THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS
("BLUE SKY LAWS"), AND MAY NOT BE OFFERED OR SOLD WITHOUT
REGISTRATION UNDER THE SECURITIES ACT, AND AS REQUIRED BY
BLUE SKY LAWS IN EFFECT AS TO SUCH TRANSFER, UNLESS AN
EXEMPTION FROM SUCH REGISTRATION UNDER STATE AND FEDERAL LAW
IS AVAILABLE.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is dated effective as of 18th of March,
2003, by and between Enova Systems, Inc., a California corporation (the
"Corporation") and Hyundai Heavy Industries Co., Ltd., (the "Investor").
R E C I T A L S
A. The Investor desires to purchase from the Corporation, and the
Corporation desires to sell to the Investor, Common Stock on the terms and
conditions hereinafter set forth pursuant to the Joint Venture Agreement
(the "JVA") to which this Stock Purchase Agreement is attached as Exhibit A
thereto.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties
hereby agree as follows:
1. Issuance of Securities, Payment and Delivery.
a. Sale of Securities. Subject to the terms and conditions of this
Agreement, the Investor agrees to purchase and the Company agrees to sell
and issue to the Investor the Shares of the Company which is equivalent to
US Three Million Dollars (USD 3,000,000) in aggregate divided into two
separate purchases on an equal basis as set forth on Schedule 1 to the
signature page attached hereto.
b. First Purchase. As for the first purchase, the Investor agrees to
purchase on the date of incorporation of the Joint Venture Company, as
specified in the JVA, (the "First Closing") that number of shares of the
Corporation's Common Stock set forth on Schedule 1 (the "Shares" or "First
Purchase Shares") at $0.065 per share for an aggregate purchase of US One
Million Five Hundred Thousand Dollars (1,500,000) as set forth on Schedule
1.
c. Second Purchase. One year after the first purchase (the "Second
Closing"), the Investor agrees to purchase that number of shares of the
Corporation's Common Stock set forth on Schedule 1 (the "Shares" or "Second
Purchase Shares") at the per share price which is equivalent to the average
daily volume weighted closing price of NASDAQ OTC (or successor trading
market such as the BBX if applicable) market share price for three (3)
months before the second purchase date for an aggregate purchase of US One
Million Five Hundred Thousand Dollars (1,500,000) as set forth on Schedule
1.
d. Payment and Delivery. For the first purchase, the Investor shall
purchase the Shares by making payment of US Five Hundred Thousand Dollars
(USD 500,000) to Enova Systems, Inc. in cash, by cashiers check or wire
transfer of funds, in immediately available U.S. Dollars funds at the First
Closing and by making payment to JVC on behalf of ENOVA, US One Million
Dollars (USD 1,000,000) for ENOVA's subscription obligations as set forth
in the JVA. The second purchase shall occur in the same manner one year
after the first purchase.
2. Deliveries at Closing. At the Closing or thereafter as indicated:
a. The Corporation and the Investor will at the Closing deliver an
executed counterpart of
this Stock Purchase Agreement;
b. The Investor will provide the Corporation at the Closing with
payment in immediately available funds of the aggregate amount of the
Purchase Price;
c. The Corporation will deliver at the Closing a share certificate
evidencing the Shares in the name of the Investor;
d. The Corporation will deliver an officer's certificate providing
that its representations and warranties contained in this Agreement are
true and correct as of the Closing;
e. The Investor will deliver a certificate providing that its
representations and warranties contained in this Agreement are true and
correct as of the Closing; and
f. The Corporation will deliver a copy of its most recently prepared
audited financial statements as well as unaudited financial statements (the
"Financial Statements").
