Exhibit 1 - Securities Purchase Agreement
ELECTRIC FUEL CORPORATION
SECURITIES PURCHASE AGREEMENT
December 27, 1999
TO THE PURCHASERS SET FORTH ON EXHIBIT A
Ladies and Gentlemen:
Electric Fuel Corporation, a Delaware corporation (the "Company"),
proposes to sell (the "Offering") to the purchasers set forth on Exhibit A (the
"Purchasers") 1,800,000 shares (the "Shares") of its common stock, $.01 par
value per share (the "Common Stock") and warrants to purchase 1,800,000 shares
of Common Stock (the "Warrants", and together with the Shares, the
"Securities"), in the amounts and for the price set forth opposite each
Purchaser's name on Exhibit A. In connection with and in consideration for the
sale and purchase of the Securities, the Company and the Purchasers agree to
abide by the mutual covenants contained herein.
1. Sale and Purchase of the Securities. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this stock purchase agreement (the "Agreement"), the
Company agrees to sell to the Purchasers, and the Purchasers agree to purchase
from the Company, the Securities. The Purchasers will purchase the Shares at a
price of $2.00 per share. Of the Warrants, Warrants to purchase 1,200,000 shares
shall have an exercise price of $1.25 per share and shall expire on the date
which is six months after the Closing Date, and Warrants to purchase 600,000
shares shall have an exercise price of $4.50 per share and shall expire on the
first anniversary of the Closing Date. The Warrants shall be in the form
attached hereto.
2. Delivery and Payment.
(a) On the Closing Date, the Purchasers will pay to Xxxxx Xxxxx & Co., as
escrow agent (the "Escrow Agent"), for the benefit of the Company an aggregate
of U.S.$3,600,000 (the "Purchase Price") and the Company shall deliver the
Securities to the Escrow Agent for the benefit of the Purchasers. Payment of the
Purchase Price shall be made by wire transfer in immediately available funds in
U.S. dollars or by delivery of a check for U.S. dollars to the Escrow Agent in
accordance with the wiring or delivery instructions provided below, provided,
however, that the Purchasers may, at their option wire or deliver New Israeli
Shekels in lieu of U.S. dollars at the Bank HaPoalim U.S. dollar cash sell rate
(i.e. the rate at which the bank sells to buyers) as of the close of business on
December 26, 1999. Notwithstanding the foregoing, the Purchasers agree that
$18,000 shall be paid to the Company in accordance with the wire transfer
instructions set forth on Annex I hereto. To the extent that monies are wired to
the Escrow Agent, they should be wired as follows: to account number 716383 in
the name of Xxxxx Xxxxx & Co. Trust Account, at Israel Discount Bank, Shlomzion
Hamalka Branch, branch number 11-063, and to the extent that payment is made via
check, delivery should be made to the attention of Xxxxx Xxxxxxxxx, Adv. c/o
Xxxxx Xxxxx & Co., 00 Xxxxxx Xxxxxx Xxxxxxxxx 00000, Xxxxxx. The Closing of the
Offering shall take place at the offices of the Company, Western Industrial
Zone, Bet Shemesh, Israel on December 27, 1999 or at such place and time on such
other date as shall be agreed upon by the Company and the Purchasers. The day on
which the Closing takes place shall be referred to herein as the "Closing Date."
(b) Pursuant to the terms of an Escrow Agreement to be entered into in
connection with the Closing in form and substance reasonably satisfactory to the
Company, the Purchasers and the Escrow Agent (the "Escrow Agreement"), the
Escrow Agent shall pay the Purchase Price to the Company and deliver the
Securities to the Purchasers upon receiving written notice from the Company to
the effect that the Securities and Exchange Commission has declared effective a
Form S-3 registration statement (the "Form S-3") filed by the Company to
register the resale of the Shares, the Warrants and the shares of Common Stock
issuable upon exercise of the Warrants (the "Effective Date") pursuant to the
terms of Section 8 below. The Escrow Agent shall hold the Purchase Price and the
Securities in escrow until the Effective Date.
(c) Notwithstanding anything in this Agreement to the contrary, the Parties
agree that the amount of Securities to be sold under this Agreement may be
reduced if without such reduction the Offering would require approval of the
Company's stockholders. In the event such reduction is required, the amount of
Securities by which the size of the Offering shall be reduced shall be
apportioned pro rata among the Purchasers.
3. Offering of Common Stock. The Common Stock will be offered and sold to
the Purchasers without being registered under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance on the exemption therefrom provided
by Section 4(2) of the Securities Act.
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Immediately after the Closing, the Company shall file the Form S-3 in
accordance with Section 8 below. At the Closing, the Company will also amend the
voting rights agreement by and among the Company, Xxxx X. Xxxxx, Xxxxxx X.
Xxxxxxx and Xxxxxx Xxxxxx dated as of September 30, 1996 so as to amend such
agreement as of the Closing Date (the "Amended Voting Rights Agreement").
