agent acting on its behalf will take any action hereafter that would cause
the loss of such exemptions.
2.8 LITIGATION. There is no action, suit, proceeding or
investigation pending, or to the Company's knowledge, currently threatened
against the Company, except as which individually or in the aggregate would
not have a Material Adverse Effect. The Company is not a party or subject to
the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. Except as set forth on the
Disclosure Schedules, there is no material action, suit, proceeding or
investigation by the Company currently pending or that the Company intends to
initiate.
2.9 PROPRIETARY INFORMATION AGREEMENTS. Each employee, officer
and consultant of the Company has executed a proprietary information and
inventions agreement in the form set forth on the Disclosure Schedules. The
Company, after reasonable investigation, is not aware that any of its
employees, officers or consultants is in violation thereof, and the Company
will use its best efforts to prevent any such violation.
4
2.10 PATENTS AND TRADEMARKS. The Company owns or licenses from
another person all inventions, patents, patent rights, computer software,
trademarks, trademark rights, service marks, service xxxx rights, trade
names, trade name rights and copyrights (collectively, the "Intellectual
Property") necessary for its business as presently conducted without any
conflict with or infringement of the valid rights of others and the lack of
which could materially and adversely affect the operations or condition,
financial or otherwise, of the Company, and the Company has not received any
notice of infringement upon or conflict with the asserted rights of others.
The Disclosure Schedules contain a complete list of all such patents, patent
rights, registered trademarks, registered service marks, registered
copyrights, all agreements related to the foregoing, and all agreements
pursuant to which the Company licenses Intellectual Property from or to a
third party (excluding "shrink wrap" license agreements relating solely to
off the shelf software which is not material to the Company's business). All
Intellectual Property owned by the Company is owned free and clear of all
liens, adverse claims, encumbrances, or restrictions, except for restrictions
contained in the terms of the licenses listed in the Disclosure Schedules.
All Intellectual Property licensed by the Company is the subject of a license
agreement which is legal, valid, binding and enforceable and in full force
and effect. The consummation of the transactions contemplated hereby will
not result in the termination or impairment of the Company's ownership of, or
right to use, any Intellectual Property. The Company has a valuable body of
trade secrets, including know-how, concepts, business plans, and other
technical data (the "Proprietary Information") for the development,
manufacture and sale of its products. The Company has the right to use the
Proprietary Information free and clear of any rights, liens, encumbrances or
claims of others. The Company is not aware, after reasonable investigation,
that any of its employees is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of his or her best efforts to
promote the interests of the Company or that would conflict with the
Company's business.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery
and performance of this Agreement, the Investors' Rights Agreement, and the
Stock Purchase Warrants by the Company, the performance by the Company of its
obligations under the Certificate of Determination, and the consummation by
the Company of the transactions contemplated hereby and thereby (including,
without limitation, the issuance and reservation for issuance, as applicable,
of the Series A Preferred Stock being sold pursuant hereto, the Class A
Common Stock issuable upon the conversion of such Series A Preferred Stock,
the Warrants and the Warrant Shares) will not (i) result in a violation of
the Company's Articles of Incorporation or Bylaws, or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture
or instrument to which the Company or any of its properties is subject, or
result in a violation of any material law, rule, regulation, order, judgment
or decree (including U.S. federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected. The Company is not in violation of its Articles of
Incorporation, Bylaws or other organizational documents, or of any judgment,
order, writ, decree, law, rule or regulation to which the Company or its
properties is subject. The Company is not in default (and no event has
occurred which, with notice or lapse of time or both, would put the Company
in default) under, nor has there occurred any event giving others (with
notice or lapse of time or both) any rights of
5
termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument to which the Company is a party or any of
its properties is subject. The Company is not in violation of the listing
requirements of the Nasdaq Small Cap market ("NASDAQ") and does not
reasonably anticipate that the Class A Common Stock will be delisted by
NASDAQ for the foreseeable future.
2.12 AGREEMENTS; ACTION. Except as set forth on the Disclosure
Schedules:
(a) there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof, other than the agreements explicitly contemplated
hereby.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound that may involve (i) obligations
(contingent or otherwise) of, or payments to the Company, in excess of $50,000,
other than obligations of, or payments to, the Company arising from purchase or
sale agreements entered into in the ordinary course of business, (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company, other than licenses arising from the purchase of "off the
shelf" or other standard products, or (iii) provisions restricting the
development, manufacture or distribution of the Company's products or services.
(c) Since the date of the most recent audited balance sheet
provided to the Investors by the Company, the Company has not (i) declared or
paid any dividends or authorized or made any distribution upon or with respect
to any class or series of its capital stock, (ii) incurred any indebtedness for
money borrowed or any other liabilities individually in excess of $50,000, (iii)
made any loans or advances to any person, other than ordinary advances for
travel expenses, or guaranteed the obligations of any person, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of business.
(d) There are no other agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound that are material to the conduct
of the Company's business.
(e) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
2.13 RELATED-PARTY TRANSACTIONS. Except as set forth in the
Disclosure Schedules, no employee, officer or director of the Company or
member of his or her immediate family is indebted to the Company, nor is the
Company indebted (or committed to make loans or extend or guarantee credit)
to any of them. To the best of the Company's knowledge, none of such persons
has any direct or indirect ownership interest in any firm or corporation with
which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company,
except that employees, officers or directors of the
6
Company and members of their immediate families may own less than 5% of the
outstanding stock of one or more publicly traded companies that may compete
with the Company. Except as set forth on the Disclosure Schedules, no
employee, officer or director of the Company or member of his or her
immediate family is directly or indirectly interested in any material
contract with the Company.
2.14 SEC DOCUMENTS AND FINANCIAL STATEMENTS. Since January 1,
1997, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Exchange Act (all of the foregoing and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, with amendments read together
with underlying documents, are referred to herein as the "SEC Documents").
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with U.S. generally
accepted accounting principles, consistently applied, during the periods
involved and fairly and accurately present in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set
forth in the most recent audited balance sheet provided to the Investors by
the Company, the Company has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent
to the date of such financial statements and (ii) obligations under contracts
and commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in such
financial statements, which, individually or in the aggregate, are not
material to the financial condition or operating results of the Company.
Except as disclosed in such financial statements, the Company is not a
guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.
2.15 CHANGES. Except as set forth on the Disclosure Schedules,
since December 31, 1998 there has not been:
(a) any change in the assets, liabilities, financial condition
or operating results of the Company from that reflected in the Company's
financial statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results or business of the Company;
7
(c) any waiver by the Company of a valuable right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company;
(e) any amendment to or termination of a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
(f) any material change in any compensation arrangement or
agreement with any employee; or
(g) any agreement or commitment by the Company to do any of the
things described in this Section 2.15.
2.16 TAX RETURNS. The Company has timely filed all tax returns
(federal, state and local) required to be filed by it and such tax returns
are true and correct in all material respects. In addition, (i) the Company
has not requested any extension of time within which to file any tax returns
in respect of any fiscal year which have not since been filed and no request
for waivers of the time to assess any taxes are pending or outstanding, (ii)
no claim for taxes has become a lien against the property of the Company or
is being asserted against the Company other than liens for taxes not yet due
and payable, (iii) no audit of any tax return of the Company is being
conducted by a tax authority, (iv) no extension of the statute of limitations
on the assessment of any taxes has been granted to, by or applied for by, the
Company and is currently in effect, and (v) there is no agreement, contract
or arrangement to which the Company is a party that may result in the payment
of any amount that would not be deductible by reason of Sections 280G, 162 or
404 of the Internal Revenue Code.
2.17 PERMITS. The Company has all material franchises, permits,
licenses and any similar authority necessary for the conduct of its business
("Permits"). The Company is not in default under any of such Permits. The
Disclosure Schedules set forth an accurate and complete list of all such
Permits.
2.18 ENVIRONMENTAL AND SAFETY LAWS. The Company is not in
violation of any applicable material statute, law or regulation relating to
the environment or occupational health and safety, and no material
expenditures are or will be required in order to comply with any such
existing statute, law or regulation.
2.19 DISCLOSURE. The Company has fully provided each Investor with
all the information that such Investor has requested for deciding whether to
purchase the Series A Preferred Stock and Warrants and all information that
the Company believes is reasonably necessary to enable such Investor to make
such decision. This Agreement (including all the Exhibits and Schedules
hereto read together with the SEC documents) does not contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements herein or therein not misleading in light of the circumstances
under which they were made.
8
2.20 REGISTRATION RIGHTS. Except as set forth on the Disclosure
Schedules and the rights granted pursuant to the Investors' Rights Agreement,
the Company has not granted or agreed to grant any registration rights,
including piggyback rights, to any person or entity.
2.21 CURRENT PUBLIC INFORMATION. The Company is currently eligible
to register the resale of its Class A Common Stock on a registration
statement on Form S-3 under the Securities Act.
2.22 NO GENERAL SOLICITATION. Neither the Company nor any
distributor participating on the Company's behalf in the transactions
contemplated hereby (if any) nor any person acting for the Company, or any
such distributor, has conducted any "general solicitation," as such term is
defined in Regulation D, with respect to any of the Securities being offered
hereby.
2.23 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offerers
to buy any security under circumstances that would require registration of
the Securities being offered hereby under the Securities Act.
2.24 CORPORATE DOCUMENTS. Except for amendments necessary to
satisfy representations and warranties or conditions contained herein (the
form of which amendments has been approved by the Investors), the Articles of
Incorporation and Bylaws of the Company are in the form attached hereto as
EXHIBIT G and EXHIBIT H, respectively.
2.25 TITLE TO PROPERTY AND ASSETS. The property and assets the
Company owns are owned by the Company free and clear of all mortgages, liens,
loans and encumbrances, except (i) as reflected in the Company's financial
statements included in the SEC Documents, (ii) for mechanic's, workmen's,
repairmen's, warehousemen's, carrier's or similar liens arising or incurred
in the ordinary course of business and which, individually or in the
aggregate, are not material, and (iii) for statutory liens for the payment of
current taxes that are not yet delinquent. With respect to the property and
assets it leases, the Company is in compliance with such leases and holds a
valid leasehold interest free of any liens, claims or encumbrances, subject
to clauses (i), (ii) and (iii) above.
2.26 FOREIGN CORRUPT PRACTICES. Neither the Company nor any
director, officer, agent, employee or other person acting on behalf of the
Company has, in the course of his actions for, or on behalf of, the Company,
used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any provision
of the U.S. Foreign Corrupt Practices Act of 1977; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or domestic government official or employee.
2.27 INSURANCE. The Disclosure Schedules set forth a complete and
accurate list of all insurance policies maintained by the Company and a
summary of the coverage provided by such policies.
9
2.28 EMPLOYEE BENEFIT PLANS. The Disclosure Schedules set forth a
complete and accurate list of all employment contracts, deferred compensation
agreements, bonus plans, incentive plans, profit sharing plans, retirement
agreements or other agreements, plans or arrangements relating to
compensation or benefits provided to the Company's employees. The Company
has complied in all material respects with all applicable state and federal
equal employment opportunity and other laws related to employment and the
agreements, plans and arrangements set forth on the Disclosure Schedules.
The Disclosure Schedules contain a complete and accurate list of all of the
Company's employees, their current rates of compensation, date of hire, and
job title.
2.29 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the Company's
knowledge, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving
the Company pending, or to the Company's knowledge, threatened, that could
have a material adverse effect on the assets, properties, financial
condition, operating results or business of the Company, nor is the Company
aware of any labor organization activity involving its employees. The
Company is not aware that any officer or key employee, or that any group of
key employees, intends to terminate their employment with the Company nor
does the Company have a present intention to terminate the employment of any
of the foregoing. The employment of each officer and employee of the Company
is terminable at the will of the Company.
2.30 YEAR 2000 COMPLIANCE. All of the Company's products currently
being sold and under development and all computer software and hardware
(including microcode, firmware, system and application programs, files,
databases, computer services and microcontrollers), including those embedded
in computer and noncomputer equipment contained in the Company's products
currently being sold and under development are Year 2000 Compliant, except to
the extent that they may be used or interfaced with other software, data or
operating systems that are not Year 2000 Compliant. All of the Company's
internal computer systems are Year 2000 Compliant, except that the Company
makes no such representation with respect to off-the-shelf software that is
used in the Company's internal computer systems the failure or malfunctioning
of which would not have a material adverse effect on the Company. To its
knowledge, the Company is not relying on the products or services of any
third party whose systems are not Year 2000 Compliant. For purposes of this
Agreement, "Year 2000 Compliant" shall mean that such products and data and
information systems and any such data, information or other files or software
it uses, individually and in combination, completely and accurately record,
store, process, calculate and present data involving dates before, on or
after January 1, 2000; specifically: (i) no value for a current date will
cause any interruption in operation; (ii) date-based functionality will
behave consistently when dealing with dates before, on or after January 1,
2000; (iii) no abnormal endings or incorrect results will be produced when
working with dates before, on or after January 1, 2000; (iv) in all
interfaces and data storage, the century will be specified explicitly and
will be unambiguously derived; and (v) year 2000 will be recognized as a leap
year.
10
2.31 COMPUTER AND COMMUNICATION INFRASTRUCTURE. The Company's
computer and communication infrastructure is adequate to conduct its
business as a supplier of automobile parts. The Company is in
compliance with QS9000.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby represents, warrants and covenants that:
3.1 AUTHORIZATION. Such Investor has full power and authority to
enter into this Agreement and the Investors' Rights Agreement, and each such
agreement constitutes its valid and legally binding obligation, enforceable
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief
or other equitable remedies.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with such Investor in reliance upon such Investor's representation to the
Company, which by such Investor's execution of this Agreement such Investor
hereby confirms, that the Securities will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in or otherwise
distributing the same; provided, however, that such Investor may make
distributions of any such Securities to such Investor's affiliates.
