PART 1 - PRIVATE PLACEMENT - Subscription Agreement
The following individuals participated in the larger part of the
Private Placement in the amounts as shown. The Securities
Subscription Agreement as follows was appropriately
completed for each of the participants in the amounts shown.
NAME SHARES PRICE
Xxxxxx, Xxxxxx X. 3,812 $6.5625
Xxxxxx, Xxxxxx X. 3,813 6.5625
Xxxxxxx Capital Diversified
Fund LP 22,875 6.5625
Xxxxxxx, A. T. 2,300 6.5625
Xxxxxxx, X.X. 7,619 6.5625
Xxxxxx, M.B. 3,810 6.5625
Xxxxxx, C. 3,810 6.5625
Xxxx, Langhorne III 10,000 6.5625
Xxxxx, X.X. 3,810 6.5625
Xxxxxxx, X.X. 19,048 6.5625
SECURITIES SUBSCRIPTION AGREEMENT
THE OFFERING OF SECURITIES OF ELECTROSOURCE, INC. HEREUNDER HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), IN RELIANCE UPON THE AVAILABILITY OF
EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 4(2) OF SAID ACT
AND REGULATION D OF THE GENERAL RULES AND REGULATIONS PROMULGATED
THEREUNDER. THERE ARE SUBSTANTIAL RESTRICTIONS UPON TRANSFER OF
THE SECURITIES. ACCORDINGLY, THE SECURITIES ARE NOT FREELY
TRANSFERABLE AND MAY HAVE TO BE HELD UNTIL TRANSFER MAY BE MADE
PURSUANT TO A REGISTERED TRANSACTION OR AN EXEMPTION FROM
REGISTRATION.
THIS SECURITIES SUBSCRIPTION AGREEMENT dated as of December
28, 1996 (the "Agreement"), is executed by the undersigned
"Purchaser" in connection with the private placement of common
stock and warrants of Electrosource, Inc., a corporation
organized under the laws of Delaware, with its principal
executive offices located at 0000 XX 00 Xxxxx, Xxx Xxxxxx, Xxxxx
00000 (hereinafter referred to as "Company"). When accepted by
the Company, this Agreement shall constitute a subscription to
purchase common stock and warrants.
1. Agreement to Subscribe; Purchase Price.
(a) Subscription. The undersigned Purchaser hereby subscribes
for and agrees to purchase ___________________________ (______)
shares of the Company's Common Stock ("Shares") for Six and
56.25/100 Dollars ($6.5625) per share (6 9/16 closing price on
December 19, 1996) for ____________________ and __/100 Dollars
($______) in total ("Purchase Price").
(b) Warrants. For purchase of the Common Stock, the Purchaser
shall also receive warrants ("Warrants") for purchase of
____________________________ (_______) shares of common stock
at the exercise price of Seven and 56/100 Dollars ($7.56)
per share. The warrants shall have a two (2) year term. The
form of the warrant is attached hereto as Exhibit "A."
(c) Payment. The Purchase Price shall be paid by delivering
immediately available funds by check or wire transfer as directed
by Company for delivery of the Shares and Warrants versus payment.
(d) Closing. The closing of the transactions contemplated by this
Agreement shall occur on or before _____________1997, or such earlier
or later date as is mutually agreed to by Purchaser and Company.
2. Company Representations.
(a) Corporate Power. The Company has all requisite legal and
corporate power to execute and deliver this Agreement, and all
requisite and legal corporate power to sell and issue the Shares
and Warrants and to carry out and perform its obligations under
the terms of this Agreement.
(b) Authorization. All corporate action on the part of The Company
necessary for the authorization, execution, delivery and performance
of this Agreement, the authorization, sale, issuance and delivery of
the Shares and Warrants and the performance of the company's
obligations hereunder has been taken or will be taken prior to closing.
