ORION ENERGY SYSTEMS, INC. NOTE PURCHASE AGREEMENT August 3, 2007
TABLE OF CONTENTS
Page | ||||||||
1. | Purchase and Sale of Note | 4 | ||||||
1.1 | Sale and Issuance of Subordinated Convertible Promissory Notes | 4 | ||||||
1.2 | Closing | 4 | ||||||
1.3 | Use of Proceeds | 4 | ||||||
2. | Representations and Warranties of the Company | 5 | ||||||
2.1 | Organization, Good Standing and Qualification | 5 | ||||||
2.2 | Existing Capitalization and Voting Rights of the Company | 5 | ||||||
2.3 | Subsidiaries | 6 | ||||||
2.4 | Authorization | 6 | ||||||
2.5 | Valid Issuance of Notes and Common Stock | 7 | ||||||
2.6 | Governmental Consents | 7 | ||||||
2.7 | Offering | 7 | ||||||
2.8 | Compliance with Law | 7 | ||||||
2.9 | Litigation | 7 | ||||||
2.10 | Patents and Trademarks | 8 | ||||||
2.11 | Compliance with Other Instruments; No Conflicts | 9 | ||||||
2.12 | Certain Contracts and Arrangements | 9 | ||||||
2.13 | Related-Party Transactions | 10 | ||||||
2.14 | Permits | 11 | ||||||
2.15 | Safety Laws | 11 | ||||||
2.16 | Environmental Matters | 11 | ||||||
2.17 | Manufacturing, Marketing and Development Rights | 13 | ||||||
2.18 | Registration Rights | 13 | ||||||
2.19 | Corporate Documents | 13 | ||||||
2.20 | Title to Property and Assets | 13 | ||||||
2.21 | Financial Statements | 13 | ||||||
2.22 | Changes | 13 | ||||||
2.23 | Employee Benefit Plans | 15 |
Page | ||||||||
2.24 | Tax | 15 | ||||||
2.25 | Insurance | 15 | ||||||
2.26 | Minute Books | 15 | ||||||
2.27 | Labor Agreements and Actions | 15 | ||||||
2.28 | Significant Customers and Suppliers | 16 | ||||||
2.29 | Inventory | 16 | ||||||
2.30 | Accounts Receivable | 16 | ||||||
2.31 | Product Warranty | 17 | ||||||
2.32 | Indebtedness | 17 | ||||||
2.33 | Margin Regulations | 17 | ||||||
2.34 | Investment Company | 17 | ||||||
2.35 | Disclosure | 17 | ||||||
3. | Representations and Warranties of the Investors | 18 | ||||||
3.1 | Authorization | 18 | ||||||
3.2 | Purchase Entirely for Own Account | 18 | ||||||
3.3 | Disclosure of Information | 18 | ||||||
3.4 | Investment Experience | 18 | ||||||
3.5 | Accredited Investor | 18 | ||||||
3.6 | Restricted Securities | 18 | ||||||
3.7 | Further Limitations on Disposition | 19 | ||||||
3.8 | Legends | 19 | ||||||
3.9 | Exculpation Among Investors | 20 | ||||||
4. | Conditions of Investors’ Obligations at Closing | 20 | ||||||
4.1 | Closing Conditions | 20 | ||||||
5. | Conditions of the Company’s Obligations at the Closing | 22 | ||||||
5.1 | Representations and Warranties | 22 | ||||||
5.2 | Payment of Purchase Price | 22 | ||||||
5.3 | Qualifications | 22 | ||||||
5.4 | Consents, etc. | 22 | ||||||
5.5 | Investors’ Rights Agreement | 22 |
2
Page | ||||||||
5.6 | First Offer and Co-Sale Agreement | 22 | ||||||
5.7 | Waiver of Series C Investors | 22 | ||||||
5.8 | Lock-up Agreements | 22 | ||||||
6. | Miscellaneous | 22 | ||||||
6.1 | Survival of Warranties | 22 | ||||||
6.2 | Successors and Assigns | 22 | ||||||
6.3 | Governing Law | 23 | ||||||
6.4 | Exclusive Jurisdiction | 23 | ||||||
6.5 | Waiver of Jury Trial | 23 | ||||||
6.6 | Titles and Subtitles | 23 | ||||||
6.7 | Notices | 23 | ||||||
6.8 | Finder’s Fee | 24 | ||||||
6.9 | Indemnification | 24 | ||||||
6.10 | Expenses | 24 | ||||||
6.11 | Amendments and Waivers | 24 | ||||||
6.12 | Severability | 25 | ||||||
6.13 | Entire Agreement | 25 | ||||||
6.14 | Delays or Omissions | 25 | ||||||
6.15 | Public Announcements | 25 | ||||||
6.16 | Counterparts | 25 |
SCHEDULE 1
|
Investors | |
SCHEDULE 2
|
Key Employees | |
EXHIBIT A
|
Form of Convertible Note | |
EXHIBIT B
|
Form of Amended and Restated Investors’ Rights Agreement | |
EXHIBIT C
|
Form of Amended and Restated Offer and Co-Sale Agreement | |
EXHIBIT D
|
Form of Proprietary Information Agreement | |
EXHIBIT E
|
Form of Opinion of Xxxxx & Xxxxxxx LLP | |
EXHIBIT F
|
Form of Lock-up Agreement | |
Schedule of Exceptions |
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THIS NOTE PURCHASE AGREEMENT (the “Agreement”) is made as of the 3rd day of August,
2007, by and among Orion Energy Systems, Inc., a Wisconsin corporation (the “Company”), and
the investors identified on the attached Schedule 1 (the “Investors”).
In consideration of the foregoing and the respective representations, warranties, covenants,
agreements and conditions hereinafter set forth, the parties agree as follows.
1. Purchase and Sale of Note.
1.1 Sale and Issuance of Subordinated Convertible Promissory Notes.
(a) Prior to the Closing the Company shall authorize (i) the sale and issuance
to each of the Investors of a Subordinated Convertible Promissory Note in the form
attached hereto as Exhibit A (each a “Note” and together the
“Notes”) in the amount set forth for such Investor on Schedule 1
(the “Purchase Price”) and (ii) the issuance of the shares of Common Stock
to be issued upon conversion of the Notes (the “Conversion Shares”)
(together, the Notes and the Conversion Shares are referred to as the
“Securities”). The Conversion Shares shall have the rights, preferences,
privileges and restrictions set forth in the Company’s Amended and Restated Articles
of Incorporation dated July 31, 2006 (the “Articles of Incorporation”).
(b) Subject to the terms and conditions of this Agreement, Investor agrees to
purchase at the Closing, and the Company agrees to sell and issue to Investors at
the Closing, the Notes for the Purchase Price.
1.2 Closing. The purchase and sale of the Notes (the “Closing”) shall
take place at the offices of Xxxxx & Lardner LLP, 000 X. Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxx, at 10:00 A.M. (local time), on August 3, 2007, or at such other time and place as
the Company and Investors agree upon orally or in writing (the “Closing Date”). At
the Closing, the Company shall deliver to each Investor the duly executed Note that such
Investor is purchasing against payment of the Purchase Price therefor by wire transfer to an
account designated by Company prior to the Closing Date.
1.3 Use of Proceeds. The Company will use the proceeds from the sale of the
Notes for general corporate purposes, including additional working capital to support the
expansion of the Company’s national account and electrical contractor customer
relationships, manufacturing and distribution capabilities, research and development
initiatives and
sales and marketing force, and to enhance the Company’s liquidity and reduce dependence
on obtaining additional debt financing.
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2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in active status under the laws of the
State of Wisconsin. Each of Great Lakes Energy Technologies, LLC, Clean Energy Solutions,
LLC and Energy Capital Partners, LLC (collectively, the “Subsidiaries” and, together
with the Company, the “Company Parties”) is a limited liability company or
corporation duly organized, validly existing and in good standing under the laws of
Wisconsin. Each of the Company Parties has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted and to carry out the
transactions contemplated by the Agreement and the Ancillary Agreements. Each of the
Company Parties is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse effect on its
assets, properties, financial condition, operating results, prospects or business as
currently conducted and as proposed to be conducted by the Company Parties, taken as a whole
(a “Material Adverse Effect”).
(a) The authorized capital of the Company consists, or will consist immediately
prior to the Closing, of:
(i) Preferred Stock. 20,000,000 shares of Cumulative Preferred
Stock, par value $0.01 per share (the “Preferred Stock”), of which
(i) 4,000,000 shares are designated Series B Preferred Stock (the
“Series B Preferred Stock”), of which 2,989,830 are issued and
outstanding, and (ii) 2,000,000 shares are designated Series C Senior
Convertible Preferred Stock (the “Series C Preferred Stock”), of
which 1,818,182 are issued and outstanding. The rights, privileges and
preferences of the Series B Preferred Stock and Series C Preferred Stock are
as stated in the Articles of Incorporation.
(ii) Common Stock. 80,000,000 shares of Common Stock, no par
value (the “Common Stock”), of which 12,086,237 shares are issued
and outstanding.
(b) The outstanding shares of Common Stock and Preferred Stock are owned by the
shareholders of record and in the amounts specified in the Schedule of Exceptions.
(c) The outstanding shares of Common Stock and Preferred Stock are duly and
validly authorized and issued, fully paid and nonassessable except to the extent
provided in Section 180.0622 of the Wisconsin Statutes (hereinafter,
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“Nonassessable”), and were issued in accordance with the registration or
qualification provisions of the applicable federal and state securities laws of the
United States and any relevant state securities laws, or pursuant to valid
exemptions therefrom.
(d) Except for (i) the rights provided in Section 2.4 of that certain Amended
and Restated Investors’ Rights Agreement in the form attached hereto as Exhibit
B (the “Investors’ Rights Agreement”), (ii) an aggregate of 5,345,577
shares of Common Stock reserved for issuance upon the exercise of outstanding
options granted or to be granted pursuant to the Company’s 2003 Stock Option Plan
and 2004 Equity Incentive Plan (the “Incentive Plans”), and (iii) 794,390
shares of Common Stock reserved for issuance upon the exercise of outstanding
warrants to purchase the Company’s Common Stock, there are no outstanding 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. 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. No stock
plan, stock purchase, stock option or other agreement or understanding between the
Company and any holder of any securities or rights exercisable or convertible for
securities provides for acceleration or other changes in the vesting provisions or
other terms of such agreement or understanding as the result of the occurrence of
any event, except as may be provided by the terms of the Incentive Plans.
2.3 Subsidiaries. The Company is the sole legal and beneficial owner of the
entire issued share capital of each of the Subsidiaries. Other than the Subsidiaries, the
Company does not own or control, directly or indirectly, any interest in any other
corporation, association, or other business entity. 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 Notes, the Investors’ Rights Agreement, and that certain Amended and
Restated First Offer and Co-Sale Agreement in the form attached hereto as Exhibit C
(the “First Offer and Co-Sale Agreement”) (together with the Investors’ Rights
Agreement, the “Ancillary Agreements”), the performance of all obligations of the
Company hereunder and thereunder, and the authorization, issuance (or reservation for
issuance), sale and delivery of the Securities being sold hereunder has been taken or will
be taken prior to or at the
Closing, and this Agreement, the Notes, and the Ancillary Agreements constitute valid
and legally binding obligations of the Company, enforceable in accordance with their
respective terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting enforcement of
creditors’ rights generally, (b) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (c)
6
to the extent the
indemnification provisions contained in the Investors’ Rights Agreement may be limited by
applicable federal or state securities laws.
2.6 Governmental 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
execution, delivery and performance by the Company of this Agreement, the Notes and the
Ancillary Agreements or the offer, issuance and sale of the Securities, or the consummation
of the transactions contemplated by this Agreement and the Notes, except (a) such filings as
have been made prior to the date hereof, and (b) such other post-closing filings as may be
required, each of which will be filed with the proper authority by the Company in a timely
manner.
2.7 Offering. Subject in part to the truth and accuracy of Investor’s
representations set forth in Section 3 of this Agreement, the offer, sale and issuance of
the Securities as contemplated by this Agreement, and the issuance of the Conversion Shares
in accordance with the terms of the Notes, are exempt from the registration requirements of
the Securities Act of 1933, as amended (the “Securities Act”), and any applicable
state securities laws. Neither the Company, nor any authorized agent acting on behalf of
the Company, will take any action hereafter that would cause the loss of such exemptions.
2.8 Compliance with Law. The Company is (and has been at all times during the
past five (5) years) in compliance with all applicable statutes, laws and regulations. The
Company has not been
charged with and, to Company’s knowledge, is not now under investigation with respect
to, a violation of any applicable statutes, laws and regulations.
2.9 Litigation. There is no action, suit, proceeding or investigation pending
or, to the Company’s knowledge, currently threatened in writing against any of the Company
Parties that questions the validity of this Agreement, the Notes or any Ancillary Agreement,
or the right of the Company to enter into such agreements, or to consummate the transactions
contemplated hereby or thereby, or that might have, either individually or in the aggregate,
a Material Adverse Effect, nor is the Company aware that there is any basis for the
foregoing. The foregoing includes, without limitation, actions, suits, proceedings or
investigations pending or threatened in writing (or any basis therefor known to the Company)
involving the prior employment of any
7
of the employees of any of the Company Parties, their
use in connection with each of the Company Parties’ business of any information or
techniques allegedly proprietary to any of their respective former employers, or their
obligations under any agreements with prior employers. None of the Company Parties is 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 Schedule of
Exceptions, there is no action, suit or proceeding by any of the Company Parties currently
pending or that any of the Company Parties intends to initiate.