3.3 ACCREDITED INVESTOR. Such Investor is an "accredited
investor" within the meaning of Securities and Exchange Commission ("SEC")
Rule 501 of Regulation D, as presently in effect.
3.4 RESTRICTED SECURITIES. Such Investor understands that the
Securities it is purchasing under this Agreement are characterized as
"restricted securities" under the federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such Securities
may be resold without registration under the Securities Act only in certain
limited circumstances. Each Investor understands that such Investor is
acquiring certain registration rights pursuant to the Investors' Rights
Agreement with respect to the registration for resale of the Class A Common
Stock issuable upon conversion of the Series A Preferred Stock and the Class
A Common Stock issuable upon exercise of the Warrants.
3.5 LEGENDS. Such Investor understands that the certificates
evidencing the Securities may bear a legend in substantially the following
form:
"These securities have not been registered under the Securities Act of
1933, as amended (the "Act"). They may not be sold, offered for sale, pledged
or hypothecated unless (i) a registration statement is in effect with respect to
the securities or (ii) an exemption from registration is available under the
Act."
11
ARTICLE IV.
CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING
The obligations of each Investor under subsection 1.1(b) of this
Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions, any or all of which may be waived with respect to an
Investor by such Investor's written consent thereto:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true on and as of
the Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
4.2 PERFORMANCE. The Company shall have performed and complied in
all material respects with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied
with by it on or before the Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to each Investor at the Closing a certificate stating that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and
sale of the Securities pursuant to this Agreement shall be duly obtained and
effective as of the Closing.
4.5 SHAREHOLDER APPROVAL. The Company shall have obtained the
requisite approval of this Agreement and the transactions contemplated
hereby, including but not limited to the Investors' Rights Agreement, by its
shareholders.
4.6 CERTIFICATE OF DETERMINATION. The Company shall have filed
the Certificate of Determination with the California Secretary of State and
shall have provided evidence satisfactory to the Investors that such filing
has been made.
4.7 DUE DILIGENCE. Each of the Investors shall have received from
the Company all the information that such Investor has theretofore requested
and which such Investor believes is reasonably necessary to enable it to make
the investment decision contemplated by this Agreement.
4.8 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto shall be reasonably satisfactory in form
and substance to the Investors and their counsel, and they shall have
received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
4.9 NO MATERIAL ADVERSE EFFECT. No event, circumstance or
condition shall have occurred which has, or could reasonably be expected to
have, a Material Adverse Effect.
4.10 PROCEEDING OR LITIGATION. No restraining order, preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction or other legal or
12
regulatory restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the
foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to
this Agreement or the transactions contemplated hereby which makes the
consummation of such transactions illegal or which otherwise prohibits the
consummation of such transactions. In the event an injunction or other order
shall have been issued, each party agrees to use its reasonable diligent
efforts to have such injunction or other order lifted.
4.11 OPINION OF COMPANY COUNSEL. Each Investor shall have received
from O'Melveny & Xxxxx, LLP, counsel for the Company, an opinion, dated as of
the Closing, in the form attached hereto as EXHIBIT D.
4.12 REDEMPTION. The Company shall have entered into a legally
binding and enforceable agreement providing for the redemption of all
outstanding Class B Common Stock into which Class A Common Stock currently
held in escrow is converted or convertible, subject only to the prior closing
of the transaction contemplated by this Agreement, either in accordance with
the terms of the Share Exchange Agreement attached hereto as EXHIBIT E, or,
otherwise, on terms and conditions satisfactory to the Investors, in their
sole discretion.
4.13 INVESTORS' RIGHTS AGREEMENT. The Company shall have executed
and delivered to the Investors the Investors' Rights Agreement in the form
attached hereto as EXHIBIT C.
4.14 BOARD OF DIRECTORS. Resolutions shall have been adopted by
the Board of Directors to increase the authorized number of directors of the
Company to seven (7) effective as of the Closing, and all of the Company's
directors, except Xxxx Xxxxx, Xxx Xxxx and Xxxxxxx Xxxxxxxx, shall have
tendered their resignations to be effective as of the Closing.
4.15 LOAN DOCUMENTS. No Event of Default, as that term is defined
in the Credit Agreement attached hereto as EXHIBIT F ("Credit Agreement"),
shall have occurred and remain uncured at the time of the Closing.
ARTICLE V.
CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The obligations of the Company to each Investor under this Agreement
are subject to the fulfillment on or before the Closing of each of the following
conditions by the Company or that Investor, as the case may be, any or all of
which may be waived by the Company's written consent thereto:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2 PAYMENT OF PURCHASE PRICE. Each Investor shall have delivered
the purchase price specified in Section 1.2.
13
5.3 QUALIFICATIONS. All material authorizations, approvals or
permits of any governmental authority or regulatory body of the United States
or of any state that are required in connection with the lawful issuance and
sale of the Securities pursuant to this Agreement and which are set forth in
this Agreement or on the Disclosure Schedules shall be duly obtained and
effective as of the Closing.
5.4 SHAREHOLDER APPROVAL. The Company shall have obtained the
requisite approval of this Agreement and the transactions contemplated
hereby, including but not limited to the Investors' Rights Agreement, by its
shareholders.
5.5 INVESTMENT REPRESENTATION. The Company shall have obtained
from each Investor a representation that such Investor has received from the
Company all the information that such Investor has requested for deciding
whether to purchase the Series A Preferred Stock and the Warrants and all
information that such Investor believes is reasonably necessary to enable
such Investor to make such decision.
5.6 CREDIT AGREEMENT. The Lender shall have performed in all
material respects the agreements and obligations to be performed by it under
the Credit Agreement which are required to be performed prior to the Closing.
ARTICLE VI.
OTHER AGREEMENTS
6.1 CONDUCT OF BUSINESS. During the period from the date of this
Agreement and continuing until the Closing, except as expressly contemplated
or permitted by this Agreement or with the prior written consent of
Investors, which shall not be unreasonably withheld or delayed, the Company
shall carry on its business in the ordinary course consistent with past
practice. Without limiting the generality of the foregoing, except as
expressly contemplated or permitted by this Agreement, the Company shall not
without the prior written consent of Investors:
(a) declare or pay any dividends on, or make other distributions
in respect of, any of the Company's capital stock;
(b) (i) repurchase, redeem or otherwise acquire any shares of
its capital stock, or any securities convertible into or exercisable for any
shares of its capital stock, (ii) split, combine or reclassify any shares of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing;
(c) amend its Articles of Incorporation, Bylaws or other similar
governing documents;
14
(d) make any capital expenditures other than those which (i) are
made in the ordinary course of business or are necessary to maintain existing
assets in good repair and (ii) do not exceed $50,000 in the aggregate;
(e) enter into any new line of business;
(f) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire any assets, which would be material, individually or in the
aggregate, to the Company;
(g) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue, or in any of the conditions to the
Closing not being satisfied;
(h) change its methods of accounting in effect at December 31,
1998, except as required by changes in GAAP or as concurred with by the
Company's independent auditors;
(i) (i) except as required by applicable law or as required to
maintain qualification pursuant to the Internal Revenue Code, adopt, amend, or
terminate any employee benefit plan or any agreement, arrangement, plan or
policy between the Company and one or more of its current or former directors,
officers or employees, or (ii) except for normal increases in the ordinary
course of business consistent with past practice or except as required by
applicable law, increase in any manner the compensation or fringe benefits of
any director, officer or employee or pay any benefit not required by any
agreement as in effect as of the date hereof (including, without limitation, the
granting of stock options, stock appreciation rights, restricted stock,
restricted stock units or performance units or shares);
(j) other than activities in the ordinary course of business
consistent with past practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose of,
any of its material assets, properties or other rights or agreements;
(k) other than in the ordinary course of business consistent
with past practice and not in excess of $50,000 (individually or in the
aggregate), incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(l) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract, agreement
or lease for goods, services or office space to which the Company is a party or
by which the Company or its properties are bound, other than the renewal in the
ordinary course of business of any lease the term of which expires prior to the
Closing; or
(m) agree to do any of the foregoing.
15
6.2 ACCESS TO INFORMATION. The Company will give Investors and
their accountants, legal counsel and other representatives full access,
during normal business hours throughout the period prior to the Closing, to
all of the properties, books, contracts, commitments and records relating to
its capital stock, business, assets and liabilities. The Company will make
available to Investors and their accountants, legal counsel and other
representatives during such period copies of all documents and all such
information concerning its affairs as Investors may reasonably request.
6.3 OTHER DISCUSSIONS; BREAK UP ARRANGEMENT.
(a) From the date hereof until the Closing, unless Investors
have given their prior written approval, none of the Company nor any of its
affiliates or representatives shall directly or indirectly, solicit, initiate,
facilitate, or encourage the submission of any other proposal for, enter into
any agreement or initiate or participate in any discussions regarding, or
furnish to any person any information or assistance with respect to, or take any
other action to facilitate the making of any proposal that constitutes or may
reasonably be expected to lead to, other business combinations or financing
transactions directly or indirectly involving the Company or its business
operations, or the acquisition, in any manner directly or indirectly, of all or
any substantial part of the business, assets, capital stock or other voting
securities of, or any other equity interest in, the Company or its business
operations by any other party. Notwithstanding the above, the Company may
respond to unsolicited written proposals or to information requests and furnish
or disclose information in response thereto if the Company's Board of Directors
determines in good faith, after consultation with legal counsel, that taking
such action is necessary in the exercise of its fiduciary obligations under
applicable law. If the Company receives any competing proposal (oral or
written), the Company shall advise Investors immediately of its terms and, if
the competing proposal is in writing, furnish Investors with a true and complete
copy thereof.
(b) If (1) the Closing does not occur (other than as a result of
a material breach of this Agreement by the Investors or the determination by the
Investors not to proceed with this transaction for failure of the condition
specified in Section 4.9 hereof) and (2) a Trigger Event (as defined below) has
occurred within twelve months from the date hereof, then the Company shall:
(i) immediately reimburse the Investors for all reasonable
out-of-pocket expenses incurred in connection with the preparation, negotiation
and performance of this Agreement up to a maximum of $150,000 (including legal,
accounting, consulting and any third party financing fees and any costs of
collection), and
(ii) immediately pay a failed transaction fee (the "Fee") to
the Investors in an amount equal to the greater of (A) 5% of the value of the
transaction constituting the Trigger Event accepted by the Board or (B)
$300,000.
(c) A "Trigger Event" means occurrence of any of the following
events: (i) any person, corporation, entity or "group" (as such term is used in
section 13(d) of the Exchange Act) (other than the Investors or any of their
affiliates) (a "Person") shall have acquired or become the beneficial owner of
more than 25% of the outstanding Class A Common Stock, or shall have been
granted any option or right (conditional or otherwise), to acquire more
16
than 25% of the outstanding Class A Common Stock; (ii) any Person shall have
commenced a bona fide tender offer or exchange offer for consideration the
fair market value of which is in excess of the initial Conversion Price (as
provided in the Certificate of Determination) per share for at least 25% of
the outstanding Class A Common Stock, (iii) the Company (or its Board) shall
have authorized, recommended, proposed or publicly announced its intention to
enter into any tender or exchange offer, merger, consolidation, liquidation,
dissolution, business combination, recapitalization, acquisition, or
disposition of a material amount of assets or securities or any comparable
transaction which has not been consented to in writing by the Investors; or
(iv) the shareholders of the Company fail to approve the Agreement.
6.4 PROXY STATEMENT. As promptly as practicable after the
execution of this Agreement, the Company shall prepare and file with the SEC
a proxy statement (together with all amendments thereto "Proxy Statement")
for use in connection with the Annual Meeting (as defined below). The
Company shall prepare the Proxy Statement in compliance with applicable
federal and state securities laws and with the applicable provisions of the
California General Corporations Law. As promptly as practicable after the
preparation of the Proxy Statement and the completion of the SEC's review, if
any, of such Proxy Statement, the Proxy Statement shall be mailed to the
shareholders of the Company. None of the information supplied by any party
hereto for inclusion in the Proxy Statement shall, at the date it or any
amendments or supplements thereto are mailed to the shareholders in
connection with the Annual Meeting, at the time of the Annual Meeting, or at
the Closing, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading.
6.5 SHAREHOLDERS' MEETING. As promptly as practicable after the
date hereof, the Company shall call and hold its annual meeting of its
shareholders for the purpose of approving this Agreement and the transactions
contemplated hereby (the "Annual Meeting"). The Company shall use its best
efforts to solicit from its shareholders proxies in favor of the approval of
this Agreement and the transactions contemplated hereby pursuant to the Proxy
Statement.
6.6 PUBLIC DISCLOSURE. Each party shall consult with the others
before issuing any press release or otherwise making any public statement or
making any other public (or non-confidential) disclosure (whether or not in
response to an inquiry) regarding the terms of this Agreement and the
transactions contemplated hereby, and shall provide to the others for review
and approval a copy of such contemplated disclosure. No party shall issue any
such press release or make any such statement or disclosure before such
review and approval by the other parties, except as such party is advised by
legal counsel is required by law.
6.7 REASONABLE EFFORTS. Each party will use its commercially
reasonable efforts to cause all conditions to the Closing to be satisfied,
including, without limitation, obtaining any of its consents necessary or
desirable in connection with the consummation of the transactions
contemplated by this Agreement.
