Exhibit 4.1
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
December 31, 2002, by and among Electric Fuel Corporation, a Delaware
corporation (the "COMPANY"), and the purchasers identified on the signature
pages hereto (each a "PURCHASER" and collectively the "PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below) and Rule
506 promulgated thereunder, the Company desires to issue and sell to the
Purchasers, and the Purchasers, severally and not jointly, desire to purchase
from the Company certain securities of the Company, as more fully described in
this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
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Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1:
"ACTION" means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation pending
or threatened in writing against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator, governmental
or administrative agency, regulatory authority (federal, state, county, local or
foreign), stock market, stock exchange or trading facility.
"AFFILIATE" means any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144.
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.
"CLOSING" means the closing of the purchase and sale of the Securities
pursuant to Section2.
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"CLOSING DATE" means the date of the Closing.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, $.01 par value per
share, and any securities into which such common stock may hereafter be
reclassified.
"COMMON STOCK EQUIVALENTS" means any securities of the Company or any
Subsidiary which entitle the holder thereof to acquire Common Stock at any time,
including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock.
"COMPANY COUNSEL" means ▇▇▇▇▇▇ Har-Oz, Esq.
"DEBENTURES" means $3,500,000 in the aggregate principal amount of 9%
Secured Convertible Debentures due on the thirtieth (30th) month anniversary of
the issuance thereof, in the form of Exhibit A hereto.
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"EFFECTIVE DATE" means the date that the initial Registration Statement
required by the Registration Rights Agreement is first declared effective by the
Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FIRST WARRANTS" means common stock purchase warrants issuable to each
Purchaser at the Closing, in the form attached hereto as Exhibit C-1.
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"INDEBTEDNESS" shall mean the principal amount of, premium, if any, profit
participation, if any, and accrued and unpaid interest on and all other amounts
and costs payable in respect of (a) indebtedness for money borrowed from others;
(b) indebtedness guaranteed, directly or indirectly, in any manner, or in effect
guaranteed, directly or indirectly, in any manner through an agreement,
contingent or otherwise, to supply funds to, or in any other manner invest in
the debtor, or to purchase indebtedness, or to purchase and pay for property if
not delivered or pay for services if not performed, primarily for the purpose of
enabling the debtor to make payment of the indebtedness or to assure the owners
of the indebtedness against loss; (c) all indebtedness secured by any mortgage,
lien, pledge, charge or other encumbrance upon property owned by the Company;
(d) all indebtedness of such Person created or arising under any conditional
sale, lease (intended primarily as a financing device) or other title retention
or security agreement with respect to property acquired by the Company even
though the rights and remedies of the seller, lessor or lender under such
agreement or lease in the event of a default may be limited to repossession or
sale of such property; and (e) renewals, extensions and refundings of any such
Indebtedness.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means the Intellectual Property
Security Agreement, dated as of the date of this Agreement, by and among the
Company, the subsidiaries of the Company party thereto, and the holders of the
Debentures, pursuant to which the obligations of the Company under the
Debentures are secured by the intellectual property of the Company and the
subsidiaries party thereto, such agreement in the form of Exhibit D attached
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hereto.
"INVESTMENT AMOUNT" means, with respect to each Purchaser, the investment
amount indicated below such Purchaser's name on the signature page of this
Agreement
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"LIEN" means any lien, charge, encumbrance, security interest, right of
first refusal or other restrictions of any kind.
"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"PURCHASER PERCENTAGE" means, with respect to a Purchaser, the percentage
equal to the product of (x) a fraction, the numerator of which shall be the
Investment Amount paid by such Purchaser on the Closing Date and the denominator
of which shall be the aggregate Investment Amount paid by all Purchasers on the
Closing Date times (y) 100.
"REGISTRATION STATEMENT" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Purchasers of the Underlying Shares and the Warrant Shares.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of the date of this Agreement, among the Company and the Purchasers, in
the form of Exhibit B hereto.
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"RULE 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"SECOND WARRANTS" means common stock purchase warrants issuable to each
Purchaser at the Closing, in the form attached hereto as Exhibit C-2.
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"SECURITIES" means the Debentures, the Underlying Shares, the Warrants and
the Warrant Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENT" means the Security Agreement, dated as of the date of
this Agreement, by and among the Company and the subsidiaries of the Company
party thereto and the holders of the Debentures, pursuant to which the
obligations of the Company under the Debentures are secured by the assets of the
Company and its subsidiaries, such agreement in the form of Exhibit E.