2.10 Patents and Trademarks. To the best of the Company’s knowledge, each of
the Company Parties has sufficient title and ownership, or sufficient rights to the use, of
all patents, trademarks, service marks, trade names, domain names, copyrights, trade
secrets, information, proprietary rights and processes necessary for its business as now
conducted and as proposed to be conducted without, to the Company’s knowledge, any conflict
with, or violation or infringement of the rights of others, including, without limitation,
any of the Company Parties’ present or former employees or the former or other employers of
all such persons. The Schedule of Exceptions contains a complete list of patents and
pending patent applications and registrations and applications for trademarks, copyrights
and domain names of each of the Company Parties. Except as set forth on the Schedule of
Exceptions, there are no outstanding options, licenses, agreements, claims, encumbrances or
shared ownership of interests of any kind relating to anything referred to above in this
Section 2.10, nor are any of the Company Parties bound by or a party to any options,
licenses, agreements or warranties of any kind with respect to the patents, trademarks,
service marks, trade names, domain names, copyrights, trade secrets, licenses, information,
proprietary rights and/or processes of any other person or entity, except, in either case,
for standard, generally commercially available, “off-the-shelf” third party products that
are not and will not to any extent be part of any product, service or intellectual property
offering of the Company. Except as set forth on the Schedule of Exceptions, none of the
Company Parties has received any communications in writing alleging that a Company Party has
violated, or by conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or
trade secrets or other proprietary rights of any other person or entity, and the
Company is not aware of any potential basis for such an allegation or of any reason to
believe that such an allegation may be forthcoming. The Company is not aware that any of
its or either of the Subsidiaries’ 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 and its
Subsidiaries or that would conflict with the Company’s and the Subsidiaries’ business as now
conducted and as proposed to be conducted. Neither the execution nor delivery of this
Agreement, nor the carrying on of the Company’s business by the employees of the Company,
nor the conduct of the Company’s business as proposed, will, to the Company’s knowledge,
conflict with or result in a breach of the terms, conditions or provisions of, or constitute
a default under, any contract, covenant or instrument under which any of such employees is
now obligated. The Company does not believe it is or will be necessary to use any
inventions of any of its employees (or persons it currently intends to hire) made prior to
their employment by the Company. The
8
Company is not subject to any “open source” or
“copyleft” obligations, or otherwise required (now or in the future) to make any public
disclosure or general availability of source code either used or developed by, the Company.
2.11 Compliance with Other Instruments; No Conflicts. None of the Company
Parties is in violation of any provision of its respective articles of incorporation or
bylaws or comparable governing documents, or in any material respect in violation or default
of any instrument, judgment, order, writ, decree or contract to which it is a party or by
which it is bound, or of any provision of any federal, state or local statute, rule or
regulation applicable to any of the Company Parties. The execution, delivery and
performance of this Agreement and the Ancillary Agreements, and the consummation of the
transactions contemplated hereby and thereby will not result in any such violation or
default or be in conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any such provision, instrument, judgment, order, writ,
decree or contract or an event that results in the creation of any lien, charge or
encumbrance upon any assets of any of the Company Parties or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or
approval applicable to any of the Company Parties, their business or operations or any of
their assets or properties.
2.12 Certain Contracts and Arrangements. Except as set forth in this
Agreement, the Ancillary Agreements or as set forth in the Schedule of Exceptions, none of
the Company Parties is a party or subject to or bound by:
(a) any contract, agreement or understanding entered into in the ordinary
course of business involving a potential commitment, obligation or payment by or to
such Company Party in excess of $200,000;
(b) any (i) contract, agreement or understanding (other than contracts,
agreements or understandings entered into in the ordinary course of business) or
(ii) instrument, judgment, order, writ or decree; in each case involving a potential
commitment, obligation or payment by or to such Company Party in excess of $100,000;
(c) any material license of any patent, copyright, trade secret or other
proprietary right to or from such Company Party (other than the license to such
Company Party of standard, generally commercially available, “off-the-shelf” third
party products that are not and will not to any extent be part of any product,
service or intellectual property offering of any of the Company Parties);
(d) provisions materially restricting the development, manufacture or
distribution of such Company Parties’ products or services;
(e) indemnification by such Company Party with respect to infringements of
proprietary rights;
(f) any indenture, mortgage, promissory note, loan agreement, or guaranty;
9
(g) any employment contracts, noncompetition agreements, severance agreements
or other agreements with present or former officers, directors, employees or
shareholders of such Company Party or persons related to or affiliated with such
persons;
(h) any stock redemption or purchase agreements or other agreements affecting
or relating to the capital stock of such Company Party;
(i) any benefit plan relating to the employees of such Company Party, including
pension, profit sharing, other deferred compensation plan or arrangement, bonus,
retirement, health insurance, severance or stock option plans;
(j) any joint venture or partnership agreement;
(k) any manufacturer, development or supply agreement involving a potential
commitment, obligation or payment by or to such Company Party in excess of $100,000;
or
(l) any acquisition, merger or similar agreement.
All contracts, agreements, leases and instruments set forth on the Schedule of Exceptions are
valid and are in full force and effect and constitute legal, valid and binding obligations of the
Company and, to the knowledge of the Company, of the other parties, and are enforceable in
accordance with their respective terms.
2.13 Related-Party Transactions. No employee, officer, director or shareholder of any of the Company Parties owning
two percent (2%) or more of the total outstanding equity of any of the Company Parties (a
“Related Party”) or member of such Related Party’s immediate family, or any
corporation, partnership or other entity in which such Related Party is an officer, director
or partner, or in which such Related Party has significant ownership interests or otherwise
controls, is indebted to any of the Company Parties, nor is any of the Company Parties
indebted (or committed to make loans or extend or guarantee credit) to any of them, other
than (a) for payment of salary for services previously rendered in the ordinary course of
business, (b) as reimbursement for reasonable expenses incurred on behalf of such Company
Party in the ordinary course of business, (c) for other standard employee benefits made
generally available to all employees (not including stock option agreements outstanding
under any stock option plan approved by the Board of Directors of the Company), or (d) such
other employee benefits as may be provided for in any written employment agreement or other
written instrument. To the Company’s knowledge, none of such persons has any direct or
indirect ownership interest in any firm or corporation with which any of the Company Parties
is affiliated or with which any of the Company Parties has a business relationship, or any
firm or corporation that competes with any of the Company Parties, except that employees,
officers, directors or shareholders of each of the Company Parties and members of such
Related Party’s immediate families may own stock in publicly traded companies that may
compete with the Company Parties. No Related Party or member of their immediate family is
directly or indirectly interested in any material contract with
10
any of the Company Parties.
The terms of any transaction with a Related Party (including, without limitation,
transactions between the Company and each of the Subsidiaries) are on arms’ length for any
purpose, as reasonably determined based on professional advice, and have been approved by
the Company or the Subsidiary, as the case may be, in accordance with applicable laws, rules
and regulations. No terms of such transactions would reasonably be expected to result in a
Material Adverse Effect.
2.14 Permits. Each of the Company Parties has all franchises, permits,
licenses, and any similar authority necessary for the conduct of its business as now
conducted and as proposed to be conducted, the lack of which could have a Material Adverse
Effect. None of the Company Parties is in default in any material respect under any of such
franchises, permits, licenses, or other similar authority.
2.15 Safety Laws. None of the Company Parties is in violation of any
applicable statute, law or regulation relating to the occupational health and safety, which
violation would have a Material Adverse Effect and no material expenditures are or, to the
Company’s knowledge, will be required in order to comply with any such existing statute, law
or regulation.
2.16 Environmental Matters.
(a) The Company Parties have complied with all applicable Environmental Laws
(as defined below), except for violations of Environmental Laws that, individually
or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect. There is no pending or, to best of the Company’s
knowledge, threatened civil or criminal litigation, written notice of violation,
formal administrative proceeding, or investigation, inquiry or information request
by any federal, state or local court, arbitrational tribunal, administrative agency
or commission or other governmental or regulatory authority or agency (each a
“Governmental Entity”) that would be reasonably expected to have a Material
Adverse Effect, and no expenditures that would be reasonably expected to have a
Material Adverse Effect are, or to the Company’s knowledge will be, required to
comply with any existing statute, law or regulation relating to any Environmental
Law involving the Company Parties. For purposes of this Agreement, “Environmental
Law” shall mean any federal, state or local law, statute, rule or regulation or the
common law relating to the environment or occupational health and safety, including
any statute, regulation, administrative decision or order pertaining to (i)
treatment, storage, disposal, generation and transportation of industrial, toxic or
hazardous materials or substances or solid or hazardous waste; (ii) air, water and
noise pollution; (iii) groundwater and soil contamination; (iv) the release or
threatened release into the environment of industrial, toxic or hazardous materials
or substances, or solid or hazardous waste, including emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants or chemicals; (v)
the protection of wild life, marine life and wetlands, including all endangered and
threatened species; (vi) storage tanks, vessels, containers, abandoned or discarded
barrels and other closed receptacles; (vii) health and safety of employees and other
persons; and
11
(viii) manufacturing, processing, using, distributing, treating,
storing, disposing, transporting or handling of materials regulated under any law as
pollutants, contaminants, toxic or hazardous materials or substances or oil or
petroleum products or solid or hazardous waste. As used above, the terms “release”
and “environment” shall have the meaning set forth in the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
(“CERCLA”).
(b) There are no past or present Environmental Claims, actions, activities,
circumstances, conditions, events or incidents, including the release, emission,
discharge, presence or disposal of any Materials of Environmental Concern (as
defined below), that would reasonably be expected to have a Material Adverse Effect.
For purposes of this Agreement, (i) “Materials of Environmental Concern”
shall mean chemicals; pollutants; contaminants; wastes; toxic or hazardous
substances, materials and wastes; petroleum and petroleum products; asbestos and
asbestos-containing materials; polychlorinated biphenyls; lead and lead-based paints
and materials; and radon; and (ii) “Environmental Claim” shall mean any
claim, action, cause of action, investigation or notice (written or oral) by any
person or entity alleging actual or potential liability for investigatory, cleanup
or governmental response costs, or natural resources or property damages, or
personal injuries, attorney’s fees or penalties arising from or relating
to (A) the presence, or release into the environment, of any Materials of
Environmental Concern, now or in the past, (B) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law, or (C) the liability
of any Company Party for any violation, or alleged violation, of any Environmental
Law by any person or entity (whether contractual, by operation of law or otherwise).
(c) Except in accordance with applicable Environmental Law, and so as not to
give rise to an Environmental Claim that would reasonably be expected to have a
Material Adverse Effect, (i) Materials of Environmental Concern have not been
generated, used, treated or stored on, transported to or from, or released on, at or
from, any past or present facilities, properties or operations of any of the Company
Parties and (ii) Materials of Environmental Concern have not been disposed of on any
past or present facilities, properties or operations of any of the Company Parties.
(d) Except as set forth in the Schedule of Exceptions, none of the Company
Parties is a party to or bound by any court order, administrative order, consent
order or other agreement between any such Company Party and any Governmental Entity
entered into in connection with any legal obligation or liability arising under any
Environmental Law that would reasonably be expected to have a Material Adverse
Effect.
(e) Set forth in the Schedule of Exceptions is a list of all documents known to
the Company (whether in hard copy or electronic form) that contain any environmental
reports, investigations and audits relating to premises currently or
12
previously owned or operated by the Company Parties (whether conducted by or on behalf of such
Company Parties or a third party, and whether done at the initiative of such Company
Parties or directed by a Governmental Entity or other third party) which were issued
or conducted during the past five years and which any of the Company Parties has
possession of or access to. A complete and accurate copy of each such document has
been provided to or made available to the Purchasers.
2.17 Manufacturing, Marketing and Development Rights. The Company has not
granted rights to manufacture, produce, assemble, license, market, or sell its products to
any other person and is not bound by any agreement that affects the Company’s exclusive
right to develop, manufacture, assemble, distribute, market or sell its products.
2.18 Registration Rights. Except as provided in the Investors’ Rights
Agreement, the Company has not granted or agreed to grant any registration rights, including
piggyback rights, to any person or entity.
2.20 Title to Property and Assets. Each of the Company Parties owns its
property and assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens that arise in the ordinary course of business and do not
materially impair such Company Parties’ ownership or use of such property or assets. With
respect to the property and assets it leases, each of the Company Parties is in compliance
with such leases and holds a valid leasehold interest free of any liens, claims or
encumbrances.
2.21 Financial Statements. The Company has delivered to each Investor (a) its
audited consolidated financial statements (balance sheet and income and cash flow
statements, including notes thereto) at March 31, 2007 and 2006 and for the fiscal years
then ended, and (b) interim, unaudited financial statements as of May 31, 2007 (the
“Financial Statements”). The Financial Statements have been prepared in accordance
with United States generally accepted accounting principles (“GAAP”) applied on a
consistent basis throughout the periods indicated. The Financial Statements fairly present
the financial condition and operating results of the Company and the Subsidiaries on a
consolidated basis as of the dates, and for the periods, indicated therein. Except as set
forth in the Financial Statements, the Company has no material liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent
to March 31, 2007 and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under GAAP to be reflected in the Financial
Statements, and which, individually or in the aggregate, are not material to the financial
condition or operating results of the Company. The Company maintains a standard system of
accounting established and administered in accordance with GAAP.
2.22 Changes. Since March 31, 2007, there has not been:
13
(a) any change in the assets, liabilities, financial condition or operating
results of the Company from that reflected in the Financial Statements, except
changes in the ordinary course of business that have not had a Material Adverse
Effect;
(b) any damage, destruction or loss, whether or not covered by insurance, of
any material asset of the Company Parties;
(c) any waiver by any of the Company Parties 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 any of the Company Parties, except in the ordinary course of
business and that has not had a Material Adverse Effect;
(e) any material change or amendment to a material contract;
(f) any material change in any compensation arrangement or agreement with any
employee, officer or director;
(g) any sale, assignment or transfer of any patents, trademarks, copyrights,
trade secrets or other intangible assets;
(h) any resignation or termination of employment of any key officer of the
Company; and the Company, to its knowledge, does not know of the impending
resignation or termination of employment of any such officer or key employee of the
Company;
(i) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
(j) any mortgage, pledge, transfer of a security interest in, or lien, created
by any of the Company Parties, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable and liens that arise in the
ordinary course of business and do not materially impair such Company Parties’
ownership or use of such property or assets;
(k) any loans or guarantees made by any of the Company Parties to or for the
benefit of its employees, officers or directors, or any members of their immediate
families, other than travel advances and other advances made in the ordinary course
of its business;
(l) any declaration, setting aside or payment or other distribution in respect
of any of the Company’s capital stock, or any direct or indirect redemption,
purchase or other acquisition of any of such stock by the Company, except to the
extent specifically contemplated by this Agreement;
14
(m) to the Company’s knowledge, any other event or condition of any character
that would be reasonably likely to have a Material Adverse Effect; or
(n) any agreement or commitment by any of the Company Parties to do any of the
things described in this Section 2.22.
2.23 Employee Benefit Plans. None of the Company Parties has any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.
2.24 Tax. None of the Company Parties is currently liable for any tax (whether income tax,
capital gains tax, or otherwise), and any taxes which were due in the past (if at all) have
been timely paid by the Company. Each of the Company Parties has accurately prepared and
timely effected and filed all necessary filings (including income and payroll tax returns
and filings that it is required to file) and reports (the “Tax Reports”) with the
appropriate tax authorities and has paid or made adequate provision for the payment of all
amounts due pursuant to the Tax Reports as well as other taxes, assessments and governmental
charges which have become due or payable. The Tax Reports are true and complete in all
material respects and accurately reflect all liability for taxes for the periods covered
thereby. None of the Company Parties’ tax returns have been audited by any taxing authority
and none of the Company Parties has been advised that any of such Tax Reports have been or
are being so audited. Each of the Company Parties has withheld or collected for each
payment made to each of its employees, the amount of all taxes (including, but not limited
to, federal income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment
Tax Act taxes) required to be withheld or collected therefrom and has timely paid the same
to the proper tax receiving officers or authorized depositories. None of the Company
Parties has notice that any tax return or report is under examination by any governmental
entity.
2.25 Insurance. Each of the Company Parties has adequate insurance, with
financially sound and reputable insurers, with respect to its properties, business and
operations that are of a character customarily insured by entities engaged in the same or a
similar business similarly situated, against loss or damage of the kinds customarily insured
against by such entities, which insurance is of such types as are customarily carried under
similar circumstances by such other entities.
2.26 Minute Books. The minute books of each of the Company Parties provided to
the Investors contain a complete summary of all meetings of directors and shareholders since
January 1, 2005 and reflect all transactions referred to in such minutes accurately in all
material respects.
2.27 Labor Agreements and Actions. None of the Company Parties is 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 any of the Company Parties. There is no strike or
other labor dispute involving any of the Company Parties pending, or to the Company’s
knowledge, threatened, that could have a Material Adverse Effect,
15
nor is the Company aware
of any labor organization activity involving the employees of any of the Company Parties.
The Company is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with any of the Company Parties, 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 each of the Company Parties is
terminable at the will of such Company Party. To the Company’s knowledge, each of the
Company Parties has complied in all material respects with all applicable federal, state and
provincial equal employment opportunity and other laws related to employment. None of the
Company Parties is subject to, and none of their employees benefit from, any collective
bargaining agreement by way of any applicable employment laws and regulations and extension
orders. All employees of the Company whose employment responsibility requires access to
confidential or proprietary information of the Company have executed and delivered Propriety
Information and Intellectual Property Agreements in the form of Exhibit D
(“Proprietary Information Agreements”) and all of such agreements are in full force
and effect. None of the employees of the Company is represented by any labor union, and
there is no labor strike or other labor trouble pending with respect to the Company
(including, without limitation any organizational drive) or, to the best of the Company’s
knowledge, threatened.
2.29 Inventory. All inventory of the Company and the Subsidiaries, whether or
not reflected on the Financial Statements, consists of a quality and quantity usable and
saleable in the ordinary course of business, except for obsolete items and items of
below-standard quality, all of which have been written-off or written-down to net realizable
value on the Financial Statements. All inventories not written-off have been priced at cost
on a first-in, first out basis. The quantities of each type of inventory, whether raw
materials, work-in-process or finished goods, are not excessive in the present circumstances
of the Company and the Subsidiaries.
2.30 Accounts Receivable. All accounts receivable of the Company and the
Subsidiaries reflected on the Financial Statements are valid receivables subject to no
setoffs or counterclaims and are
current and collectible (within ninety (90) days after the
16
date on which it first
became due and payable), net of the applicable reserve for bad debts on the Financial
Statements. All accounts receivable reflected in the financial or accounting records of the
Company that have arisen since March 31, 2007 are valid receivables subject to no setoffs or
counterclaims and are collectible (within ninety (90) days after the date on which it first
became due and payable), net of a reserve for bad debts in an amount proportionate to the
reserve shown on the Financial Statements.
2.31 Product Warranty. No product manufactured, sold, leased, licensed or
delivered by the Company or any Subsidiary is subject to any guaranty, warranty, right of
return, right of credit or other indemnity other than (a) the applicable standard terms and
conditions of sale or lease of the Company or the appropriate Subsidiary, which are set
forth in Section 2.31 of the Schedule of Exceptions and (b) manufacturers’ warranties for
which neither the Company nor any Subsidiary has any liability. Section 2.31 of the
Schedule of Exceptions sets forth the aggregate expenses incurred by the Company and the
Subsidiaries in fulfilling their obligations under their guaranty, warranty, right of return
and indemnity provisions during each of the fiscal years and the interim period covered by
the Financial Statements; and the Company does not know of any reason why such expenses
should significantly increase as a percentage of sales in the future.
2.32 Indebtedness. The Company has no Indebtedness other than the Notes and
Senior Indebtedness. The Company has provided to the Investors true and complete copies of
all documents related to any indebtedness of the Company.
2.33 Margin Regulations. No part of the proceeds from the sale of the Notes
will be used, directly or indirectly, for the purpose of buying or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any securities under
such circumstances as to involve the Company in a violation of Regulation X of said Board
(12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board
(12 CFR 220).
2.34 Investment Company. The Company is not subject to regulation under the
Investment Company Act of 1940, as amended.
2.35 Disclosure. The Company has provided each Investor with all information
that such Investor has requested for deciding whether to purchase the Note. This Agreement,
including all Exhibits and Schedules hereto, and together with the written plans,
projections, and estimates provided to the Investors in connection with the
transactions contemplated by this Agreement (the “Additional Materials”), when read
together, do not contain any untrue statement of a material fact or omit a material fact
necessary in order to make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading. The Company knows of no
information or fact which has or would have a Material Adverse Effect, which has not been
disclosed in the Schedule of Exceptions. Each projection furnished in the Additional
Materials was prepared in good faith based on reasonable assumptions and reflects the
Company’s best estimate of future results based on information available as of the date of
such Additional Materials.
17
3.1 Authorization. Such Investor has requisite corporate or partnership power
and authority to enter into this Agreement and the Ancillary Agreements, and each such
agreement constitutes its valid and legally binding obligation, enforceable in accordance
with its terms except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of creditors’ rights
generally, (b) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (c) to the extent the indemnification
provisions contained in the Investors’ Rights Agreement may be limited by applicable
federal, state or provincial securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with such
Investor in reliance upon 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 Investor’s own account, not as a nominee or agent, and not with
a view to the distribution of any part thereof, and that such Investor has no present
intention of selling, granting any participation in, or otherwise distributing the same. By
executing this Agreement, such Investor further represents that such Investor does not have
any contract, undertaking, agreement or arrangement with any person to sell, transfer or
grant participations to such person or to any third person, with respect to any of the
Securities.
3.3 Disclosure of Information. Such Investor further represents that it has
had an opportunity to ask questions and receive answers from the Company regarding the terms
and conditions of the offering of the Securities and the business, properties, prospects and
financial condition of the Company. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or the right of
the Investor to rely thereon.
3.5 Accredited Investor. The Investor is an “accredited investor” within the
meaning of Securities and Exchange Commission (“SEC”) Rule 501 of Regulation D, as
presently in effect and understands the meaning of that term.
3.6 Restricted Securities. Each Investor understands that the Securities have
not been, and shall not be (except to the extent provided in the Investors’ Rights
Agreement), registered under 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 intent and the accuracy of the Investor’s
18
representations
as expressed herein. Each Investor understands that the Securities are “restricted
securities” under applicable U.S. federal and state securities laws and that, pursuant to
these laws, the Investor must hold the Securities indefinitely unless they are registered
with the SEC and qualified by state authorities, or an exemption from such registration and
qualification requirements is available. Each Investor acknowledges that the Company has no
obligation to register or qualify the Securities for resale except as set forth in the
Investors’ Rights Agreement. Each Investor further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period for the
Securities, and on requirements relating to the Company which are outside of the Investor’s
control, and which the Company is under no obligation (except to the extent provided in the
Investors’ Rights Agreement) and may not be able to satisfy.
3.7 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, such Investor further agrees not to make any disposition of
all or any portion of the Securities to any person or entity other than to an affiliate of
such Investor unless and until:
(a) There is then in effect a Registration Statement under the Act covering
such proposed disposition and such disposition is made in accordance with such
Registration Statement; or
(b) Such Investor shall have (i) notified the Company of the proposed
disposition and (ii) if reasonably requested by the Company, such Investor shall
have furnished the Company with an opinion of counsel, that such disposition will
not require registration of such shares under the Act. It is agreed that the
Company will not require opinions of counsel for transactions made pursuant to Rule
144 except in unusual circumstances.
(c) Notwithstanding the provisions of subsections (a) and (b) above, no such
registration statement or opinion shall be necessary for a transfer by an Investor
that is a partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such partner
or retired partner or the transfer by gift, will or intestate succession of any
partner to his or her spouse or to the siblings, lineal descendants or ancestors of
such partner or his or her spouse in each case so long as the prospective transferee
agrees in all such instances in writing to be subject to the terms hereof to the
same extent as if he or she were an original Investor hereunder or to any other
entity which controls, is controlled by or is under common control with such
Investor.
3.8 Legends. It is understood that the certificates evidencing the Securities
may bear one (1) or more of the following legends:
(a) “These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or hypothecated
except pursuant to an effective registration statement in effect with
19
respect to the
securities under the Act or unless sold pursuant to Rule 144 of such Act or pursuant
to any other exemption under such Act.”
(b) Any legend set forth in the Ancillary Agreements.
(c) Any legend required by the Blue Sky laws of any state or the securities
laws of any province to the extent such laws are applicable to the Securities
represented by the certificate so legended.
3.9 Exculpation Among Investors. Each Investor acknowledges that it is not
relying upon any person, firm or corporation, other than the Company and its officers and
directors, in making its investment or decision to invest in the Company. Each Investor
agrees that no Investor nor the respective controlling persons, officers, directors,
partners, agents, or employees of any Investor shall be liable to any other Investor for any
action heretofore or hereafter taken or omitted to be taken by any of them in connection
with the purchase of the Securities.
4.1 Closing Conditions. The obligations of each Investor under Sections 1.1(b)
and 1.2 of this Agreement are subject to the fulfillment on or before the Closing of each of
the following
conditions. The waiver of any condition hereunder shall be effective only if given in
writing by the Investors purchasing a majority of the Notes:
(a) 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 if made on and as of such date (except where otherwise
specifically provided in such representations).
(b) Performance. The Company shall have performed and complied 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.
(c) Compliance Certificate. The President of the Company shall deliver
to Investor at the Closing a certificate stating that the conditions specified in
this Section 4.1 have been fulfilled.
(d) 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 being issued and sold at the Closing pursuant to this Agreement shall be
duly obtained and effective as of the Closing.
(e) 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 they shall have received all such counterpart original and certified
or other copies of such documents as they may reasonably request.
20
(f) Consents, etc. The Company shall have secured all permits,
consents and authorizations that shall be necessary or required lawfully to
consummate this Agreement and to issue the Securities, including without limitation
any consent that may be required by any of the Company’s lenders in connection with
the payment of interest as required by the Notes.
(h) Certificates and Documents. The Company shall have delivered to
the Investors:
(i) The Articles of Incorporation;
(ii) Consent of the Company’s lenders to the sale of the Notes and the
payments of interest provided thereunder; and
(iii) A certificate, as of the most recent practicable date, as to the
active corporate status of the Company Parties issued by the Department of
Financial Institutions of the State of Wisconsin.
(i) Proprietary Information Agreements. Each of the officers and
employees of the Company listed on Schedule 2 hereto shall have entered into
a Proprietary Information Agreement substantially in the form attached hereto as
Exhibit D.
(k) Investors’ Rights Agreement. The Company and each other party
thereto shall have entered into the Investors’ Rights Agreement.
(l) First Offer and Co-Sale Agreement. The Company and each other
party thereto shall each have entered into the First Offer and Co-Sale Agreement.
(m) Waiver of Preemptive Rights. The Company shall have delivered to
the Investors a written waiver from each of the shareholders of the Company, if any,
who has preemptive rights, by which such shareholder confirms that such shareholder
waives any rights of preemption, over allotment or participation with respect to the
issuance of the Securities.
21
5.1 Representations and Warranties. The representations and warranties of the
Investors contained in Section 3 shall be true on and as of the Closing.
5.2 Payment of Purchase Price. The Investors shall have delivered the Purchase
Price pursuant to Section 1.2 hereof.
5.3 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.
5.4 Consents, etc. The Company shall have secured all permits, consents and authorizations that shall
be necessary or required lawfully to consummate this Agreement and to issue the Securities.
5.5 Investors’ Rights Agreement. The Investors shall have entered into the
Investors’ Rights Agreement.
5.6 First Offer and Co-Sale Agreement. The Investors and each other party
thereto (other than the Company) shall each have entered into the First Offer and Co-Sale
Agreement.
5.7 Waiver of Series C Investors. Clean Technology Fund II, LP
(“ECP”), Capvest Venture Fund, LP, and Technology Transformation Fund II, LP (the
“Series C Investors”) shall have delivered to the Company a consent and waiver, in a
form reasonably satisfactory to the parties, by which the Series C Investors waive any
rights arising under the Articles of Incorporation or any other agreement or instrument to
which the Company and the Series C Investors are parties to object to or assert any rights
with respect to the transactions contemplated by this Agreement.
5.8 Lock-up Agreements. Investors shall have delivered to the Company duly
executed Lock-up Agreements in the form attached as Exhibit F .
6.1 Survival of Warranties. 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 the Closing 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.
6.2 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).
22
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. None of the rights, privileges, or obligations set forth in,
arising under, or created by this Agreement may be assigned or transferred without the prior
consent in writing by holders of a majority of the Notes purchased pursuant to this
Agreement, with
the exception of assignments and transfers by an Investor to any other entity or
individual who controls, is controlled by or is under common control with such Investor or
any entity that is managed by the same joint management company as such Investor or any
entity that is the general partner or limited partner of such Investor.
6.4 Exclusive Jurisdiction. Each of the parties hereto (a) consents to submit
itself exclusively to the personal jurisdiction of the United States District Court for the
Southern District of New York in the event any dispute arises out of this Agreement, the
Note, the Amended and Restated Investment Rights Agreement and/or the Amended and Restated
First Offer and Co-Sale Agreement, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such court, and (c)
agrees that it will not bring any action relating to this Agreement in any court other than
the United States District Court for the Southern District of New York.
6.5 Waiver of Jury Trial. TO THE EXTENT EACH MAY LEGALLY DO SO, EACH PARTY
HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION,
CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, OR IN ANY
WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALING OF THE PARTIES HERETO WITH
RESPECT TO THIS AGREEMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE. TO THE EXTENT EACH MAY LEGALLY DO SO, EACH PARTY HERETO HEREBY AGREES THAT ANY
SUCH CLAIM, DEMAND, ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY
AND THAT EITHER PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF ANY OTHER PARTY HERETO TO THE WAIVER OF
ITS RIGHT TO TRIAL BY JURY.
6.6 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.
6.7 Notices. All notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the party to be
notified; (b) when sent by confirmed electronic mail or
23
facsimile if sent during normal
business hours of the recipient; if not, then on the next business day; (c) five (5) days
after having been sent by registered or certified mail, return receipt requested, postage
prepaid; or (d) one (1) 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 respective parties at the addresses set forth on the signature pages
attached hereto (or at such other addresses as shall be specified by notice given in
accordance with this Section 6.7).
6.8 Finder’s Fee. 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 finder’s 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 finder’s 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.
6.9 Indemnification. The Company agrees (a) to indemnify and hold harmless the
Investors, their affiliates and their respective directors, officers, employees, agents and
controlling persons (each, an “Indemnified Person”), from and against any losses,
claims, demands, damages or liabilities of any kind (other than losses which arise solely
out of market risk) (collectively, “Liabilities”) arising out of or related to this
Agreement or the Ancillary Agreements, and/or the investment in the Company, and (b) to
reimburse each Indemnified Person for all reasonable expenses (including, but not limited
to, reasonable fees and disbursements of counsel) incurred by such Indemnified Person in
connection with investigating, preparing, responding to or defending any investigative,
administrative, judicial or regulatory action or proceeding in any jurisdiction related to
or arising out of such activities, services, transactions or role, whether or not in
connection with pending or threatened litigation to which any Indemnified Person is a party,
in each case as such expenses are incurred or paid; provided, that the foregoing
indemnification shall not, as to any Indemnified Person, apply to any such Liabilities or
expenses to the extent that they are finally judicially determined to have resulted
primarily from such Indemnified Person’s gross negligence or willful misconduct.
6.10 Expenses. Each party shall pay its own costs and expenses incurred with
respect to the negotiation, execution, delivery and performance of this Agreement; provided,
that the
Company shall, at the Closing, (a) reimburse the reasonable and actual out-of-pocket
legal, technical and other professional fees and expenses incurred by GE Capital Equity
Investments, Inc. (“GE”) in connection with the transactions contemplated hereby, up
to a total amount of $40,000, and (b) reimburse the reasonable and actual out-of-pocket
legal, technical, and other professional fees and expenses incurred by ECP in connection
with the transactions contemplated hereby, up to a total amount of $15,000.