6.8 BOARD OF DIRECTORS. The parties understand that pursuant to
the Certificate of Determination, the authorized number of directors of the
Company shall be seven, the holders of Common Stock shall be entitled to
elect two directors, and the holders of Series A Preferred Stock shall be
entitled to elect five directors. At or prior to the Closing, all of the
Company's
17
directors, except Xxxx Xxxxx, Xxx Xxxx and Xxxxxxx Xxxxxxxx, shall have
resigned. The remaining directors shall fill the vacancies created by such
resignations and appoint directors who are acceptable to the Investors.
6.9 BRIDGE LOAN. Concurrently, with the execution of this
Agreement, the parties shall enter into the Credit Agreement, together with
the related security agreements and documents referred to therein, pursuant
to which the Investors shall loan funds to the Company (the "Bridge Loan")
subject to the terms and on the conditions set forth in such Credit Agreement.
6.10 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Investors, and Investors shall give prompt notice to the
Company, of (a) the occurrence or nonoccurrence of any event the occurrence
or nonoccurrence of which would likely to cause any representation or
warranty of the notifying party contained in this Agreement to become
materially untrue or inaccurate, or (b) any failure of the notifying party to
materially comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
6.11 INDEMNIFICATION. In the event any third party brings an
action, suit or proceeding (including, without limitation, any derivative
proceeding) against any Investor arising out of any allegation that this
Agreement or the agreements and transactions contemplated hereby violate or
interfere with an agreement or arrangement between such third party and the
Company, then the Company agrees to indemnify the Investors from and against
the entirety of any loss, damage, claim, cost or expense (including
reasonable attorneys' fees) the Investors may suffer through and after the
date of the claim for indemnification resulting from, arising out of,
relating to, in the nature of, or caused by the third party action, suit or
proceeding referenced above.
ARTICLE VII.
MISCELLANEOUS
7.1 SURVIVAL. The warranties, representations and covenants of
the Company and Investors contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and shall in no
way be affected by any investigation of the subject matter thereof made by or
on behalf of the Investors or the Company prior to the Closing. The
warranties, representations, and covenants of the Company shall terminate
upon the Closing and shall be of no further force or effect after such date.
7.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the parties
(including transferees of any Securities). Nothing in this Agreement, express
or implied, is intended to confer upon any party, other than the parties
hereto or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
7.3 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
18
7.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.5 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified, (ii) when sent by confirmed telex or facsimile
if sent during normal business hours of the recipient, if not, then on the
next business day; (iii) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall
be sent to the address as set forth on the signature page hereof or at such
other address as such party may designate by ten days advance written notice
to the other parties hereto.
7.6 FINDER'S FEE. Except as set forth on the Disclosure
Schedules, each party represents that it neither is nor will be obligated for
any finders' fee or commission in connection with this transaction. Each
Investor agrees to indemnify and to hold harmless the Company from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which such Investor or any of its officers, partners,
employees or representatives is responsible. The Company agrees to indemnify
and hold harmless each Investor from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company
or any of its officers, employees or representatives is responsible.
7.7 EXPENSES. The Company shall pay all costs and expenses that
it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement, the agreements related hereto, and the
agreements related to the Bridge Loan. Upon the execution of this Agreement,
the Company shall reimburse the Investors for their actual costs (including
reasonable legal fees) incurred in connection with the Bridge Loan, but not
in excess of $50,000. If the Closing is effected, the Company shall, at the
Closing, reimburse the actual costs (including reasonable legal fees) of the
Investors in connection with the negotiation, execution, delivery, and
performance of this Agreement and the transactions and agreements
contemplated hereby (in addition to the costs associated with the Bridge Loan
as previously reimbursed) not to exceed $150,000. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
Investors' Rights Agreement, or the Certificate of Determination, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party
may be entitled.
7.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and each
Investor.
7.9 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
19
7.10 TERMINATION. If the closing has not occurred on or before
June 30, 1999, either party may terminate this Agreement by providing written
notice to the other party; provided, however, if the SEC reviews the
Company's Proxy Statement, the date on which termination pursuant to this
Section 7.10 shall first be permitted will be July 30, 1999.
Notwithstanding, the termination of this Agreement pursuant to this Section
7.10, the Company shall be liable for the payments described in Section 6.3
if a Trigger event subsequently occurs within the time period set forth in
that section.
7.11 AGGREGATION OF STOCK. All shares of the Series A Preferred
Stock or Common Stock issued upon conversion thereof held or acquired by
affiliated entities or persons shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement.
7.12 ENTIRE AGREEMENT. This Agreement and the documents referred
to herein constitute the entire agreement among the parties and no party
shall be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or
therein.
7.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
THE COMPANY: AMERIGON INCORPORATED
By: /s/ XXX X. XXXX
----------------------------------
Its:
----------------------------------
Address:
----------------------------------
----------------------------------
----------------------------------
INVESTORS: WESTAR CAPITAL II LLC
By: /s/ XXXX X. XXXXX
----------------------------------
Its:
----------------------------------
Address:
----------------------------------
----------------------------------
----------------------------------
BIG BEAVER INVESTMENTS LLC
By: /s/ XXXXX X. XXXX III
----------------------------------
Its: President
----------------------------------
Address:
----------------------------------
----------------------------------
----------------------------------
21
SCHEDULE A
INVESTOR SERIES A PREFERRED STOCK PURCHASE PRICE
-------- ------------------------ --------------
Westar Capital II LLC 4,500 $4,500,000
Big Beaver Investments LLC 4,500 $4,500,000
INVESTOR WARRANT PURCHASE PRICE
-------- ------- ---------------
Westar Capital II LLC Warrants to purchase that number of shares $500
of Class A Common Stock equal to 36.9% of
the aggregate shares subject to (i) currently
outstanding warrants (excluding the Bridge Loan
Warrants) plus (ii) warrants that are issuable at the
Closing to Xxxxxxx Xxxxx Securities Incorporated
on the terms and conditions set forth in the
Contingent Common Stock Purchase Warrants attached
hereto as Exhibit B.
Big Beaver Investments LLC Warrants to purchase that number of shares $500
of Class A Common Stock equal to 36.9% of
the aggregate shares subject to (i) currently
outstanding warrants (excluding the Bridge Loan
Warrants) plus (ii) warrants that are issuable at the
Closing to Xxxxxxx Xxxxx Securities Incorporated
on the terms and conditions set forth in the Contingent
Common Stock Purchase Warrants attached hereto as Exhibit B.
22
EXHIBIT A TO SECURITIES PURCHASE AGREEMENT
BEGINS ON THE FOLLOWING PAGE.
CERTIFICATE OF DETERMINATION
OF RIGHTS, PREFERENCES AND PRIVILEGES
OF
THE SERIES A PREFERRED STOCK
OF
AMERIGON INCORPORATED
---------------------
Pursuant to the Provisions of Section 401 of the
General Corporation Law of the State of California
The undersigned and , the President and
Secretary, respectively, of Amerigon Incorporated, a California corporation (the
"Corporation"), do hereby certify as follows:
A. That the following resolution designates nine thousand shares of
Series A Preferred Stock, and that as of the date hereof, no shares of Series A
Preferred Stock have been issued or are outstanding.
B. That the Board of Directors of the Corporation, pursuant to the
authority so vested in it by the Articles of Incorporation of the Corporation
and in accordance with the provisions of Section 401 of the General Corporation
Law of the State of California, adopted the following resolution creating a
series of Preferred Stock designated as "Series A Preferred Stock":
WHEREAS, the Articles of Incorporation of this Corporation
authorize the issuance of one or more series of preferred stock
("Preferred Stock") of the Corporation and authorize the Board of
Directors to determine the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series of
Preferred Stock and to fix the number of shares of such series;
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority
expressly granted to and vested in the board of directors of the
corporation pursuant to the Articles of Incorporation, there is hereby
created one series of preferred stock, without par value, of the
Corporation which shall be designated "SERIES A PREFERRED STOCK." The
number of shares of Series A Preferred Stock authorized for issuance
is nine thousand. In addition to those set forth in the Articles of
Incorporation of the Corporation, the Series A Preferred Stock shall
have the powers and preferences, the relative, participating, optional
or other rights, and the qualifications, limitations or restrictions
set forth below:
1. DIVIDEND PROVISIONS. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, the holders of
shares of Series A Preferred Stock shall be entitled to receive dividends, out
of any assets legally available therefor, in an amount equal to the dividends
that would be paid on the outstanding Class A Common Stock of the corporation
into which the Series A Preferred Stock is convertible on an as converted basis,
payable when, as and if declared by the Board of Directors.
2. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of
this corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock that may from time to time come into existence, the
holders of Series A Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of this corporation to the
holders of Common Stock by reason of their ownership thereof, an amount per
share equal to the sum of (i) $1,000 for each outstanding share of Series A
Preferred Stock (the "Original Series A Issue Price"), (ii) an amount equal to
7% of the Original Series A Issue Price annually, but only until the fourth
anniversary of the issuance of the Series A Preferred Stock, and (iii) an amount
equal to any declared but unpaid dividends on such share (the amounts in (ii)
and (iii) being referred to herein as the "Premium"). If upon the occurrence of
such event, the assets and funds thus distributed among the holders of the
Series A Preferred Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amounts, then, subject to the rights
of series of Preferred Stock that may from time to time come into existence, the
entire assets and funds of the corporation legally available for distribution
shall be distributed ratably among the holders of the Series A Preferred Stock
in proportion to the amount of such stock owned by each such holder.
(b) Upon the completion of the distribution required by subparagraph
(a) of this Section 2 and any other distribution that may be required with
respect to series of Preferred Stock that may from time to time come into
existence, if assets remain in this corporation, the holders of the Common Stock
of this corporation, shall receive all of the remaining assets of the
corporation.
(c)(i) For purposes of this Section 2, a liquidation, dissolution
or winding up of this corporation shall be deemed to be occasioned by, or to
include, (A) the acquisition of the corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation but, excluding any
merger effected exclusively for the purpose of changing the domicile of the
corporation); or (B) a sale of all or substantially all of the assets of the
corporation; UNLESS the corporation's shareholders of record as constituted
immediately prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as consideration for the
corporation's acquisition or sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity.
(ii) In any of such events, if the consideration received by the
corporation is other than cash, its value will be deemed its fair market value.
Any securities shall be valued as follows:
(A) Securities not subject to investment letter or other
similar restrictions on free marketability:
(1) If traded on a securities exchange or on the
NASDAQ National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange over the thirty-day period
ending three (3) days prior to the closing;
2
(2) If actively traded over-the-counter or on NASDAQ
(other than on the National Market), the value shall be deemed to be the average
of the closing bid or sale prices (whichever is applicable) over the thirty-day
period ending three (3) days prior to the closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as determined in good faith by the Board
of Directors of the corporation.
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as determined in good faith by the Board of Directors of
the corporation.
(iii) In the event the requirements of this subsection 2(c) are
not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such time as
the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Series A Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in subsection
2(c)(iv) hereof.
(iv) The corporation shall give each holder of record of
Series A Preferred Stock written notice of such impending transaction not later
than twenty (20) days prior to (A) the date of the shareholders' meeting called
to approve such transaction, (B) the effective date of a written consent of the
shareholders to approve the transaction, or (C) the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and the corporation shall thereafter give such holders prompt
notice of any material changes relating to the transaction. The transaction
shall in no event take place sooner than twenty (20) days after the corporation
has given the first notice provided for herein or sooner than ten (10) days
after the corporation has given notice of any material changes provided for
herein; provided, however, that such periods may be shortened upon the written
consent of the holders of Preferred Stock that are entitled to such notice
rights or similar notice rights and that represent at least a majority of the
voting power of all then outstanding shares of such Preferred Stock.
3. REDEMPTION.
(a) Subject to the rights of series of Preferred Stock which may from
time to time come into existence, on or at any time after January 1, 2003, this
corporation may at any time it may lawfully do so, at the option of the Board of
Directors, redeem in whole or in part the Series A Preferred Stock (such date of
redemption is referred to herein as the "Series A Redemption Date") by paying in
cash therefor a sum equal to the Original Series A Issue Price
3
plus the Premium, as adjusted for any stock dividends, combinations or splits
with respect to such shares (the "Series A Redemption Price"); provided,
however, that this corporation may only redeem shares of Series A Preferred
Stock hereunder if the average of the closing prices of the Class A Common
Stock as reported by Nasdaq (or such other exchange or market on which the
shares are then traded) for the sixty trading days preceeding the date the
notice of redemption is given in accordance with subsection (b) is at least 4
times greater than the then applicable Conversion Price (as defined in
Section 4(a) below) . Any redemption effected pursuant to this subsection
(3)(a) shall be made on a pro rata basis among the holders of the Series A
Preferred Stock in proportion to the number of shares of Series A Preferred
Stock then held by them.
