Exhibit 4.2
The following is the Form of Stock Purchase Agreement ("Agreement")
between Energy Conversion Devices, Inc. and each of Heimdall Investments Ltd.
and CCM Master Qualified Fund, Ltd. (each an "Investor").
The Agreements are identical in all material respects with the exception
of the identity of the Investor and the number of units purchased.
Units
Investor Purchased
-------- --------
Heimdall Investments Ltd. 382,226
CCM Master Qualified Fund, Ltd. 191,113
FORM OF
STOCK PURCHASE AGREEMENT
Energy Conversion Devices, Inc.
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The undersigned investor (the "Investor"), hereby confirms its agreement
with you as follows:
1. This Stock Purchase Agreement (this "Agreement") is made as of the date set
forth below between Energy Conversion Devices, Inc., a Delaware corporation (the
"Company"), and the Investor.
2. The Company has authorized the sale and issuance to the Investor in a private
placement transaction (the "Offering") of ______ units (the "Units"), each
comprised of one share (collectively, the "Shares") of the Company's Common
Stock, $.01 par value per share (the "Common Stock"), and a warrant
(collectively, the "Warrants") to purchase one share of Common Stock for the
exercise price set forth in the form warrant attached hereto, subject to
adjustment, for a purchase price of $9.755 per Unit.
3. The Company and the Investor hereby agree that the Investor will purchase
from the Company, and the Company will issue and sell to the Investor, ______
Units for an aggregate purchase price of $________ pursuant to the Terms and
Conditions for Purchase of Units attached hereto as Annex I and incorporated
herein by this reference as if fully set forth herein.
4. The Company represents that the terms and conditions set forth in Annex I are
the same terms and conditions upon which _____________________ and
___________________________ have agreed to purchase Units from the Company on
the date hereof, except for the number of Units purchased, and that the Company
is not selling any Units in this offering to any other parties other than such
investors and the Investor.
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
[NAME OF INVESTOR]
By:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
AGREED AND ACCEPTED :
ENERGY CONVERSION DEVICES, INC.
By:
---------------------------------
Title:
---------------------------------
Date:
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STOCK PURCHASE AGREEMENT
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF UNITS
1. Authorization and Sale of the Units. Subject to the terms and conditions of
this Agreement, the Company has authorized the sale of the Units.
2. Agreement to Sell and Purchase the Units; Subscription Date. At the Closing
(as defined in Section 3), the Company will sell to the Investor, and the
Investor will purchase from the Company, upon the terms and conditions
hereinafter set forth, ________ Units for an aggregate purchase price of
$__________ (the "Purchase Price").
3. Delivery of the Units at Closing.
3.1 Closing. The completion of the purchase and sale of the Units (the
"Closing") will occur on January __, 2004 (the "Closing Date") at a place to be
agreed by the Company and the Investor. At the Closing, the Company will deliver
or caused to be delivered to the Investor one or more certificates representing
the number of Shares and Warrants purchased pursuant to Section 2, each such
certificate to be registered in the name of the Investor or, if so indicated on
the Stock Certificate Questionnaire attached hereto as Exhibit A, in the name of
a nominee designated by the Investor. The Warrants delivered by the Company to
the Investor at the Closing will be in substantially the form attached to this
Agreement as Exhibit B.
3.2 Conditions to the Company's Performance. The Company's obligation to issue
the Units to the Investor will be subject to the simultaneous receipt by the
Company of the Purchase Price, the accuracy of the representations and
warranties made by the Investor and the fulfillment of those undertakings of the
Investor to be fulfilled prior to the Closing.
3.3 Conditions to the Investor's Performance. The Investor's obligation to
purchase the Units will be subject to the simultaneous receipt of a certificate
representing the Shares and a duly authorized Warrant, the accuracy of the
representations and warranties made by the Company and the fulfillment of those
undertakings of the Company to be fulfilled prior to the Closing.
3.4 Legend. The Investor acknowledge and agrees that certificates
evidencing the Shares delivered by the Company to the Investor at the Closing
will bear the following legend and that the Company may instruct the transfer
agent for its Common Stock to include corresponding stop transfer notations in
the Company's stock transfer ledger:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
CONSIDERATION) BY THE HOLDER WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF
THE ACT."
4. Representations, Warranties and Covenants of the Company. The Company hereby
represents and warrants to, and covenants with, the Investor as follows:
4.1 Organization. The Company is duly incorporated and validly existing in good
standing under the laws of the jurisdiction of its organization. The Company has
full power and authority to own, operate and occupy its properties and to
conduct its business as presently conducted and is registered or qualified to do
business and in good standing in each jurisdiction in which it owns or leases
property or transacts business and where the failure to be so qualified would
have a material adverse effect upon the business, financial condition,
properties or operations of the Company and its subsidiaries, taken as a whole
("Material Adverse Effect"), and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification.
4.2 Subsidiaries. The Company has no direct or indirect subsidiaries as defined
in Rule 405 under the Securities Act (each a "Subsidiary") other than those
listed on Exhibit 21.1 of the Company's Annual Report on Form 10-K for its
fiscal year ended June 30, 2003 (the "Current 10-K"). Except as set forth in the
SEC Documents, the Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each Subsidiary free and clear of any and
all liens, encumbrances, claims and security interests (collectively "Liens"),
and all of the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid and non-assessable, free of preemptive and
similar rights.
4.3 Due Authorization. The Company has all requisite power, subject to obtaining
the approval of the Company's stockholders referred to in Section 9, and
authority to execute, deliver and perform its obligations under this Agreement
and the Warrants, and this Agreement and the Warrants have each been duly
authorized and validly executed and delivered by the Company and constitute
legal, valid and binding agreements of the Company enforceable against the
Company in accordance with their terms, except as rights to indemnity and
contribution may be limited by state or federal securities laws or the public
policy underlying such laws, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.4 Non-Contravention. The execution and delivery of this Agreement, the
issuance and sale of the Shares and the Warrants to be sold by the Company under
this Agreement, the fulfillment of the terms of the Agreement and the Warrants
(including the issuance of shares of Common Stock issued upon exercise thereof)
and the consummation of the transactions contemplated thereby will not (a)
subject to obtaining the approval of the Company's stockholders referred to in
Section 9, conflict with or constitute a violation of, or default (with the
passage of time or otherwise) under, (i) any material bond, debenture, note or
other evidence of indebtedness, or any material lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which the Company is a party or by which it or its property is
bound, where such conflict, violation or default is likely to result in a
Material Adverse Effect, (ii) the charter, by-laws or other organizational
documents of the Company or (iii) any law, administrative regulation, ordinance
or order of any court or governmental agency, arbitration panel or authority
binding upon the Company or its property, where such conflict, violation or
default is likely to result in a Material Adverse Effect or (b) result in the
creation or imposition of any lien, encumbrance, claim, security interest or
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restriction whatsoever upon any of the material properties or assets of the
Company or an acceleration of indebtedness pursuant to any obligation, agreement
or condition contained in any material bond, debenture, note or any other
evidence of indebtedness or any material indenture, mortgage, deed of trust or
any other material agreement or instrument to which the Company is a party or by
which it is bound or to which any of the material property or assets of the
Company is subject.
4.5 Filings, Consents and Approvals. Except as contemplated by Section 9 and
assuming the accuracy of the Investor's representations and warranties set forth
in Sections 5.1 and 5.2, no consent, approval, permission, ratification, waiver,
finding of suitability, permit, license, franchise, exemption certification,
authorization or other order of, or registration (including registration under
the Securities Act of 1933, as amended (the "Securities Act")), notification,
qualification or filing with (each an "Authorization"), any court, arbitral
tribunal, regulatory body, administrative agency, commission or other
governmental body in the United States (each a "Governmental Entity") is
required for the execution and delivery of this Agreement and the valid issuance
and sale of the Shares and the Warrants to be sold pursuant to this Agreement
and the performance by the Company of its obligations under this Agreement,
except for (a) Authorizations that have been already been obtained, (b)
Authorizations which, if not obtained, are not likely to result in a Material
Adverse Effect, and (c) the Form D Notice of Sale of Securities Pursuant to
Regulation D required to be made post-closing under federal and state securities
laws.
4.6 Issuance of the Securities. Except as set forth in Section 9, the Shares and
Warrants to be sold pursuant to this Agreement and the Shares to be issued upon
exercise of the Warrants have been duly authorized and appropriately reserved,
and when issued and paid for in accordance with the terms of this Agreement and
the Warrants, will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens (except for such restrictions on transfer or
ownership imposed by applicable federal or state securities laws), and will not
be issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities.
4.7 Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock of the Company, and all shares of Common Stock
reserved for issuance under the Company's various option and incentive plans, is
described in the Company's regular reports on Forms 10-Q, 10-K, and 8-K as filed
by the Company with the Securities and Exchange Commission through and including
the date of this Agreement (the "SEC Documents"), as of the dates set forth
therein. The Company has not issued any capital stock since June 30, 2003 other
than (a) certain shares issued pursuant to the equity compensation plans
described in the Company's SEC Documents and (b) an aggregate of 390 shares of
Common Stock issued upon the conversion of certain convertible securities issued
prior to such date. The outstanding shares of capital stock of the Company have
been duly and validly issued and are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and were not
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. Except as set forth in or contemplated by the Company's
SEC Documents, no securities of the Company are 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 participation in the
transactions contemplated by this Agreement. Except as set forth in or
contemplated by the Company's SEC Documents, there are no outstanding rights
(including, without limitation, preemptive rights, call or commitments of any
character and scrip rights),
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warrants or options to acquire, or instruments convertible into or exchangeable
for, any unissued shares of capital stock or other equity interest in the
Company, or any contract, commitment, agreement, understanding or arrangement of
any kind to which the Company is a party and relating to the issuance or sale of
any capital stock of the Company, any such convertible or exchangeable
securities or any such rights, warrants or options, other than those issued
pursuant to the equity compensation plans described in the Company's SEC
Documents. Except as disclosed in the Company's SEC Documents, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Common Stock to which the Company is a party. Except as
disclosed in the Company's SEC Documents, the issue and sale of the Shares and
Warrants will not, immediately or with the passage of time, obligate the Company
to issue shares of Common Stock or other securities to any person or result in a
right of any holder of the Company's securities to adjust the exercise,
conversion, exchange or reset price under such securities.
4.8 Legal Proceedings. Except as set forth in the Company's SEC Documents, there
are no proceedings pending or, the Company's knowledge, threatened in any court
or before or by any other Government Entity to which the Company or any of its
subsidiaries is or could be a party or to which any of their respective
properties or assets could be subject, which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect. To the knowledge
of the Company, no order or relief of any nature by any Governmental Entity has
been issued with respect to the Company or any of it subsidiaries which would
suspend or prevent the offering, issuance or sale of the Shares and Warrants in
any jurisdiction in which the Shares and Warrants are proposed to be sold. The
Securities and Exchange Commission (the "SEC") 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 Securities Exchange Act of 1934, as
amended (the "Exchange Act") or the Securities Act.
4.9 No Violations. The Company is not in violation of its charter, bylaws or
other organizational document, or in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company, which violation, individually or
in the aggregate, would be reasonably likely to have a Material Adverse Effect,
or is in default (and there exists no condition which, with the passage of time
or otherwise, would constitute a default) in the performance of any material
bond, debenture, note or any other evidence of indebtedness in any indenture,
mortgage, deed of trust or any other material agreement or instrument to which
the Company is a party or by which the Company is bound or by which the property
of the Company is bound, which would be reasonably likely to have a Material
Adverse Effect.
4.10 Compliance. The Company is in compliance with the applicable requirements
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations thereunder
promulgated by the SEC, except where such noncompliance would note have or
reasonably be expected to result in a Material Adverse Effect.
4.11 Governmental Permits, Etc. The Company has all necessary franchises,
licenses, certificates and other authorizations from any foreign, federal, state
or local government or governmental agency, department or body that are
currently necessary for the operation of the business of the Company as
currently conducted, except where the failure to currently possess could not
reasonably be expected to have a Material Adverse Effect.
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4.12 Intellectual Property.
(a) Except as described in the Company's SEC Documents, the Company has
exclusive ownership or a valid license or legal right to use all patent,
copyright, trade secret, trademark, customer lists, designs, formulas,
manufacturing or other processes, computer software, systems, data compilation,
research results or other proprietary rights used in the business of the Company
and material to the Company and its subsidiaries, taken as a whole,
(collectively, "Intellectual Property") other than Intellectual Property
generally available on commercial terms from other sources. All of such patents,
trademarks and copyrights owned by the Company have been duly registered in,
filed in or issued by the United States Patent and Trademark Office, the United
States Register of Copyrights or the corresponding offices of other
jurisdictions in which the Company has registered such patents, trademarks and
copyrights and have been maintained and renewed in accordance with all
applicable provisions of law and administrative regulations in the United States
and all such jurisdictions.
(b) All material licenses or other material agreements under which (i) the
Company is granted rights in Intellectual Property, other than Intellectual
Property generally available on commercial terms from other sources, and (ii)
the Company has granted rights to others in Intellectual Property owned or
licensed by the Company, are in full force and effect and, to the knowledge of
the Company, there is no material default by the Company thereto.
(c) No proceedings have been instituted or are pending which challenge the
rights of the Company in respect to the Company's right to the use of the
Intellectual Property. The Company has the right to use, free and clear of
material claims or rights of other persons, all of its customer lists, designs,
formulas, computer software, systems, data compilations, and other information
that are required for its products or its business as presently conducted.
(d) The Company believes it has taken all steps required in accordance with
sound business practice and business judgment to establish and preserve its
ownership of all material copyright, trade secret and other proprietary rights
with respect to its products and technology.
(e) Except as described in the Company's SEC Documents, to the knowledge of the
Company, the present business, activities and products of the Company do not
infringe any intellectual property of any other person, except where such
infringement would not have a Material Adverse Effect on the Company. Except as
described in the Company's SEC Documents, no proceeding charging the Company
with infringement of any adversely held Intellectual Property has been filed. To
the Company's knowledge, there exists no third party unexpired patent or patent
application which includes claims that would be infringed by, or otherwise have
a Material Adverse Effect. To the knowledge of the Company, the Company is not
making unauthorized use of any confidential information or trade secrets of any
person. Neither the Company nor, to the knowledge of the Company, any of its
employees have any agreements or arrangements with any persons other than the
Company related to confidential information or trade secrets of such persons,
other than such agreements that would not restrict the Company from conducting
its business as currently conducted.
4.13 Financial Statements. The financial statements of the Company and the
related notes contained in the Company's SEC Documents comply in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto
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as in effect at the time of filing. Such financial statements are related notes
present fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of the dates indicated, and the results of
its operations and cash flows for the periods therein specified. Such financial
statements (including the related notes) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods therein specified, except as disclosed in the Company's
SEC Documents.
4.14 No Material Adverse Change. Except as disclosed in the Company's SEC
Documents, since the date of the filing of the Company's Current 10-K: (a) there
has not been any event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect affecting the
Company, (b) the Company has not incurred any obligation, direct or contingent,
that is material to the Company and its subsidiaries considered as one
enterprise, except trade payables and accrued expenses incurred in the ordinary
course of business and liabilities that would not be required to be disclosed in
filings made with the SEC, (c) the Company has not altered its method of
accounting or the identity of its auditors, except as disclosed in the SEC
Documents, (d) the Company has not declared or made any dividend or distribution
of any kind on the capital stock of the Company, or purchased, redeemed or made
any agreements to purchase or redeem any shares of its capital stock, (e) except
for the transactions contemplated by this Agreement and the other Stock Purchase
Agreements that the Company is entering into on the date hereof, there has not
been any material change or any development involving or which could reasonably
be expect to involve a material change in the capital stock of the Company or
any of its subsidiaries, (f) there has not been any loss or damage (whether or
not insured) to the physical property of the Company which has been sustained
which has a Material Adverse Effect, or (g) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to the
Company's existing stock option plans. The Company does not have pending before
the SEC any request for confidential treatment of information.
4.15 Disclosure. The Company understands and confirms that the Investor will
rely on the foregoing representations and warranties in effecting transactions
in securities of the Company. All disclosures provided to the Investor in
connection with this Section 4 are true and correct and do not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.16 NASDAQ Compliance. The Company's Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and is listed on The Nasdaq National Market
(the "Nasdaq Stock Market"), and, except for the Company's failure to timely
file its Current 10-K (the "Late Filing"), the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or delisting the Common Stock from the
Nasdaq Stock Market, nor has the Company received any notification that the SEC
or the National Association of Securities Dealers, Inc. (the "NASD") is
contemplating terminating such registration or listing other than in connection
with the Late Filing of the Current 10-K. The Company is in compliance with the
listing and maintenance requirements for continued listing of the Common Stock
on the Nasdaq Stock Market.
4.17 SEC Reports. Except for the Late Filing of the Current 10-K, the Company
has filed in a timely manner (taking into account any permitted extensions) all
reports that the Company was required to file under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the 12
months preceding the date of this
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Agreement (the forgoing materials are collectively referred to herein as the
"SEC Documents"). The Company filed its Current 10-K on October 22, 2003. The
Company has informed Investor prior to the date hereof of any filing by the
Company of any SEC reports within the 5 days preceding the date hereof. Except
for the Late Filing of the Current 10-K, the SEC Documents complied in all
material respects with the SEC's requirements as of their respective filing
dates, and the information contained therein as of the date thereof did not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances under which they were made not misleading.
4.18 Listing. The Company will comply with all requirements of the NASD with
respect to the issuance of the Shares and the listing of the Shares sold
pursuant to this Agreement and upon exercise of the Warrants on the Nasdaq Stock
Market.
4.19 Foreign Corrupt Practices. Neither the Company nor, to the knowledge of the
Company, any agent or other person acting on behalf of the Company, have (a)
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign or domestic
political activity, (b) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds, (c) failed to disclose fully any contribution
made by the Company or made by any person acting on its behalf and of which the
Company is aware in violation of law or (d) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended.
4.20 No Manipulation of Stock. The Company has not taken and will not, in
violation of applicable law, take, any action outside the ordinary course of
business designed to or that might reasonably be expected to cause or result in
unlawful manipulation of the price of the Common Stock to facilitate the sale or
resale of the Units.
4.21 Accountants. Deloitte & Touche LLP, who the Company expects will express
their opinion with respect to the financial statements to be filed with the
Registration Statement (as defined below) and the Prospectus which forms a part
thereof, are independent accountants as required by the Securities Act and the
rules and regulations promulgated thereunder.
4.22 Contracts. The contracts described in the SEC Documents or incorporated by
reference therein that are material to the Company are in full force and effect
on the date hereof, and neither the Company nor, to the Company's knowledge, any
other party to such contracts is in breach of or default under any of such
contracts which would have a Material Adverse Effect.