6.11 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
24
particular instance and either retroactively or prospectively), only with the written consent of the
Company and Investors purchasing or holding at least a majority of the total indebtedness
represented by the Notes to be purchased or purchased hereunder. Any amendment or waiver
effected in accordance with this section shall be binding upon each holder of any securities
purchased under this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the Company.
Notwithstanding the foregoing, no investment amount initially set forth on Schedule A may be
changed without the consent of such Investor.
6.12 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.
6.13 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.
6.14 Delays or Omissions. No delay or omission to exercise any right, power,
or remedy accruing to any party upon any breach or default under this Agreement, shall be
deemed a waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent, or approval of any kind or character on the part of any party of
any breach or default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any of the parties, shall be cumulative and not
alternative.
6.15 Public Announcements. Except for statements made or press releases (a) required to be issued pursuant to
the Securities Act of 1933 or the Securities Exchange Act of 1934, (b) required to be issued
pursuant to any listing agreement with or the rules and regulations of any national
securities exchange or automated quotation system on which the Company’s capital stock is
listed or quoted, or (c) otherwise required by law, no party shall issue any press release
or otherwise make any public statements with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other parties. If the Company
is required to make any disclosure under applicable law that refers to GE or any of its
affiliates, the Company will provide prior written notice of such disclosure (together with
the proposed text of such disclosure) to GE, and the disclosure made by the Company will
reflect any comments provided to the Company by GE.
6.16 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Facsimile signatures shall be binding as original.
25
{Remainder of Page Intentionally Blank — Signature Pages Immediately Follow}
26
COMPANY | ||||||
ORION ENERGY SYSTEMS, INC. | ||||||
By: | /s/ Xxxx X. Xxxxxxxxx |
|||||
Title: President | ||||||
Address: Xxxx X. Xxxxxxxxx, President Orion Energy Systems, Inc. 0000 Xxxxxxx Xxxx Xxxxxxxx, XX 00000 |
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With copies to: | ||||||
General Counsel Orion Energy Systems, Inc. 0000 Xxxxxxx Xxxx Xxxxxxxx, XX 00000; and |
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Xxxxx & Lardner LLP 000 Xxxx Xxxxxx Xxxxxx Xxxxxxx, XX 00000 Attention: Xxxx X. Xxxxxx |
Signature Page to Note Purchase
Agreement for Orion Energy Systems, Inc.
Agreement for Orion Energy Systems, Inc.
INVESTOR: | ||||||||
CLEAN TECHNOLOGY FUND II, LP | ||||||||
By: | Expansion Capital Partners II, LP, its General Partner |
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By: | Expansion Capital Partners II General Partner, LLC, its General Partner |
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By: | /s/ Xxxxxxxx X. Xxxxxxx | |||||||
Name: Xxxxxxxx X. Xxxxxxx | ||||||||
Title: Managing Member | ||||||||
Address: | Expansion Capital Partners | |||||||
00 Xxxx Xxxxxx, Xxxxx 0000 Xxx Xxxx, XX 00000 |
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With copies to: | ||||||||
Xxxxxxxxx & Xxxxxxx LLP 0000 Xxxxxxxxxxxx Xxxxxx XX Xxxxxxxxxx, XX 00000 Fax: (000) 000-0000 Attention: Xxxx X. Xxxxxx |
Signature Page to Note Purchase
Agreement for Orion Energy Systems, Inc.
Agreement for Orion Energy Systems, Inc.
INVESTOR: | ||||||
GE CAPITAL EQUITY INVESTMENTS, INC. | ||||||
By: | /s/ Xxxxxxx Xxxxxxxx |
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Title: Senior Vice President | ||||||
Address: 000 Xxxxxxx 7 X.X. Xxx 0000 Xxxxxxx, XX 00000 Fax:____________ |
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With copies to: | ||||||
King & Spalding LLP 0000 Xxxxxxxxx Xxxxxx Xxxxxxx, XX 00000 Fax: (000) 000-0000 Attention: Xxxxxxx X. Xxxxx |
Signature Page to Note Purchase
Agreement for Orion Energy Systems, Inc.
Agreement for Orion Energy Systems, Inc.
INVESTOR: | ||||||
CAPVEST VENTURE FUND, LP | ||||||
By: | /s/
|
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|
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By: |
|
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Name: | ||||||
Title: | ||||||
Address: | ||||||
With copies to: | ||||||
Signature Page to Note Purchase
Agreement for Orion Energy Systems, Inc.
Agreement for Orion Energy Systems, Inc.
INVESTOR: | ||||||
TECHNOLOGY TRANSFORMATION VENTURE FUND, LP | ||||||
By: | /s/
|
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|
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By: |
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Name: | ||||||
Title: | ||||||
Address: | ||||||
With copies to: | ||||||
Signature Page to Note Purchase
Agreement for Orion Energy Systems, Inc.
Agreement for Orion Energy Systems, Inc.
SCHEDULE 1
INVESTORS
INVESTORS
Investor | Note Amount | |||
GE Capital Equity Investments, Inc. |
$ | 8,000,000 | ||
Clean Technology Fund II, L.P. |
$ | 2,500,000 | ||
CapVest Venture Fund, LP |
$ | 50,000 | ||
Technology Transformation Venture Fund, LP |
$ | 50,000 | ||
Total |
$ | 10,600,000 |
1-1
SCHEDULE 2
KEY EMPLOYEES
KEY EMPLOYEES
Xxxx Xxxxxxxxx
Xxxx Xxxxx
Xxx Xxxxxx
Xxx Xxxxxxxxx
Xxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxxx von Estorff
Xxxx Xxxxx
Xxx Xxxxxx
Xxx Xxxxxxxxx
Xxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxxx von Estorff
2-1
EXHIBIT A
FORM OF CONVERTIBLE NOTE
FORM OF CONVERTIBLE NOTE
[See attached]
A-1
EXHIBIT B
FORM OF AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
FORM OF AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
[See attached]
B-1
EXHIBIT C
FORM OF AMENDED AND RESTATED OFFER AND CO-SALE AGREEMENT
FORM OF AMENDED AND RESTATED OFFER AND CO-SALE AGREEMENT
[See attached]
C-1
EXHIBIT D
FORM OF PROPRIETARY INFORMATION AGREEMENT
FORM OF PROPRIETARY INFORMATION AGREEMENT
[See attached]
D-1
EXHIBIT E
OPINION OF XXXXX & LARDNER LLP
OPINION OF XXXXX & LARDNER LLP
[See attached]
E-1
EXHIBIT F
FORM OF LOCK-UP AGREEMENT
FORM OF LOCK-UP AGREEMENT
[See attached]
F-1