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"SUBSIDIARY" means any subsidiary of the Company that is required to be
listed in Schedule 3.1(a), provided, that to the extent no subsidiaries are
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listed in Schedule 3.1(a), any reference to "Subsidiary" or "Subsidiaries"
in the Transaction Documents shall be disregarded.
"THIRD WARRANTS" means common stock purchase warrants issuable to each
Purchaser at the Closing, in the form attached hereto as Exhibit C-3.
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"TRADING DAY" means (i) a day on which the Common Stock is traded on a
Trading Market, or (ii) if the Common Stock is not listed on a Trading Market, a
day on which the Common Stock is traded in the over-the-counter market, as
reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted
on the OTC Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by Pink Sheets LLC (formerly the National
Quotation Bureau Incorporated) (or any similar organization or agency succeeding
to its functions of reporting prices); provided, that in the event that the
Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) above,
then Trading Day shall mean a Business Day.
"TRADING MARKET" means whichever of the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market that the Common Stock is listed or quoted for trading on the date in
question.
"TRANSACTION DOCUMENTS" means this Agreement, the Debentures, the Security
Agreement, the Intellectual Property Security Agreement, the Warrants, the
Registration Rights Agreement, the Transfer Agent Instructions and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
"TRANSFER AGENT INSTRUCTIONS" means the Company's Transfer Agent
Instructions in the form of Exhibit F.
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"UNDERLYING SHARES" means the shares of Common Stock issuable in respect of
the Debentures, including the shares of Common Stock issuable in respect of
interest on the Debentures.
"WARRANTS" means First Warrants, the Second Warrants and the Third
Warrants.
"WARRANT SHARES" means the shares of Common Stock issuable upon exercise of
the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
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Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
the Debentures and the Warrants, for the aggregate purchase price set forth
below each Purchaser's address on the signature pages to this Agreement. The
Closing shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ on the date hereof or at such other location or
time as the parties may agree.
2.2 Closing Deliveries. (a) At the Closing, the Company shall deliver or
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cause to be delivered to each Purchaser the following:
(i) this Agreement duly executed by the Company;
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(ii) a Debenture, registered in the name of such Purchaser, evidencing
the principal amount of Debentures purchased by such Purchaser, which
amount is such Purchaser's Investment Amount;
(iii) a certificate evidencing a number of shares of Common Stock
equal to (x) 387,301 times (y) such Purchaser's Purchaser Percentage,
registered in the name of such Purchaser, which amount represents the
payment of interest, at the rate of 9% per annum, on the outstanding
principal amount of the Debentures for the first nine months following the
Closing Date;
(iv) a First Warrant, registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to acquire the number
of shares of Common Stock equal to (x) 1,166,700 times (y) such Purchaser's
Purchaser Percentage, at an exercise price of $.84 per share;
(v) a Second Warrant, registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to acquire the number
of shares of Common Stock equal to (x) 1,166,700 times (y) such Purchaser's
Purchaser Percentage, at an exercise price of $.89 per share;
(vi) a Third Warrant, registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to acquire the number
of shares of Common Stock equal to (x) 1,166,700 times such Purchaser's
Purchaser Percentage, at an exercise price of $.93 per share;
(vii) the legal opinion of Company Counsel, in agreed form, addressed
to the Purchasers;
(viii) the Registration Rights Agreement duly executed by the Company;
(ix) the Security Agreement duly executed by the Company and the
subsidiaries of the Company party thereto;
(x) the Intellectual Property Security Agreement duly executed by the
Company and the subsidiaries of the Company party thereto; and
(xi) the Transfer Agent Instructions executed by the Company and
delivered to and acknowledged by the Company's transfer agent.
(b) At the Closing, each Purchaser shall deliver or cause to be delivered
to the Company the following:
(i) this Agreement duly executed by such Purchaser;
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(ii) such Purchaser's Investment Amount, in United States dollars and
in immediately available funds, by wire transferr to an account designated
in writing by the Company for such purpose;
(iii) the Security Agreement duly executed by such Purchaser;
(iv) the Intellectual Property Security Agreement duly executed by
such Purchaser; and
(v) the Registration Rights Agreement duly executed by such Purchaser.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company. The Company hereby
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makes the following representations and warranties to each Purchaser:
(a) Subsidiaries. The Company has no direct or indirect Subsidiaries other
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than those listed in Schedule 3.1(a). Except as disclosed in Schedule 3.1(a),
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the Company owns, directly or indirectly, all of the capital stock of each
Subsidiary free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights.