4.23 Properties. The Company has good and marketable title to all the properties
and assets reflected as owned by it in the financial statements included in or
incorporated by reference into the SEC Documents, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except (a) those, if any, reflected in
such financial statements, (b) those of the United States Government to exercise
rights with respect to inventions made with Government support, or (c) those
which are not material in amount and do not adversely affect the use made and
promised to be made of such property by the Company. The Company holds its
leased properties under valid and binding leases, with such exceptions as are
not materially significant in relation to their respective businesses. Except as
disclosed in the SEC Documents,
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the Company owns or leases all such properties as are necessary to its
operations as now conducted.
4.24 Taxes. The Company has filed all necessary federal, state and foreign
income and franchise tax returns and has paid or accrued all taxes shown as due
thereon, and the Company has no knowledge of a tax deficiency which has been or
might be asserted or threatened against it which would have a Material Adverse
Effect.
4.25 Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the Units to be sold to the Investor hereunder will be, or
will have been, fully paid or provided for by the Company and all laws imposing
such taxes will be or will have been fully complied with.
4.26 Investment Company. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.
4.27 Offering Materials. Other than the SEC Documents, the Company has not
distributed and will not distribute prior to the Closing Date any offering
material in connection with the offering and sale of the Units. The Company has
not in the past nor will it hereafter take any action to sell, offer for sale or
solicit offers to buy any securities of the Company which would bring the offer,
issuance or sale of the Units, as contemplated by this Agreement, within the
provisions of Section 5 of the Securities Act, unless such offer, issuance or
sale was or will be within the exemptions of Section 4 of the Securities Act.
4.28 Insurance. The Company maintains and will continue to maintain insurance of
the types and in the amounts that the Company reasonably believes is adequate
for its business, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against
by similarly situated companies, all of which insurance is in full force and
effect.
4.29 Transactions with Affiliates and Employees. Except as set forth in the SEC
Documents, none of the officers or directors or Affiliates of the Company and,
to the knowledge of the Company, none of the employees of the Company are
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, Affiliate 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.
4.30 Internal Accounting Controls. Except as disclosed in the SEC Documents, the
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (a) transactions are executed in
accordance with management's general or specific authorizations, (b)
transactions are recoded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (c) access to assets is permitted only in
accordance with management's general or specific authorization, and (d) the
recorded
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accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
4.31 Solvency. Based on the financial condition of the Company as of the Closing
Date (and assuming that the Closing shall have occurred), (a) 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, (b) 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 the projected capital
requirements and capital availability thereof, and (c) 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).
4.32 Certain Fees. Other than fees paid to ▇▇▇▇▇ Securities, 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 Investor shall have no obligation with respect to any fees
or with respect to any claims (other than such fees or commissions owed by
Investor pursuant to written agreements executed by such Investor which fees and
commissions shall be the sole responsibility of such Investor) 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.
4.33 Certain Registration Matters. Assuming the accuracy of the Investor's
representations and warranties set forth in Section 5.1 and 5.2, no registration
under the Securities Act is required for the offer and sale of the Shares and
Warrants by the Company to the Investor under this Agreement. The Company is
eligible to register the resale of its Common Stock by the Investor under Form
S-1 promulgated under the Securities Act.
4.34 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 similar anti-takeover provision under the Company's Certificate of
Incorporation or the laws of Delaware or any agreement to which the Company is a
party that is or could become applicable to the Investor as a result of its and
the Company's fulfillment of their respective obligations or the exercise of
their respective rights under this Agreement and the Warrant, including without
limitation the Company's issuance of the Shares and the Warrants and the
Investor's ownership thereof.
4.35 Regulation D. None of the Company or any of its Affiliates have directly or
through any agent (a) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of any security which is or will be integrated
with the sale of the Shares and Warrants under this Agreement in a manner that
will require the registration of the Shares and Warrant under the Securities
Act, or (b) engaged in or used any form of general solicitation or advertising
in connection with the sale of the Shares and Warrants, including articles,
notices or
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other communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or advertising.
5. Representations, Warranties and Covenants of the Investor.
5.1 Accredited Investor; Compliance with Securities Laws. The Investor
represents and warrants to, and covenants with, the Company that (a) the
Investor is an "accredited investor" as defined in Regulation D under the
Securities Act; (b) the Investor is acquiring the Units the ordinary course of
its business and for its own account for investment only and with no present
intention of distributing any of such Units or any arrangement or understanding
with any other persons regarding the distribution of such Units; (c) the
Investor will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Units except in compliance with the
Securities Act, applicable state securities laws and the respective rules and
regulations promulgated thereunder; (d) the Investor has answered all questions
in the Investor Questionnaire attached hereto as Exhibit C for use in
preparation of the Registration Statement and the answers thereto are true and
correct as of the date hereof and will be true and correct as of the Closing
Date; and (e) the Investor will notify the Company immediately of any change in
any of such information required to be included in the Registration Statement
until such time as the Investor has sold all of its Units or until the Company
is no longer required to keep the Registration Statement effective. The Investor
understands that its acquisition of the Units has not been registered under the
Securities Act, or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of the Investor's investment intent as
expressed herein.
5.2 Re-Sales of Units. The Investor hereby covenants with the Company not to
make any sale of the Units without complying with the provisions of this
Agreement, including Section 7.2 hereof, and without effectively causing the
prospectus delivery requirement under the Securities Act to be satisfied, and
the Investor acknowledges that the certificates evidencing the Units will be
imprinted with the legend set forth in Section 3.4.
5.3 Authorization and Enforceability. The Investor represents and warrants to
the Company that (a) the Investor has full right, power, authority and capacity
to enter into this Agreement and to consummate the transactions contemplated
hereby and has taken all necessary action to authorize the execution, delivery
and performance of this Agreement, and (b) this Agreement constitutes a valid
and binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.4 Dispositions prior to Effectiveness. Prior to the effectiveness of the
Registration Statement, the Investor will not enter into any Short Sales. For
such purposes, a "Short Sale" by the Investor means a short sale of Common Stock
executed at a time when the Investor has no equivalent offsetting long position
in the Common Stock. For purposes of determining whether the Investor has an
equivalent offsetting long position in the Common Stock, shares that underlie
any convertible securities held by the Investor, including warrants, will be
included as if held long by the Investor.
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5.5 No Legal, Tax or Investment Advice. The Investor understands that nothing in
this Agreement or any other materials presented to the Investor in connection
with the purchase and sale of the Units constitutes legal, tax or investment
advice. The Investor has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of Units.
6. Survival of Representations, Warranties and Agreements. Notwithstanding any
investigation made by any party to this Agreement, all covenants, agreements,
representations and warranties made by the Company and the Investor herein will
survive the execution of this Agreement, the delivery to the Investor of the
Units being purchased and the payment therefor.
7. Registration of the Shares; Compliance with the Securities Act.
7.1 Registration Procedures and Expenses. It is a condition precedent to the
obligations of the Company to take any action pursuant to this Section 7.1 that
the Investor furnishes to the Company such information regarding itself, the
Shares to be sold by the Investor, and the intended method of disposition of
such securities as will be required to effect the registration of the Shares.
(a) Subject to receipt of necessary information from the Investor, the Company
will use its best efforts to prepare and file with the SEC, as soon as
practicable, but in no event later than 60 days after the Closing Date (the
"Target Filing Date"), a registration statement on Form S-1 (the "Registration
Statement") to enable the resale of the Shares issued pursuant to this Agreement
and upon exercise of the Warrants by the Investor from time to time through the
automated quotation system of the Nasdaq Stock Market or in privately-negotiated
transactions.
(b) Subject to receipt of necessary information from the Investor, the Company
will use its best efforts to cause the Registration Statement to become
effective as soon as practicable, but in no event later than 90 days after the
Registration Statement is filed by the Company (the "Target Effective Date").
The plan of distribution disclosed in the Registration Statement shall be
subject to the Investor's review, comment and approval.
(c) The Company will use its reasonable efforts to prepare and file with the SEC
such amendments and supplements to the Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement current and effective for a period not exceeding, with respect to each
Investor's Shares purchased hereunder or acquired upon exercise of the Warrants,
the earliest of (i) the third anniversary of the Closing Date, or (ii) such time
as all Shares purchased by such Investor in this Offering, including upon
exercise of the Warrants, have been sold pursuant to a registration statement or
pursuant to Rule 144 (the "Target Effective Period").
(d) The Company will furnish to the Investor with respect to the Shares
registered under the Registration Statement such number of copies of the
Registration Statement, Prospectuses and Preliminary Prospectuses in conformity
with the requirements of the Securities Act and such other documents as the
Investor may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Shares by the Investor; provided that the
obligation of the Company to deliver copies of Prospectuses or Preliminary
Prospectuses to the Investor will be subject to the receipt by the Company of
reasonable assurances from the
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Investor that the Investor will comply with the applicable provisions of the
Securities Act and of such other securities or blue sky laws as may be
applicable in connection with any use of such Prospectuses or Preliminary
Prospectuses.
(e) The Company will file documents required of the Company for normal blue sky
clearance in states specified in writing by the Investor; provided that the
Company will not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented.
(f) The Company will bear all expenses in connection with the procedures in
paragraphs (a) through (e) of this Section 7.1 and the registration of the
Shares pursuant to the Registration Statement, including the fees and expenses
of one counsel to the Investor and the other parties purchasing shares of the
Company's Common Stock on the date hereof. All underwriting discounts, brokerage
fees and commissions incurred by the Investor, if any, shall be borne by the
Investor.