This Agreement, when executed and delivered, shall constitute the valid
and binding obligation of the Company, enforceable in accordance
with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors, rules of law
governing specific performance, injunctive relief or other equitable
remedies, and limitations of public policy. The Shares and Warrants
issued in compliance with the provisions of this Agreement will be
validly issued, fully paid and non-assessable and free of any liens
or encumbrances; provided, however, that the Shares and Warrants are
subject to restrictions on transfer under state and/or federal securities
laws as set forth herein. The Shares and Warrants are not subject to
any preemptive rights or rights of first refusal.
3. Purchaser Representation.
The Purchaser hereby represents and warrants to the Company as follows,
and acknowledges and agrees that the Company will rely upon such
representations and warranties in accepting the subscription of the
undersigned for the purchase of the Shares:
(a) The Purchaser is an "Accredited Investor," as such term
is defined in Rule 501 promulgated under the Securities Act,
which is a corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose
of acquiring the Shares, with total assets in excess of
$5,000,000, or natural person that either alone or together
with his spouse has a net worth of at least $1,000,000 or
has individual income for each of the past two (2) years of
not less than $200,000 ($300,000 joint) and reasonably
expects income of at least such amount in the current year.
(b) No representations or warranties have been made to the
Purchaser by the Company, or any agent, employee or
affiliate of the Company, and in entering into this
transaction the Purchaser is not relying upon any
information other than the information contained in the
documents and reports filed by the Company with the
Securities and Exchange Commission under the Securities
Exchange Act of 1934 (the "SEC filings"), or resulting from
its own independent investigation. The Purchaser, before
the date hereof, had had an opportunity to ask questions and
receive answers from the Company or a person or persons
acting on its behalf, concerning the terms and conditions of
this investment and has had an opportunity to examine all
applicable documents and such applicable information as
specified in Schedule A to the Securities Act, to the extent
such documents and information are relevant to this
transaction and are possessed by the Company or are
obtainable by the Company without unreasonable effort or
expense, and all such questions have been answered and
documents and information have been supplied to the full
satisfaction of the Purchaser.
(c) The Purchaser is aware that:
(i) there are substantial risks incident to an
investment in the Shares, and such investment is
speculative and involves a high degree of risk of loss
of its entire investment in the Company;
(ii) no Federal or State agency has passed upon the
sale of the Shares or made any finding or determination
concerning the fairness of this investment, and the
terms of the offering may not conform to the guidelines
of certain state securities administrators;
(iii) the Company has and may continue to have a
significant need for cash for operating expenses and
other purposes; that the aggregate proceeds from the
sale of the Shares alone may not be sufficient to
satisfy the cash requirements of the Company for any
appreciable period of time; that other sources of funds
may not be available;
(iv) the industry in which the Company is engaged is
occupied by several firms, some of which will be
substantially greater in size and have financial
resources and personnel staff larger and more
established than those of the Company, and there can be
no assurance that the Company will be able to compete
in the market effectively;
(d) The Purchaser understands that an investment in the
Company is an illiquid investment and further recognizes and
agrees that because the Shares have not been registered
under applicable securities laws or an exemption from such
registration is available, the Purchaser must bear the
economic risk of the investment for an indefinite period of
time. The Purchaser further acknowledges that each
certificate representing Shares will bear a legend to the
effect that the Shares have not been registered under any
securities law and setting forth or referring to the
restrictions on transferability and sale of the shares. The
Purchaser further acknowledges that the Company will issue
stop transfer orders to its transfer agent restricting
transfer of the Shares in the absence of registration under
the securities laws or exemption therefrom.
(e) The Purchaser acknowledges that there are substantial
restrictions on the transferability of the Shares. Unless
the Shares are registered under the Securities Act and any
applicable state securities law, the Shares may not be, and
the Purchaser agrees that they shall not be, sold unless
such sale is exempt from such registration under the
Securities Act and any other applicable state blue sky laws
or regulations. The Purchaser further acknowledges that the
Company is under no obligation to aid it in obtaining any
exemption from the registration requirements. The Purchaser
also acknowledges responsibility for compliance with all
conditions on transfer imposed by any securities
administrator of any state.
(f) The Purchaser is acquiring the Shares for its own
account, as principal, and not for the account of any other
person.