Pursuant to the Amended Voting Rights Agreement, the Purchasers shall be
entitled to have one designated nominee elected to the Board of Directors of the
Company so long as the Purchasers hold in the aggregate 1,200,000 shares of
Common Stock. This Agreement, the Escrow Agreement and the Amended Voting Rights
Agreement are hereinafter referred to collectively as the "Operative Documents."
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers as follows:
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the state of Delaware. The
Company's wholly-owned Israeli subsidiary, Electric Fuel (E.F.L.) Limited
("EFL"), is duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation. Each
of the Company and EFL is qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
assets or properties (owned, leased or licensed) or the nature of its
business makes such qualification necessary, except for such jurisdictions
where the failure to so qualify, individually or in the aggregate, would
not have a material adverse effect on the assets or properties, business,
results of operations or financial condition, taken as a whole, of the
Company and EFL.
(b) All necessary corporate action has been duly and validly taken to
authorize the execution, delivery and performance of the Operative
Documents by the Company. This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles. The Escrow Agreement and the Amended
Voting Rights Agreement have been duly and validly authorized, and when
executed and delivered, will constitute the legal, valid and binding
obligations of the Company enforceable against the Company in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(c) Neither the execution, delivery and performance of the Operative
Documents by the Company nor the consummation of any of the transactions
contemplated hereby or thereby (including, without limitation, the issuance
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and sale by the Company of the Securities) will give rise to a right to
terminate or accelerate the due date of any payment due under, or conflict
with or result in the breach of any term or provision of, or constitute a
default (or an event which with notice or lapse of time or both would
constitute a default) under, or require any consent or waiver under, or
result in the execution or imposition of any material lien, charge or
encumbrance upon any properties or assets of the Company pursuant to the
terms of, any material indenture, mortgage, deed of trust or other
agreement or instrument to which the Company is a party or by which the
Company or any of its properties or businesses is bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company, or violate any provision of the charter or
by-laws of the Company or EFL, except for such consents or waivers that
have already been obtained and are in full force and effect, or, except for
in connection with the Form S-3, require any consent, approval,
authorization or other order of or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency
or official, or such consents or waivers the failure to so obtain would not
individually or in the aggregate, have a material adverse effect upon the
assets or properties, business, results of operations or financial
condition, taken as a whole, of the Company and EFL.
(d) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, the Company's Form 10-Qs for the fiscal periods ended
March 31, 1999, June 30, 1999 and September 30, 1999 and all documents
filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (such documents are hereinafter referred to as the "Exchange Act
Documents") were filed in a timely manner and, when they were filed (or, if
any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects to the
requirements of the Exchange Act, and the rules and regulations thereunder,
and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. Subsequent to the respective dates
as of which information was given in the Exchange Act Documents, except as
described therein, there has not been any material adverse change, and, to
the Company's knowledge, no event has occurred which with notice or lapse
of time or both, that would constitute such a material adverse change, in
the assets or properties, business, results of operations or financial
condition of the Company taken as a whole.
(e) There are no claims for brokerage commissions or finder's fees on
similar compensation in connection with the transactions by this Agreement
based on any arrangement or agreement made by or on behalf of the Company
other than as previously disclosed to the Purchasers, and the Company
agrees to indemnify and hold the Purchasers harmless against any damages
incurred as a result of any such claims.
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5. Representations and Warranties of the Purchasers. Each Purchaser
represents and warrants to Company that:
(a) Such Purchaser has full power and authority to execute, deliver
and perform each of this Agreement, the Escrow Agreement and the Amended
Voting Rights Agreement. This Agreement constitutes a valid and legally
binding obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles.
(b) The Securities to be received by such Purchaser will be acquired
for investment for such Purchaser's own account, and not with a view to the
distribution of any part thereof. Such Purchaser has no present intention
of selling, granting any participation in, or otherwise distributing the
same. Such Purchaser does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participation to
such person or to any third person, with respect to any of the Securities.
(c) Such Purchaser understands that the Securities may not be sold,
transferred, or otherwise disposed of without registration under the
Securities Act, or an exemption therefrom, and that in the absence of an
effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must
be held indefinitely. In the absence of an effective registration statement
covering the Securities, such Purchaser will sell, transfer, or otherwise
dispose of the Securities only in a manner consistent with its
representations and agreements set forth herein.
(d) Such Purchaser understands that until the Securities are
registered under the Securities Act, the certificates evidencing the
Securities may bear substantially the following legends:
(i) "THE SECURITIES EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND APPLICABLE
STATE LAW, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM (IN EACH CASE BASED UPON DOCUMENTATION SATISFACTORY TO
THE COMPANY, INCLUDING AN OPINION OF COUNSEL SATISFACTORY TO IT
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THAT REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE LAWS IS NOT REQUIRED) OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT."
(ii) Any legend required by the Escrow Agreement, the Amended Voting
Agreement or any applicable law.
(e) Such Purchaser is an "accredited investor" as such term is defined
in Rule 501(a)(1) promulgated pursuant to the Securities Act.
(f) Such Purchaser's financial condition is such that he is able to
bear the risk of holding the Securities for an indefinite period of time.