(g) The Company will advise the Investor, promptly after it receives notice or
obtains knowledge of the issuance of any stop order by the SEC delaying or
suspending the effectiveness of the Registration Statement or of the initiation
of any proceeding for that purpose. The Company will promptly use its
commercially reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
(h) The Company understands that the Investor disclaims being an underwriter,
but the Investor being deemed an underwriter by the SEC will not relieve the
Company of any obligations it has hereunder. But if the Company receives
notification from the SEC that the Investor is deemed an underwriter, then the
period by which the Company is obligated to submit an acceleration request to
the SEC pursuant to Section 7.1(b) will be extended to the earlier of (a) the
90th day after such SEC notification or (b) 120 days after the initial filing of
the Registration Statement with the SEC.
(i) If the Registration Statement has not become effective on or before the
Target Effective Date, the Company shall pay liquidated damages to the Investor
in an amount equal to 0.02% of the Purchase Price per day beginning on the
Target Effective Date. If a stop order is imposed or if for any other reason the
effectiveness of the Registration Statement is suspended during the Target
Effective Period, then the Company shall pay liquidated damages to the Investor
in an amount equal to 0.02% of the Purchase Price per day beginning on the date
of such stop order or other suspension of effectiveness. Notwithstanding the two
preceding sentences, the Investor will not be entitled to receive liquidated
damages under this Agreement during a Suspension Period (as hereinafter
defined). Liquidated damages shall be deemed to commence accruing on the day on
which the event triggering such liquidated damages occurs.
The liquidated damages to be paid to the Investor pursuant to this Section
7.1(i) shall cease to accrue (i) with respect to the liquidated damages for
failure to have the Registration Statement declared effective on or prior to the
Target Effective Date, on the day after the Registration Statement is declared
effective, or (ii) with respect to the liquidated damages for the suspension of
effectiveness, on the day after the reinstatement of effectiveness of the
Registration Statement. Notwithstanding the foregoing, if the sole reason why
the Registration Statement has not become effective on or before the Target
Effective Date is because the Investor did not provide the Company with
information which is required to be disclosed in the Registration Statement and
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which the Company reasonably requested the holder to so provide in writing at
least five (5) days prior to the Target Effective Date, the Company's obligation
to pay liquidated damages with respect thereto will not begin to accrue until
five (5) business days after such information has been provided.
The Company shall pay the liquidated damages due under this section at the end
of each week during which such damages accrue and, to the extent such liquidated
damages are not paid when due, shall thereafter accrue dividends at a rate equal
to the U.S. prime rate plus the lesser of (i) 1% per annum and (ii) the maximum
amount permitted by law. Liquidated damages shall be paid to the Investor by
wire transfer in immediately available funds to the accounts designated by such
holders.
The parties hereto agree that the liquidated damages provided for in this
Section 7.1(i) constitute a reasonable estimate of the damages that will be
suffered by the holders by reason of the failure of the Registration Statement
to be filed, to be declared effective and/or to remain effective, as the case
may be, in accordance with this Agreement. The right of the Investor to be paid
the liquidated damages provided for in this Section 7.1(i) is the exclusive
remedy available to the Investor by reason of the failure of the Registration
Statement to be filed, to be declared effective and/or to remain effective, as
the case may be.
7.2 Transfer of Shares After Registration; Suspension.
(a) The Investor agrees that it will not effect any Disposition of the Shares or
its right to purchase the Shares that would constitute a sale within the meaning
of the Securities Act except as contemplated in the Registration Statement
referred to in Section 7.1 and as described below, and that it will promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Investor or its plan of distribution.
(b) Except in the event that paragraph (c) below applies, the Company will (i)
if deemed necessary by the Company, prepare and file from time to time with the
SEC a post-effective amendment to the Registration Statement or a supplement to
the related Prospectus or a supplement or amendment to any document incorporated
therein by reference or file any other required document so that such
Registration Statement will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and so that, as thereafter delivered
to purchasers of the Shares being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, (ii)
provide the Investor copies of any documents filed pursuant to Section 7.2(b)(i)
and (iii) inform each Investor that the Company has complied with its
obligations in Section 7.2(b)(i) (or that, if the Company has filed a
post-effective amendment to the Registration Statement which has not yet been
declared effective, the Company will notify the Investor to that effect, will
use its reasonable efforts to secure the effectiveness of such post-effective
amendment as promptly as possible and will promptly notify the Investor pursuant
to Section 7.2(b)(i) hereof when the amendment has become effective).
(c) Subject to paragraph (d) below, in the event (i) of any request by the SEC
or any other federal or state governmental authority during the period of
effectiveness of
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the Registration Statement for amendments or supplements to a Registration
Statement or related Prospectus or for additional information, (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Shares for sale in any
jurisdiction or the initiation of any proceeding for such purpose or (iv) of any
event or circumstance which necessitates the making of any changes in the
Registration Statement or Prospectus, or any document incorporated or deemed to
be incorporated therein by reference, so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the case of the
Prospectus, it will not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; then the Company will deliver a certificate in
writing to the Investor (the "Suspension Notice") to the effect of the foregoing
and, upon receipt of such Suspension Notice, the Investor will refrain from
selling any Shares pursuant to the Registration Statement (a "Suspension") until
the Investor's receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in any such Prospectus. In the event of any Suspension, the Company
will use its reasonable efforts to cause the use of the Prospectus so suspended
to be resumed as soon as reasonably practicable within 20 business days after
delivery of a Suspension Notice to the Investor. In addition to and without
limiting any other remedies (including, without limitation, at law or at equity)
available to the Investor, the Investor will be entitled to specific performance
in the event that the Company fails to comply with the provisions of this
Section 7.2(c).
(d) Notwithstanding the foregoing paragraphs of this Section 7.2, the Investor
will not be prohibited from selling Shares under the Registration Statement as a
result of Suspensions on more than three occasions of not more than 60 days
during any 12-month period; provided, however, that once the Company becomes
eligible to use Form S-3 promulgated under the Securities Act, the maximum
number of days an Investor may be prohibited from selling Shares during any
12-month period pursuant to this subsection (d) shall be reduced to 45 days. Any
Suspension that does not exceed the limitations set forth in this section 7.2(d)
is referred to herein as a "Suspension Period."
(e) Provided that a Suspension is not then in effect, the Investor may sell
Shares under the Registration Statement, provided that it arranges for delivery
of a current Prospectus to the transferee of such Shares. Upon receipt of a
request therefor, the Company has agreed to provide an adequate number of
current Prospectuses to the Investor and to supply copies to any other parties
requiring such Prospectuses.
(f) In the event of a sale of Shares by the Investor, the Investor will deliver
to the Company's transfer agent, with a copy to the Company, a Certificate of
Subsequent Sale substantially in the form attached hereto as Exhibit D, so that
the shares may be properly transferred.
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7.3 Indemnification. For the purpose of this Section 7.3, the term "Selling
Stockholder" includes the Investor and any affiliate of the Investor; the term
"affiliate" means any person who controls the Investor within the meaning of
Section 15 of the Securities Act; the term "Registration Statement" includes any
final Prospectus, exhibit, supplement or amendment included in or relating to
the Registration Statement referred to in Section 7.1; and the term "untrue
statement" includes any untrue statement or alleged untrue statement, or any
omission or alleged omission to state in the Registration Statement a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(a) The Company agrees to indemnify and hold harmless each Selling Stockholder
from and against any losses, claims, damages or liabilities to which such
Selling Stockholder may become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon (i) any untrue
statement of a material fact contained in the Registration Statement or (ii) any
failure by the Company to fulfill any undertaking included in the Registration
Statement, and the Company will reimburse such Selling Stockholder for any
reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided
that the Company will not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of, or is based upon, an untrue
statement made in such Registration Statement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Selling Stockholder specifically for use in preparation of the Registration
Statement or the failure of such Selling Stockholder to comply with any of its
covenants and agreements contained in Sections 5 and 7.2 hereof or any statement
or omission in any Prospectus that is corrected in any subsequent Prospectus
that was delivered to the Investor prior to the pertinent sale or sales by the
Investor.
(b) The Investor agrees to indemnify and hold harmless the Company (and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon (i) its failure
to comply with any of the covenants and agreements contained in Sections 5 and
7.2 hereof or (ii) any untrue statement of a material fact contained in the
Registration Statement if such untrue statement was made in reliance upon and in
conformity with written information furnished by or on behalf of the Investor
specifically for use in preparation of the Registration Statement, and the
Investor will reimburse the Company (or such officer, director or controlling
person), as the case may be, for any legal or other expenses reasonably incurred
in investigating, defending or preparing to defend any such action, proceeding
or claim.
(c) Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 7.3, such indemnified
person will notify the indemnifying person in writing of such claim or of the
commencement of such action. But the omission to so notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party under this Section 7.3 or otherwise, except to the extent that
such omission materially and adversely affects the indemnifying party's ability
to defend such action.
- 15 -
Subject to the provisions hereinafter stated, in case any such action will be
brought against an indemnified person, the indemnifying person will be entitled
to participate therein and, to the extent that it will elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, will be entitled to assume the defense thereof with
counsel reasonably satisfactory to such indemnified person. After notice from
the indemnifying person to such indemnified person of its election to assume the
defense thereof, such indemnifying person will not be liable to such indemnified
person for any legal expenses subsequently incurred by such indemnified person
in connection with the defense thereof unless there exists or will exist a
conflict of interest that would make it inappropriate, in the reasonable written
opinion of counsel to the indemnified person, for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof. In such event, the indemnified person will be entitled to
retain its own counsel at the expense of the indemnifying person; provided that
no indemnifying person will be responsible for the fees and expenses of more
than one separate counsel (together with appropriate local counsel) for all
indemnified parties. In no event will any indemnifying person be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
person will have approved the terms of such settlement. Such approval will not
be unreasonably withheld or delayed. No indemnifying person will, without the
prior written consent of the indemnified person, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified person is
or could have been a party and indemnification could have been sought hereunder
by such indemnified person, unless such settlement includes an unconditional
release of such indemnified person from all liability on claims that are the
subject matter of such proceeding.
(d) If the indemnification provided for in this Section 7.3 is unavailable to or
insufficient to hold harmless an indemnified party under Section 7.3(a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then each indemnifying
party will contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and the Investor on the other in connection with the
statements or omissions or other matters which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault will be determined by
reference to, among other things, in the case of an untrue statement, whether
the untrue statement relates to information supplied by the Company on the one
hand or an Investor on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement. The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section 7.3(d) were determined by pro
rata allocation (even if the Investor were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this Section 7.3(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this Section 7.3(d) will be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7.3(d), the Investor will not be required to contribute any amount in
excess of the amount by which the gross amount received by the Investor from the
sale of the Shares to which such loss relates exceeds the amount of any damages
which the Investor has otherwise been required to pay by reason of such untrue
statement. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to contribution from
any person
- 16 -
who was not guilty of such fraudulent misrepresentation. The Investor's
obligations in this Section 7.3(d) to contribute are several in proportion to
their sales of Shares to which such loss relates and not joint.
(e) The parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions of
this Section 7.3, and are fully informed regarding said provisions. They further
acknowledge that the provisions of this Section 7.3 fairly allocate the risks in
light of the ability of the parties to investigate the Company and its business
in order to assure that adequate disclosure is made in the Registration
Statement as required by the Act and the Exchange Act. The parties are advised
that federal or state public policy as interpreted by the courts in certain
jurisdictions may be contrary to certain of the provisions of this Section 7.3,
and the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under this Section
7.3 and further agree not to attempt to assert any such defense.
7.4 Termination of Conditions and Obligations. The conditions precedent imposed
by Section 5 or this Section 7 upon the transferability of the Shares will cease
and terminate as to any particular number of the Shares when such Shares will
have been effectively registered under the Securities Act and sold or otherwise
disposed of in accordance with the intended method of disposition set forth in
the Registration Statement covering such Shares or at such time as an opinion of
counsel satisfactory to the Company will have been rendered to the effect that
such conditions are not necessary in order to comply with the Securities Act.
7.5 Information Available.
(a) So long as the Registration Statement is effective covering the resale of
Shares owned by the Investor, the Company will furnish to the Investor:
(i) as soon as practicable after it is available, one copy of (A) its Annual
Report to Stockholders (which Annual Report will contain financial statements
audited in accordance with generally accepted accounting principles by a
national firm of certified public accountants) and (B) if not included in
substance in the Annual Report to Stockholders, its Annual Report on Form 10-K
(the foregoing, in each case, excluding exhibits);
(ii) upon the reasonable request of the Investor, all exhibits excluded by the
parenthetical to Section 7.5(a)(i)(B) as filed with the SEC and all other
information that is made available to shareholders; and
(iii) upon the reasonable request of the Investor, an adequate number of copies
of the Prospectuses to supply to any other party requiring such Prospectuses.
(b) So long as the Registration Statement is effective covering the resale of
Shares owned by the Investor, upon the reasonable request of the Investor, the
Company will meet with the Investor or a representative thereof at the Company's
headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Shares and will otherwise cooperate with the
Investor in connection with any investigation conducted by the Investor for the
purpose of reducing or eliminating the Investor's exposure to liability under
the Securities Act, including the reasonable production of information at the
Company's headquarters; provided that the Company will not be required to
disclose any confidential
- 17 -
information to or meet at its headquarters with the Investor until and unless
the Investor has entered into a confidentiality agreement with the Company in
form and substance reasonably satisfactory to the Company with respect thereto.
7.6 Rule 144. With a view to making available to the Investor the benefits of
Rule 144 (or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Investor to sell Shares to the public without
registration, the Company covenants and agrees to (i) make and keep public
information available, as those terms are understood and defined in Rule 144,
until the earlier of (A) such date as all of the Investor's Shares may be resold
pursuant to Rule 144(k) or any other rule of similar effect or (B) such date as
all of the Investor's Shares will have been resold; (ii) file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and under the Exchange Act; and (iii) furnish to the Investor
upon request, as long as the Investor owns any Shares, (A) a written statement
by the Company that it has complied with the reporting requirements of the
Securities Act and the Exchange Act, (B) a copy of the Company's most recent
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other
information as may be reasonably requested in order to avail the Investor of any
rule or regulation of the SEC that permits the selling of any such Shares
without registration.
8. Future Offerings. The Company agrees that it will not grant to any person any
registration rights that are senior or pari passu or conflict in any way with
the rights granted in Section 7. The Company agrees that it will not file a
registration statement with the SEC (other than the Registration Statement or a
registration statement on Form ▇-▇, ▇-▇ or any similar or successor registration
form) relating to the offering by the Company of its Common Stock (or other
securities convertible into or exercisable or exchangeable for shares of its
Common Stock) prior to the date the Registration Statement is declared effective
by the SEC. If the Company proposes to effect any private offering of its Common
Stock (or other securities convertible into or exercisable or exchangeable for
shares of its Common Stock) prior to the first anniversary of the date of this
Agreement, including any offering pursuant to the preceding sentence, the
Company will be required to notify the Investor in writing of such offering at
least five business days prior to the consummation thereof and the Investor will
be permitted to participate in such offering on the same terms and conditions
applicable to the other investors participating in the offering. If the number
of shares subscribed for by the Investor and the other investors participating
in such offering exceeds the number of shares the Company proposes to sell in
the offering, the shares will be prorated among the Investor and such other
investors on the basis of the number of shares subscribed for by each party. If
the Investor does not execute a written purchase agreement with respect to its
participation in any such offering within five business days after the Investor
is notified of the offering by the Company, the Company may proceed with the
offering and the Investor will not have any further right to participate
therein. The provisions of this Section 8 will not apply to any offering or sale
of Common Stock or Warrants to ChevronTexaco Corp. or its affiliates in
satisfaction of the Company's existing contractual obligations relating to such
parties to the extent such obligations arise out of the sale of the Shares and
the Warrants to the Investor pursuant to this Agreement.
9. Stockholder Approval. The Company has advised the Investor that the Company
does not currently have a sufficient number of authorized and unissued shares of
Common Stock to permit it to issue Shares upon the exercise of the Warrants. The
Company shall hold its next annual meeting of stockholders (the "Annual
Meeting") on or before March
- 18 -
18, 2004, at which meeting the Company, acting in accordance with applicable
law, its Certificate of Incorporation and Bylaws and the rules of the Nasdaq
Stock Market, shall:
(a) include as one of the proposals to be considered at the Annual Meeting a
proposal adopted by the Company's Board of Directors to amend and restate the
Certificate of Incorporation of the Company to increase the authorized number of
shares of Common Stock to permit the issuance of the aggregate number of shares
of Common Stock issuable upon the exercise of the Warrants in full;
(b) file with the SEC prior to the Annual Meeting a preliminary proxy statement
on Schedule 14A with respect to the Annual Meeting (the "Proxy Statement")
complying in all material respects with the Exchange Act, respond promptly to
any comments raised by the SEC with respect to the preliminary Proxy Statement
and use its commercially reasonable efforts to cause the definitive version of
the Proxy Statement to be mailed to its stockholders a reasonable period of time
prior to the Annual Meeting; and
(c) include in the Proxy Statement the recommendation of the Company's Board of
Directors that the stockholders of the Company vote in favor of the proposal to
amend and restate the Company's Certificate of Incorporation included in the
Proxy Statement.
The Investor will provide all information regarding the Investor
reasonably requested by the Company that is required by law to be included in
the Proxy Statement.
10. Notices. All notices, requests, consents and other communications hereunder
will be in writing, will be mailed (a) if within the domestic United States by
first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, or by facsimile or (b) if delivered from
outside the United States, by International Federal Express or facsimile, and
will be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by
nationally recognized overnight carrier, one business day after so mailed, (iii)
if delivered by International Federal Express, two business days after so mailed
and (iv) if delivered by facsimile, upon electric confirmation of receipt and
will be delivered as addressed as follows:
(a) if to the Company, to:
Energy Conversion Devices, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) with a copy mailed to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
One Prudential Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
- 19 -
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Investor, at its address on the Stock Certificate Questionnaire
attached as Exhibit A hereto, or at such other address or addresses as may have
been furnished to the Company in writing.
11. Changes. This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Investor.
12. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and will not be deemed to be part of
this Agreement.
13. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein will not in any way
be affected or impaired thereby.
14. Governing Law. This Agreement will be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law that would require the application
of the laws of any other jurisdiction.
15. Counterparts. This Agreement may be executed in two or more counterparts,
each of which will constitute an original, but all of which, when taken
together, will constitute but one instrument, and will become effective when one
or more counterparts have been signed by each party hereto and delivered to the
other parties.
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EXHIBIT A
ENERGY CONVERSION DEVICES, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares and Warrants --------------------------
are to be registered in (this is the name that
will appear on your stock and warrant
certificate(s)). You may use a nominee name if
appropriate:
2. The relationship between the Investor and the --------------------------
registered holder listed in response to item
1 above:
3. The mailing address of the registered holder --------------------------
listed in response to item 1 above:
4. The Social Security Number or Tax --------------------------
Identification Number of the registered
holder listed in the response to item 1
above:
A-1
EXHIBIT B
ENERGY CONVERSION DEVICES, INC.
FORM OF WARRANT
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES WHICH MAY BE ACQUIRED
UPON THE EXERCISE OF THIS COMMON STOCK PURCHASE WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (WHETHER
OR NOT FOR CONSIDERATION) BY THE HOLDER WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF
THE ACT.
Void after October 31, 2006 Right to Purchase ____________ Shares
or otherwise as provided herein of Common Stock (subject to adjustment)
of Energy Conversion Devices, Inc.
COMMON STOCK PURCHASE WARRANT
Energy Conversion Devices, Inc., a Delaware corporation (the "Company"),
for value received and subject to the terms set forth below, hereby grants to
______________________ and its registered successors and assigns (the "Holder"),
the right to purchase from the Company up to ____________ fully paid and
non-assessable shares of the Common Stock (as defined below), at the applicable
Exercise Price (as defined herein), upon the terms and subject to the conditions
set forth in this Warrant. The Exercise Price and the number and character of
such shares of Common Stock purchasable pursuant to the rights granted under
this Warrant are subject to adjustment as provided herein.
This Warrant is subject to the following provisions:
1. Definitions. As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
"Assignment" means the assignment attached hereto in substantially the
form of Annex A.
"Authorization Date" means the date the Company, pursuant to a vote of its
stockholders, amends its Certificate of Incorporation to provide a sufficient
number of authorized and unissued shares of Common Stock to permit the Company
to issue shares of Common Stock upon the exercise of this Warrant.
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"Common Stock" means all stock of any class or classes (however
designated) of the Company, authorized upon the Issue Date or thereafter, the
holders of which will have the right, without limitation as to amount, either to
all or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference, and the holders of which will ordinarily, in the absence of
contingencies, be entitled to vote for the election of a majority of directors
of the Company (even though the right to so vote has been suspended by the
happening of such a contingency); provided that "Common Stock" will not include
the shares of the Class A or Class B Common Stock as authorized, issued,
outstanding and constituted on the date hereof, or the shares of any future
class of common stock as will possess actual or contingent special voting rights
of the kind provided for as of the date hereof with respect to the Class A and
Class B Common Stock ("Special Voting Rights"), if the rights and privileges of
such future class of common stock are in all other material respects the same as
those of the Common Stock generally and the Special Voting Rights of the shares
of said future class, together with all other Special Voting Rights that may be
exercisable simultaneously therewith, do not exceed in the aggregate the number
of votes that are provided by the Special Voting Rights of the Class A Common
Stock outstanding as of the date hereof (other than as a result of changes in
the Common Stock of the kind described in Section 3 hereof).
"Commission " means the Securities and Exchange Commission, or any
other Federal agency at the time administering the Securities Act.
"Exercise Date" has the meaning set forth in Section 2.2(a).
"Exercise Price" means (a) for all Subscription Agreements delivered
to the Company on or before May 2, 2005, $13.96 per share (as adjusted pursuant
to Section 3), and (b) for all Subscription Agreements delivered to the Company
after such date, $16.03 per share (as adjusted pursuant to Section 3).
"Issue Date" means January __, 2004.
"Other Securities" means any stock (other than Common Stock) and
other securities of the Company or any other Person (corporate or other) which
the Holder of this Warrant at any time will be entitled to receive, or will have
received, upon the exercise of this Warrant, in lieu of or in addition to Common
Stock, or which at any time will be issuable or will have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 3.2 hereof or otherwise.
"Person" means, without limitation, an individual, a partnership, a
corporation, a limited liability company, a trust, a joint venture, an
unincorporated organization, or a government or any department or agency
thereof.
"Purchaser" has the meaning set forth in Section 2.2(a)(i).
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"Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
under the Securities Act, as they each may, from time to time, be in effect.
"Subscription Agreement" means the agreement attached hereto in
substantially the form of Annex B.
"Warrant" means, collectively, this Warrant and all other stock
purchase warrants issued in exchange therefor or replacement thereof.
2. Exercise of Warrant.
2.1 Exercise Period. Subject to Sections 2.6 and 3.2, the Holder may
exercise this Warrant, in whole or in part (but not as to a fractional share of
Common Stock), at any time and from time to time after the close of business on
the Authorization Date and prior to 5 :00 p.m., New York, New York time on
October 31, 2006.
2.2 Exercise Procedure.
(a) This Warrant will be deemed to have been exercised at such
time as the Company is deemed to have received all of the following items (the
"Exercise Date"):
(i) a completed Subscription Agreement in the form
attached hereto as Annex B executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in the name of
the
Purchaser, an Assignment or Assignments evidencing the assignment of this
Warrant to the Purchaser together with any documentation required pursuant to
Section 7(a) hereof; and
(iv) a check payable to the order of the Company in an
amount
equal to the product of the Exercise Price multiplied by the number of shares of
Common Stock being purchased upon such exercise.
(b) As soon as practicable after the exercise of this Warrant
in full or in part, and in any event within three trading days after the
Exercise Date, the Company at its expense will cause to be issued in the name of
and delivered to the Purchaser, or as the Purchaser (upon payment by the
Purchaser of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and non-assessable shares of Common
Stock (or Other Securities) to which the Purchaser is entitled upon such
exercise, together with any other stock or other securities and property
(including cash, where applicable) to which the Purchaser is entitled upon
exercise.
B-3
(c) Unless this Warrant has expired or all of the purchase
rights represented hereby have been exercised, the Company at its expense will,
within ten days after the Exercise Date, issue and deliver to or upon the order
of the Holder hereof a new Warrant or Warrants of like tenor, in the name of the
Holder or as the Holder (upon payment by the Holder of any applicable transfer
taxes) may request, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock remaining issuable under this Warrant.
(d) The Common Stock (or Other Securities) issuable upon the
exercise of this Warrant will be deemed to have been issued to the Purchaser on
the Exercise Date, and the Purchaser will be deemed for all purposes to have
become the record holder of such Common Stock (or Other Securities) on the
Exercise Date.
(e) The issuance of certificates for shares of Common Stock
(or Other Securities) upon exercise of this Warrant will be made without charge
to the Holder or the Purchaser for any issuance tax in respect thereof or any
other cost incurred by the Company in connection with such exercise and the
related issuance of shares of Common Stock (or Other Securities).
2.3 Acknowledgment of Continuing Obligations. The Company will, at
the time of the exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing its continuing obligation to afford to the Holder any
rights to which the Holder will continue to be entitled after such exercise in
accordance with the provisions of this Warrant; provided that if the Holder
fails to make any such request, such failure will not affect the continuing
obligation of the Company to afford to the Holder any such rights.
2.4 Subscription Agreement. The Subscription Agreement will be
substantially in the form set forth in Annex B hereto, except that if the shares
of Common Stock (or Other Securities) issuable upon exercise of this Warrant are
not to be issued in the name of the Holder hereof, the Subscription Agreement
will also state the name of the Person to whom the certificates for the shares
of Common Stock (or Other Securities) are to be issued, and if the number of
shares of Common Stock (or Other Securities) to be issued does not include all
the shares of Common Stock (or Other Securities) issuable hereunder, it will
also state the name of the Person to whom a new Warrant for the unexercised
portion of the rights hereunder is to be delivered.
2.5 Fractional Shares. No fractional share of Common Stock (or Other
Securities) will be issued in connection with exercise hereof; in lieu of a
fractional share upon complete exercise hereof, the Purchaser may purchase a
whole share by delivering payment equal to the appropriate portion of the then
current Exercise Price.
2.6 Early Termination. If after the Issue Date a share of the Common
Stock trades for a period of 30 consecutive trading days at a bid price of
greater than 200% of the Exercise Price as then in effect and a Registration
Statement is currently effective with respect to all of the Shares underlying
this Warrant, then the Company may terminate this Warrant by giving the Holder
written notice thereof. Such notice will specify the date (at least twenty days
subsequent to the date on which notice is given) on which this Warrant will
terminate. The
B-4
Holder will forfeit its rights under this Warrant to the extent that the
Exercise Date does not occur prior to the expiration of such twenty day period.
2.7 Limitation on Number of Shares. Notwithstanding any provision of
this Warrant to the contrary, in no event will the sum of (a) the number of
shares of Common Stock issued to the initial Holder by the Company pursuant to
the Stock Purchase Agreement dated as of the date of this Warrant between the
Company and the initial Holder plus (b) the number of shares of Common Stock
issuable upon the exercise of this Warrant, exceed 19.995% of the shares of
Common Stock outstanding immediately prior to the date of this Warrant.
2.8 Limited Put Right. In the event the Authorization Date shall not
have occurred on or before March 19, 2003, the Holder may elect at any time
after March 19, 2003 to sell this Warrant to the Company, and the Company shall
upon such election purchase this Warrant from the Holder, for an amount equal to
the product of (i) $0.50 multiplied by (ii) the number of shares for which this
Warrant would have been exercisable had the Authorization Date occurred.
Notwithstanding the foregoing, to the extent, but only to the extent, the
purchase by the Company of this Warrant pursuant to the preceding sentence would
cause the Company to violate Nasdaq Marketplace Rule 4350(i)(1)(D) (based upon
written notice from Nasdaq), then the Company shall not be required to purchase
such portion as would cause such violation (the "Violating Portion") for the
price provided above, but instead shall purchase such Violating Portion for the
original price paid therefor, being $0.125 multiplied by number of shares for
which the Violating Portion of this Warrant would have been exercisable had the
Authorization Date occurred.
2.9 Limitation on Exercise. Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect
hereof)shall be limited to the extent necessary to insure that, following such
exercise (or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder's for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), does not exceed 9.999% (the "Maximum Percentage") of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
Each delivery of a notice of exercise hereunder will constitute a representation
by the Holder that it has evaluated the limitation set forth in this paragraph
and determined that issuance of the full number of shares requested in such
notice is permitted under this paragraph. The Company's obligation to issue
shares of Common Stock in excess of the limitation referred to in this Section
shall be suspended until the earlier to occur of (a) the expiration date of this
Warrant and (b) such time, if any, as such shares of Common Stock may be issued
in compliance with such limitation. By written notice to the Company, the Holder
may waive the provisions of this Section or increase or decrease the Maximum
Percentage to any other percentage specified in such notice, but (i) any such
waiver or increase or decrease will not be effective until the 61st day after
such notice is delivered to the Company, and (ii) any such waiver or increase or
decrease will apply only to the Holder and not to any other holder of Warrants.
B-5
3. Adjustments.
3.1 Adjustments for Stock Splits, Etc. If the Company will at any
time after the Issue Date declare a stock dividend, subdivide its outstanding
Common Stock (or Other Securities), by split-up or otherwise, or combine its
outstanding Common Stock (or Other Securities), the number of shares issuable on
the exercise of the unexercised portion of this Warrant will forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of combination, and the Exercise Price
then applicable to shares covered by the unexercised portion of this Warrant
will forthwith be proportionately decreased in the case of a subdivision or
stock dividend, or proportionately increased in the case of combination.
3.2 Adjustment for Reclassification, Reorganization, Etc. In case of
any reclassification, capital reorganization, or change of the outstanding
Common Stock (or Other Securities), or in the case of any consolidation of the
Company with, or merger of the Company into, another Person (other than a
consolidation or merger in which the Company is the continuing corporation),
then, as a condition of such reclassification, reorganization, change,
consolidation or merger, lawful provision will be made, and duly executed
documents evidencing the same from the Company or its successor will be
delivered to the Holder of this Warrant, so that the Holder of this Warrant will
have the right at any time prior to the expiration of this Warrant to purchase,
at a total price not to exceed that payable upon the exercise of the unexercised
portion of this Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, reorganization,
change, consolidation or merger, by a holder of the number of shares of Common
Stock (or Other Securities) as to which this Warrant was exercisable immediately
prior to such reclassification, reorganization, change, consolidation or merger,
and in any such case appropriate provision will be made with respect to the
rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for the adjustment
of the Exercise Price and of the number of shares purchasable upon exercise of
this Warrant) will thereafter be applicable in relation to any shares of stock,
and other securities and property, thereafter deliverable upon exercise hereof.
If, as a consequence of any such transaction, solely cash, and no securities or
other property of any kind, is deliverable upon exercise of this Warrant, then,
in such event, the Company may terminate this Warrant by giving the Holder
hereof written notice thereof. Such notice will specify the date (at least 30
days subsequent to the date on which notice is given) on which this Warrant will
terminate; provided that the Holder may condition his exercise upon the
successful consummation of such cash merger or other similar transaction of
which notice is given.
3.3 Adjustment for Dividends. The Company shall only pay dividends
in an amount consistent with past practices and in no event will the Company pay
a dividend greater than $1.00. Subject to the forgoing, in case the Company
will, at any time or from time to time after the Issue Date, pay any dividend or
make any other distribution upon its Common Stock (or Other Securities) payable
in cash (other than ordinary cash dividends out of earnings or earned surplus),
property or securities of a corporation other than the Company, then forthwith
upon the
B-6
payment of such dividend, or the making of such other distribution, as the case
may be, the Exercise Price then in effect will be reduced by the amount of such
dividend or other distribution in respect of each outstanding share of
Common Stock (or Other Securities). The Board of Directors of the Company and
the Investor will mutually agree upon the fair value of any dividend or other
distribution made upon Common Stock (or Other Securities) payable in property or
securities of a corporation other than the Company.
3.4 Certificate of Adjustment. Whenever the Exercise Price or the
number of shares issuable hereunder is adjusted, as herein provided, the Company
will promptly deliver to the registered Holder of this Warrant a certificate of
the Treasurer of the Company, which certificate will state (a) the Exercise
Price and the number of shares of Common Stock (or Other Securities) issuable
hereunder after such adjustment, (b) the facts requiring such adjustment, and
(c) the method of calculation for such adjustment and increase or decrease.
4. No Impairment. The Company will not, by amendment of its corporate
charter or by-laws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all action as may be
necessary or appropriate in order to protect the rights of the Holder of this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company (a) will not permit the par value of any shares of Common Stock (or
Other Securities) receivable upon the exercise of this Warrant to exceed the
amount payable therefore upon such exercise, and (b) will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable shares of Common Stock (or Other
Securities) upon the exercise of this Warrant.
5. Notices of Record Date, Etc. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities of the Company for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution, or any
right to or otherwise acquire any shares of stock of any class of the Company or
any other securities or property, or to receive any other right;
(b) any capital reorganization of the Company, or any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to or
consolidation or merger of the Company with or into any other Person; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the Company will give notice to the Holder at least 30 days prior to the date of
the specified event.
6. Reservation of Stock Issuable on Exercise of Warrant; Payment of Taxes.
The Company will at all times after the Authorization Date reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
all shares of Common Stock (or Other Securities) from time to time issuable upon
the exercise of this Warrant. The Company
B-7
covenants that all shares of Common Stock (or Other Securities) which will be
issuable upon exercise of this Warrant and payment of the Exercise Price in
compliance with this Warrant will, at the time of delivery, be duly and validly
issued, fully paid, nonassessable and free from all taxes, liens and charges
with respect to the issue thereof (other than those which the Company will
promptly pay or discharge). The Company will pay all documentary, stamp or
similar taxes and other governmental charges that may be imposed with respect
to the issuance of Warrants, or the issuance or delivery of any shares upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Holder, then no such
delivery will be made unless the person requesting the same has paid to the
Company the amount of transfer taxes or charges incident thereto, if any.
7. Disposition of This Warrant, Common Stock, Etc.
(a) The Holder of this Warrant and any transferee hereof or of the
Common Stock (or Other Securities) with respect to which this Warrant may be
exercisable, by their acceptance hereof, hereby understand and agree that this
Warrant and the Common Stock (or Other Securities) with respect to which this
Warrant may be exercisable have not been registered under the Securities Act,
and may not be sold, pledged, hypothecated, donated, or otherwise transferred
(whether or not for consideration) without an effective registration statement
under the Securities Act or an opinion of counsel reasonably satisfactory to the
Company and/or submission to the Company of such other evidence as may be
reasonably satisfactory to counsel to the Company, in each such case, to the
effect that any such transfer will not be in violation of the Securities Act. It
will be a condition to the transfer of this Warrant that any transferee thereof
deliver to the Company its written agreement to accept and be bound by all of
the terms and conditions of this Warrant.
(b) The stock certificates of the Company that will evidence the
shares of Common Stock (or Other Securities) with respect to which this Warrant
may be exercisable will be imprinted with a conspicuous legend in substantially
the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
CONSIDERATION) BY THE HOLDER WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY AND/OR SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE EFFECT
THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE ACT."
Except as otherwise provided in a certain Stock Purchase Agreement between
the Company and the Holder executed and delivered simultaneously with the
issuance of this Warrant (the "Purchase Agreement"), the Company has not agreed
to (a) register any of the Holder's shares of Common Stock (or Other Securities)
with respect to which this Warrant may be exercisable for distribution in
accordance with the provisions of the Securities Act or (b) comply with any
exemption from registration under the Securities Act for the resale of the
Holder's shares of Common Stock (or Other Securities) with respect to which this
Warrant may
B-8
be exercised. Hence, it is the understanding of the Holder of this Warrant that
by virtue of the provisions of certain rules respecting restricted securities
promulgated by the Commission, the shares of Common Stock (or Other Securities)
of the Company with respect to which this Warrant may be exercisable may be
required to be held indefinitely, unless and until registered under the
Securities Act, unless an exemption from such registration is available, in
which case the Holder may still be limited as to the number of shares of Common
Stock (or Other Securities) with respect to which this Warrant may be exercised
that may be sold from time to time.
8. Rights and Obligations of Warrant Holder. The Holder of this Warrant
will not, by virtue hereof, be entitled to any voting rights or other rights as
a stockholder of the Company. No provision of this Warrant, in the absence of
affirmative actions by the Holder to purchase Common Stock (or Other Securities)
by exercising this Warrant, and no enumeration in this Warrant of the rights or
privileges of the Holder, will give rise to any liability of such Holder for the
Exercise Price acquirable by exercise hereof or as a stockholder of the Company.
9. Transfer of Warrant. Subject to compliance with the restrictions on
transfer applicable to this Warrant referred to in Section 7 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the registered Holder, upon surrender of this Warrant with a properly
executed Assignment (in substantially the form attached hereto as Exhibit A), to
the Company, and the Company at its expense will issue and deliver to or upon
the order of the Holder hereof a new Warrant or Warrants in such denomination or
denominations as may be requested, but otherwise of like tenor, in the name of
the Holder or as the Holder (upon payment of any applicable transfer taxes) may
direct.
10. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of affidavit of loss reasonably satisfactory in form to the Company or, in the
case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company at its expense will execute and deliver, in lieu thereof, a new
Warrant of like tenor.
11. Remedies. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
12. Company Records. Until this Warrant is transferred on the books of the
Company, the Company may treat the registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.
13. Miscellaneous.
13.1 Notices. All notices, requests, consents and other communications
hereunder will be in writing, will be mailed (a) if within the domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by
B-9
facsimile or (b) if delivered from outside the United States, by International
Federal Express or facsimile, and will be deemed given (i) if delivered by
first-class registered or certified mail domestic, three business days after so
mailed, (ii) if delivered by nationally recognized overnight carrier, one
business day after so mailed, (iii) if delivered by International Federal
Express, two business days after so mailed and (iv) if delivered by facsimile,
upon electric confirmation of receipt and will be delivered as addressed as
follows:
To the Company: Energy Conversion Devices, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
One Prudential Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holder: At its address on the Stock Certificate
Questionnaire attached as Exhibit A to the Purchase
Agreement, or at such other address or addresses as may
have been furnished to the Company in writing.