4. Registration Rights.
(a) The Company agrees to file a registration statement on
Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act") covering the sale by Purchaser of the
Shares and the Shares issuable upon exercise of the
Warrants. Such registration statement will be applicable
only to sales by the Purchaser of Shares purchased in the
Offering made through registered broker-dealers at market
prices prevailing at the time of sale, although the Company
may elect to include in the registration securities to be
registered for the account of selling shareholders other
than the Purchaser. The obligation of the Company to effect
the registration of the Shares may at the election of the
Company be accomplished through the filing of a new
registration statement or through the amendment of a then-
currently filed registration statement to include the Shares
so long as such registration statement remains current for
the time period set forth in paragraph (b)(ii) below.
(b) In connection with the registration of Shares
undertaken by the Company pursuant to this paragraph, the
Company shall:
(i) use its best reasonable efforts within thirty (30)
days of closing to prepare and file with the Securities
and Exchange Commission (the OCommissionO) a
registration statement on Form S-3 with respect to the
Shares, and thereafter and use its reasonable best
efforts to cause such registration statement to become
effective;
(ii) prepare and file with the Commission such
amendments and supplements to such registration
statement and the prospectus used in connection
therewith as may be necessary to keep such registration
statement current at any time that sales are proposed
to be made thereunder for a period expiring one hundred
twenty (120) days after the date that such registration
statement is declared to be effective by the
Commission.
(iii) provide Purchaser a reasonable opportunity to
review prior to filing the registration statement and
any amendments or supplements to such registration
statement and any prospectus used in connection
therewith;
(iv) furnish to Purchaser such number of conformed
copies of such registration statement and of each such
amendment and supplement thereto (in each case
including all exhibits), such number of copies of the
prospectus included in such registration statement
(including each preliminary prospectus and prospectus
supplement), in conformity with the requirements of the
Securities Act, and such other documents as Purchaser
may reasonably request in order to facilitate the sale
of the Shares covered by such registration statement;
(v) notify Purchaser at any time when a prospectus
relating to the Shares covered by such registration
statement is required to be delivered under the
Securities Act, of the CompanyOs becoming aware that
the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances then existing, and at the request of
Purchaser promptly prepare and furnish to Purchaser a
reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter
delivered to the Purchaser of such shares, such
prospectus shall not include an 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 in light of the
circumstances then existing; and
(vi) use its best efforts to cause all of the Shares by
such registration statement to be accepted for
quotation on NASDAQ.
(c) In connection with any registration pursuant to this
paragraph 3, the Company shall pay all registration and
filing fees, printing expenses, fees and disbursements of
the CompanyOs legal counsel and accountants, and transfer
agentsO and registrarsO fees. Purchaser shall pay all
underwriting discounts, commissions and expenses
attributable to the sale of the Shares and all fees and
disbursements of Purchaser's legal counsel and accountants.
(d) At least ten days prior to making any offer or sale of
Shares pursuant to the registration statement, the Purchaser
shall advise the Company that the Purchaser proposes to make
offers or sales of Shares, the number of Shares proposed to
be offered and sold, the name and address of each broker or
dealer to or through which such offers and sales are
proposed to be made, and the approximate period of time in
which such offers and sales are proposed to be made. If, in
the reasonable judgment of the Company, it is necessary to
amend or supplement the registration statement or the
prospectus contained therein (the OprospectusO) prior to or
in connection with any such offer or sale or during the
period any such offer or sale is being made, the Company
will advise the Purchaser, who shall promptly notify each
broker or dealer named by the Purchaser as participating in
the offer or sale of Shares by the Purchaser. The Purchaser
and each broker or dealer participating in the offer or sale
of Shares by the Purchaser shall not make any offer or sale
of Shares until the expiration of ten business days after
such Purchaser has advised the Company that it proposes to
make such offers and sales and, following such ten-day
period, shall offer and sell Shares only during the period
specified by such Purchaser in the notice given to the
Company. Notwithstanding the foregoing, if the Company shall
advise the Purchaser of its determination that it is
necessary to amend or supplement the registration statement
or prospectus, the Purchaser and each broker or dealer
participating in the offer and sale of Shares by the
Purchaser shall make no offers or sales of Shares until the
Company notifies the Purchaser that such supplement has been
filed with or that such amendment has been declared
effective by the Commission. Purchaser shall promptly notify
the Company of each sale of Shares and shall promptly notify
the Company when the sale or other distribution of all
Shares held by the Purchaser have been completed.