(g) Such Purchaser has such knowledge and experience in financial and
business matters and in making high risk investments of this type that he
is capable of evaluating the merits and risks of the purchase of the
Securities.
(h) Such Purchaser has been furnished access to the business records
of the Company and such additional information and documents as such
Purchaser has requested and has been afforded an opportunity to ask
questions of and receive answers from representatives of the Company
concerning the business, operations, market potential, capitalization,
financial condition and prospects, and all other matters deemed relevant by
such Purchaser.
(i) There are no claims for brokerage commissions or finder's fees or
similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf
of such Purchaser, and such Purchaser agrees to indemnify and hold the
Company harmless against any damages incurred as a result of any such
claims.
(j) Such Purchaser acknowledges that the Company will rely upon the
truth and accuracy of the foregoing acknowledgments, representations and
agreements and agrees that, if any of the acknowledgments, representations
and agreements are no longer accurate, he shall promptly notify the
Company.
6. Conditions of the Purchaser's Obligations. The obligation of the
Purchasers to purchase the Securities is subject to each of the following terms
and conditions:
(a) The representations and warranties of the Company contained in
this Agreement shall be true and correct when made and on and as of the
Closing Date as if made on such date and the Company shall have performed
all covenants and agreements and satisfied all the conditions contained in
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this Agreement required to be performed or satisfied by it at or before the
Closing Date.
(b) The Company shall have executed and delivered the Escrow
Agreement and the Amended Voting Rights Agreement and delivered the
Securities to the Escrow Agent.
7. Conditions of the Company's Obligations. The obligation of the Company
to sell the Securities is subject to each of the following terms and conditions:
(a) The representations and warranties of the Purchasers contained in
this Agreement shall be true and correct when made and on and as of the
Closing Date as if made on such date and the Purchasers shall have
performed all covenants and agreements and satisfied all the conditions
contained in this Agreement required to be performed or satisfied by it at
or before the Closing Date.
(b) Receipt by the Escrow Agent of the Purchase Price from the
Purchasers and receipt by the Company of $18,000.
(c) The Purchasers shall have executed and delivered the Escrow
Agreement and the Amended Voting Rights Agreement.
8. Registration Rights. Promptly following the Closing, the Company shall
file and use its reasonable best efforts to have declared effective, the Form
S-3 registering for resale the Securities issued pursuant to this Agreement. The
Company shall use its reasonable efforts to maintain the effectiveness of the
Form S-3 until the date that is eighteen months after the Closing.
9. Covenant of the Company. The Company covenants and agrees as follows:
The Company shall use its reasonable best efforts to do and perform all
things required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date, and to satisfy all conditions precedent
to the delivery of the Common Stock.
10. Covenants of the Purchaser. The Purchasers covenant and agree as
follows:
(a) The Purchasers shall use their reasonable best efforts to do and
perform all things required or necessary to be done and performed under
this Agreement by the Purchasers prior to the Closing Date, and to satisfy
all conditions precedent to the delivery of the Securities.
(b) The Purchasers agree that from the date hereof until the fifth
anniversary of the Closing Date, they will not, and will not permit any of
his Affiliates, as defined in the Securities Act, to directly or indirectly
or in conjunction with or through any Associate (as defined in Rule 12b-2
of the Exchange Act), (i) solicit proxies with respect to any capital stock
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or other voting securities of the Company under any circumstances, or
become a "participant" in any "election contest" relating to the election
of directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A of the Exchange Act) or (ii) make an offer for the
acquisition of substantially all of the assets or capital stock of the
Company or induce or assist any other person to make such an offer or (iii)
form or join any "group" within the meaning of Section 13(d)(3) of the
Exchange Act with respect to any capital stock or other voting securities
of the Company for the purpose of accomplishing the actions referred to in
clauses (i) and (ii) above other than pursuant to the Amended Voting Rights
Agreement.
(c) The holders of a majority of the Securities may act on behalf of
the Purchasers.
11. Miscellaneous. This Agreement has been and is made for the benefit of
the Purchasers and the Company, and their respective successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchasers of
Securities from the Purchasers merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Purchasers to the address set forth on Exhibit A, with a copy
to:________________________; and (b) if to the Company, to Xxxxxx Xxxxxx,
Electric Fuel Ltd., Western Industrial Zone, X.X. Xxx 000, Xxx Xxxxxxx 00000,
Xxxxxx, with a copy to Xxxx X. Xxxxxxxxx, Esq., Ropes & Xxxx, Xxx Xxxxxxxxxxxxx
Xxxxx, Xxxxxx, XX 00000 and Xxxxx X. Xxxxx, Adv., Meitar, Liquornik, Geva & Co.,
00 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxx Xxx 00000, Israel.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to any conflicts or choice of law
principles which would cause the application of the internal laws of any
jurisdiction other than the State of Delaware.
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement among
us.
Very truly yours,
ELECTRIC FUEL CORPORATION
By /s/ Xxxxxx X. Xxxxxxx
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Title: Chairman & Chief Financial Officer
Agreed and accepted:
THE PURCHASERS
/s/ Xxxx X. Xxxxx
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