(b) As used herein and in subsection (3)(c) and (d) below, the term
"Redemption Date" shall refer to each "Series A Redemption Date" and the term
"Redemption Price" shall refer to each "Series A Redemption Price." Subject to
the rights of series of Preferred Stock which may from time to time come into
existence, at least fifteen (15) but no more than thirty (30) days prior to each
Redemption Date, written notice shall be mailed, first class postage prepaid, to
each holder of record (at the close of business on the business day next
preceding the day on which notice is given) of the Series A Preferred Stock to
be redeemed, at the address last shown on the records of this corporation for
such holder, notifying such holder of the redemption to be effected, specifying
the number of shares to be redeemed from such holder, the Redemption Date, the
Redemption Price, the place at which payment may be obtained and calling upon
such holder to surrender to this corporation, in the manner and at the place
designated, his, her or its certificate or certificates representing the shares
to be redeemed (the "Redemption Notice"). Except as provided in subsection
(3)(c) on or after the Redemption Date, each holder of Series A Preferred Stock
to be redeemed shall surrender to this corporation the certificate or
certificates representing such shares, in the manner and at the place designated
in the Redemption Notice, and thereupon the Redemption Price of such shares
shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(c) From and after the Redemption Date, unless there shall have been
a default in payment of the Redemption Price, all rights of the holders of
shares of Series A Preferred Stock designated for redemption in the Redemption
Notice as holders of Series A Preferred Stock (except the right to receive the
Redemption Price without interest upon surrender of their certificate or
certificates) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of this corporation or be deemed to be
outstanding for any purpose whatsoever. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, if the funds of
the corporation legally available for redemption of shares of Series A Preferred
Stock on any Redemption Date are insufficient to redeem the total number of
shares of Series A Preferred Stock to be redeemed on such date, those funds
which are legally available will be used to redeem the maximum possible number
of such shares ratably among the holders of such shares to be redeemed based
upon their holdings of Series A Preferred Stock. The shares of Series A
Preferred Stock not redeemed shall remain outstanding and entitled to all the
rights and preferences provided herein. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, at any time
thereafter when additional funds of the corporation are legally available for
the redemption of shares of Series A
4
Preferred Stock, such funds will immediately be used to redeem the balance of
the shares which the corporation has become obliged to redeem on any
Redemption Date but which it has not redeemed.
(d) On or prior to each Redemption Date, this corporation shall
deposit the Redemption Price of all shares of Series A Preferred Stock
designated for redemption in the Redemption Notice, and not yet redeemed or
converted, with a bank or trust corporation having aggregate capital and
surplus in excess of $100,000,000 as a trust fund for the benefit of the
respective holders of the shares designated for redemption and not yet
redeemed, with irrevocable instructions and authority to the bank or trust
corporation to publish the notice of redemption thereof and pay the
Redemption Price for such shares to their respective holders on or after the
Redemption Date, upon receipt of notification from the corporation that such
holder has surrendered his, her or its share certificate to the corporation
pursuant to subsection (3)(b) above. As of the date of such deposit (even if
prior to the Redemption Date), the deposit shall constitute full payment of
the shares to their holders, and from and after the date of the deposit the
shares so called for redemption shall be redeemed and shall be deemed to be
no longer outstanding, and the holders thereof shall cease to be shareholders
with respect to such shares and shall have no rights with respect thereto
except the rights to receive from the bank or trust corporation payment of
the Redemption Price of the shares, without interest, upon surrender of their
certificates therefor, and the right to convert such shares as provided in
Section 4 hereof. Such instructions shall also provide that any moneys
deposited by the corporation pursuant to this subsection (3)(d) for the
redemption of shares thereafter converted into shares of the corporation's
Common Stock pursuant to Section 4 hereof prior to the Redemption Date shall
be returned to the Corporation forthwith upon such conversion. The balance
of any moneys deposited by this corporation pursuant to this subsection
(3)(d) remaining unclaimed at the expiration of two (2) years following the
Redemption Date shall thereafter be returned to this corporation upon its
request expressed in a resolution of its Board of Directors.
4. CONVERSION. The holders of the Series A Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series A Preferred Stock shall
be convertible, at the option of the holder thereof, at any time after the date
of issuance of such share and on or prior to the fifth day prior to the
Redemption Date, if any, as may have been fixed in any Redemption Notice with
respect to the Series A Preferred Stock, at the office of this corporation or
any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Class A Common Stock as is determined by dividing the
Original Series A Issue Price by the conversion price ("Conversion Price")
applicable to such share, determined as hereafter provided, in effect on the
date the certificate is surrendered for conversion. The initial Conversion
Price per share for shares of Series A Preferred Stock shall be $1.675;
provided, however, that the Conversion Price for the Series A Preferred Stock
shall be subject to adjustment as set forth in subsection 4(d).
(b) AUTOMATIC CONVERSION. Each share of Series A Preferred Stock
shall automatically be converted into shares of Class A Common Stock at the
Conversion Price at the time in effect for such Series A Preferred Stock
immediately upon the date specified by written
5
consent or agreement of the holders of a majority of the then outstanding
shares of Series A Preferred Stock.
(c) MECHANICS OF CONVERSION. Before any holder of Series A Preferred
Stock shall be entitled to convert the same into shares of Class A Common Stock,
he shall surrender the certificate or certificates therefor, duly endorsed, at
the office of this corporation or of any transfer agent for the Series A
Preferred Stock, and shall give written notice to this corporation at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Class A Common Stock are to be issued. This corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Series A Preferred Stock, or to the nominee or nominees of such holder, a
certificate or certificates for the number of shares of Class A Common Stock to
which such holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Series A Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Class A Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Class A Common Stock as of such date. If
the conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, the conversion may, at the
option of any holder tendering Series A Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Class A Common Stock upon conversion of the Series A Preferred Stock shall not
be deemed to have converted such Series A Preferred Stock until immediately
prior to the closing of such sale of securities.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK FOR CERTAIN
DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price of the
Series A Preferred Stock shall be subject to adjustment from time to time as
follows:
(i) In the event the corporation should at any time or from
time to time after the date upon which any shares of Series A Preferred Stock
were first issued (the "Purchase Date" with respect to such series) fix a record
date for the effectuation of a split or subdivision of the outstanding shares of
Class A Common Stock or the determination of holders of Class A Common Stock
entitled to receive a dividend or other distribution payable in additional
shares of Class A Common Stock without payment of any consideration by such
holder for the additional shares of Class A Common Stock, then, as of such
record date (or the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion Price of the Series A Preferred Stock
shall be appropriately decreased so that the number of shares of Class A Common
Stock issuable on conversion of each share of such series shall be increased in
proportion to such increase of the aggregate of shares of Class A Common Stock
outstanding. In the event the corporation shall declare or pay, without
consideration, any dividend on the Class A Common Stock payable in any right to
acquire Class A Common Stock for no consideration, then the corporation shall be
deemed to have made a dividend payable in Class A Common Stock in an amount of
shares equal to the maximum number of shares issuable upon exercise of such
rights to acquire Class A Common Stock.
(ii) If the number of shares of Class A Common Stock outstanding
at any time after the Purchase Date is decreased by a combination of the
outstanding shares of
6
Common Stock, then, following the record date of such combination, the
Conversion Price for the Series A Preferred Stock shall be appropriately
increased so that the number of shares of Class A Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to
such decrease in outstanding shares.
(iii) All adjustments to the Conversion Price will be calculated
to the nearest cent of a dollar. No adjustment in the Conversion Price will be
required unless such adjustment would require an increase or decrease of at
least one cent per dollar; PROVIDED, HOWEVER, that any adjustments which by
reason of this Section 4(d)(iii) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All adjustments to
the Conversion Price shall be made successively.
(e) OTHER DISTRIBUTIONS. In the event this corporation shall declare
a distribution payable in securities of other persons, evidences of indebtedness
issued by this corporation or other persons, assets (excluding cash dividends)
or options or rights not referred to in subsection 4(d), then, in each such case
for the purpose of this subsection 4(e), the holders of the Series A Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Class A Common Stock of
the corporation into which their shares of Series A Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Class A Common Stock of the corporation entitled to receive such distribution.
(f) RECAPITALIZATIONS AND REORGANIZATIONS. If the Class A Common
Stock issuable upon conversion of the Series A Preferred Stock shall be
changed into or exchanged for a different class or classes of capital stock,
or other securities or property whether by reorganization, recapitalization
or otherwise (other than a subdivision, combination or merger or sale of
assets transaction provided for elsewhere in this Section 4 or Section 2)
provision shall be made so that the holders of the Series A Preferred Stock
shall thereafter be entitled to receive upon conversion of the Series A
Preferred Stock the number of shares of stock or other securities or
property, to which a holder of Class A Common Stock deliverable upon
conversion would have been entitled on such recapitalization or
reorganization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 4 with respect to the
rights of the holders of the Series A Preferred Stock after the
recapitalization or reorganization to the end that the provisions of this
Section 4 (including adjustment of the Conversion Price then in effect and
the number of shares purchasable upon conversion of the Series A Preferred
Stock) shall be applicable after that event as nearly equivalent as may be
practicable.
(g) NO IMPAIRMENT. This corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by this
corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Preferred Stock against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
7
(i) No fractional shares shall be issued upon the conversion of
any share or shares of the Series A Preferred Stock, and the number of shares of
Class A Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Series A Preferred
Stock the holder is at the time converting into Class A Common Stock and the
number of shares of Class A Common Stock issuable upon such aggregate
conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A Preferred Stock pursuant to this Section 4,
this corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series A Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price for such series of Preferred Stock at the
time in effect, and (C) the number of shares of Class A Common Stock and the
amount, if any, of other property which at the time would be received upon the
conversion of a share of Series A Preferred Stock.
(i) NOTICES OF RECORD DATE. In the event of any taking by this
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right (except the
right to vote), this corporation shall mail to each holder of Series A Preferred
Stock, at least 20 days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Class A Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of its
shares of Class A Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred Stock;
and if at any time the number of authorized but unissued shares of Class A
Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock, in addition to such other
remedies as shall be available to the holder of such Series A Preferred Stock,
this corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Class A
Common Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
shareholder approval of any necessary amendment to these articles.
(k) NOTICES. Any notice required by the provisions of this Section 4
to be given to the holders of shares of Series A Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at his address appearing on the books of this corporation.
8
5. VOTING RIGHTS. The holder of each share of Series A Preferred
Stock shall have the right to one vote for each share of Class A Common Stock
into which such Series A Preferred Stock could then be converted, and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Class A Common Stock, and
shall be entitled, notwithstanding any provision hereof, to notice of any
shareholders' meeting in accordance with the bylaws of this corporation, and,
except with respect to the election of directors as provided in Section 6
hereof, shall be entitled to vote, together with holders of Class A Common
Stock, with respect to any question upon which holders of Class A Common Stock
have the right to vote. Fractional votes shall not, however, be permitted and
any fractional voting rights available on an as-converted basis (after
aggregating all shares into which shares of Series A Preferred Stock held by
each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward).
6. BOARD OF DIRECTORS. So long as at least 40% of the authorized
shares of Series A Preferred Stock are outstanding, the holders of Series A
Preferred Stock, voting as a class, shall be entitled to elect five directors
and the holders of Common Stock, voting as a class, shall be entitled to elect
two directors. So long as at least 40% of the authorized shares of Series A
Preferred Stock are outstanding, this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Series A
Preferred Stock, change the authorized number of directors of the corporation.
7. STATUS OF CONVERTED OR REDEEMED STOCK. In the event any shares
of Series A Preferred Stock shall be redeemed or converted pursuant to Section 3
or Section 4 hereof, the shares so converted or redeemed shall be cancelled and
shall not be issuable by the corporation. The Articles of Incorporation of this
corporation shall be appropriately amended to effect the corresponding reduction
in the corporation's authorized capital stock.
8. REPURCHASE OF SHARES. In connection with repurchases by this
corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California General Corporation Law
shall not apply in whole or in part with respect to such repurchases.
IN WITNESS WHEREOF, this Certificate is signed by ______________,
President, and _________________, Secretary, as of this ____ day of ________,
1999.
____________________________________
, President
____________________________________
, Secretary
9
We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this Certificate are true
and correct of our own knowledge.
____________________________________
, President
____________________________________
, Secretary
10
EXHIBIT B TO SECURITIES PURCHASE AGREEMENT
BEGINS ON THE FOLLOWING PAGE.
CONTINGENT COMMON STOCK PURCHASE WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
AMERIGON INCORPORATED
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, __________________ (the
"Holder") is entitled to subscribe for and purchase up to 9225 shares (subject
to adjustment from time to time pursuant to the provisions of Section 5 hereof)
of fully paid and nonassessable Class A Common Stock of Amerigon Incorporated, a
California corporation (the "Company"), at the price specified in Section 2
hereof, as such price may be adjusted from time to time pursuant to Section 5
hereof (the "Warrant Price"), subject to the provisions and upon the terms and
conditions hereinafter set forth.
As used herein, the term "Class A Common Stock" shall mean the
Company's presently authorized Class A Common Stock, no par value, and any stock
into or for which such Common Stock may hereafter be converted or exchanged.
1. TERM OF WARRANT; CONTINGENT EXERCISE.
(a) TERM. Subject to Section 1(b) hereof, the purchase right
represented by this Warrant is exercisable, in whole or in part, at any time
during a period beginning on [Closing Date] and ending ninety days after the
latest of the end of the terms of the warrants as respectively set forth in
Section 1(a) of the Common Stock Purchase Warrant dated December 21, 1998 from
the Company to Xxxxxxx Xxxxx Securities, Inc., Section 1(a) of the Common Stock
Purchase Warrant dated December 21, 1998 from the Company to Xxxx X. Xxxxx and
Section 1(a) of the Common Stock Purchase Warrant dated December 21, 1998 from
the Company to Xxxxx X. Xxxxxxxxxx and Section 1(a) of the Common Stock Purchase
Warrant dated March 24, 1999 from the Company to Xxxxxxx Xxxxxxxxxx (the "Xxxxx
Warrants").
(b) CONTINGENT EXERCISE. The number of shares that may be purchased
pursuant to the exercise of this Warrant is limited to a number of shares equal
to 36.9% multiplied by the number of shares purchased pursuant to the exercise
of the Xxxxx Warrants after the date hereof. To the extent that this would
result in the right to purchase a fractional number of shares, the number of
shares permitted to be purchased will be rounded down to the lowest whole share;
PROVIDED, however, that the number of shares with respect to which this Warrant
shall not then have been exercised will appropriately reflect such adjustment.
2. WARRANT PRICE.
The Warrant Price is $5.30 per share, subject to adjustment from time
to time pursuant to the provisions of Section 5 hereof.