(e) The Purchaser hereby represents and warrants to the
Company that no broker, dealer, Underwriter, Prospective
Underwriter, Affiliated Purchaser or other person who has
agreed to Participate or is Participating in the
Distribution contemplated hereby on behalf of or at the
direction of such Purchaser, shall directly or indirectly,
by the use of any means or instrumentality of interstate
commerce, or of the mails, or of any facility of any
national securities exchange, either alone or with one or
more other persons, bid for or purchase for any account in
which he has a beneficial interest, any shares of Common
Stock, or any right to purchase shares of Common Stock, or
attempt to induce any person to purchase any shares of
Common Stock or rights until after he has completed his
Participation in such Distribution. Purchaser shall be
deemed to have completed his Participation in the
Distribution when he has sold all Shares owned by him. So
long as such transactions are not engaged in for the purpose
of creating actual, or apparent, active trading in or
raising the price of the Common Stock, this paragraph shall
not prohibit (i) transactions in connection with the
Distribution contemplated hereby effected otherwise than on
a securities exchange with the Company or the Purchaser on
whose behalf such distribution is being made or among
Underwriters, Prospective Underwriters or other persons who
have agreed to Participate or are Participating in such
Distribution; or (ii) unsolicited, privately negotiated
purchases, each involving at least a block of shares, that
are not effected from or through a broker or dealer; or
(iii) purchases by the Company effected more than 40 days
after the effective date of the Registration Statement
covering the Common Stock to be distributed hereunder, for
the purpose of satisfying a sinking fund or similar
obligation to which the Company is subject and which becomes
due as of a date that does not exceed twelve months from the
date of such purchases; or (iv) odd-lot transactions and
round-lot transactions that offset odd-lot transactions
previously or simultaneously executed or reasonably
anticipated in the usual course of business by a person who
acts in the capacity of an odd-lot dealer; or (v) brokerage
transactions not involving solicitation of the customer's
order; or (vi) brokerage transactions involving the
solicitation of a customerOs order made prior to the later
of nine business days before commencement of offers or sales
of the Shares to be Distributed or the time the broker-
dealer becomes a Participant in the Distribution; or (vii)
offers to sell or the solicitation of offers to buy Shares
being Distributed or securities or rights offered as
principal by the person making such offer to sell or
solicitation; or (viii) the exercise of any right or
conversion privilege set forth in the instrument governing a
security, to acquire any security directly from the Company;
or (ix) bids or purchases by an Underwriter, Prospective
Underwriter, Affiliated Purchaser or dealer, if all such
bids or purchases are made (a) prior to the later of nine
business days prior to the commencement of offers or sales
of the shares of Common Stock to be Distributed or the time
such person becomes a Participant in the Distribution or (b)
in the case of unsolicited purchases, prior to the later of
the date of commencement of offers or sales of the shares of
Common Stock to be Distributed or the time such person
becomes a Participant in the Distribution; or (x) bids or
purchases by the Company or the Purchaser or by an
Affiliated Purchaser if all such bids and purchases are made
(a) nine or more business days prior to the commencement of
offers or sales of the shares of Common Stock to be
Distributed or (b) in the case of unsolicited purchases,
prior to the date of commencement of offers or sales of the
Shares. Capitalized terms used in this paragraph and not
defined in this Agreement shall have the meanings assigned
to such terms in Rule 10b-6 of the Commission.
(f) The Company and the Purchaser agree to comply with all
applicable federal and state laws and regulations in
connection with the registration, qualification, offering
and sale of Shares, including but not limited to the
Securities Act, the Securities Exchange Act of 1934 (the
OExchange ActO), the rules and regulations promulgated by
the Commission under the Securities Act and the Exchange Act
and, particularly, Rules 10b-2, 10b-6 and 10b-7 of the
Commission under the Exchange Act.