3. Corporation's Representations and Warranties. The Corporation hereby
represents and warrants to the Investor that as of the Closing:
a. Corporate Organization and Standing. The Corporation is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California. The Corporation has the requisite
corporate power to carry on its business as presently conducted, and as
proposed or contemplated to be conducted in the future, and to enter into
and carry out the provisions of this Agreement and the transactions
contemplated under this Agreement.
b. Authorization. All corporate action on the part of the Corporation,
its directors and shareholders necessary for the authorization, execution,
delivery and performance of this Agreement by the Corporation and the
performance of all of the Corporation's obligations hereunder has been
taken. This Agreement, when executed and delivered by the Corporation,
shall constitute a valid and binding obligation of the Corporation,
enforceable in accordance with its terms, except as may be limited by
principles of public policy, and subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of
law governing specific performance, injunctive relief or other equitable
remedies. The Shares, when issued in compliance with the provisions of this
Agreement, will be validly issued, fully paid and non-assessable.
c. No Breach. The issue and sale of the Shares by the Corporation does
not and will not conflict with and does not and will not result in a breach
of any of the terms of the Corporation's incorporating documents or any
agreement or instrument to which the Corporation is a party. The
consummation of the transactions or performance of the obligations
contemplated by this Agreement will not result in a breach of any term of,
or constitute a default under, any statute, indenture, mortgage, or other
agreement or instrument to which the Corporation or any of its subsidiaries
is or are a party or by which any of them is or are bound.
d. Pending or Threatened Claims. Neither the Corporation nor any of
its subsidiaries is a party to any action, suit or proceeding which could
materially affect its business or financial condition, and no such actions,
suits or proceedings are contemplated or have been threatened.
e. No Preemptive Rights. There are no preemptive rights of any
shareholder of the Corporation with respect to the Shares.
4. Investor Representations and Warranties. The Investor represents and
warrants to the Corporation that:
a. Account. The Investor is acquiring the Shares for investment for
its own account, and not with a view to, or for resale in connection with,
any distribution thereof, and it has no present intention of selling or
distributing any of the Shares. The Investor understands that the Shares
have not been registered
under the Securities Act of 1933, as amended (the "Securities Act") by reason of
a specific exemption from the registration provisions of the Securities Act
which depends upon, among other things, the bona fide nature of the investment
as expressed herein.
b. Access to Data. The Investor has had an opportunity to discuss the
Corporation's business, management and financial affairs with its
management and to obtain any additional information which the Investor has
deemed necessary or appropriate for deciding whether or not to purchase the
Securities, and has had an opportunity to receive, review and understand
the disclosures and information regarding the Corporation's financial
statements, capitalization and other business information as set forth in
Corporation's filings with the Securities and Exchange Commission (the "SEC
Filings") which are all incorporated herein by reference, together with all
exhibits referenced therein. Investor understands that the Financial
Statements and any other information obtained from the Corporation that has
not been disclosed in the Corporation's SEC Filings are confidential and
may not be disclosed to any third party or used by the Investor for
purposes of trading in the Corporation's publicly traded stock until such
information is publicly released by the Corporation. The Investor
acknowledges that no other representations or warranties, oral or written,
have been made by the Corporation or any agent thereof except as set forth
in this Agreement.
c. No Fairness Determination. The Investor is aware that no federal,
state or other agency has made any finding or determination as to the
fairness of the investment, nor made any recommendation or endorsement of
the Shares.
d. Limited Public Market. The Investor is aware that there is
currently a very limited "over-the-counter" public market for the
Corporation's registered securities and that the Corporation became a
"reporting issuer" under the Securities Exchange Act of 1934, as amended,
on January 27, 1995. There is no guarantee that a more established public
market will develop at any time in the future. The Investor understands
that the Shares are all unregistered and may not presently be sold in even
this limited public market. The Investor understands that the Shares cannot
be readily sold or liquidated in case of an emergency or other financial
need. The Investor has sufficient liquid assets available so that the
purchase and holding of the Shares will not cause it undue financial
difficulties.
e. Authority. If Investor is a corporation, partnership, trust or
estate: (i) the individual executing and delivering this Agreement on
behalf of the Investor has been duly authorized and is duly qualified to
execute and deliver this Agreement on behalf of Investor in connection with
the purchase of the Shares and (ii) the signature of such individual is
binding upon Investor.
f. Investment Experience. The Investor is an "accredited investor" as
that term is defined in Regulation D promulgated by the Securities and
Exchange Commission. The term "Accredited Investor" under Regulation D
refers to:
(i) A person or entity who is a director or executive officer
of the Corporation;
(ii) Any bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its individual
or fiduciary capacity; any broker or dealer registered pursuant to Section
15 of the Exchange Act; insurance Corporation as defined in Section 2(13)
of the Securities Act; investment Corporation registered under the
Investment Corporation Act of 1940; or a business development Corporation
as defined in Section 2(a)(48) of that Act; Small Business Investment
Corporation licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; any
plan established and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political subdivisions for
the benefit of its employees, if such plan has total assets in excess of
$5,000,000; employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, if the investment decision is made
by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance Corporation, or
registered investment adviser, or if the employee benefit plan has total
assets in excess of $5,000,000 or, if a self-directed plan, with investment
decision made solely by persons that are accredited investors;
(iii) Any private business development Corporation as defined
in Section 202(a)(22) of the Investment Advisers Act of 1940;
(iv) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
Securities offered, with total assets in excess of $5,000,000;
(v) Any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of his purchase exceeds
$1,000,000;
(vi) Any natural person who had an individual income in excess
of $200,000 during each of the previous two years or joint income with that
person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current
year;
(vii) Any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Securities offered,
whose purchase is directed by a person who has such knowledge and
experience in financial and business matters that he is capable of
evaluating the merits and risks of the prospective investment; or
(viii) Any entity in which all of the equity owners are
accredited investors.
(ix) As used in this Section 4(g), the term "net worth" means
the excess of total assets over total liabilities. For the purpose of
determining a person's net worth, the principal residence owned by an
individual should be valued at fair market value, including the cost of
improvements, net of current encumbrances. As used in this Section 4(g),
"income" means actual economic income, which may differ from adjusted gross
income for income tax purposes. Accordingly, the undersigned should
consider whether it should add any or all of the following items to its
adjusted gross income for income tax purposes in order to reflect more
accurately its actual economic income: Any amounts attributable to
tax-exempt income received, losses claimed as a limited partner in any
limited partnership, deductions claimed for depletion, contributions to an
XXX or Xxxxx retirement plan, and alimony payments.
5. Lock-Up. The Investor acknowledges and agrees that the Shares shall be
subject to certain restrictions on transfer following a registered public
offering of the Corporation's securities. In connection with any
registration of the Corporation's securities, the Investor agrees, upon the
request of the Corporation and/or the underwriters managing such offering
of the Corporation's securities, if applicable, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose
of any Shares (other than those included in the registration) without the
prior written consent of the Corporation and, if applicable, such
underwriters, as the case may be, for such period of time, not to exceed
fourteen (14) days before and one hundred eighty (180) days, after the
effective date of such registration as the Corporation or the underwriters
may specify; provided, however, that all executive officers, directors and
shareholders holding more than 1% of the fully diluted capital stock of the
Corporation enter into similar agreements. The Corporation and underwriters
may request such additional written agreements in furtherance of such
standoff in the form reasonably satisfactory to the Corporation and such
underwriter. The Corporation may also impose stop-transfer instructions
with respect to the shares subject to the foregoing restrictions until the
end of said one hundred eighty (180) day period. Furthermore, with respect
to (i) the First Purchase Shares for a period of 18 months after the First
Closing and (ii) the Second Purchase Shares for a period of 12 months after
the Second Closing , the Investor agrees not to sell, make any short sale
of, loan, grant any option for the purchase of, or otherwise dispose of any
such Shares.
6. Restrictive Legends. Each certificate evidencing the Shares which the
Investor may acquire hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or
similar event (unless no longer required in the opinion of the counsel for
the Corporation)
shall be imprinted with one or more legends substantially in the following
form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS,
AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. THE HOLDER OF THESE SHARES MAY BE REQUIRED TO
DELIVER TO THE COMPANY, IF THE COMPANY SO REQUESTS, AN OPINION OF COUNSEL
(REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) TO THE
EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (OR
QUALIFICATION UNDER STATE SECURITIES LAWS) IS AVAILABLE WITH RESPECT TO ANY
TRANSFER OF THESE SHARES THAT HAS NOT BEEN SO REGISTERED (OR QUALIFIED).