(b) Organization and Qualification. Each of the Company and each Subsidiary
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is an entity duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and each
Subsidiary is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, have or reasonably
be expected to result in (i) an adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and adverse effect
on the results of operations, assets, business or financial condition of the
Company and the Subsidiaries, taken as a whole, or (iii) an adverse impairment
to the Company's ability to perform on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT").
(c) Authorization; Enforcement. The Company has the requisite corporate
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power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company in
connection therewith. Each Transaction Document has been (or upon delivery will
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have been) duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except (a)
as such enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally, (b) as enforceability of
any indemnification and contribution provisions may be limited under the federal
and state securities laws and public policy, and (c) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(d) No Conflicts. The execution, delivery and performance of the
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Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that 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 (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. Neither the Company nor any Subsidiary
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is required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration (collectively, "CONSENTS") with,
any court or other federal, state, local or other governmental authority or
other Person in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than (i) the filing of appropriate
UCC financing statements with the appropriate states and other authorities
pursuant to the Security Agreement and the Intellectual Property Security
Agreement, (ii) the filing with the Commission of one or more Registration
Statements in accordance with the requirements of the Registration Rights
Agreement, (iii) the application(s) to the Nasdaq National Market for the
listing of the Underlying Shares and Warrant Shares for trading thereon if and
in the time and manner required thereby, (iv) all filings required pursuant to
Section 4.5 hereof, and (v) those Consents set forth in Schedule 3.1(e), which
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Consents have been obtained prior to the date hereof.
(f) Issuance of the Securities. The Securities have been duly authorized
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and, when issued and paid for in accordance with the Transaction Documents, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens. The Company has reserved from its duly authorized capital stock the
maximum number of shares of Common Stock issuable pursuant to the Debentures and
the Warrants in order to issue the full number of Underlying Shares and Warrant
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Shares as are or may become issuable in accordance with the terms of the
Debentures and Warrants.
(g) Capitalization. The number of shares and type of all authorized, issued
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and outstanding capital stock of the Company is set forth in Schedule 3.1(g).
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Except as set forth in Schedule 3.1(g), no securities of the Company are
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entitled to preemptive or similar rights, and no Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities and except as
disclosed in Schedule 3.1(g), there are no outstanding options, warrants, scrip
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rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. Except as set forth in Schedule
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3.1(g), the issue and sale of the Securities will not, immediately or with the
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passage of time, obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities.
(h) SEC Reports; Financial Statements. The Company has filed all reports
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required to be filed by it under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such reports) (the foregoing materials being collectively referred
to herein as the "SEC REPORTS" and, together with the Schedules to this
Agreement, the "DISCLOSURE MATERIALS") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. The Company has delivered to the Purchasers a
copy of all SEC Reports filed within the 10 days preceding the date hereof. As
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, 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. The Company is in compliance with the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, and the rules and regulations promulgated thereunder
by all government and regulatory authorities and agencies. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.
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(i) Material Changes. Since the date of the latest audited financial
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statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that has
had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting or the identity of its
auditors, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock, and (v) the
Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option plans. The Company
does not have pending before the Commission any request for confidential
treatment of information.
(j) Litigation. Except as set forth in Schedule 3.1(j), there is no Action
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which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has
been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty.
There has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company. The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
(k) Labor Relations. No material labor dispute exists or, to the knowledge
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of the Company, is imminent with respect to any of the employees of the Company.
(l) Compliance. Neither the Company nor any Subsidiary (i) is in default
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under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is or has been in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws relating
to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each case as
could not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.
(m) Regulatory Permits. The Company and the Subsidiaries possess all
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certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect ("MATERIAL
PERMITS"), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.
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(n) Title to Assets. The Company and the Subsidiaries have good and
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marketable title in fee simple to all real property owned by them that is
material to their respective businesses and good and marketable title in all
personal property owned by them that is material to their respective businesses,
in each case free and clear of all Liens, except as set forth in Schedule 3.1(n)
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and except for Liens as do not materially affect the value of such property and
do not materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries. Any real property and facilities
held under lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance in all material respects.
(o) Patents and Trademarks. The Company and the Subsidiaries have, or have
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rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have could, individually or in the aggregate, have or reasonably be expected
to result in a Material Adverse Effect (collectively, the "INTELLECTUAL PROPERTY
RIGHTS"). Neither the Company nor any Subsidiary has received a written notice
that the Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any Person. Except as set forth in the
SEC Reports, to the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights.
(p) Insurance. The Company and the Subsidiaries are insured by insurers of
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recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged. The Company has no reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost, other than
anticipated increases in the market price of officers' and directors' liability
insurance generally.
(q) Transactions With Affiliates and Employees. Except as set forth in the
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SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
(r) Internal Accounting Controls. The Company and the Subsidiaries maintain
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a system of internal accounting controls which the audit committee of the board
of directors reasonably believes is sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general or
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specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(s) Solvency. Based on the financial condition of the Company as of the
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Closing Date, (i) the Company's fair saleable value of its assets exceeds the
amount that will be required to be paid on or in respect of the Company's
existing debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company's assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt).
(t) Certain Fees. Except as described in Schedule 3.1(t), no brokerage or
------------- ---------------
finder's fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by
this Agreement. The Purchasers shall have no obligation with respect to any
fees or with respect to any claims (other than such fees or commissions owed by
a Purchaser pursuant to written agreements executed by such Purchaser which fees
or commissions shall be the sole responsibility of such Purchaser) made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement.
(u) Certain Registration Matters. Assuming the accuracy of the Purchasers'
------------------------------
representations and warranties set forth in Section 3.2(b)-(f), no registration
under the Securities Act is required for the offer and sale of the Underlying
Shares and Warrant Shares by the Company to the Purchasers as contemplated by
the Transaction Documents. The Company is eligible to register the resale of
its Common Stock for resale by the Purchasers under Form S-3 promulgated under
the Securities Act. Except as described in Schedule 3.1(u), the Company has not
----------------
granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority that have not been satisfied.
(v) Listing and Maintenance Requirements. Except as set forth in the SEC
---------------------------------------
Reports or as set forth in Schedule 3.1(v), the Company has not, in the two
---------------
years preceding the date hereof, received notice (written or oral) from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. Except for the maintenance of the $1.00
minimum bid price (pursuant to the rules and regulations of the Nasdaq Stock
Market), the Company is currently in compliance with all such listing and
maintenance requirements. The issuance and sale of the Securities hereunder does
not contravene the rules and regulations of the Trading Market and no approval
-11-
of the shareholders of the Company is required for the Company to issue and
deliver to the Purchasers the maximum number of shares of Common Stock
contemplated by this Agreement, including by reason of the issuance of shares of
Common Stock upon conversion in full of the Debentures and the issuance of the
Warrant Shares upon exercise in full of the Warrants.
(w) Investment Company. The Company is not, and is not an Affiliate of, an
-------------------
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(x) Application of Takeover Protections. The Company has taken all
--------------------------------------
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchasers
solely as a result of the Purchasers and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation the Company's issuance of the Securities and the
Purchasers' ownership of the Securities.
(y) Ranking of Debentures. Except as set forth on Schedule 3.1(y), no
----------------------- ---------------
Indebtedness of the Company is senior to or ranks pari passu with the Debentures
in right of payment, whether with respect of payment of redemptions, interest,
damages or upon liquidation or dissolution or otherwise.
(z) Disclosure. The Company confirms that neither it nor any Person acting
----------
on its behalf has provided any of the Purchasers or their agents or counsel with
any information that the Company believes constitutes material, non-public
information. The Company understands and confirms that the Purchasers will rely
on the foregoing representations and covenants in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, furnished by
or on behalf of the Company (including the Company's representations and
warranties set forth in this Agreement) are true and correct and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
3.4 Representations and Warranties of the Purchasers. Each Purchaser
-----------------------------------------------------
hereby, for itself and for no other Purchaser, represents and warrants to the
Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly organized,
------------------------
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by such Purchaser of the transactions
contemplated by this Agreement has been duly authorized by all necessary
corporate or partnership action on the part of such Purchaser. Each Transaction
Document to which such Purchaser is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
-12-
Purchaser, enforceable against it in accordance with its terms, except (a) as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (b) as enforceability of any
indemnification and contribution provisions may be limited under the federal and
state securities laws and public policy, and (c) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) Investment Intent. Such Purchaser is acquiring the Securities as
------------------
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Purchaser's right at all times to sell or otherwise
dispose of all or any part of such Securities in compliance with applicable
federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold the Securities for any
period of time. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.