13.2 Amendment and Waiver. Except as otherwise provided herein, this
Warrant and any term hereof may be amended, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such amendment, waiver, discharge or termination is sought.
13.3 Entire Agreement. This Agreement, together with the Purchase
Agreement referenced herein, embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supercedes all prior agreements and understandings relating to such subject
matter.
13.4 Governing Law; Descriptive Headings. This Warrant will be
construed and enforced in accordance with and governed by the laws of the State
of New York. The headings in this Warrant are for purposes of reference only,
and will not limit or otherwise affect any of the terms hereof.
Dated: January __, 2004
ENERGY CONVERSION DEVICES, INC.
By: ___________________________________
Name: ___________________________
Title: ____________________________
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ANNEX A
FORM OF ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and transfers
all of the rights of the undersigned under the within Warrant with respect to
the number of shares of the Common Stock (or Other Securities) covered thereby
set forth below, unto:
Name of Assignee Address No. of Shares
Dated: _____________ Signature ___________________________________
(Signature must conform in all respects to
name of Holder as specified on the
face of the Warrant.)
Address ____________________________________
------------------------------------
B-11
ANNEX B
FORM OF SUBSCRIPTION AGREEMENT
[To be signed only upon exercise of Warrant]
To: Energy Conversion Devices, Inc. Date: __________
The undersigned, the Holder of the within Warrant, pursuant to the
provisions set forth in the within Warrant, hereby irrevocably elects to
exercise the purchase rights represented by such Warrant for, and agrees to
subscribe for and purchase thereunder, _________ shares of the Common Stock (or
Other Securities) covered by such Warrant and herewith makes payment of $______
therefore, and requests that the certificates for such shares be issued in the
name of, and delivered to, __________________________________________, whose
address is:
-----------------------------------------------------------------------------.
If said number of shares is less than all the shares covered by such
Warrant, a new Warrant will be registered in the name of the undersigned and
delivered to the address stated below.
Signature__________________________________
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant or on the form of Assignment
attached as Annex A thereto.)
Address ______________________________________
--------------------------------------
B-12
EXHIBIT C
ENERGY CONVERSION DEVICES, INC.
INVESTOR QUESTIONNAIRE
To: Energy Conversion Devices, Inc.
This Investor Questionnaire (the "Questionnaire") must be completed by
each potential investor in connection with the offer and sale of the shares of
the Common Stock, par value $0.01 per share, of Energy Conversion Devices, Inc.
(the "Securities"). The Securities are being offered and sold by Energy
Conversion Devices, Inc. (the "Company") without registration under the
Securities Act of 1933, as amended (the "Act"), and the securities laws of
certain states, in reliance on the exemptions contained in Section 4(2) of the
Act and on Regulation D promulgated thereunder and in reliance on similar
exemptions under applicable state laws. The Company must determine that a
potential investor meets certain suitability requirements before offering or
selling Securities to such investor. The purpose of this Questionnaire is to
assure the Company that each investor will meet the applicable suitability
requirements. The information supplied by you will be used in determining
whether you meet such criteria, and reliance upon the private offering exemption
from registration is based in part on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a solicitation
of an offer to buy any security. Your answers will be kept strictly
confidential. However, by signing this Questionnaire you will be authorizing the
Company to provide a completed copy of this Questionnaire to such parties as the
Company deems appropriate in order to ensure that the offer and sale of the
Securities will not result in a violation of the Act or the securities laws of
any state and that you otherwise satisfy the suitability standards applicable to
purchasers of the Securities. All potential investors must answer all applicable
questions and complete, date and sign this Questionnaire. Please print or type
your responses and attach additional sheets of paper if necessary to complete
your answers to any item.
A. BACKGROUND INFORMATION
Name:
---------------------------------------------------------------------------
Business Address:
---------------------------------------------------------------
(Number and Street)
--------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: ( )
-------------------------------------------------------
Residence Address:
--------------------------------------------------------------
(Number and Street)
--------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: ( )
-------------------------------------------------------
C-1
If an individual:
Age:______ Citizenship:__________ Where registered to vote:
--------
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity:
State of formation:______________ Date of formation:
---------------
Social Security or Taxpayer Identification No.
--------------------------------
Send all correspondence to (check one): __ Residence Address __ Business Address
B. STATUS AS ACCREDITED INVESTOR
The undersigned is an "accredited investor" as such term is defined in
Regulation D under the Act, as at the time of the sale of the Securities the
undersigned falls within one or more of the following categories (Please initial
one or more, as applicable):
_____(1) a bank as defined in Section 3(a)(2) of the Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the Act
whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934; an
insurance company as defined in Section 2(13) of the Act; an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; a Small Business Investment
Company licensed by the U.S. Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions for the benefit of its
employees, if such plan has total assets in excess of $5,000,000; an employee
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974 if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
the investment decisions made solely by persons that are accredited investors;
_____(2) a private business development company as defined in Section 202(a)(22)
of the Investment Adviser Act of 1940;
_____(3) an organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the Securities
offered, with total assets in excess of $5,000,000;
_____(4) a natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of such person's purchase of the Securities
exceeds $1,000,0001;
-------------------
1 As used in this Questionnaire, the term "net worth" means the excess of total
assets over total liabilities. In computing net worth for the purpose of
subsection (4), the principal residence of the investor must be valued at cost,
including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
income, the investor should add to the investor's adjusted gross income any
amounts attributable to tax exempt income received, losses claimed as a limited
partner in any limited partnership,
C-2
_____(5) a natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
_____(6) a trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
and
_____(7) an entity in which all of the equity owners are accredited investors
(as defined above).
C. REPRESENTATIONS
The undersigned hereby represents and warrants to the Company as follows:
1. The undersigned has had no position, office or other material
relationship within the past three years with the Company or its affiliates.
Neither the undersigned nor any group of which it is a member or to which it is
related, beneficially owns (including the right to acquire or vote) any
securities of the Company or presently maintains, directly or indirectly, a put
equivalent position, as defined in Rule 16(a)-1(h) under the Securities Exchange
Act of 1934, with respect to the Company's equity securities. The undersigned
has no direct or indirect affiliation or association with any member of the
National Associations of Securities Dealers, Inc.
2. Any purchase of the Securities would be solely for the account of the
undersigned and not for the account of any other person or with a view to any
resale, fractionalization, division, or distribution thereof.
3. The information contained herein is complete and accurate and may be
relied upon by the Company, and the undersigned will notify the Company
immediately of any material change in any of such information occurring prior to
the closing, if any, with respect to the purchase of Securities by the
undersigned or any co-purchaser.
4. There are no suits, pending litigation, or claims against the
undersigned that could materially affect the net worth of the undersigned as
reported in this Questionnaire.
5. The undersigned acknowledges that, subject to the limitations set forth
in Section 7.2(d) of the Stock Purchase Agreement, there may occasionally be
times when the Company, based on the advice of its counsel, determines that it
must suspend the use of the Prospectus forming a part of the Registration
Statement (as such terms are defined in the Stock Purchase Agreement to which
this Questionnaire is attached) until such time as an amendment to the
Registration Statement has been filed by the Company and declared effective by
the Securities and Exchange Commission or until the Company has amended or
supplemented such Prospectus. The undersigned is aware that, in such event, the
Securities will not be subject to ready liquidation, and that any Securities
purchased by the undersigned would have to be held during
-------------------
deductions claimed for depiction, contributions to an ▇▇▇ or ▇▇▇▇▇ retirement
plan, alimony payments, and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
C-3
such suspension. The overall commitment of the undersigned to investments which
are not readily marketable is not excessive in view of the undersigned's net
worth and financial circumstances, and any purchase of the Securities will not
cause such commitment to become excessive. The undersigned is able to bear the
economic risk of an investment in the Securities.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire
this _____ day of _____________, 2004, and declares under oath that it is
truthful and correct.
[INSERT NAME OF INVESTOR]
By:
---------------------------------
Title:
------------------------------
C-4
EXHIBIT D
ENERGY CONVERSION DEVICES, INC.
CERTIFICATE OF SUBSEQUENT SALE
[Stock Transfer Agent]
RE: Sale of Shares of Common Stock of Energy Conversion Devices, Inc.
(the "Company") pursuant to the Company's Prospectus dated _______,
20__ (the "Prospectus")
Dear Sir/Madam:
The undersigned hereby certifies, in connection with the sale of shares of
Common Stock of the Company included in the table of Selling Shareholders in the
Prospectus, that the undersigned has sold the Shares pursuant to the Prospectus
and in a manner described under the caption "Plan of Distribution" in the
Prospectus and that such sale complies with all applicable securities laws,
including the Prospectus delivery requirements of the Securities Act of 1933, as
amended.
Selling Shareholder (the beneficial owner): ------------------------------
Record Holder (e.g., if held in name of nominee):-------------------------
Restricted Stock Certificate No.(s):--------------------------------------
Number of Shares Sold:----------------------------------------------------
Date of Sale:-------------------------------------------------------------
In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer on your records with regard to such certificate.
Very truly yours,
[INSERT NAME OF INVESTOR]
By:
---------------------------------
Print Name:
-------------------------
Title:
------------------------------
Dated:
------------------
cc:Energy Conversion Devices, Inc.
D-1