AMERIGON INCORPORATED
SECURITIES PURCHASE AGREEMENT
MARCH 29, 1999
TABLE OF CONTENTS
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Page
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ARTICLE I. PURCHASE AND SALE OF STOCK AND WARRANTS......................... 1
1.1 Sale and Issuance of Series A Preferred Stock and Warrants..... 1
1.2 Closing........................................................ 1
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 2
2.1 Organization, Good Standing and Qualification.................. 2
2.2 Capitalization and Voting Rights............................... 2
2.3 Subsidiaries................................................... 3
2.4 Authorization.................................................. 3
2.5 Valid Issuance of Preferred and Class A Common Stock........... 3
2.6 Consents....................................................... 4
2.7 Offering....................................................... 4
2.8 Litigation..................................................... 4
2.9 Proprietary Information Agreements............................. 4
2.10 Patents and Trademarks......................................... 5
2.11 Compliance with Other Instruments.............................. 5
2.12 Agreements; Action............................................. 6
2.13 Related-Party Transactions..................................... 6
2.14 SEC Documents and Financial Statements......................... 7
2.15 Changes........................................................ 7
2.16 Tax Returns.................................................... 8
2.17 Permits........................................................ 8
2.18 Environmental and Safety Laws.................................. 8
2.19 Disclosure..................................................... 8
2.20 Registration Rights............................................ 9
2.21 Current Public Information..................................... 9
2.22 No General Solicitation........................................ 9
2.23 No Integrated Offering......................................... 9
2.24 Corporate Documents............................................ 9
2.25 Title to Property and Assets................................... 9
2.26 Foreign Corrupt Practices...................................... 9
2.27 Insurance...................................................... 9
2.28 Employee Benefit Plans......................................... 10
2.29 Labor Agreements and Actions................................... 10
2.30 Year 2000 Compliance........................................... 10
2.31 Computer and Communication Infrastructure...................... 11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS............... 11
3.1 Authorization.................................................. 11
3.2 Purchase Entirely for Own Account.............................. 11
3.3 Accredited Investor............................................ 11
3.4 Restricted Securities.......................................... 11
3.5 Legends........................................................ 11
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TABLE OF CONTENTS (Continued)
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Page
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ARTICLE IV. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING............... 12
4.1 Representations and Warranties................................ 12
4.2 Performance................................................... 12
4.3 Compliance Certificate........................................ 12
4.4 Qualifications................................................ 12
4.5 Shareholder Approval.......................................... 12
4.6 Certificate of Determination.................................. 12
4.7 Due Diligence................................................. 12
4.8 Proceedings and Documents..................................... 12
4.9 Material Adverse Change....................................... 12
4.10 Proceeding or Litigation...................................... 12
4.11 Opinion of Company Counsel.................................... 13
4.12 Sale of EV Business........................................... 13
4.13 Investors' Rights Agreement................................... 13
4.14 Board of Directors............................................ 13
4.15 Loan Documents................................................ 13
ARTICLE V. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING............. 13
5.1 Representations and Warranties................................ 13
5.2 Payment of Purchase Price..................................... 13
5.3 Qualifications................................................ 14
5.4 Shareholder Approval.......................................... 14
5.5 Investment Representation..................................... 14
ARTICLE VI. OTHER AGREEMENTS.............................................. 14
6.1 Conduct of Business........................................... 14
6.2 Access to Information......................................... 16
6.3 Other Discussions; Break Up Arrangement....................... 16
6.4 Proxy Statement............................................... 17
6.5 Shareholders' Meeting......................................... 17
6.6 Public Disclosure............................................. 17
6.7 Reasonable Efforts............................................ 17
6.8 Board of Directors............................................ 17
6.9 Bridge Loan................................................... 18
6.10 Notification of Certain Matters............................... 18
6.11 Indemnification............................................... 18
ARTICLE VII. MISCELLANEOUS................................................ 18
7.1 Survival...................................................... 18
7.2 Successors and Assigns........................................ 18
7.3 Governing Law................................................. 18
7.4 Titles and Subtitles.......................................... 19
7.5 Notices....................................................... 19
7.6 Finder's Fee.................................................. 19
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TABLE OF CONTENTS (Continued)
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Page
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7.7 Expenses...................................................... 19
7.8 Amendments and Waivers........................................ 19
7.9 Severability.................................................. 19
7.10 Termination................................................... 20
7.11 Aggregation of Stock.......................................... 20
7.12 Entire Agreement.............................................. 20
7.13 Counterparts.................................................. 20
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TABLE OF CONTENTS (Continued)
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SCHEDULE A Schedule of Investors
SCHEDULE B Disclosure Schedules
EXHIBIT A Certificate of Determination
EXHIBIT B Contingent Common Stock Purchase Warrants
EXHIBIT C Investors' Rights Agreement
EXHIBIT D Opinion of Counsel for the Company
EXHIBIT E Share Exchange Agreement
EXHIBIT F Credit Agreement
EXHIBIT G Articles of Incorporation
EXHIBIT H Bylaws
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SECURITIES PURCHASE AGREEMENT
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THIS SECURITIES PURCHASE AGREEMENT is made on the 29th day of
March, 1999, by and among Amerigon Incorporated, a California corporation (the
"Company"), and the investors listed on Schedule A hereto (each, an "Investor"
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and collectively, the "Investors").
THE PARTIES HEREBY AGREE AS FOLLOWS:
ARTICLE I.
PURCHASE AND SALE OF STOCK AND WARRANTS
1.1 Sale and Issuance of Series A Preferred Stock and Warrants.
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(a) The Company shall adopt and file with the Secretary of State
of California on or before the Closing (as defined below) the Certificate of
Determination of Rights, Preferences and Privileges of the Series A Preferred
Stock in the form attached hereto as Exhibit A (the "Certificate of
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Determination").
(b) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally, to purchase at the Closing and the Company agrees to
sell and issue to each Investor at the Closing, (i) that number of shares of
Company's Series A Preferred Stock, no par value ("Series A Preferred Stock"),
which is convertible into the Company's Class A Common Stock, no par value
("Class A Common Stock") and (ii) Warrants (the "Warrants") to purchase that
number of shares Class A Common Stock (the "Warrant Shares") set forth opposite
each Investor's name on Schedule A hereto for the purchase price set forth
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thereon. The Warrants will be subject to the terms and conditions set forth in
the form of Contingent Common Stock Purchase Warrants attached hereto as Exhibit
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B (the "Stock Purchase Warrants"). The Series A Preferred Stock being purchased
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hereunder, the Class A Common Stock issuable upon conversion of such Series A
Preferred Stock, the Warrants and the Warrant Shares are collectively referred
to herein as the "Securities."
1.2 Closing.
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The purchase and sale of the Series A Preferred Stock and the Warrants
being purchased hereunder shall take place at the offices of O'Melveny & Xxxxx
LLP, 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, at 10:00 A.M., on
June 2, 1999, or at such other time and place as the Company and the Investors
mutually agree upon orally or in writing (which time and place are designated as
the "Closing"). At the Closing, the Company shall deliver to each Investor a
certificate representing the Series A Preferred Stock and duly executed Stock
Purchase Warrants representing the Warrants that such Investor is purchasing
against payment of the purchase price therefor by bank cashier's check, wire
transfer, cancellation of indebtedness or any combination thereof. In the event
that payment by an Investor is made, in whole or in part, by cancellation of
indebtedness, then such Investor shall surrender to the Company for cancellation
at the Closing any evidence of such indebtedness or shall execute an instrument
of cancellation in form and substance acceptable to the Company. In addition,
at the Closing the Company shall deliver to any Investor choosing to pay any
part of the purchase price of the
Series A Preferred Stock and Warrants by cancellation of indebtedness, a check
in the amount of any interest accrued on such indebtedness through the Closing.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedules to this Agreement (the
"Disclosure Schedules"), each such schedule being numbered to correspond to the
section of this Agreement to which it applies, the Company hereby represents and
warrants to each Investor that:
2.1 Organization, Good Standing and Qualification. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of California and has the requisite corporate power to own its
properties and carry on its business as presently conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which it has employees, maintains offices, leases or owns real property or is
otherwise required to be so qualified, except where the failure to be so
qualified would not have a Material Adverse Effect (as defined below). For
purposes of this Agreement, "Material Adverse Effect" shall mean any event,
circumstance or condition pertaining to the Company's business, assets,
liabilities or operations that, individually or in the aggregate, is, or could
reasonably be expected to be, materially adverse to the business, operations,
assets or liabilities (including without limitation contingent liabilities),
employee relationships, customer or supplier relationships, prospects, projected
results of operations or cash flow for the years ending December 31, 1999, 2000
or 2001, or the condition (financial or otherwise) of the Company.
2.2 Capitalization and Voting Rights. The authorized capital of the
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Company consists, or will consist immediately prior to the Closing, of:
(a) Preferred Stock. 5,000,000 shares of Preferred Stock, no par
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value (the "Preferred Stock"), of which 9,000 shares have been designated Series
A Preferred Stock and up to all of which will be sold pursuant to this
Agreement. The rights, privileges and preferences of the Series A Preferred
Stock will be as stated in the Company's Certificate of Determination. No other
series of Preferred Stock has been designated and, except for the shares of
Series A Preferred Stock being sold pursuant to this Agreement, no shares of
Preferred Stock are, or will be at the Closing, outstanding.
(b) Common Stock. 20,000,000 shares of Class A Common Stock, of
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which 2,510,088 shares are issued and outstanding, and 600,000 shares of Class
Common Stock, no par value ("Class B Common Stock"), none of which are issued
and outstanding as of the date hereof. The Class A Common Stock and Class B
Common Stock are together referred to herein as "Common Stock." The holders of
the Class B Common Stock and the number of shares held by such shareholders are
set forth on the Disclosure Schedules.
(c) The outstanding shares of Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities.
(d) Except for (i) the conversion privileges of the Series A
Preferred Stock to be issued under this Agreement, (ii) the rights provided in
the Investors' Rights
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Agreement, (iii) currently outstanding options to purchase 210,169 shares of
Class A Common Stock granted to consultants or employees pursuant to the
Company's Stock Option Plans (the "Option Plans") listed on the Disclosure
Schedules, and (iv) the options, warrants or rights set forth on the Disclosure
Schedules, there are not outstanding any options, warrants, rights (including
conversion or preemptive rights) or agreements for the purchase or acquisition
from the Company of any shares of its capital stock or securities convertible
into or exercisable for shares of capital stock. In addition to the
aforementioned options, the Company has reserved an additional 52,848 shares of
its Class A Common Stock for purchase upon exercise of options to be granted in
the future under the Option Plans. All such shares of capital stock issuable
pursuant to the rights or agreements set forth in this Section 2.2(d) will be,
upon issuance, duly and validly issued, fully paid and nonassessable. The
Company is not a party or subject to any agreement or understanding, and, to the
Company's knowledge, there is no agreement or understanding between any persons
and/or entities, which affects or relates to the voting or giving of written
consents with respect to any security or by a director of the Company.
2.3 Subsidiaries. Except as set forth on the Disclosure Schedules, the
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Company does not presently own or control, directly or indirectly, any interest
in any other corporation, association, or other business entity. Except as set
forth on the Disclosure Schedules, the Company is not a participant in any joint
venture, partnership, or similar arrangement.
2.4 Authorization. All corporate action on the part of the Company,
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its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the Stock Purchase Warrants, and the
Investors' Rights Agreement (attached hereto as Exhibit C), the performance of
all obligations of the Company hereunder and thereunder, and the authorization
(or reservation for issuance), sale and issuance of the Series A Preferred Stock
and the Warrants being sold hereunder, the Class A Common Stock issuable upon
conversion of the Series A Preferred Stock and the Warrant Shares has been taken
or will be taken prior to the Closing. This Agreement, the Stock Purchase
Warrants, and the Investors' Rights Agreement constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
2.5 Valid Issuance of Preferred and Class A Common Stock. The Series A
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Preferred Stock that is being purchased by the Investors hereunder is duly
authorized and, when issued, sold and delivered in accordance with the terms of
this Agreement for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and will be free of liens, claims, and
encumbrances of the Company and of restrictions on transfer, other than
restrictions on transfer under applicable state and federal securities laws. The
Class A Common Stock issuable upon conversion of the Series A Preferred Stock
purchased under this Agreement is duly authorized and reserved for issuance and,
upon issuance in accordance with the terms of the Certificate of Determination,
will be duly and validly issued, fully paid and nonassessable and will be free
of liens, claims and encumbrances of the Company and of restrictions on
transfer, other than restrictions on transfer under applicable state and federal
securities laws. The Warrants are duly authorized and, upon issuance in
accordance with the terms of this Agreement,
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will be validly issued, fully paid and nonassessable, and will be free of liens,
claims and encumbrances of the Company and of restrictions on transfer, other
than restrictions on transfer under applicable state and federal securities
laws. The Warrant Shares are duly authorized and reserved for issuance, and,
upon exercise of the Warrants in accordance with the terms thereof, will be
validly issued, fully paid and nonassessable, and will be free of liens, claims,
and encumbrances of the Company and of restrictions on transfer, other than
restrictions on transfer under applicable state and federal securities laws.
2.6 Consents. No consent, approval, order or authorization of, or
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registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement, except for: (i) the filing of a Notice of Transaction pursuant
to Section 25102(f) of the California Corporate Securities Law of 1968, as
amended, and the rules thereunder, which filing will be effected within the time
prescribed by law; (ii) the filing of a Form D pursuant to Regulation D under
the Securities Act of 1933, as amended (the "Securities Act"), which filing will
be effected within the required statutory period; (iii) the filing and
distribution of a proxy statement pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") with respect to
the special meeting of shareholders to be held to approve this Agreement and the
transactions and agreements contemplated hereby; (iv) such other filings
required pursuant to applicable federal and state securities laws and blue sky
laws, which filings will be effected within the required statutory period; (v)
the approval of this Agreement and the transactions and agreements contemplated
hereby by the requisite vote of the Company's shareholders; (vi) the consents
set forth on the Disclosure Schedules; and (vii) the filing of an Application
for the Listing of Additional Shares with Nasdaq.
2.7 Offering. Subject to the truth and accuracy of each Investor's
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representations set forth in Section 3 of this Agreement, the offer, sale and
issuance of the Series A Preferred Stock and the Warrants as contemplated by
this Agreement are exempt from the registration requirements of the Securities
Act , and the qualification or registration requirements of applicable state
securities laws. Neither the Company nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemptions.
2.8 Litigation. There is no action, suit, proceeding or investigation
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pending, or to the Company's knowledge, currently threatened against the
Company, except as which individually or in the aggregate would not have a
Material Adverse Effect. The Company is not a party or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. Except as set forth on the Disclosure Schedules,
there is no material action, suit, proceeding or investigation by the Company
currently pending or that the Company intends to initiate.
2.9 Proprietary Information Agreements. Each employee, officer and
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consultant of the Company has executed a proprietary information and inventions
agreement in the form set forth on the Disclosure Schedules. The Company, after
reasonable investigation, is not aware that any of its employees, officers or
consultants is in violation thereof, and the Company will use its best efforts
to prevent any such violation.
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2.10 Patents and Trademarks. The Company owns or licenses from another
----------------------
person all inventions, patents, patent rights, computer software, trademarks,
trademark rights, service marks, service xxxx rights, trade names, trade name
rights and copyrights (collectively, the "Intellectual Property") necessary for
its business as presently conducted without any conflict with or infringement of
the valid rights of others and the lack of which could materially and adversely
affect the operations or condition, financial or otherwise, of the Company, and
the Company has not received any notice of infringement upon or conflict with
the asserted rights of others. The Disclosure Schedules contain a complete list
of all such patents, patent rights, registered trademarks, registered service
marks, registered copyrights, all agreements related to the foregoing, and all
agreements pursuant to which the Company licenses Intellectual Property from or
to a third party (excluding "shrink wrap" license agreements relating solely to
off the shelf software which is not material to the Company's business). All
Intellectual Property owned by the Company is owned free and clear of all liens,
adverse claims, encumbrances, or restrictions, except for restrictions contained
in the terms of the licenses listed in the Disclosure Schedules. All
Intellectual Property licensed by the Company is the subject of a license
agreement which is legal, valid, binding and enforceable and in full force and
effect. The consummation of the transactions contemplated hereby will not result
in the termination or impairment of the Company's ownership of, or right to use,
any Intellectual Property. The Company has a valuable body of trade secrets,
including know-how, concepts, business plans, and other technical data (the
"Proprietary Information") for the development, manufacture and sale of its
products. The Company has the right to use the Proprietary Information free and
clear of any rights, liens, encumbrances or claims of others. The Company is not
aware, after reasonable investigation, that any of its employees is obligated
under any contract (including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of the Company or that would conflict with the
Company's business.
2.11 Compliance with Other Instruments. The execution, delivery and
---------------------------------
performance of this Agreement, the Investors' Rights Agreement, and the Stock
Purchase Warrants by the Company, the performance by the Company of its
obligations under the Certificate of Determination, and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance and reservation for issuance, as applicable, of the
Series A Preferred Stock being sold pursuant hereto, the Class A Common Stock
issuable upon the conversion of such Series A Preferred Stock, the Warrants and
the Warrant Shares) will not (i) result in a violation of the Company's Articles
of Incorporation or Bylaws, or (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company or any of its properties is subject, or result in a violation of any
material law, rule, regulation, order, judgment or decree (including U.S.
federal and state securities laws and regulations) applicable to the Company or
by which any property or asset of the Company is bound or affected. The Company
is not in violation of its Articles of Incorporation, Bylaws or other
organizational documents, or of any judgment, order, writ, decree, law, rule or
regulation to which the Company or its properties is subject. The Company is not
in default (and no event has occurred which, with notice or lapse of time or
both, would put the Company in default) under, nor has there occurred any event
giving others (with notice or lapse of time or both) any rights of
5
termination, amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which the Company is a party or any of its properties
is subject. The Company is not in violation of the listing requirements of the
Nasdaq Small Cap market ("NASDAQ") and does not reasonably anticipate that the
Class A Common Stock will be delisted by NASDAQ for the foreseeable future.
2.12 Agreements; Action. Except as set forth on the Disclosure
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Schedules:
(a) there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof, other than the agreements explicitly contemplated
hereby.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound that may involve (i) obligations
(contingent or otherwise) of, or payments to the Company, in excess of $50,000,
other than obligations of, or payments to, the Company arising from purchase or
sale agreements entered into in the ordinary course of business, (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company, other than licenses arising from the purchase of "off the
shelf" or other standard products, or (iii) provisions restricting the
development, manufacture or distribution of the Company's products or services.
(c) Since the date of the most recent audited balance sheet
provided to the Investors by the Company, the Company has not (i) declared or
paid any dividends or authorized or made any distribution upon or with respect
to any class or series of its capital stock, (ii) incurred any indebtedness for
money borrowed or any other liabilities individually in excess of $50,000, (iii)
made any loans or advances to any person, other than ordinary advances for
travel expenses, or guaranteed the obligations of any person, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of business.
(d) There are no other agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound that are material to the conduct
of the Company's business.
(e) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
2.13 Related-Party Transactions. Except as set forth in the Disclosure
--------------------------
Schedules, no employee, officer or director of the Company or member of his or
her immediate family is indebted to the Company, nor is the Company indebted (or
committed to make loans or extend or guarantee credit) to any of them. To the
best of the Company's knowledge, none of such persons has any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that employees, officers or
directors of the
6
Company and members of their immediate families may own less than 5% of the
outstanding stock of one or more publicly traded companies that may compete with
the Company. Except as set forth on the Disclosure Schedules, no employee,
officer or director of the Company or member of his or her immediate family is
directly or indirectly interested in any material contract with the Company.
2.14 SEC Documents and Financial Statements. Since January 1, 1997,
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the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein, with amendments read together with underlying
documents, are referred to herein as the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
U.S. generally accepted accounting principles, consistently applied, during the
periods involved and fairly and accurately present in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
most recent audited balance sheet provided to the Investors by the Company, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the date of such
financial statements and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in such financial statements,
which, individually or in the aggregate, are not material to the financial
condition or operating results of the Company. Except as disclosed in such
financial statements, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
2.15 Changes. Except as set forth on the Disclosure Schedules, since
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December 31, 1998 there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Company's financial
statements, except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results or business of the Company;
7
(c) any waiver by the Company of a valuable right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company;
(e) any amendment to or termination of a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
(f) any material change in any compensation arrangement or
agreement with any employee; or
(g) any agreement or commitment by the Company to do any of the
things described in this Section 2.15.
2.16 Tax Returns. The Company has timely filed all tax returns
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(federal, state and local) required to be filed by it and such tax returns are
true and correct in all material respects. In addition, (i) the Company has not
requested any extension of time within which to file any tax returns in respect
of any fiscal year which have not since been filed and no request for waivers of
the time to assess any taxes are pending or outstanding, (ii) no claim for taxes
has become a lien against the property of the Company or is being asserted
against the Company other than liens for taxes not yet due and payable, (iii) no
audit of any tax return of the Company is being conducted by a tax authority,
(iv) no extension of the statute of limitations on the assessment of any taxes
has been granted to, by or applied for by, the Company and is currently in
effect, and (v) there is no agreement, contract or arrangement to which the
Company is a party that may result in the payment of any amount that would not
be deductible by reason of Sections 280G, 162 or 404 of the Internal Revenue
Code.
2.17 Permits. The Company has all material franchises, permits,
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licenses and any similar authority necessary for the conduct of its business
("Permits"). The Company is not in default under any of such Permits. The
Disclosure Schedules set forth an accurate and complete list of all such
Permits.
2.18 Environmental and Safety Laws. The Company is not in violation of
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any applicable material statute, law or regulation relating to the environment
or occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
2.19 Disclosure. The Company has fully provided each Investor with all
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the information that such Investor has requested for deciding whether to
purchase the Series A Preferred Stock and Warrants and all information that the
Company believes is reasonably necessary to enable such Investor to make such
decision. This Agreement (including all the Exhibits and Schedules hereto read
together with the SEC documents) does not contain any untrue statement of a
material fact or omit a material fact necessary to make the statements herein or
therein not misleading in light of the circumstances under which they were made.
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2.20 Registration Rights. Except as set forth on the Disclosure
-------------------
Schedules and the rights granted pursuant to the Investors' Rights Agreement,
the Company has not granted or agreed to grant any registration rights,
including piggyback rights, to any person or entity.
2.21 Current Public Information. The Company is currently eligible to
--------------------------
register the resale of its Class A Common Stock on a registration statement on
Form S-3 under the Securities Act.
2.22 No General Solicitation. Neither the Company nor any distributor
-----------------------
participating on the Company's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company, or any such distributor, has
conducted any "general solicitation," as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.
2.23 No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offerers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act.
2.24 Corporate Documents. Except for amendments necessary to satisfy
-------------------
representations and warranties or conditions contained herein (the form of which
amendments has been approved by the Investors), the Articles of Incorporation
and Bylaws of the Company are in the form attached hereto as Exhibit G and
---------
Exhibit H, respectively.
---------
2.25 Title to Property and Assets. The property and assets the Company
----------------------------
owns are owned by the Company free and clear of all mortgages, liens, loans and
encumbrances, except (i) as reflected in the Company's financial statements
included in the SEC Documents, (ii) for mechanic's, workmen's, repairmen's,
warehousemen's, carrier's or similar liens arising or incurred in the ordinary
course of business and which, individually or in the aggregate, are not
material, and (iii) for statutory liens for the payment of current taxes that
are not yet delinquent. With respect to the property and assets it leases, the
Company is in compliance with such leases and holds a valid leasehold interest
free of any liens, claims or encumbrances, subject to clauses (i), (ii) and
(iii) above.
2.26 Foreign Corrupt Practices. Neither the Company nor any director,
-------------------------
officer, agent, employee or other person acting on behalf of the Company has, in
the course of his actions for, or on behalf of, the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
2.27 Insurance. The Disclosure Schedules set forth a complete and
---------
accurate list of all insurance policies maintained by the Company and a summary
of the coverage provided by such policies.
9
2.28 Employee Benefit Plans. The Disclosure Schedules set forth a
----------------------
complete and accurate list of all employment contracts, deferred compensation
agreements, bonus plans, incentive plans, profit sharing plans, retirement
agreements or other agreements, plans or arrangements relating to compensation
or benefits provided to the Company's employees. The Company has complied in all
material respects with all applicable state and federal equal employment
opportunity and other laws related to employment and the agreements, plans and
arrangements set forth on the Disclosure Schedules. The Disclosure Schedules
contain a complete and accurate list of all of the Company's employees, their
current rates of compensation, date of hire, and job title.
2.29 Labor Agreements and Actions. The Company is not bound by or
----------------------------
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the Company's
knowledge, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the Company's knowledge, threatened, that could have a
material adverse effect on the assets, properties, financial condition,
operating results or business of the Company, nor is the Company aware of any
labor organization activity involving its employees. The Company is not aware
that any officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company nor does the Company have a present
intention to terminate the employment of any of the foregoing. The employment of
each officer and employee of the Company is terminable at the will of the
Company.
2.30 Year 2000 Compliance. All of the Company's products currently
--------------------
being sold and under development and all computer software and hardware
(including microcode, firmware, system and application programs, files,
databases, computer services and microcontrollers), including those embedded in
computer and noncomputer equipment contained in the Company's products currently
being sold and under development are Year 2000 Compliant, except to the extent
that they may be used or interfaced with other software, data or operating
systems that are not Year 2000 Compliant. All of the Company's internal computer
systems are Year 2000 Compliant, except that the Company makes no such
representation with respect to off-the-shelf software that is used in the
Company's internal computer systems the failure or malfunctioning of which would
not have a material adverse effect on the Company. To its knowledge, the Company
is not relying on the products or services of any third party whose systems are
not Year 2000 Compliant. For purposes of this Agreement, "Year 2000 Compliant"
shall mean that such products and data and information systems and any such
data, information or other files or software it uses, individually and in
combination, completely and accurately record, store, process, calculate and
present data involving dates before, on or after January 1, 2000; specifically:
(i) no value for a current date will cause any interruption in operation; (ii)
date-based functionality will behave consistently when dealing with dates
before, on or after January 1, 2000; (iii) no abnormal endings or incorrect
results will be produced when working with dates before, on or after January 1,
2000; (iv) in all interfaces and data storage, the century will be specified
explicitly and will be unambiguously derived; and (v) year 2000 will be
recognized as a leap year.
10
2.31 Computer and Communication Infrastructure. The Company's computer
-----------------------------------------
and communication infrastructure is adequate to conduct its business as a
supplier of automobile parts. The Company is in compliance with QS9000.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby represents, warrants and covenants that:
3.1 Authorization. Such Investor has full power and authority to enter
-------------
into this Agreement and the Investors' Rights Agreement, and each such agreement
constitutes its valid and legally binding obligation, enforceable in accordance
with its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Securities will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in or otherwise
distributing the same; provided, however, that such Investor may make
distributions of any such Securities to such Investor's affiliates.
3.3 Accredited Investor. Such Investor is an "accredited investor"
-------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.4 Restricted Securities. Such Investor understands that the
---------------------
Securities it is purchasing under this Agreement are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such Securities may be
resold without registration under the Securities Act only in certain limited
circumstances. Each Investor understands that such Investor is acquiring certain
registration rights pursuant to the Investors' Rights Agreement with respect to
the registration for resale of the Class A Common Stock issuable upon conversion
of the Series A Preferred Stock and the Class A Common Stock issuable upon
exercise of the Warrants.
3.5 Legends. Such Investor understands that the certificates
-------
evidencing the Securities may bear a legend in substantially the following form:
"These securities have not been registered under the Securities Act of
1933, as amended (the "Act"). They may not be sold, offered for sale, pledged
or hypothecated unless (i) a registration statement is in effect with respect to
the securities or (ii) an exemption from registration is available under the
Act."
11
ARTICLE IV.
CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING
The obligations of each Investor under subsection 1.1(b) of this
Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions, any or all of which may be waived with respect to an
Investor by such Investor's written consent thereto:
4.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied in all
-----------
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.
4.3 Compliance Certificate. The President of the Company shall
----------------------
deliver to each Investor at the Closing a certificate stating that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 Qualifications. All authorizations, approvals or permits, if any,
--------------
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
4.5 Shareholder Approval. The Company shall have obtained the
--------------------
requisite approval of this Agreement and the transactions contemplated hereby,
including but not limited to the Investors' Rights Agreement, by its
shareholders.
4.6 Certificate of Determination. The Company shall have filed the
----------------------------
Certificate of Determination with the California Secretary of State and shall
have provided evidence satisfactory to the Investors that such filing has been
made.
4.7 Due Diligence. Each of the Investors shall have received from the
-------------
Company all the information that such Investor has theretofore requested and
which such Investor believes is reasonably necessary to enable it to make the
investment decision contemplated by this Agreement.
4.8 Proceedings and Documents. All corporate and other proceedings in
-------------------------
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investors and their counsel, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
4.9 No Material Adverse Effect. No event, circumstance or condition
--------------------------
shall have occurred which has, or could reasonably be expected to have, a
Material Adverse Effect.
4.10 Proceeding or Litigation. No restraining order, preliminary or
------------------------
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or
12
regulatory restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to this
Agreement or the transactions contemplated hereby which makes the consummation
of such transactions illegal or which otherwise prohibits the consummation of
such transactions. In the event an injunction or other order shall have been
issued, each party agrees to use its reasonable diligent efforts to have such
injunction or other order lifted.
4.11 Opinion of Company Counsel. Each Investor shall have received
--------------------------
from O'Melveny & Xxxxx, LLP, counsel for the Company, an opinion, dated as of
the Closing, in the form attached hereto as Exhibit D.
---------
4.12 Redemption. The Company shall have entered into a legally binding
----------
and enforceable agreement providing for the redemption of all outstanding Class
B Common Stock into which Class A Common Stock currently held in escrow is
converted or convertible, subject only to the prior closing of the transaction
contemplated by this Agreement, either in accordance with the terms of the Share
Exchange Agreement attached hereto as Exhibit E, or, otherwise, on terms and
---------
conditions satisfactory to the Investors, in their sole discretion.
4.13 Investors' Rights Agreement. The Company shall have executed and
---------------------------
delivered to the Investors the Investors' Rights Agreement in the form attached
hereto as Exhibit C.
---------
4.14 Board of Directors. Resolutions shall have been adopted by the
------------------
Board of Directors to increase the authorized number of directors of the Company
to seven (7) effective as of the Closing, and all of the Company's directors,
except Xxxx Xxxxx, Xxx Xxxx and Xxxxxxx Xxxxxxxx, shall have tendered their
resignations to be effective as of the Closing.
4.15 Loan Documents. No Event of Default, as that term is defined in
-----------------------------------
the Credit Agreement attached hereto as Exhibit F ("Credit Agreement"), shall
---------
have occurred and remain uncured at the time of the Closing.
ARTICLE V.
CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The obligations of the Company to each Investor under this Agreement
are subject to the fulfillment on or before the Closing of each of the following
conditions by the Company or that Investor, as the case may be, any or all of
which may be waived by the Company's written consent thereto:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
5.2 Payment of Purchase Price. Each Investor shall have delivered the
-------------------------
purchase price specified in Section 1.2.
13
5.3 Qualifications. All material authorizations, approvals or permits
--------------
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement and which are set forth in this Agreement
or on the Disclosure Schedules shall be duly obtained and effective as of the
Closing.
5.4 Shareholder Approval. The Company shall have obtained the
--------------------
requisite approval of this Agreement and the transactions contemplated hereby,
including but not limited to the Investors' Rights Agreement, by its
shareholders.
5.5 Investment Representation. The Company shall have obtained from
-------------------------
each Investor a representation that such Investor has received from the Company
all the information that such Investor has requested for deciding whether to
purchase the Series A Preferred Stock and the Warrants and all information that
such Investor believes is reasonably necessary to enable such Investor to make
such decision.
5.6 Credit Agreement. The Lender shall have performed in all material
----------------
respects the agreements and obligations to be performed by it under the Credit
Agreement which are required to be performed prior to the Closing.
ARTICLE VI.
OTHER AGREEMENTS
6.1 Conduct of Business. During the period from the date of this
-------------------
Agreement and continuing until the Closing, except as expressly contemplated or
permitted by this Agreement or with the prior written consent of Investors,
which shall not be unreasonably withheld or delayed, the Company shall carry on
its business in the ordinary course consistent with past practice. Without
limiting the generality of the foregoing, except as expressly contemplated or
permitted by this Agreement, the Company shall not without the prior written
consent of Investors:
(a) declare or pay any dividends on, or make other distributions
in respect of, any of the Company's capital stock;
(b) (i) repurchase, redeem or otherwise acquire any shares of its
capital stock, or any securities convertible into or exercisable for any shares
of its capital stock, (ii) split, combine or reclassify any shares of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing;
(c) amend its Articles of Incorporation, Bylaws or other similar
governing documents;
14
(d) make any capital expenditures other than those which (i) are
made in the ordinary course of business or are necessary to maintain existing
assets in good repair and (ii) do not exceed $50,000 in the aggregate;
(e) enter into any new line of business;
(f) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire any assets, which would be material, individually or in the
aggregate, to the Company;
(g) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue, or in any of the conditions to the
Closing not being satisfied;
(h) change its methods of accounting in effect at December 31,
1998, except as required by changes in GAAP or as concurred with by the
Company's independent auditors;
(i) (i) except as required by applicable law or as required to
maintain qualification pursuant to the Internal Revenue Code, adopt, amend, or
terminate any employee benefit plan or any agreement, arrangement, plan or
policy between the Company and one or more of its current or former directors,
officers or employees, or (ii) except for normal increases in the ordinary
course of business consistent with past practice or except as required by
applicable law, increase in any manner the compensation or fringe benefits of
any director, officer or employee or pay any benefit not required by any
agreement as in effect as of the date hereof (including, without limitation, the
granting of stock options, stock appreciation rights, restricted stock,
restricted stock units or performance units or shares);
(j) other than activities in the ordinary course of business
consistent with past practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose of,
any of its material assets, properties or other rights or agreements;
(k) other than in the ordinary course of business consistent with
past practice and not in excess of $50,000 (individually or in the aggregate),
incur any indebtedness for borrowed money or assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other individual, corporation or other entity;
(l) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract, agreement
or lease for goods, services or office space to which the Company is a party or
by which the Company or its proper-ties are bound, other than the renewal in the
ordinary course of business of any lease the term of which expires prior to the
Closing; or
(m) agree to do any of the foregoing.
15
6.2 Access to Information. The Company will give Investors and their
---------------------
accountants, legal counsel and other representatives full access, during normal
business hours throughout the period prior to the Closing, to all of the
properties, books, contracts, commitments and records relating to its capital
stock, business, assets and liabilities. The Company will make available to
Investors and their accountants, legal counsel and other representatives during
such period copies of all documents and all such information concerning its
affairs as Investors may reasonably request.
6.3 Other Discussions; Break Up Arrangement.
---------------------------------------
(a) From the date hereof until the Closing, unless Investors have
given their prior written approval, none of the Company nor any of its
affiliates or representatives shall directly or indirectly, solicit, initiate,
facilitate, or encourage the submission of any other proposal for, enter into
any agreement or initiate or participate in any discussions regarding, or
furnish to any person any information or assistance with respect to, or take any
other action to facilitate the making of any proposal that constitutes or may
reasonably be expected to lead to, other business combinations or financing
transactions directly or indirectly involving the Company or its business
operations, or the acquisition, in any manner directly or indirectly, of all or
any substantial part of the business, assets, capital stock or other voting
securities of, or any other equity interest in, the Company or its business
operations by any other party. Notwithstanding the above, the Company may
respond to unsolicited written proposals or to information requests and furnish
or disclose information in response thereto if the Company's Board of Directors
determines in good faith, after consultation with legal counsel, that taking
such action is necessary in the exercise of its fiduciary obligations under
applicable law. If the Company receives any competing proposal (oral or
written), the Company shall advise Investors immediately of its terms and, if
the competing proposal is in writing, furnish Investors with a true and complete
copy thereof.
(b) If (1) the Closing does not occur (other than as a result of
a material breach of this Agreement by the Investors or the determination by the
Investors not to proceed with this transaction for failure of the condition
specified in Section 4.9 hereof) and (2) a Trigger Event (as defined below) has
occurred within twelve months from the date hereof, then the Company shall:
(i) immediately reimburse the Investors for all reasonable
out-of-pocket expenses incurred in connection with the preparation, negotiation
and performance of this Agreement up to a maximum of $150,000 (including legal,
accounting, consulting and any third party financing fees and any costs of
collection), and
(ii) immediately pay a failed transaction fee (the "Fee") to
the Investors in an amount equal to the greater of (A) 5% of the value of the
transaction constituting the Trigger Event accepted by the Board or (B)
$300,000.
(c) A "Trigger Event" means occurrence of any of the following
events: (i) any person, corporation, entity or "group" (as such term is used in
section 13(d) of the Exchange Act) (other than the Investors or any of their
affiliates) (a "Person") shall have acquired or become the beneficial owner of
more than 25% of the outstanding Class A Common Stock, or shall have been
granted any option or right (conditional or otherwise), to acquire more
16
than 25% of the outstanding Class A Common Stock; (ii) any Person shall have
commenced a bona fide tender offer or exchange offer for consideration the fair
market value of which is in excess of the initial Conversion Price (as provided
in the Certificate of Determination) per share for at least 25% of the
outstanding Class A Common Stock, (iii) the Company (or its Board) shall have
authorized, recommended, proposed or publicly announced its intention to enter
into any tender or exchange offer, merger, consolidation, liquidation,
dissolution, business combination, recapitalization, acquisition, or disposition
of a material amount of assets or securities or any comparable transaction which
has not been consented to in writing by the Investors; or (iv) the shareholders
of the Company fail to approve the Agreement.
6.4 Proxy Statement. As promptly as practicable after the execution of
---------------
this Agreement, the Company shall prepare and file with the SEC a proxy
statement (together with all amendments thereto "Proxy Statement") for use in
connection with the Annual Meeting (as defined below). The Company shall prepare
the Proxy Statement in compliance with applicable federal and state securities
laws and with the applicable provisions of the California General Corporations
Law. As promptly as practicable after the preparation of the Proxy Statement and
the completion of the SEC's review, if any, of such Proxy Statement, the Proxy
Statement shall be mailed to the shareholders of the Company. None of the
information supplied by any party hereto for inclusion in the Proxy Statement
shall, at the date it or any amendments or supplements thereto are mailed to the
shareholders in connection with the Annual Meeting, at the time of the Annual
Meeting, or at the Closing, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
6.5 Shareholders' Meeting. As promptly as practicable after the date
---------------------
hereof, the Company shall call and hold its annual meeting of its shareholders
for the purpose of approving this Agreement and the transactions contemplated
hereby (the "Annual Meeting"). The Company shall use its best efforts to solicit
from its shareholders proxies in favor of the approval of this Agreement and the
transactions contemplated hereby pursuant to the Proxy Statement.
6.6 Public Disclosure. Each party shall consult with the others before
-----------------
issuing any press release or otherwise making any public statement or making any
other public (or non-confidential) disclosure (whether or not in response to an
inquiry) regarding the terms of this Agreement and the transactions contemplated
hereby, and shall provide to the others for review and approval a copy of such
contemplated disclosure. No party shall issue any such press release or make any
such statement or disclosure before such review and approval by the other
parties, except as such party is advised by legal counsel is required by law.
6.7 Reasonable Efforts. Each party will use its commercially
------------------
reasonable efforts to cause all conditions to the Closing to be satisfied,
including, without limitation, obtaining any of its consents necessary or
desirable in connection with the consummation of the transactions contemplated
by this Agreement.
6.8 Board of Directors. The parties understand that pursuant to the
------------------
Certificate of Determination, the authorized number of directors of the Company
shall be seven, the holders of Common Stock shall be entitled to elect two
directors, and the holders of Series A Preferred Stock shall be entitled to
elect five directors. All of the Company's directors, except Xxxx Xxxxx,
17
Xxx Xxxx and Xxxxxxx Xxxxxxxx, shall resign effective as of the Closing. The
remaining directors shall fill the vacancies created by such resignations and
appoint directors who are acceptable to the Investors.
6.9 Bridge Loan. Concurrently, with the execution of this Agreement,
-----------
the parties shall enter into the Credit Agreement, together with the related
security agreements and documents referred to therein, pursuant to which the
Investors shall loan funds to the Company (the "Bridge Loan") subject to the
terms and on the conditions set forth in such Credit Agreement.
6.10 Notification of Certain Matters. The Company shall give prompt
-------------------------------
notice to Investors, and Investors shall give prompt notice to the Company, of
(a) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would likely to cause any representation or warranty of the notifying
party contained in this Agreement to become materially untrue or inaccurate, or
(b) any failure of the notifying party to materially comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
6.11 Indemnification. In the event any third party brings an action,
---------------
suit or proceeding (including, without limitation, any derivative proceeding)
against any Investor arising out of any allegation that this Agreement or the
agreements and transactions contemplated hereby violate or interfere with an
agreement or arrangement between such third party and the Company, then the
Company agrees to indemnify the Investors from and against the entirety of any
loss, damage, claim, cost or expense (including reasonable attorneys' fees) the
Investors may suffer through and after the date of the claim for indemnification
resulting from, arising out of, relating to, in the nature of, or caused by the
third party action, suit or proceeding referenced above.
ARTICLE VII.
MISCELLANEOUS
7.1 Survival. The warranties, representations and covenants of the
--------
Company and Investors contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Investors or the Company prior to the Closing. The warranties,
representations, and covenants of the Company shall terminate upon the Closing
and shall be of no further force or effect after such date.
7.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
18
7.4 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.5 Notices. All notices required or permitted hereunder shall be in
-------
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the address
as set forth on the signature page hereof or at such other address as such party
may designate by ten days advance written notice to the other parties hereto.
7.6 Finder's Fee. Except as set forth on the Disclosure Schedules,
------------
each party represents that it neither is nor will be obligated for any finders'
fee or commission in connection with this transaction. Each Investor agrees to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which such Investor
or any of its officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.7 Expenses. The Company shall pay all costs and expenses that it
--------
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement, the agreements related hereto, and the agreements related to the
Bridge Loan. Upon the execution of this Agreement, the Company shall reimburse
the Investors for their actual costs (including reasonable legal fees) incurred
in connection with the Bridge Loan, but not in excess of $50,000. If the Closing
is effected, the Company shall, at the Closing, reimburse the actual costs
(including reasonable legal fees) of the Investors in connection with the
negotiation, execution, delivery, and performance of this Agreement and the
transactions and agreements contemplated hereby (in addition to the costs
associated with the Bridge Loan as previously reimbursed) not to exceed
$150,000. If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the Investors' Rights Agreement, or the Certificate
of Determination, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
7.8 Amendments and Waivers. Any term of this Agreement may be amended
----------------------
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and each Investor.
7.9 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
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7.10 Termination. If the closing has not occurred on or before June
-----------
30, 1999, either party may terminate this Agreement by providing written notice
to the other party; provided, however, if the SEC reviews the Company's Proxy
Statement, the date on which termination pursuant to this Section 7.10 shall
first be permitted will be July 30, 1999. Notwithstanding, the termination of
this Agreement pursuant to this Section 7.10, the Company shall be liable for
the payments described in Section 6.3 if a Trigger event subsequently occurs
within the time period set forth in that section.
7.11 Aggregation of Stock. All shares of the Series A Preferred Stock
--------------------
or Common Stock issued upon conversion thereof held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
7.12 Entire Agreement. This Agreement and the documents referred to
----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
7.13 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY: AMERIGON INCORPORATED
By: /s/ Xxx X. Xxxx
Its: Chief Executive Officer
Address: ____________________________________________
____________________________________________
____________________________________________
INVESTORS: WESTAR CAPITAL II, LLC
By: Westar Capital Associates II, LLC
Manager
By: /s/ Xxxx Xxxxx
Its: Managing Member
Address: ____________________________________________
____________________________________________
____________________________________________
BIG BEAVER INVESTMENTS LLC
By: /s/ Xxxxx X. Xxxx III
Its: President
Address: ____________________________________________
____________________________________________
____________________________________________
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SCHEDULE A
Investor Series A Preferred Stock Purchase Price
-------- ------------------------ --------------
Westar Capital II LLC 4,500 $4,500,000
Big Beaver Investments LLC 4,500 $4,500,000
Investor Warrant Purchase Price
-------- ------- --------------
Westar Capital II LLC Warrants to purchase that number of shares $500
of Class A Common Stock equal to 36.9% of
the aggregate shares subject to (i) currently
outstanding warrants (excluding the Bridge Loan
Warrants) plus (ii) warrants that are issuable at the
Closing to Xxxxxxx Xxxxx Securities Incorporated,
on the terms and conditions set forth in the
Contingent Common Stock Purchase Warrants
attached hereto as Exhibit B.
Big Beaver Investments LLC Warrants to purchase that number of shares $500
of Class A Common Stock equal to 36.9% of
the aggregate shares subject to (i) currently
outstanding warrants (excluding the Bridge Loan
Warrants) plus (ii) warrants that are issuable at the
Closing to Xxxxxxx Xxxxx Securities Incorporated,
on the terms and conditions set forth in the
Contingent Common Stock Purchase Warrants
attached hereto as Exhibit B.
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