(c) Purchaser Status. At the time such Purchaser was offered the
-----------------
Securities, it was, and at the date hereof it is, and on each date on which it
exercises the Warrants it will be, an "accredited investor" as defined in Rule
501(a) under the Securities Act. Such Purchaser is not a registered
broker-dealer under Section 15 of the Exchange Act.
(d) Experience of such Purchaser. Such Purchaser, either alone or together
-----------------------------
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the
economic risk of an investment in the Securities and, at the present time, is
able to afford a complete loss of such investment.
(e) General Solicitation. Such Purchaser is not purchasing the Securities
---------------------
as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
(f) Access to Information. Such Purchaser acknowledges that it has reviewed
---------------------
the Disclosure Materials and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.
-13-
The Company acknowledges and agrees that each Purchaser does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions. (a) Securities may only be disposed of in
----------------------
compliance with state and federal securities laws. In connection with any
transfer of the Securities other than pursuant to an effective registration
statement, to the Company, to an Affiliate of a Purchaser or in connection with
a pledge as contemplated in Section 4.1(b), the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.
(b) Certificates evidencing the Securities will contain the
following legend, so long as is required by this Section 4.1(c):
---------------
[NEITHER] THESE SECURITIES [NOR THE SECURITIES ISSUABLE UPON
[EXERCISE][CONVERSION] OF THESE SECURITIES] HAVE [NOT] BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement or grant a security
interest in some or all of the Securities and, if required under the terms of
such arrangement, such Purchaser may transfer pledged or secured Securities to
the pledgees or secured parties. Such a pledge or transfer would not be subject
to approval or consent of the Company and no legal opinion of legal counsel to
the pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the appropriate
Purchaser's expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities including the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders thereunder.
-14-
(c) Certificates evidencing the Underlying Shares and Warrant
Shares shall not contain any legend (including the legend set forth in Section
4.1(b)): (i) while a registration statement (including the Registration
Statement) covering the resale of such Underlying Shares and Warrant Shares is
effective under the Securities Act, or (ii) following any sale of such
Underlying Shares or Warrant Shares pursuant to Rule 144, or (iii) if such
Underlying Shares or Warrant Shares are eligible for sale under Rule 144(k), or
(iv) if such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the Staff of the Commission). The Company shall cause its counsel to issue the
legal opinion included in the Transfer Agent Instructions to the Company's
transfer agent on the Effective Date. Following the Effective Date or at such
earlier time as a legend is no longer required for the Underlying Shares and
Warrant Shares under this Section 4.1(c), the Company will, no later than three
Trading Days following the delivery by a Purchaser to the Company or the
Company's transfer agent of a certificate representing Underlying Shares or
Warrant Shares containing a restrictive legend, deliver or cause to be delivered
to such Purchaser a certificate representing such Underlying Shares or Warrant
Shares that is free from all restrictive and other legends. The Company may not
make any notation on its records or give instructions to any transfer agent of
the Company that enlarge the restrictions on transfer set forth in this Section.
4.2 Furnishing of Information. As long as any Purchaser owns the
---------------------------
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any such Person, the Company shall deliver to
such Person a written certification of a duly authorized officer as to
whether it has complied with the preceding sentence. As long as any Purchaser
owns Securities, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Purchasers and make publicly available
in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Underlying Shares and Warrant Shares under Rule 144. The
Company further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Underlying Shares and Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
4.3 Integration. The Company shall not, and shall use its best efforts to
-----------
ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers, or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market.
4.4 Subsequent Registrations and Subsequent Placements.
------------------------------------------------------
(a) Prior to the Effective Date, the Company shall not file a registration
statement (including any shelf registration statements) (other than on Form S-8
or pursuant to the Registration Rights Agreement) with the Commission with
respect to any securities of the Company (other than pre-effective amendments to
Registration Statement Nos. 333-99559 and 333-99673).
-15-
(b) Prior to the expiration of the first anniversary of the Effective Date,
the Company will not, directly or indirectly, offer, sell, grant any option to
purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition of) any of Common Stock or Common Stock
Equivalents or any of its Subsidiaries' equity or Common Stock Equivalents,
including without limitation, pursuant to a private placement, an equity line of
credit or a shelf registration statement in accordance with Rule 415 under the
Securities Act, (such offer, sale, grant, disposition or announcement being
referred to as "SUBSEQUENT PLACEMENT"), unless: (i) the Company delivers to each
Purchaser a written notice (the "SUBSEQUENT PLACEMENT NOTICE") of its intention
to effect such Subsequent Placement, which Subsequent Placement Notice shall
describe in reasonable detail the proposed terms of such Subsequent Placement,
the amount of proceeds intended to be raised thereunder, the Person with whom
such Subsequent Placement is proposed to be effected, and attached to which
shall be a term sheet or similar document relating thereto and (ii) such
Purchaser shall not have notified the Company by 6:30 p.m. (New York City time)
on the seventh Trading Day after (but not including) its receipt of the
Subsequent Placement Notice of its willingness to provide (or to cause its
designee to provide), subject to completion of mutually acceptable
documentation, all or part of such financing to the Company on the same terms
set forth in the Subsequent Placement Notice. If the Purchasers shall fail to
so notify the Company of their willingness to participate in full in the
Subsequent Placement, the Company may effect the remaining portion of such
Subsequent Placement on the terms and to the Persons set forth in the Subsequent
Placement Notice. The Company shall provide the Purchasers with a second
Subsequent Placement Notice and the Purchasers will again have the right of
first refusal set forth in this Section 4.4(b), if the Subsequent Placement
subject to the initial Subsequent Placement Notice is not consummated for any
reason on the terms set forth in such Subsequent Notice within 30 Trading Days
after the date of the initial Subsequent Placement Notice with the Person
identified in the Subsequent Placement Notice. If the Purchasers indicate a
willingness to provide financing in excess of the amount set forth in the
Subsequent Placement Notice, then each Purchaser will be entitled to provide
financing pursuant to such Subsequent Placement Notice up to an amount equal to
such Purchaser Percentage of the financing, but the Company shall not be
required to accept financing from the Purchasers in an amount in excess of the
amount set forth in the Subsequent Placement Notice.
(c) The restrictive period set forth in the first sentence of Section 4.4(b)
shall be extended for the number of Trading Days during such period in which (i)
trading in the Common Stock is suspended by any Trading Market, or (ii)
following the Effective Date, the Registration Statement is not effective or the
prospectus included in the Registration Statement may not be used by the
Purchasers for the resale of the Underlying Shares and the Warrant Shares.
(d) The restrictions contained in Sections 4.4(b) shall not apply to any
grant or issuance by the Company of any of the following: (i) the issuance of
securities upon the exercise or conversion of any Common Stock Equivalents
issued by the Company prior to the date of this Agreement and listed on Schedule
3.1(g), and (ii) the grant of options or warrants, or the issuance of additional
-16-
securities, under any duly authorized Company stock option, restricted stock
plan or stock purchase plan in existence on the Closing Date (but not as to any
amendments or other modifications to the number of Common Stock issuable
thereunder, the terms set forth therein, or the exercise price set forth
therein).
4.5 Securities Laws Disclosure; Publicity. The Company shall no later than
--------------------------------------
January 6, 2003, (x) issue a press release reasonably acceptable to the
Purchasers disclosing the transactions contemplated hereby and (y) file a
Current Report on Form 8-K disclosing the transactions contemplated hereby, and
shall make such other filings and notices in the manner and time required by the
Commission. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure.
4.6 Indemnification of Purchasers. The Company will indemnify and hold the
------------------------------
Purchasers and their directors, officers, shareholders, partners, employees and
agents (each, a "PURCHASER PARTY") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation (collectively, "LOSSES") that any
such Purchaser Party may suffer or incur as a result of or relating to (a) any
misrepresentation, breach or inaccuracy, or any allegation by a third party
that, if true, would constitute a breach or inaccuracy, of any of the
representations, warranties, covenants or agreements made by the Company in any
Transaction Document; or (b) any Action brought or made against such Purchaser
Party and solely arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement or any of the other Transaction
Documents. In addition to the indemnity contained herein, the Company will
reimburse each Purchaser Party for its reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred.
4.7 Shareholders Rights Plan. No claim will be made or enforced by the
--------------------------
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
the Securities under the Transaction Documents or under any other agreement
between the Company and the Purchasers.
4.8 Non-Public Information. The Company covenants and agrees that neither
-----------------------
it nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.
4.9 Use of Proceeds. The Company shall use the net proceeds from the sale
-----------------
of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
-17-
receivables and accrued expenses in the ordinary course of the Company's
business and consistent with prior practices), to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation.
4.10 Secured Obligation. The payment obligations under the Debentures are
-------------------
secured pursuant to the Security Agreement and the Intellectual Property
Security Agreement.
ARTICLE V.
MISCELLANEOUS
5.1. Fees and Expenses. At the Closing, the Company shall reimburse the
-------------------
Purchasers for their legal fees and expenses in connection with the preparation
and negotiation of the Transaction Documents by paying $32,500 to ▇▇▇▇▇ ▇▇▇▇
LLP. Except as specified in the immediately preceding sentence and as
contemplated in the Registration Rights Agreement, each party shall pay the fees
and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
sale of the Securities. In addition to the foregoing, the Company shall pay the
fees described in Schedule 3.1(t) no later than January 3, 2003.
5.2 Entire Agreement. The Transaction Documents, together with the Exhibits
----------------
and Schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.3 Notices. Any and all notices or other communications or deliveries
-------
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon actual receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as follows:
If to the Company: Electric Fuel Corporation
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Financial Officer and General
Counsel
-18-
With a copy to: Electric Fuel (E.F.L.) Ltd.
Western Industrial ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Facsimile No.: 011-972-2-990-6688
Attn.: Chief Financial Officer and General
Counsel
If to a Purchaser: To the address set forth under such Purchaser's
name on the signature pages hereof;
or such other address as may be designated in writing hereafter, in the
same manner, by such Person.
5.4 Amendments; Waivers. No provision of this Agreement may be waived or
--------------------
amended except in a written instrument signed, in the case of an amendment, by
the Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.
5.5 Construction. The headings herein are for convenience only, do not
------------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party. This
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement or any of the
Transaction Documents.
5.6 Successors and Assigns. This Agreement shall be binding upon and inure
-----------------------
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the "Purchasers."
5.7 No Third-Party Beneficiaries. This Agreement is intended for the
------------------------------
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.6.
5.8 Liquidated Damages. The Company's obligations to pay any liquidated
-------------------
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid liquidated
damages and other amounts have been paid notwithstanding the fact that the
instrument or security pursuant to which such liquidated damages or other
amounts are due and payable shall have been canceled. Such liquidated damages
are not to be construed as the sole damages for remedies available to the
Persons entitled to the same. The parties hereby agree that all remedies and
damages are cumulative.
-19-
5.9 Governing Law. All questions concerning the construction, validity,
--------------
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflict of laws thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, stockholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New
York, Borough of Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of the any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, or that such Proceeding has been commenced in an improper or
inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding
to enforce any provisions of a Transaction Document, then the prevailing party
in such Proceeding shall be reimbursed by the other party for its reasonable
attorney's fees and other actual costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.
5.10 Survival. The representations, warranties, agreements and covenants
--------
contained herein shall survive the Closing and the delivery of the Underlying
Shares and Warrant Shares, as applicable.
5.11 Execution. This Agreement may be executed in two or more counterparts,
---------
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that all parties need not sign
the same counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.
5.12 Severability. If any provision of this Agreement is held to be invalid
------------
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
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5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
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contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
5.14 Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities. If a replacement
certificate or instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
5.1 Remedies. In addition to being entitled to exercise all rights
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provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.16 Payment Set Aside. To the extent that the Company makes a payment or
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payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
5.17 Independent Nature of Purchasers' Obligations and Rights. The
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obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
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Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
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SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
ELECTRIC FUEL CORPORATION
By:
--------------------------------------
Name:
Title:
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SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
ZLP MASTER TECHNOLOGY FUND, LTD.
By:______________________________
Name:
Title:
Investment Amount: $2,000,000
Address for Notice:
▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ( )
Attn:
With a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
SMITHFIELD FIDUCIARY LLC
By:_____________________________________
Name:
Title:
Investment Amount: $1,000,000
Address for Notice:
c/o Highbridge Capital Management, LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇ / ▇▇▇▇ ▇. Chill
Facsimile: 212-751-0755
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ and
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
VERTICAL VENTURES INVESTMENTS, LLC
By:_________________________________
Name:
Title:
Investment Amount: $500,000
Address for Notice:
c/o Vertical Ventures, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ and
(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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