(g) Neither Purchaser nor any broker or dealer or other
person acting for or on behalf of the Purchaser shall place
any bid or effect any purchase for the purpose of pegging,
fixing or stabilizing the price of the Shares to be offered
as contemplated herein.
(h) The Purchaser shall comply with all applicable
requirements with respect to the delivery of prospectuses
set forth in sections 5 and 10 of the Securities Act and all
applicable rules thereunder.
(PURCHASER)
By:
Printed Name:
Its:
ACCEPTED BY:
ELECTROSOURCE, INC.
This ______ day of _________________, 1996.
By:
Printed Name:
Its:
EXHIBIT A
STOCK PURCHASE WARRANT
To Purchase Shares of Common Stock of
ELECTROSOURCE, INC.
Expiring ________________
No. W_______
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON
ITS EXERCISE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE. THIS WARRANT MAY NOT BE EXERCISED, AND
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON
ITS EXERCISE MAY BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED, IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR
AN OPINION OF COUNSEL FOR THE HOLDER OF THIS WARRANT
REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT
THAT AN EXEMPTION FROM REGISTRATION THEREUNDER IS
AVAILABLE. NEITHER THE OFFERING OF THIS WARRANT NOR
ANY OFFERING MATERIALS HAVE BEEN REVIEWED BY AN
ADMINISTRATOR UNDER SUCH ACT OR ANY APPLICABLE STATE
LAW.
Warrant to Purchase
Date___________ _______ Shares
of Common Stock
The undersigned, Electrosource, Inc. (the "Company"), a
Delaware corporation, for good and valuable consideration desires
to grant to __________________________________ ("Purchaser") a
warrant or option to acquire shares of Common Stock in the
Company. The option covered hereby is granted pursuant to the
terms of a Subscription Agreement ("Subscription Agreement")
dated as of ______________, 199___ between the Company and
Purchaser, and all provisions of that Agreement are incorporated
herein by reference. Defined terms shall have the same meaning
as in the Subscription Agreement.
1. Warrant. The Company does hereby grant to Purchaser
the exclusive option to purchase from the Company all or any part
of an aggregate of ________________________ _________________
(_______) shares ("Shares") of Common Stock of the Company at the
price of Seven and 56/100 Dollars ($7.56) per share.
2. Term. The Option shall be exercisable as provided in
the Subscription Agreement and otherwise at any time until the
option expires or terminates in accordance with the provisions
hereof. This option shall in any event terminate at 5:00 o'clock
P.M., San Marcos, Texas time two years after its date of grant.
3. Exercise. To exercise this option, Purchaser shall
give written notice of such election to the Company at its
Corporate Headquarters, Attention Corporate Secretary, so as to
be received by the Company within the period this option is
exercisable, which notice shall specify the number of shares to
be purchased and be accompanied by payment in full. Payment for
such shares may be by check or wire transfer, as directed by the
Company.
4. Share Issue. Upon receipt by the Company of proper
notice of exercise of this Warrant, the Company as promptly as
practicable and subject to the other provisions in this Warrant,
shall deliver a certificate or certificates representing Shares
so purchased, and shall pay all original issuance or transfer
taxes on the exercise of this Warrant, and all other fees and
expenses necessarily incurred by the Company in connection
therewith. Certificates evidencing such Shares may have endorsed
thereon such language as may be deemed necessary or advisable by
counsel for the Company in order to ensure compliance with the
applicable securities laws or regulations. Registration rights
shall be as set forth in the Subscription Agreement.