THE COMPANY IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK. A COPY OF
THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF EACH CLASS AND SERIES
WILL BE PROVIDED TO EACH STOCKHOLDER WITHOUT CHARGE, UPON WRITTEN REQUEST.
The Corporation shall be entitled to enter stop transfer notices on its
transfer books with respect to the Securities.
7. Miscellaneous.
a. Notices. Any notice, request or other communication required or
permitted hereunder will be in writing and shall be deemed to have been
duly given if personally delivered or if telecopied or mailed by registered
or certified mail, postage prepaid, at the respective addresses of the
parties as set forth below. Any party hereto may by notice so given change
its address for future notice hereunder. Notice will be deemed to have been
given when personally delivered or when deposited in the mail or telecopied
in the manner set forth above and will be deemed to have been received when
delivered.
(a) If to the Investor: as set forth on Schedule 1
(b) If to the Company
Enova Systems, Inc.
00000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: President
with a copy to:
Xxxx Xxxxx Xxxxxx Xxxxxx
0000 Xxxxxxxx Xxxxxx, 00xx Xxx.
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier (000) 000-0000
b. Survival. The representations, warranties, covenants and agreements
made herein shall survive the closing of the transactions contemplated
hereby.
c. Successors and Assigns. Except as otherwise expressly 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.
d. Applicable Law. This Agreement and all acts and transactions
pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed
and interpreted in accordance with the laws of the State of California,
without giving effect to principles of conflicts of law.
e. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. This Agreement may be executed by
facsimile.
f. Title and Subtitles. The titles of the Sections and subsections of
this Agreement are for the convenience of reference only and are not to be
considered in construing this Agreement.
g. Attorney's Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to
which it may be entitled.
h. Waiver. The provisions of this Agreement may be waived, altered,
amended or repealed, in whole or in part, only upon the written consent of
the Corporation and the Investor. No waiver by any party hereto of any
breach of this Agreement by any other party shall operate or be construed
as a waiver of any other or subsequent breach. No waiver by any party
hereto of any breach of this Agreement by any other party hereto shall be
effective unless it is in writing and signed by the party claimed to have
waived such breach.
i. Remedies Cumulative; Specific Performance. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any breach or
threatened breach by the Corporation to this Agreement of any covenant,
obligation or other provision set forth in this Agreement for the benefit
of any other party to this Agreement, such other party shall be entitled
(in addition to any other remedy that may be available to it) to (A) a
decree or order of specific performance or mandamus to enforce the
observance and performance of such covenant, obligation or other provision,
and (B) an injunction restraining such breach or threatened breach.
j. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith to achieve the closest comparable terms as is
possible. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (a) such provision
shall be excluded from this Agreement, (b) the balance of the Agreement
shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
k. Venue. Any action, arbitration, or proceeding arising directly or
indirectly from this Agreement or any other instrument or security
referenced herein shall be litigated or arbitrated, as appropriate, in the
County of Los Angeles, State of California.
l. Entire Agreement. This Agreement and the Exhibits, Schedules and
other documents referred to herein constitute the entire
agreement between the parties hereto pertaining to the subject
matter hereof, and any and all other written or oral agreements
regarding the subject matter hereof existing between the parties
hereto are expressly canceled.
SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
HYUNDAI HEAVY INDUSTRIES Co., Ltd. ENOVA SYSTEMS, INC.
______________________________ __________________________________
By: Xx. Xxx-Xxx Min, President/CEO Xxxx X. Xxxxx, President/CEO
Schedule 1
Closing Date: March 18, 2003
First Year Second Year
Number of Shares: 23,076,923 [TO BE DETERMINED AT SECOND CLOSING
ACCORDING TO SECTION 1.(a) OF THIS
AGREEMENT]
Purchase Price: US$1,500,000 US$1,500,000
Price per share: $0.065 $0.XX_[SEE FORMULA ABOVE]