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder, in whole or in part,
by the surrender of this Warrant (with the notice of exercise form attached
hereto as EXHIBIT 1 duly executed) at the principal office of the Company and by
the payment to the Company, by cashier's check or wire transfer, of an amount
equal to the then applicable Warrant Price per share multiplied by the number of
shares then being purchased. The Company agrees that the shares so purchased
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. In the event of any
exercise of this Warrant, certificates for the shares of stock so purchased
shall be delivered to the Holder within 15 business days thereafter and, unless
this Warrant has been fully exercised or expired, a new Warrant representing the
portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder within such 15 business
day period.
(b) CONVERSION. Subject to Section 1 hereof, the Holder may convert
this Warrant (the "Conversion Right"), in whole or in part, into the number of
shares (less the number of shares which have been previously exercised or as to
which the Conversion Right has been previously exercised) calculated pursuant to
the following formula by surrendering this Warrant (with the notice of exercise
form attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company specifying the number of shares the rights to purchase which the Holder
desires to convert:
Y (A - B)
----------
X = A
where: X = the number of shares of Class A Common Stock to be issued to
the Holder;
Y = the number of shares of Class A Common Stock subject to this
Warrant for which the Conversion Right is being exercised;
A = the Market Price of the Common Stock (as defined below) as
of the trading day immediately preceding the date of
exercise of this Warrant; and
B = the Warrant Price
For purposes hereof, the "Market Price of the Common Stock" shall be
the closing price per share of the Class A Common Stock of the Company
on the
2
principal national securities exchange on which the Class A
Common Stock of the Company is then listed or admitted to trading or,
if not then listed or traded on any such exchange, on the NASDAQ
National Market System, or if then not listed or traded on such
system, the closing bid price per share on NASDAQ or other over-the-
counter trading market. If at any time such quotations are not
available, the market price of a share of Class A Common Stock shall
be the highest price per share which the Company could obtain from a
willing buyer (not a current employee or director) for shares of Class
A Common Stock sold by the Company, from authorized but unissued
shares, as determined in good faith by the Board of Directors of the
Company, unless the Company shall become subject to a merger,
acquisition or other consolidation pursuant to which the Company is
not the surviving party, in which case the market price of a share of
Class A Common Stock shall be deemed to be the value received by the
holders of the Company's Class A Common Stock for each share of Class
A Common Stock pursuant to the Company's acquisition.
The Company agrees that the shares so converted shall be deemed issued
to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered
as aforesaid. In the event of any conversion of this Warrant,
certificates for the shares of stock so converted shall be delivered
to the holder hereof within 15 business days thereafter and, unless
this Warrant has been fully converted or expired, a new Warrant
representing the portion of the shares, if any, with respect to which
this Warrant shall not then have been converted, shall also be issued
to the holder hereof within such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Class A Common Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all United States taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Class A Common Stock to provide for the exercise of the rights represented by
this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The exercise price and number of shares purchasable on exercise of
this Warrant shall adjust identically with any adjustments made pursuant to the
Xxxxx Warrants and the provisions of Section 5 of the Xxxxx Warrants and the
definitions of the different terms therein are hereby incorporated by reference.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5
hereof, the Company shall prepare a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method
3
by which such adjustment was calculated, the Warrant Price after giving
effect to such adjustment and the number of shares then purchasable upon
exercise of this Warrant, and shall cause copies of such certificate to be
mailed (by first class mail, postage prepaid) to the Holder of this Warrant
at the address specified in Section 10(c) hereof, or at such other address as
may be provided to the Company in writing by the Holder of this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Class A Common Stock will be issued in
conjunction with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefore on the basis of the Warrant
Price then in effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that this
Warrant and the shares of Class A Common Stock to be issued on exercise hereof
are being acquired for investment and that it will not offer, sell or otherwise
dispose of this Warrant or any shares of Class A Common Stock to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). This Warrant and all
shares of Class A Common Stock issued upon exercise of this Warrant (unless
registered under the Act) shall be stamped and imprinted with a legend
substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS
IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
IS FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
9. NOTICE OF EXERCISE OF CLASS A WARRANTS.
Whenever any Xxxxx Warrants shall be exercised, within 30 days after
such exercise the Company shall notify the Holder (by first class mail, postage
prepaid) at the address specified in Section 10(c) hereof, or at such other
address as may be provided to the Company in writing by the Holder of this
Warrant.
10. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall not
be entitled to vote or receive dividends or be deemed the Holder of Class A
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization, issuance of
4
stock, reclassification of stock, change of par value or change of stock to
no par value, consolidation, merger, conveyance or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised and the shares
purchasable upon the exercise hereof shall have become deliverable, as
provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of mutilation, on surrender and cancellation of this Warrant, the
Company, at the Holder's expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant
shall be in writing, and any notice hereunder shall be deemed to have been given
upon the earlier of delivery thereof by hand delivery, by courier, or by
standard form of telecommunication or three (3) business days after the mailing
thereof in the U.S. mail if sent registered mail with postage prepaid, addressed
to the Company at its principal executive offices and to the Holder at its
address set forth in the Company's books and records or at such other address as
the Holder may have provided to the Company in writing.
(d) GOVERNING LAW. This Warrant shall be governed and construed
under the laws of the State of California.
5
This Warrant is executed as of this ____ day of ___________, 1999.
AMERIGON INCORPORATED
By:___________________________________
Name:_________________________________
Title:________________________________
6
EXHIBIT 1
NOTICE OF EXERCISE
TO: AMERIGON INCORPORATED
1. Check Box that Applies:
/ / The undersigned hereby elects to purchase __________ shares of
Class A Common Stock of AMERIGON INCORPORATED pursuant to the terms
of the attached Warrant, and tenders herewith payment of the purchase
price of such shares in full.
/ / The undersigned hereby elects to convert the attached warrant into
________ shares of Class A Common Stock of AMERIGON INCORPORATED
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said
shares of Class A Common Stock in the name of the undersigned or in such other
name as is specified below:
__________________________________
(Name)
__________________________________
__________________________________
(Address)
3. The undersigned represents that the aforesaid shares of Class A
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
__________________________
Signature
7
CONTINGENT COMMON STOCK PURCHASE WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
AMERIGON INCORPORATED
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, __________________ (the
"Holder") is entitled to subscribe for and purchase up to 558,659 shares
(subject to adjustment from time to time pursuant to the provisions of Section 5
hereof) of fully paid and nonassessable Class A Common Stock of Amerigon
Incorporated, a California corporation (the "Company"), at the price specified
in Section 2 hereof, as such price may be adjusted from time to time pursuant to
Section 5 hereof (the "Warrant Price"), subject to the provisions and upon the
terms and conditions hereinafter set forth.
As used herein, the term "Class A Common Stock" shall mean the
Company's presently authorized Class A Common Stock, no par value, and any stock
into or for which such Common Stock may hereafter be converted or exchanged.
1. TERM OF WARRANT; CONTINGENT EXERCISE.
(a) TERM. Subject to Section 1(b) hereof, the purchase right
represented by this Warrant is exercisable, in whole or in part, at any time
during a period beginning on [Closing Date] and ending ninety days after the
Warrant Expiration Date as such term is defined in the Warrant Agreement dated
February 12, 1997, by and among the Company, U.S. Stock Transfer Corporation, as
Warrant Agent, and X.X. Xxxxx Investment Banking Corp. (the "1997 Warrant
Agreement").
(b) CONTINGENT EXERCISE. The number of shares that may be purchased
pursuant to the exercise of this Warrant is limited to a number of shares equal
to 36.9% multiplied by the number of shares purchased pursuant to the exercise
of Class A Warrants of the Company after the date hereof. To the extent that
this would result in the right to purchase a fractional number of shares, the
number of shares permitted to be purchased will be rounded down to the lowest
whole share; PROVIDED, however, that the number of shares with respect to which
this Warrant shall not then have been exercised will appropriately reflect such
adjustment.
2. WARRANT PRICE.
The Warrant Price is $25.00 per share, subject to adjustment from time
to time pursuant to the provisions of Section 5 hereof.
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder, in whole or in part,
by the surrender of this Warrant (with the notice of exercise form attached
hereto as EXHIBIT 1 duly executed) at the principal office of the Company and by
the payment to the Company, by cashier's check or wire transfer, of an amount
equal to the then applicable Warrant Price per share multiplied by the number of
shares then being purchased. The Company agrees that the shares so purchased
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. In the event of any
exercise of this Warrant, certificates for the shares of stock so purchased
shall be delivered to the Holder within 15 business days thereafter and, unless
this Warrant has been fully exercised or expired, a new Warrant representing the
portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder within such 15 business
day period.
(b) CONVERSION. Subject to Section 1 hereof, the Holder may convert
this Warrant (the "Conversion Right"), in whole or in part, into the number of
shares (less the number of shares which have been previously exercised or as to
which the Conversion Right has been previously exercised) calculated pursuant to
the following formula by surrendering this Warrant (with the notice of exercise
form attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company specifying the number of shares the rights to purchase which the Holder
desires to convert:
Y (A - B)
-----------
X = A
where: X = the number of shares of Class A Common Stock to be issued to
the Holder;
Y = the number of shares of Class A Common Stock subject to this
Warrant for which the Conversion Right is being exercised;
A = the Market Price of the Common Stock (as defined below) as
of the trading day immediately preceding the date of
exercise of this Warrant; and
B = the Warrant Price
For purposes hereof, the "Market Price of the Common Stock" shall be
the closing price per share of the Class A Common Stock of the Company
on the principal national securities exchange on which the Class A
Common Stock of the Company is then listed or admitted to trading or,
if not then listed or traded on
2
any such exchange, on the NASDAQ National Market System, or if then
not listed or traded on such system, the closing bid price per
share on NASDAQ or other over-the-counter trading market. If at
any time such quotations are not available, the market price of a
share of Class A Common Stock shall be the highest price per share
which the Company could obtain from a willing buyer (not a current
employee or director) for shares of Class A Common Stock sold by
the Company, from authorized but unissued shares, as determined in
good faith by the Board of Directors of the Company, unless the
Company shall become subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving
party, in which case the market price of a share of Class A Common
Stock shall be deemed to be the value received by the holders of
the Company's Class A Common Stock for each share of Class A Common
Stock pursuant to the Company's acquisition.
The Company agrees that the shares so converted shall be deemed issued
to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered
as aforesaid. In the event of any conversion of this Warrant,
certificates for the shares of stock so converted shall be delivered
to the holder hereof within 15 business days thereafter and, unless
this Warrant has been fully converted or expired, a new Warrant
representing the portion of the shares, if any, with respect to which
this Warrant shall not then have been converted, shall also be issued
to the holder hereof within such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Class A Common Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all United States taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Class A Common Stock to provide for the exercise of the rights represented by
this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The exercise price and number of shares purchasable on exercise of
this Warrant shall adjust identically with any adjustments made pursuant to the
1997 Warrant Agreement and the provisions of Section 9 of the 1997 Warrant
Agreement and the definitions of the different terms therein are hereby
incorporated by reference.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5
hereof, the Company shall prepare a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, the Warrant Price after giving effect to such adjustment and the
number of shares then purchasable upon exercise of this Warrant, and shall
3
cause copies of such certificate to be mailed (by first class mail, postage
prepaid) to the Holder of this Warrant at the address specified in Section
10(c) hereof, or at such other address as may be provided to the Company in
writing by the Holder of this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Class A Common Stock will be issued in
conjunction with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefore on the basis of the Warrant
Price then in effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that this
Warrant and the shares of Class A Common Stock to be issued on exercise hereof
are being acquired for investment and that it will not offer, sell or otherwise
dispose of this Warrant or any shares of Class A Common Stock to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). This Warrant and all
shares of Class A Common Stock issued upon exercise of this Warrant (unless
registered under the Act) shall be stamped and imprinted with a legend
substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS
IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
IS FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
9. NOTICE OF EXERCISE OF CLASS A WARRANTS.
Whenever any Class A Warrant shall be exercised, within 30 days after
such exercise the Company shall notify the Holder (by first class mail, postage
prepaid) at the address specified in Section 10(c) hereof, or at such other
address as may be provided to the Company in writing by the Holder of this
Warrant.
10. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall not
be entitled to vote or receive dividends or be deemed the Holder of Class A
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization, issuance of stock, reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger, conveyance
or otherwise) or to receive notice of meetings, or to receive
4
dividends or subscription rights or otherwise until the Warrant shall have
been exercised and the shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of mutilation, on surrender and cancellation of this Warrant, the
Company, at the Holder's expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant
shall be in writing, and any notice hereunder shall be deemed to have been given
upon the earlier of delivery thereof by hand delivery, by courier, or by
standard form of telecommunication or three (3) business days after the mailing
thereof in the U.S. mail if sent registered mail with postage prepaid, addressed
to the Company at its principal executive offices and to the Holder at its
address set forth in the Company's books and records or at such other address as
the Holder may have provided to the Company in writing.
(d) GOVERNING LAW. This Warrant shall be governed and construed
under the laws of the State of California.
5
This Warrant is executed as of this ____ day of ___________, 1999.
AMERIGON INCORPORATED
By:___________________________________
Name:_________________________________
Title:________________________________
6
EXHIBIT 1
NOTICE OF EXERCISE
TO: AMERIGON INCORPORATED
1. Check Box that Applies:
/ / The undersigned hereby elects to purchase __________ shares of
Class A Common Stock of AMERIGON INCORPORATED pursuant to the terms
of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full.
/ / The undersigned hereby elects to convert the attached warrant
into ________ shares of Class A Common Stock of AMERIGON
INCORPORATED pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said
shares of Class A Common Stock in the name of the undersigned or in such other
name as is specified below:
__________________________________
(Name)
__________________________________
__________________________________
(Address)
3. The undersigned represents that the aforesaid shares of Class A
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
__________________________
Signature
CONTINGENT COMMON STOCK PURCHASE WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
AMERIGON INCORPORATED
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, __________________ (the
"Holder") is entitled to subscribe for and purchase up to 4428 shares (subject
to adjustment from time to time pursuant to the provisions of Section 5 hereof)
of fully paid and nonassessable Class A Common Stock of Amerigon Incorporated, a
California corporation (the "Company"), at the price specified in Section 2
hereof, as such price may be adjusted from time to time pursuant to Section 5
hereof (the "Warrant Price"), subject to the provisions and upon the terms and
conditions hereinafter set forth.
As used herein, the term "Class A Common Stock" shall mean the
Company's presently authorized Class A Common Stock, no par value, and any stock
into or for which such Common Stock may hereafter be converted or exchanged.
1. TERM OF WARRANT; CONTINGENT EXERCISE.
(a) TERM. Subject to Section 1(b) hereof, the purchase right
represented by this Warrant is exercisable, in whole or in part, at any time
during a period beginning on [Closing Date] and ending ninety days after the
later of the two "Warrant Expiration Dates" as defined in the Warrant to
Purchase Class A Common Stock dated December 29, 1995 from the Company to Sutro
& Co. and the Warrant to Purchase Class A Common Stock dated December 29, 1995
from the Company to Lido Consulting, Inc. (the "1995 Private Placement
Warrants").
(b) CONTINGENT EXERCISE. The number of shares that may be purchased
pursuant to the exercise of this Warrant is limited to a number of shares equal
to 36.9% multiplied by the number of shares purchased pursuant to the exercise
of the 1995 Private Placement Warrants after the date hereof. To the extent
that this would result in the right to purchase a fractional number of shares,
the number of shares permitted to be purchased will be rounded down to the
lowest whole share; PROVIDED, however, that the number of shares with respect to
which this Warrant shall not then have been exercised will appropriately reflect
such adjustment.
2. WARRANT PRICE.
The Warrant Price is $51.25 per share, subject to adjustment from time
to time pursuant to the provisions of Section 5 hereof.
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder, in whole or in part,
by the surrender of this Warrant (with the notice of exercise form attached
hereto as EXHIBIT 1 duly executed) at the principal office of the Company and by
the payment to the Company, by cashier's check or wire transfer, of an amount
equal to the then applicable Warrant Price per share multiplied by the number of
shares then being purchased. The Company agrees that the shares so purchased
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. In the event of any
exercise of this Warrant, certificates for the shares of stock so purchased
shall be delivered to the Holder within 15 business days thereafter and, unless
this Warrant has been fully exercised or expired, a new Warrant representing the
portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder within such 15 business
day period.
(b) CONVERSION. Subject to Section 1 hereof, the Holder may convert
this Warrant (the "Conversion Right"), in whole or in part, into the number of
shares (less the number of shares which have been previously exercised or as to
which the Conversion Right has been previously exercised) calculated pursuant to
the following formula by surrendering this Warrant (with the notice of exercise
form attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company specifying the number of shares the rights to purchase which the Holder
desires to convert:
Y (A - B)
------------
X = A
where: X = the number of shares of Class A Common Stock to be issued to
the Holder;
Y = the number of shares of Class A Common Stock subject to this
Warrant for which the Conversion Right is being exercised;
A = the Market Price of the Common Stock (as defined below) as
of the trading day immediately preceding the date of
exercise of this Warrant; and
B = the Warrant Price
For purposes hereof, the "Market Price of the Common Stock" shall be
the closing price per share of the Class A Common Stock of the Company
on the principal national securities exchange on which the Class A
Common Stock of the Company is then listed or admitted to trading or,
if not then listed or traded on
2
any such exchange, on the NASDAQ National Market System, or if then
not listed or traded on such system, the closing bid price per
share on NASDAQ or other over-the-counter trading market. If at
any time such quotations are not available, the market price of a
share of Class A Common Stock shall be the highest price per share
which the Company could obtain from a willing buyer (not a current
employee or director) for shares of Class A Common Stock sold by
the Company, from authorized but unissued shares, as determined in
good faith by the Board of Directors of the Company, unless the
Company shall become subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving
party, in which case the market price of a share of Class A Common
Stock shall be deemed to be the value received by the holders of
the Company's Class A Common Stock for each share of Class A Common
Stock pursuant to the Company's acquisition.
The Company agrees that the shares so converted shall be deemed issued
to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered
as aforesaid. In the event of any conversion of this Warrant,
certificates for the shares of stock so converted shall be delivered
to the holder hereof within 15 business days thereafter and, unless
this Warrant has been fully converted or expired, a new Warrant
representing the portion of the shares, if any, with respect to which
this Warrant shall not then have been converted, shall also be issued
to the holder hereof within such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Class A Common Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all United States taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Class A Common Stock to provide for the exercise of the rights represented by
this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The exercise price and number of shares purchasable on exercise of
this Warrant shall adjust identically with any adjustments made pursuant to the
1995 Private Placement Warrants and the provisions of Section 7 of the 1995
Private Placement Warrants or other adjustment provisions set forth in the 1995
Private Placement Warrants and the definitions of the different terms therein
are hereby incorporated by reference.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5
hereof, the Company shall prepare a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, the Warrant Price after giving effect to such
3
adjustment and the number of shares then purchasable upon exercise of this
Warrant, and shall cause copies of such certificate to be mailed (by first
class mail, postage prepaid) to the Holder of this Warrant at the address
specified in Section 10(c) hereof, or at such other address as may be
provided to the Company in writing by the Holder of this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Class A Common Stock will be issued in
conjunction with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefore on the basis of the Warrant
Price then in effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that this
Warrant and the shares of Class A Common Stock to be issued on exercise hereof
are being acquired for investment and that it will not offer, sell or otherwise
dispose of this Warrant or any shares of Class A Common Stock to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). This Warrant and all
shares of Class A Common Stock issued upon exercise of this Warrant (unless
registered under the Act) shall be stamped and imprinted with a legend
substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS
IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
IS FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
9. NOTICE OF EXERCISE OF CLASS A WARRANTS.
Whenever any 1995 Private Placement Warrants shall be exercised,
within 30 days after such exercise the Company shall notify the Holder (by first
class mail, postage prepaid) at the address specified in Section 10(c) hereof,
or at such other address as may be provided to the Company in writing by the
Holder of this Warrant.
10. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall not
be entitled to vote or receive dividends or be deemed the Holder of Class A
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization, issuance of stock, reclassification of stock, change of
par value or change of stock to no par value,
4
consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until
the Warrant shall have been exercised and the shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of mutilation, on surrender and cancellation of this Warrant, the
Company, at the Holder's expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant
shall be in writing, and any notice hereunder shall be deemed to have been given
upon the earlier of delivery thereof by hand delivery, by courier, or by
standard form of telecommunication or three (3) business days after the mailing
thereof in the U.S. mail if sent registered mail with postage prepaid, addressed
to the Company at its principal executive offices and to the Holder at its
address set forth in the Company's books and records or at such other address as
the Holder may have provided to the Company in writing.
(d) GOVERNING LAW. This Warrant shall be governed and construed
under the laws of the State of California.
[Remainder of page intentionally left blank]
5
This Warrant is executed as of this ____ day of ___________, 1999.
AMERIGON INCORPORATED
By:___________________________________
Name:_________________________________
Title:________________________________
6
EXHIBIT 1
NOTICE OF EXERCISE
TO: AMERIGON INCORPORATED
1. Check Box that Applies:
/ / The undersigned hereby elects to purchase __________ shares of
Class A Common Stock of AMERIGON INCORPORATED pursuant to the terms
of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full.
/ / The undersigned hereby elects to convert the attached warrant
into ________ shares of Class A Common Stock of AMERIGON
INCORPORATED pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said
shares of Class A Common Stock in the name of the undersigned or in such other
name as is specified below:
__________________________________
(Name)
__________________________________
__________________________________
(Address)
3. The undersigned represents that the aforesaid shares of Class A
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
__________________________
Signature
7
CONTINGENT COMMON STOCK PURCHASE WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
AMERIGON INCORPORATED
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, __________________ (the
"Holder") is entitled to subscribe for and purchase up to 7380 shares (subject
to adjustment from time to time pursuant to the provisions of Section 5 hereof)
of fully paid and nonassessable Class A Common Stock of Amerigon Incorporated, a
California corporation (the "Company"), at the price specified in Section 2
hereof, as such price may be adjusted from time to time pursuant to Section 5
hereof (the "Warrant Price"), subject to the provisions and upon the terms and
conditions hereinafter set forth.
As used herein, the term "Class A Common Stock" shall mean the
Company's presently authorized Class A Common Stock, no par value, and any stock
into or for which such Common Stock may hereafter be converted or exchanged.
1. TERM OF WARRANT; CONTINGENT EXERCISE.
(a) TERM. Subject to Section 1(b) hereof, the purchase right
represented by this Warrant is exercisable, in whole or in part, at any time
during a period beginning on [Closing Date] and ending ninety days after the
latest of the end of the terms of the warrants as respectively set forth in
Section 1(a) of the Common Stock Purchase Warrant dated [Issue Date] from the
Company to Xxxxxxx Xxxxx Securities Incorporated (the "Xxxxx Warrant").
(b) CONTINGENT EXERCISE. The number of shares that may be purchased
pursuant to the exercise of this Warrant is limited to a number of shares equal
to 36.9% multiplied by the number of shares purchased pursuant to the exercise
of the Xxxxx Warrant after the date hereof. To the extent that this would
result in the right to purchase a fractional number of shares, the number of
shares permitted to be purchased will be rounded down to the lowest whole share;
PROVIDED, however, that the number of shares with respect to which this Warrant
shall not then have been exercised will appropriately reflect such adjustment.
2. WARRANT PRICE.
The Warrant Price is $[Xxxxx Warrant issue price], subject to
adjustment from time to time pursuant to the provisions of Section 5 hereof.
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder, in whole or in part,
by the surrender of this Warrant (with the notice of exercise form attached
hereto as EXHIBIT 1 duly executed) at the principal office of the Company and by
the payment to the Company, by cashier's check or wire transfer, of an amount
equal to the then applicable Warrant Price per share multiplied by the number of
shares then being purchased. The Company agrees that the shares so purchased
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. In the event of any
exercise of this Warrant, certificates for the shares of stock so purchased
shall be delivered to the Holder within 15 business days thereafter and, unless
this Warrant has been fully exercised or expired, a new Warrant representing the
portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder within such 15 business
day period.
(b) CONVERSION. Subject to Section 1 hereof, the Holder may convert
this Warrant (the "Conversion Right"), in whole or in part, into the number of
shares (less the number of shares which have been previously exercised or as to
which the Conversion Right has been previously exercised) calculated pursuant to
the following formula by surrendering this Warrant (with the notice of exercise
form attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company specifying the number of shares the rights to purchase which the Holder
desires to convert:
Y (A - B)
-----------
X = A
where: X = the number of shares of Class A Common Stock to be issued to
the Holder;
Y = the number of shares of Class A Common Stock subject to this
Warrant for which the Conversion Right is being exercised;
A = the Market Price of the Common Stock (as defined below) as
of the trading day immediately preceding the date of
exercise of this Warrant; and
B = the Warrant Price
For purposes hereof, the "Market Price of the Common Stock" shall be
the closing price per share of the Class A Common Stock of the Company
on the principal national securities exchange on which the Class A
Common Stock of the Company is then listed or admitted to trading or,
if not then listed or traded on
2
any such exchange, on the NASDAQ National Market System, or if then
not listed or traded on such system, the closing bid price per
share on NASDAQ or other over-the-counter trading market. If at
any time such quotations are not available, the market price of a
share of Class A Common Stock shall be the highest price per share
which the Company could obtain from a willing buyer (not a current
employee or director) for shares of Class A Common Stock sold by
the Company, from authorized but unissued shares, as determined in
good faith by the Board of Directors of the Company, unless the
Company shall become subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving
party, in which case the market price of a share of Class A Common
Stock shall be deemed to be the value received by the holders of
the Company's Class A Common Stock for each share of Class A Common
Stock pursuant to the Company's acquisition.
The Company agrees that the shares so converted shall be deemed issued
to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered
as aforesaid. In the event of any conversion of this Warrant,
certificates for the shares of stock so converted shall be delivered
to the holder hereof within 15 business days thereafter and, unless
this Warrant has been fully converted or expired, a new Warrant
representing the portion of the shares, if any, with respect to which
this Warrant shall not then have been converted, shall also be issued
to the holder hereof within such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Class A Common Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all United States taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Class A Common Stock to provide for the exercise of the rights represented by
this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The exercise price and number of shares purchasable on exercise of
this Warrant shall adjust identically with any adjustments made pursuant to the
Xxxxx Warrant and the provisions of Section 5 of the Xxxxx Warrant and the
definitions of the different terms therein are hereby incorporated by reference.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5
hereof, the Company shall prepare a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, the Warrant Price after giving effect to such adjustment and the
number of shares then purchasable upon exercise of this Warrant, and shall
3
cause copies of such certificate to be mailed (by first class mail, postage
prepaid) to the Holder of this Warrant at the address specified in Section
10(c) hereof, or at such other address as may be provided to the Company in
writing by the Holder of this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Class A Common Stock will be issued in
conjunction with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefore on the basis of the Warrant
Price then in effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that this
Warrant and the shares of Class A Common Stock to be issued on exercise hereof
are being acquired for investment and that it will not offer, sell or otherwise
dispose of this Warrant or any shares of Class A Common Stock to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). This Warrant and all
shares of Class A Common Stock issued upon exercise of this Warrant (unless
registered under the Act) shall be stamped and imprinted with a legend
substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS
IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
IS FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
9. NOTICE OF EXERCISE OF CLASS A WARRANTS.
Whenever any Xxxxx Warrant shall be exercised, within 30 days after
such exercise the Company shall notify the Holder (by first class mail, postage
prepaid) at the address specified in Section 10(c) hereof, or at such other
address as may be provided to the Company in writing by the Holder of this
Warrant.
10. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall not
be entitled to vote or receive dividends or be deemed the Holder of Class A
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization, issuance of stock, reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger, conveyance
or otherwise) or to receive notice of meetings, or to receive
4
dividends or subscription rights or otherwise until the Warrant shall have
been exercised and the shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of mutilation, on surrender and cancellation of this Warrant, the
Company, at the Holder's expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant
shall be in writing, and any notice hereunder shall be deemed to have been given
upon the earlier of delivery thereof by hand delivery, by courier, or by
standard form of telecommunication or three (3) business days after the mailing
thereof in the U.S. mail if sent registered mail with postage prepaid, addressed
to the Company at its principal executive offices and to the Holder at its
address set forth in the Company's books and records or at such other address as
the Holder may have provided to the Company in writing.
(d) GOVERNING LAW. This Warrant shall be governed and construed
under the laws of the State of California.
[Remainder of page intentionally left blank]
5
This Warrant is executed as of this ____ day of ___________, 1999.
AMERIGON INCORPORATED
By:___________________________________
Name:_________________________________
Title:________________________________
6
EXHIBIT 1
NOTICE OF EXERCISE
TO: AMERIGON INCORPORATED
1. Check Box that Applies:
/ / The undersigned hereby elects to purchase __________ shares of
Class A Common Stock of AMERIGON INCORPORATED pursuant to the terms
of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full.
/ / The undersigned hereby elects to convert the attached warrant
into ________ shares of Class A Common Stock of AMERIGON
INCORPORATED pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said
shares of Class A Common Stock in the name of the undersigned or in such other
name as is specified below:
__________________________________
(Name)
__________________________________
__________________________________
(Address)
3. The undersigned represents that the aforesaid shares of Class A
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
__________________________
Signature
7
EXHIBIT C TO SECURITIES PURCHASE AGREEMENT
BEGINS ON THE FOLLOWING PAGE.
-------------
INVESTORS' RIGHTS AGREEMENT
-------------
__________, 1999
15
TABLE OF CONTENTS
Page
-----
1. Registration Rights.. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Request for Registration.. . . . . . . . . . . . . . . . . . . . .2
1.3 Company Registration.. . . . . . . . . . . . . . . . . . . . . . .3
1.4 Obligations of the Company.. . . . . . . . . . . . . . . . . . . .3
1.5 Furnish Information. . . . . . . . . . . . . . . . . . . . . . . .5
1.6 Expenses of Demand Registration. . . . . . . . . . . . . . . . . .5
1.7 Expenses of Company Registration.. . . . . . . . . . . . . . . . .5
1.8 Underwriting Requirements. . . . . . . . . . . . . . . . . . . . .6
1.9 Delay of Registration. . . . . . . . . . . . . . . . . . . . . . .6
1.10 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . .6
1.11 Reports Under Securities Exchange Act of 1934. . . . . . . . . . .8
1.12 Form S-3 Registration. . . . . . . . . . . . . . . . . . . . . . .9
1.13 Assignment of Registration Rights. . . . . . . . . . . . . . . . .9
1.14 Limitations on Subsequent Registration Rights. . . . . . . . . . 10
1.15 "Market Stand-Off" Agreement.. . . . . . . . . . . . . . . . . . 10
1.16 Termination of Registration Rights.. . . . . . . . . . . . . . . 11
2. Right of First Offer. . . . . . . . . . . . . . . . . . . . . . . . . 11
3. Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Successors and Assigns.. . . . . . . . . . . . . . . . . . . . . 12
3.2 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4 Titles and Subtitles.. . . . . . . . . . . . . . . . . . . . . . 13
3.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7 Amendments and Waivers.. . . . . . . . . . . . . . . . . . . . . 14
3.8 Severability.. . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.9 Aggregation of Stock.. . . . . . . . . . . . . . . . . . . . . . 14
3.10 Entire Agreement; Amendment; Waiver. . . . . . . . . . . . . . . 14
i
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT is made as of the day of
, 1999, by and between Amerigon Incorporated, a
California corporation (the "Company"), and the investors listed on the
signature page hereof, each of which is herein referred to as an "Investor."
RECITALS
WHEREAS, the Company and the Investors are parties to the
Securities Purchase Agreement dated March __, 1999 (the "Securities Purchase
Agreement") pursuant to which the Investors are acquiring Series A Preferred
Stock of the Company and warrants to purchase Class A Common Stock of the
Company (the "Warrants");
WHEREAS, in order to induce the Company to enter into the
Securities Purchase Agreement and to induce the Investors to invest funds in
the Company pursuant to the Securities Purchase Agreement, the Investors and
the Company hereby agree that this Agreement shall govern the rights of the
Investors to cause the Company to register shares of Common Stock issuable to
the Investors and certain other matters as set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Common Stock" means the Class A Common Stock,
no par value, of the Company.
(c) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.13 hereof.
(e) The term "1934 Act" means the Securities Exchange Act of
1934, as amended.
(f) The term "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document.
1
(g) The term "Registrable Securities" means (i) the Common
Stock issuable or issued upon conversion of the Series A Preferred Stock,
(ii) the Common Stock issued or issuable upon the exercise of the Warrants,
(iii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange
for or in replacement of the shares referenced in (i) and (ii) above,
excluding in all cases, however, any Registrable Securities sold by a person
in a transaction in which his rights under this Section 1 are not assigned.
(h) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(i) The term "SEC" means the Securities and Exchange
Commission.
1.2 REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after the date
of this Agreement, a written request from the Holders of a majority of the
Registrable Securities then outstanding that the Company file a registration
statement under the Act covering the registration of at least ten percent
(10%) of the Registrable Securities then outstanding, then the Company shall:
(i) within ten (10) days of the receipt thereof, give
written notice of such request to all Holders; and
(ii) as soon as practicable, and in any event within 45
days of the receipt of such request, file a registration statement under the
Act covering all Registrable Securities which the Holders request to be
registered, subject to the limitations of subsection 1.2(b), within twenty
(20) days of the mailing of such notice by the Company in accordance with
Section 3.5.
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall
so advise the Company as a part of their request made pursuant to subsection
1.2(a) and the Company shall include such information in the written notice
referred to in subsection 1.2(a). The underwriter will be selected by the
Company and shall be reasonably acceptable to a majority in interest of the
Initiating Holders. In such event, the right of any Holder to include his
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise
mutually agreed by a majority in interest of the Initiating Holders and such
Holder) to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company
as provided in subsection 1.4(e)) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section 1.2, if
the underwriter advises the Initiating Holders in writing
2
that marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in
the underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided,
however, that the number of shares of Registrable Securities to be included
in such underwriting shall not be reduced unless all other securities are
first entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this
Section 1.2, a certificate signed by the Chief Executive Officer of the
Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company
shall have the right to defer taking action with respect to such filing for a
period of not more than 90 days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve-month period.
(d) The Company shall be obligated to effect only two such
registrations pursuant to this Section 1.2. Registrations effected on Form
S-3 pursuant to Section 1.12, however, shall not be counted as demands
pursuant to this Section 2.
1.3 COMPANY REGISTRATION. At any time within five years after the
date of this Agreement, if (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by
the Company for shareholders other than the Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, a registration on
any form which does not include substantially the same information as would
be required to be included in a registration statement covering the sale of
the Registrable Securities or a registration in which the only Common Stock
being registered is Common Stock issuable upon conversion of debt securities
which are also being registered), the Company shall, at such time, promptly
give each Holder written notice of such registration. Upon the written
request of each Holder given within twenty (20) days after mailing of such
notice by the Company in accordance with Section 3.5, the Company shall,
subject to the provisions of Section 1.8, cause to be registered under the
Act all of the Registrable Securities that each such Holder has requested to
be registered.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for a period of up to one hundred
twenty (120) days or until the distribution contemplated in the Registration
Statement
3
has been completed; provided, however, that (i) such 120-day period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company; and (ii) in
the case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such 120-day period
shall be extended, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold, provided that Rule 415, or
any successor rule under the Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the Act
governing the obligation to file a post-effective amendment permit, in lieu
of filing a post-effective amendment which (I) includes any prospectus
required by Section 10(a)(3) of the Act or (II) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the incorporation by reference of information
required to be included in (I) and (II) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the
registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities
owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Holders; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions,
unless the Company is already subject to service in such jurisdiction and
except as may be required by the Act.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each
Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
4
(h) Use its best efforts to furnish, at the request of any
Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this
Section 1, if such securities are being sold through underwriters, or, if
such securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i)
an opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the
independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
1.6 EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements (not to exceed $15,000) of
one counsel for the selling Holders (as selected by the Holders of a majority
of the Registrable Securities to be registered) shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.2 if
the registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in
which case all participating Holders shall bear such expenses), unless the
Holders of a majority of the Registrable Securities agree to forfeit their
right to one demand registration pursuant to Section 1.2; provided further,
however, that if at the time of such withdrawal, the Holders have learned of
a material adverse change in the condition, business, or prospects of the
Company from that known to the Holders at the time of their request and have
withdrawn the request with reasonable promptness following disclosure by the
Company of such material adverse change, then the Holders shall not be
required to pay any of such expenses and shall retain their rights pursuant
to Section 1.2.
1.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as
provided in Section 1.13), including (without limitation) all registration,
filing, and qualification fees, printers and accounting fees relating or
apportionable thereto and the fees and disbursements (not to exceed $15,000)
of one counsel for the selling Holders (as selected by the Holders of a
majority of the Registrable Securities to be registered), but excluding
underwriting discounts and commissions relating to Registrable Securities.
5
1.8 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it (or by other persons entitled to select the underwriters), and then
only in such quantity as the underwriters determine in their sole discretion
will not jeopardize the success of the offering by the Company. If the total
amount of securities, including Registrable Securities, requested by
shareholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters
determine in their sole discretion will not jeopardize the success of the
offering (the securities so included to be apportioned pro rata among the
selling shareholders according to the total amount of securities entitled to
be included therein owned by each selling shareholder or in such other
proportions as shall mutually be agreed to by such selling shareholders) but
in no event shall (i) the amount of securities of the selling Holders
included in the offering be reduced below twenty percent (20%) of the total
amount of securities included in such offering, or (ii) notwithstanding (i)
above, any shares being sold by a shareholder exercising a demand
registration right similar to that granted in Section 1.2 be excluded from
such offering. For purposes of the preceding parenthetical concerning
apportionment, for any selling shareholder which is a holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and shareholders of such holder, or the estates and family members
of any such partners and retired partners and any trusts for the benefit of
any of the foregoing persons shall be deemed to be a single "selling
shareholder", and any pro-rata reduction with respect to such "selling
shareholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling shareholder", as defined in this sentence.
1.9 DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 1.
1.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the 1934 Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Act, the 1934 Act or other federal or state
securities law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) 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 (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act,
6
any rule or regulation promulgated under the Act or the 1934 Act, or any
other federal or state securities law; and the Company will pay to each such
Holder, underwriter or controlling person any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.10(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of
the foregoing persons may become subject, under the Act, the 1934 Act or
other federal or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with
such registration; and each such Holder will pay any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection 1.10(b), in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.10(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided, that, in no event
shall any indemnity under this subsection 1.10(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.10,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party
7
within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 1.10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to
any indemnified party otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss,
liability, claim, damage, or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering
are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), or that
it qualifies as a registrant whose securities may be resold pursuant to Form
S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.
8
1.12 FORM S-3 REGISTRATION. In case the Company shall receive from
any Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 for the resale of shares from time to time in broker
transactions (and not in connection with an underwritten offering), and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written
request given within 15 days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this section
1.12: (1) if Form S-3 is not available for such offering by the Holders; (2)
if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an aggregate
price to the public (net of any underwriters' discounts or commissions) of
less than $300,000; (3) if the Company shall furnish to the Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such Form S-3
Registration to be effected at such time, in which event the Company shall
have the right to defer the filing of the Form S-3 registration statement for
a period of not more than 90 days after receipt of the request of the Holder
or Holders under this Section 1.12; provided, however, that the Company shall
not utilize this right more than once in any twelve month period; (4) if the
Company has, within the twelve (12) month period preceding the date of such
request, already effected two registrations on Form S-3 for the Holders
pursuant to this Section 1.12; (5) the Company has previously effected four
registrations on Form S-3 for the Holders pursuant to this Section 1.12, or
(6) in any particular jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt
of the request or requests of the Holders. All expenses incurred in
connection with a registration requested pursuant to Section 1.12, including
(without limitation) all registration, filing, qualification, printer's and
accounting fees, and the fees and disbursements (not to exceed $15,000) of
one counsel for the selling Holder (as selected by the Holders of a majority
of the Registrable Securities to be registered) and counsel for the Company,
shall be borne by the Company. Registrations effected pursuant to this
Section 1.12 shall not be counted as demands for registration or
registrations effected pursuant to Sections 1.2 or 1.3, respectively.
1.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all
9
related obligations) by a Holder to a transferee or assignee of such
securities, provided: (a) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee
agrees in writing to be bound by and subject to the terms and conditions of
this Agreement, including without limitation the provisions of Section 1.15
below; and (c) such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act.
1.14 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
1.2 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only
to the extent that the inclusion of his securities will not reduce the amount
of the Registrable Securities of the Holders which is included or (b) to make
a demand registration which could result in such registration statement being
declared effective prior to the earlier of either of the dates set forth in
subsection 1.2(a) or within one hundred twenty (120) days of the effective
date of any registration effected pursuant to Section 1.2.
1.15 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that,
during the period of duration specified by the Company and an underwriter of
common stock or other securities of the Company, following the effective date
of a registration statement of the Company filed under the Act in connection
with an underwritten offering, it shall not, to the extent requested by the
Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees
who agree to be similarly bound) any securities of the Company held by it at
any time during such period except common stock included in such
registration; provided, however, that:
(a) all officers and directors of the Company and all other
persons with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements; and
(b) such market stand-off time period shall not exceed 90
days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 1.15 shall not apply to a registration relating solely to employee
benefit plans on Form S-l or Form S-8 or similar forms which may be
promulgated in the future, or a registration relating solely to a
10
Commission Rule 145 transaction on Form S-14 or Form S-15 or similar forms
which may be promulgated in the future.
1.16 TERMINATION OF REGISTRATION RIGHTS. The right of any Holder
to request registration or inclusion in any registration pursuant to this
Agreement shall terminate if all shares of Registrable Securities held or
entitled to be held upon conversion by such Holder may immediately be sold
under Rule 144 during any 90-day period.
2. RIGHT OF FIRST OFFER.
Subject to the terms and conditions specified in this Section
2, the Company hereby grants to each Major Investor (as hereinafter defined)
a right of first offer with respect to future sales by the Company of its
Shares (as hereinafter defined). For purposes of this Section 2, a Major
Investor shall mean (i) any Investor who holds at least 30% of the original
investment such Investor makes in the Company pursuant to the Securities
Purchase Agreement and (ii) any person who acquires at least 15% of the
Series A Preferred Stock (or the common stock issued upon conversion thereof)
issued pursuant to the Securities Purchase Agreement. For purposes of this
Section 2, Investor includes any general partners and affiliates of an
Investor. An Investor shall be entitled to apportion the right of first
offer hereby granted it among itself and its partners and affiliates in such
proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of
its capital stock ("Shares"), the Company shall first make an offering of
such Shares to each Major Investor in accordance with the following
provisions:
(a) The Company shall deliver a notice by certified mail
("Notice") to the Major Investors stating (i) its bona fide intention to
offer such Shares, (ii) the number of such Shares to be offered, and (iii)
the price and terms, if any, upon which it proposes to offer such Shares.
(b) By written notification received by the Company,
within 20 calendar days after giving of the Notice, the Major Investor may
elect to purchase or obtain, at the price and on the terms specified in the
Notice, up to that portion of such Shares which equals the proportion that
the number of shares of common stock issued and held, or issuable upon
conversion of the Series A Preferred Stock then held, by such Major Investor
bears to the total number of shares of common stock of the Company then
outstanding (assuming full conversion and exercise of all convertible or
exercisable securities). The Company shall promptly, in writing, inform each
Major Investor which purchases all the shares available to it
("Fully-Exercising Investor") of any other Major Investor's failure to do
likewise. During the ten-day period commencing after such information is
given, each Fully-Exercising Investor shall be entitled to obtain that
portion of the Shares for which Major Investors were entitled to subscribe
but which were not subscribed for by the Major Investors which is equal to
the proportion that the number of shares of common stock issued and held, or
issuable upon conversion of Series A Preferred Stock then held, by such
Fully-Exercising Investor bears to the total number of shares of common stock
issued and held, or issuable upon conversion of the
11
Series A Preferred Stock then held, by all Fully-Exercising Investors who
wish to purchase some of the unsubscribed shares.
(c) If all Shares which Investors are entitled to obtain
pursuant to (b) are not elected to be obtained as provided in (b) hereof, the
Company may, during the 30-day period following the expiration of the period
provided in (b) hereof, offer the remaining unsubscribed portion of such
Shares to any person or persons at a price not less than, and upon terms no
more favorable to the offeree than those specified in the Notice. If the
Company does not enter into an agreement for the sale of the Shares within
such period, or if such agreement is not consummated within 30 days of the
execution thereof, the right provided hereunder shall be deemed to be revived
and such Shares shall not be offered unless first reoffered to the Major
Investors in accordance herewith.
(d) The right of first offer in this Section 2 shall not
be applicable (i) to the issuance or sale of shares of common stock (or
options therefor) to employees for the primary purpose of soliciting or
retaining their employment pursuant to a stock option or stock purchase plan,
(ii) the issuance of securities pursuant to the conversion or exercise of
convertible or exercisable securities, (iii) the issuance of securities in
connection with a bona fide business acquisition of or by the Company,
whether by merger, consolidation, sale of assets, sale or exchange of stock
or otherwise or (iv) the issuance of stock, warrants or other securities or
rights to persons or entities with which the Company has business
relationships provided such issuances are for other than primarily equity
financing purposes and provided that at the time of any such issuance, the
aggregate of such issuance and similar issuances in the preceding twelve
month period do not exceed 2% of the then outstanding Common Stock of the
Company (assuming full conversion and exercise of all convertible and
exercisable securities).
(e) The right of first refusal set forth in this Section
2 may not be assigned or transferred, except that (i) such right is
assignable by each Holder to any wholly owned subsidiary or parent of, or to
any corporation or entity that is, within the meaning of the Act,
controlling, controlled by or under common control with, any such Holder, and
(ii) such right is assignable between and among any of the Holders.
3. MISCELLANEOUS.
3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in
this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
3.2 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
12
3.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice
to the other parties.
3.6 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements
in addition to any other relief to which such party may be entitled.
3.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders
of a majority of the Registrable Securities then outstanding. Any amendment
or waiver effected in accordance with this paragraph shall be binding upon
each holder of any Registrable Securities then outstanding, each future
holder of all such Registrable Securities, and the Company.
3.8 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.9 AGGREGATION OF STOCK. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.
3.1. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement
(including the exhibits hereto, if any) constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
13
IN WITNESS WHEREOF, the parties have executed this Investors'
Rights Agreement as of the date first above written.
AMERIGON INCORPORATED,
a California corporation
By:
--------------------------
, President
Address:
----------------------
------------------------------
INVESTORS:
WESTAR CAPITAL II LLC
By:
--------------------------
Address:
----------------------
------------------------------
BIG BEAVER INVESTMENTS LLC
By:
--------------------------
Address:
----------------------
------------------------------
14
EXHIBIT D
March 29, 1999
[LETTERHEAD]
Westar Capital II LLC
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Big Beaver Investments L.L.C.
000 X. Xxx Xxxxxx Xxxx
Xxxxx 000
Xxxx, Xxxxxxxx 00000
Dear Ladies and Gentlemen:
We have acted as counsel to Amerigon Incorporated, a California
corporation (the "Company"), in connection with that certain Securities
Purchase Agreement dated March 29, 1999 (the "Securities Purchase Agreement")
between the Company and you, the Investor Rights' Agreement dated ______ __,
1999 (the "Investor Rights' Agreement") between the Company and you and the
Warrants dated _______ __, 1999 to be issued pursuant to the Securities
Purchase Agreement (the "Warrants"; the Securities Purchase Agreement, the
Investor Rights' Agreement and the Warrants are together referred to as the
"Agreements"). We are providing this opinion to you at the request of the
Company pursuant to Section 4.11 of the Securities Purchase Agreement.
Except as otherwise indicated, capitalized terms used in this opinion and
defined in the Agreements will have the meanings given in the Agreements.
In our capacity as such counsel, we have examined originals or copies of
those corporate and other records and documents we considered appropriate.
As to relevant factual matters, we have relied upon, among other things, the
Company's factual representations in the Agreements and factual
representations in certificates of officers of the Company. In addition, we
have obtained and relied upon those certificates of public officials we
considered appropriate.
We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity with originals
of all documents submitted to us as copies. To the extent the Company's
obligations depend on the enforceability of the Agreements against other
parties to the Agreements, we have assumed that the Agreements are
enforceable against the other parties thereto.
EXHIBIT D (CONT.)
Westar Capital LLC, Big Beaver Investments L.I.C., March 29, 1999 - Page 2
On the basis of such examination, our reliance upon the assumptions in
this opinion and our consideration of those questions of law we considered
relevant, and subject to the limitations and qualifications in this opinion,
we are of the opinion that:
1. The Company has been duly incorporated, and is validly existing in
good standing under the laws of the state of California, with corporate power
to enter into the Agreement and to perform its obligations under the
Agreements.
2. The authorized capital stock of the Company consists of 20,000,000
shares of Class A Common Stock, 600,000 shares of Class B Common Stock and
5,000,000 shares of Preferred Stock.
3. The execution, delivery and performance of the Agreements have been
duly authorized by all necessary corporate action on the part of the Company,
and the Agreements have been duly executed and delivered by the Company.
4. The Agreements constitute the legally valid and binding obligation
of the Company, enforceable against the Company in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in equity or at law.
5. The Company's execution of and delivery of, and performance of its
obligations on or prior to the date of this opinion under the Agreements do
not (i) violate the Company's Articles of Incorporation or Bylaws, (ii)
violate, breach, or result in a default under, the existing obligation of or
restriction on the Company under any of the agreements listed on Exhibit A
attached hereto, or (iii) to our knowledge, breach or otherwise violate any
existing obligation of or restriction on the Company under any order,
judgment or decree of any California or federal court of government authority
binding on the Company.
6. The shares of Series A Preferred Stock to be issued in connection
with the Agreements have been duly authorized by all necessary corporate
action on the part of the Company and, upon payment for and delivery of the
shares of Series A Preferred Stock in accordance with the Agreement, the
Series A Preferred Stock will be validly issued, fully paid and
non-assessable. The Class A Common Stock issuable upon conversion of the
Series A Preferred Stock to be issued in connection with the Agreements has
been duly and validly reserved for issuance and, when and if issued upon such
conversion in accordance with the Company's Certificate of Determination will
be validly issued, fully paid and nonassessable.
EXHIBIT D (CONT.)
Westar Capital LLC, Big Beaver Investments L.I.C., March 29, 1999 - Page 3
7. The Warrants to be issued in connection with the Securities
Purchase Agreement have been duly authorized by all necessary corporate
action on the part of the Company and, upon payment for and delivery of the
Warrants in accordance with the Securities Purchase Agreement, the Contingent
Warrants will be validly issued. The Class A Common Stock issuable upon
exercise of the Warrants has been duly and validly reserved for issuance and,
when and if issued upon such exercise in accordance with the terms of the
Warrants will be validly issued, fully paid and nonassessable.
8. Except for the matters described in Exhibit B attached hereto, we
have not, since ______ given substantive attention on behalf of the Company
to, or represented the Company in connection with any actions, suits or
proceedings pending or threatened against the Company before any court,
arbitrator or governmental agency, which (i) seek to affect the
enforceability of the Agreements or (ii)seek damages in excess of $_________.
We call your attention to the fact that our engagement is limited to specific
matters as to which we are consulted by the Company.
Our opinion in paragraph 4 above as to the enforceability of the
Agreement is subject to: (i) public policy considerations, statutes or court
decisions that may limit the rights of a party to obtain indemnification; and
(ii) the unenforceability under certain circumstances of broadly or vaguely
stated waivers or waivers of rights granted by law where the waivers are
against public policy or prohibited by law.
The law covered by this opinion is limited to the present federal law of
the United States, the present law of the State of California. We express no
opinion as to the laws of any other jurisdiction and no opinion regarding the
statutes, administrative decisions, rules, regulations or requirements of any
county, municipality, subdivision or local authority of any jurisdiction.
We express no opinion as to any provision of the Agreements require
written amendments or waivers of the Agreement insofar as it suggests that
oral or other modifications, amendments or waivers could not be effectively
agreed upon by the parties or that the doctrine of promissory estoppel might
not apply.
We express no opinion as to the enforceability of Section 6.3 of the
Securities Purchase Agreement.
Our use of the terms "known to us," "to our knowledge," or similar
phrases to qualify a statement in this opinion means that those attorneys in
this firm who have given substantive attention to the representation
described in the introductory paragraph of this opinion do not have current
actual knowledge that the statement is inaccurate. Such terms do not include
any knowledge of other attorneys within our firm (regardless of whether they
have represented or are representing the Company in connection with any other
matter) or any constructive or imputed notice of any matters or items of
information. We have not undertaken any independent investigation to
determine the accuracy of the statement, and any limited inquiry undertaken
by us during the preparation of this opinion letter should not be regarded as
such an investigation.
EXHIBIT D (CONT.)
Westar Capital LLC, Big Beaver Investments L.I.C., March 29, 1999 - Page 4
No inference as to our knowledge of any matters bearing on the accuracy of
any such statement should be drawn from the fact of our representation of the
Company in connection with this opinion letter or in other matters.
This opinion is furnished by us as counsel to the Company and may be
relied upon by you only in connection with the Agreement. It may not be used
or relied upon by you for any other purpose or by any other person, nor may
copies be delivered to any other person, without in each instance our prior
written consent.
Respectfully yours,
EXHIBIT E TO SECURITIES PURCHASE AGREEMENT
INTENTIONALLY OMITTED BECAUSE FILED ELSEWHERE.
EXHIBIT F TO SECURITIES PURCHASE AGREEMENT
INTENTIONALLY OMITTED BECAUSE FILED ELSEWHERE.
EXHIBIT G TO SECURITIES PURCHASE AGREEMENT
INTENTIONALLY OMITTED BECAUSE FILED ELSEWHERE.
EXHIBIT H TO SECURITIES PURCHASE AGREEMENT
INTENTIONALLY OMITTED BECAUSE FILED ELSEWHERE.