5. Change in Capitalization; Merger; Liquidation. The
number of Shares of Common Stock covered by this Warrant, and the
price per share shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common
Stock resulting from a subdivision or combination of shares or
the payment of a stock dividend in shares of Common Stock to
holders of outstanding shares of Common Stock. If the Company
shall be the surviving corporation in any merger or
consolidation, recapitalization, reclassification of shares or
similar reorganization, Purchaser shall be entitled to purchase,
at the same times and upon the same terms and conditions as are
provided in this Warrant, the number and class of shares of stock
or other securities to which it would have been entitled to
receive as a result of such transaction as if the Purchaser had
exercised the Warrant in full on the record date for the
transaction in question. In the event of a dissolution or
liquidation of the company or a merger or consolidation in which
the Company is not the surviving corporation, this Warrant shall
terminate upon the effective date thereof, except to the extent
that another corporation assumes such Warrant or substitutes
another option therefore. In the event of a change of the
Company's shares of Common Stock with par value into the same
number of shares with a different par value or without par value,
the shares resulting from any such change shall be deemed to be
Common Stock.
IN WITNESS WHEREOF, the Parties have executed this
Agreement on the date first written above.
ELECTROSOURCE, INC. (PURCHASER)
By: By:
Printed Name: Printed Name:
Its: Its:
ANNEX TO SUBSCRIPTION AGREEMENT
ALL INFORMATION WILL BE TREATED CONFIDENTIALLY
PURCHASER QUESTIONNAIRE
Electrosource, Inc.
0000 Xxxxxxxxxx 00 Xxxxx
Xxx Xxxxxx XX 00000
Gentlemen:
The information contained herein is being furnished to you
in order to determine whether _____________ (insert name of
proposed purchaser) may purchase Shares of the Common Stock of
ELECTROSOURCE, INC. (the "Company"), pursuant to the private
offering exemption from registration provided by the Securities
Act of 1933, as amended (the "Securities Act"). The undersigned
understands that (i) the Company will rely upon the information
contained herein for purposes of such determination, (ii) the
Shares will not be registered under the Securities Act in
reliance upon the private offering exemption from registration
provided by the Securities Act, and (iii) this questionnaire is
not an offer of the Shares or any other securities to the
undersigned or to the above-named proposed purchaser.
I herewith furnish you with the following representations
and information:
1. Name: _____________________
2. Address:
3 Corporate, Trust or Partnership assets
$______________________.
4. Individual Financial Data - see Subscription Agreement,
Section 3(a).
(a) Individual income* during 1995: $___________
(b) Individual income* during 1996: $___________
(c) Estimated individual income* during 1997: $____________
(d) Joint income* with spouse during 1995: $___________
(e) Joint income* with spouse during 1996: $___________
(f) Estimated joint income* with spouse during 1997: $________
(g) Current net worth of undersigned (including homes,
furnishings and automobiles): $_____________
(h) Current net worth of undersigned (excluding homes,
furnishings and automobiles): $_____________
(i) Current net worth of spouse, if any (including homes,
furnishings and automobiles): $_____________
(j) Current net worth of spouse, if any (excluding homes,
furnishings and automobiles): $_____________
* The term "Income" shall be deemed to mean adjusted gross
income of the undersigned (as shown on the undersigned's
Federal Income Tax returns).
5. I have such knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and
risks of the proposed investment. I can bear the economic risks
in and can afford a complete loss of any investment I may make by
virtue of purchasing Securities and can afford to hold any such
investment for an indefinite period. If I acquire any
Securities, such acquisition shall be for my own account, for
investment and not with a view to the resale or distribution
thereof.
6. I represent to you that (a) the information contained herein
is complete and accurate and may be relied upon by you, and (b) I
will notify you immediately of any material change in any of such
information occurring prior to the closing of my purchase of
Securities. I agree that, notwithstanding the confidential
treatment to be accorded the information contained here, you may
divulge such information in whole or in part or present all or
any part of this document to such parties as you may deem
appropriate in connection with establishing the availability of
an exemption under any Federal or state securities laws, rules
and regulations.
IN WITNESS WHEREOF, I have executed this Purchaser
Questionnaire this ____ day of _____________, 199____, and
declare that it is truthful and correct.
PURCHASER:
________________________
Sworn to before me this ____ day of _________________,
199___.
Notary Public in and for
The State of Texas
Printed Name:
My Commission Expires:
