<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 1997
REGISTRATION NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
BOLDER TECHNOLOGIES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 84-1166231
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
4403 TABLE MOUNTAIN PARKWAY
GOLDEN, COLORADO 80403
(303) 215-7200
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
DANIEL S. LANKFORD
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BOLDER TECHNOLOGIES CORPORATION
4403 TABLE MOUNTAIN PARKWAY
GOLDEN, COLORADO 80403
(303) 215-7200
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
JAMES H. CARROLL, ESQ.
COOLEY GODWARD LLP
2595 CANYON BOULEVARD, SUITE 250
BOULDER, COLORADO 80302-6737
(303) 546-4000
---------------
APPROXImATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF SHARES TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
===================================================================================================================================
<S> <C> <C> <C> <C>
Series A Convertible Preferred Stock, $.001 par
value 336,200 (1) $50.00 $16,810,000 $4,959
Common Stock, $.001 par value 453,870 (2) $11.25(3) $ 5,106,038(3) $1,506
------
$6,465
======
===================================================================================================================================
</TABLE>
(1) Includes such currently indeterminate number of shares of Common Stock as
shall be issued from time to time upon conversion of the Series A Preferred
Stock being registered hereby, for which no additional consideration will
be received and therefore no registration fee is required pursuant to Rule
457(i).
(2) Reflects up to 453,870 shares of Common Stock which may be issued from time
to time in the event that the issuer elects to pay dividends on the Series
A Convertible Preferred Stock in the form of Common Stock rather than cash.
(3) Estimated in accordance with Rule 457(c) solely for the purpose of
computing the amount of the registration fee based on the average of the
high and low prices of the Registrant's Common Stock as reported on The
Nasdaq National Market on December 4, 1997, the date prior to the date this
Registration Statement was originally filed.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
===============================================================================
<PAGE> 2
PROSPECTUS
BOLDER TECHNOLOGIES CORPORATION
336,200 SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK,
AN INDETERMINATE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF
AND
UP TO 453,870 SHARES OF COMMON STOCK ISSUABLE AS DIVIDENDS
ON THE SERIES A CONVERTIBLE PREFERRED STOCK
This Prospectus relates to the offering of 336,200 Shares of Series A
Convertible Preferred Stock (the "Series A Preferred Stock"), as well as the
offering of shares of the Common Stock, par value $.001 per share ("Common
Stock") (the Series A Preferred Stock and the Common Stock are referred to
collectively as the "Shares"), of BOLDER Technologies Corporation ("Bolder" or
the "Company"), issuable upon conversion of the Company's Series A Preferred
Stock and up to 453,870 shares of Common Stock issuable as stock dividends on
the Series A Preferred Stock.
An aggregate of 336,200 shares of Series A Preferred Stock were issued
upon the closing of a private placement on October 8, 1997 (the "Closing Date").
Dividends on the Series A Preferred Stock are cumulative from October 8, 1997
and are payable semi-annually commencing December 31, 1997, at an annual rate
equal to (i) $4.00 per share of Series A Preferred Stock to the extent the
dividend is paid in cash, and (ii) $4.50 per share of Series A Preferred Stock
to the extent the dividend is paid in shares of Common Stock. Dividends are
payable in cash or Common Stock or a combination thereof, at the Company's
option.
Each share of Series A Preferred Stock is convertible at the option of
the holder at any time after December 8, 1997, unless previously redeemed, into
Common Stock at a conversion price of $15.00 per share, subject to adjustment
under certain circumstances. The Series A Preferred Stock may be redeemed by the
Company under certain circumstances during the period beginning on October 8,
1999 and will be redeemed by the Company, subject to certain limitations, on
October 8, 2002 in each case at a redemption price of $50.00 per share, plus
accrued and unpaid dividends (the "Redemption Price"). In the event of certain
fundamental changes relating to the Company, the Series A Preferred Stock will
be repurchased at the option of the holders at the Redemption Price. Under
either circumstance, the Redemption Price may be paid in cash or Common Stock
or a combination thereof, at the Company's option.
All or part of the Shares may be offered by the selling stockholders
named herein (the "Selling Stockholders") from time to time for their own
account in transactions on The Nasdaq National Market, in negotiated
transactions or otherwise, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Selling Stockholders may effect such transactions by selling the Shares to or
through broker-dealers and such broker-dealers may receive compensation in the
form of discounts, concessions or
<PAGE> 3
commission from the Selling Stockholders or the purchaser of the Securities for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions).
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. The Company has agreed to bear
certain expenses in connection with the registration and sale of the Shares
being offered by the Selling Stockholders. The Selling Stockholders and any
broker-dealers participating in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), and any profit on the sale of Shares by the Selling
Stockholders and any commissions received by any such broker-dealer may be
deemed to be underwriting commissions under the Securities Act.
The Shares have not been registered for sale by the Selling
Stockholders under the securities laws of any State as of the date of this
Prospectus. Brokers or dealers effecting transactions in the Shares should
confirm registration thereof under the securities laws of the states in which
such transactions occur, or the existence of any exemption from registration.
The Company's Common Stock is traded on The Nasdaq National Market
under the symbol "BOLD". On December 4, 1997, the last reported sale price of
the Common Stock on The Nasdaq National Market was $11.22 per share. Prior to
this offering, there has been no trading market for the Series A Preferred
Stock. The Series A Preferred Stock is not listed on any securities exchange or
quoted in any over-the-counter market. The Series A Preferred Stock is eligible
for trading in the Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market. The Company cannot provide any assurance that a
secondary market for the shares of Series A Preferred Stock registered hereby
will develop.
---------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS," PAGE 6.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS DECEMBER 5, 1997.
2.
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's
following Regional Offices: Chicago Regional Office, Suite 1400, CitiCorp
Center, 500 West Madison Street, Chicago, Illinois 60661; and New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048. Copies
of such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the site is http://www.sec.gov. Reports and other information concerning the
Company also may be inspected at the offices of the Nasdaq National Market, 1735
K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act with respect to
the shares of the Company being offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
For further information with respect to the Company and the Common Stock,
reference is hereby made to the Registration Statement and the exhibits and
schedules filed therewith. Statements contained in this Prospectus as to the
contents of any contract or other documents referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the
Exchange Act are incorporated by reference in this Prospectus, except as
superseded or modified herein:
(1) the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996;
(2) the Company's Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997;
(3) the Company's Current Report on Form 8-K, dated December 19, 1996;
(4) the Company's Current Report on Form 8-K, dated February 5, 1997;
(5) the Company's Current Report on Form 8-K, dated March 16, 1997;
3.
<PAGE> 5
(6) the Company's Current Report on Form 8-K, dated May 8, 1997;
(7) the Company's Current Report on Form 8-K, dated October 9, 1997;
and
(8) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A declared effective by the Commission on April
29, 1996.
All reports and documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Prospectus and prior to the termination of the offering of the shares
offered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the documents that have been or
may be incorporated by reference herein (other than exhibits to such documents
which are not specifically incorporated by reference into such documents). Such
requests should be directed to the Company at its principal executive offices:
Bolder Technologies Corporation, 4403 Table Mountain Drive, Golden, Colorado
80403, telephone: (303) 215-7200, Attention: Joseph F. Fojtasek.
-------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO PURCHASE, ANY OF THE SECURITIES OFFERED BY THIS PROSPECTUS, OR THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN OFFER OR PROXY
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF
THE SECURITIES OFFERED HEREBY SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
4.
<PAGE> 6
The following information is qualified in its entirety by the more
detailed information and financial statements and notes appearing elsewhere in
this Prospectus and in the documents incorporated by reference herein. This
Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the section entitled "Risk
Factors."
THE COMPANY
BOLDER Technologies Corporation ("Bolder" or the "Company") is an
energy technology company that is developing and commercializing advanced, high
power, rechargeable battery systems based on its patented thin metal film
("TMF(TM)") technology. The Company's TMF battery uses proven lead acid
electrochemistry in a proprietary configuration that has higher power density
than any other commercially available battery system. The Company believes that
the high power and other performance characteristics of TMF batteries offer a
number of advantages over commercially available batteries in a broad range of
current and future applications.
The world market for rechargeable batteries was estimated to be between
$14 and $16 billion in 1995. Demand for rechargeable batteries is being driven
by the growing use of existing applications such as portable tools and
appliances, standby power systems, automotive and small engine starting,
electronics, and military and aerospace, as well as the development of new and
emerging applications such as hybrid electric vehicles and very small batteries
for engine starting. Past advances in battery technology have enabled new
applications, and the Company believes that its breakthrough TMF technology will
create opportunities for new battery powered products.
The Company believes that the combination of the following
characteristics of its prototype TMF battery systems offers advantages over
commercially available rechargeable batteries:
High Power. TMF batteries deliver higher sustained power than any other
commercially available battery technology.
Cost Effective. TMF batteries use inexpensive raw materials and a
straightforward manufacturing process.
No Memory Effect. TMF batteries have no memory effect, a negative
characteristic of nickel cadmium ("NiCd") batteries.
Small Size. High power density allows smaller TMF batteries to do the
same amount of work as larger conventional batteries in high rate
applications.
More Useful Work. TMF batteries can do more useful work between
recharges in high rate applications than a conventional battery of
similar size.
5.
<PAGE> 7
Faster Recharge. TMF batteries can be recharged in less than five
minutes with an appropriate charger.
Stable Discharge Voltage. TMF batteries provide consistent voltage
throughout their discharge cycle.
Cool Operation. TMF batteries have low impedance and, therefore,
generate little heat, even in high rate applications.
Multiple Form Factors. TMF batteries may be manufactured in a number of
form factors for a wide variety of applications.
Easy to Recycle. TMF batteries can be recycled using the existing
recycling process for lead acid batteries.
Bolder's objective is to become a major supplier of innovative
rechargeable batteries. To date, 84 companies have tested the Company's
prototype TMF batteries and over 2,000 companies have inquired about the
Company's battery products. Currently, many high power applications are served
by NiCd and traditional lead acid batteries. The Company believes that its TMF
batteries, when manufactured in commercial quantities, can substantially replace
NiCd batteries in many of these high power applications and that its TMF
batteries will become the battery of choice for certain applications currently
powered by traditional lead acid batteries, particularly applications which
require high power in a small package.
An integral part of the Company's strategy is to work with original
equipment manufacturer ("OEM") customers and strategic partners to develop
market opportunities and leverage its resources. The Company has agreements with
value added partners ("VAPs") for marketing and distribution of the Company's
products throughout North America and Europe and has a strategic relationship
with Johnson Controls, Inc. ("Johnson Controls"), one of the world's leading
suppliers of automotive batteries.
The Company has focused its initial product development efforts on its
sub-C cell, which is competitive with a widely used NiCd form factor, and is
currently engaged in product development efforts for new form factors such as a
1/16 inch thick prismatic, or flat, cell suitable for consumer electronics, and
the 5 Ah spiral wound cell suitable for very high power applications such as
professional power tools and hybrid electric vehicles. The Company has produced
over 61,000 prototype TMF batteries with its semi-automated pilot production
line and in May 1997 occupied a new manufacturing facility in Golden, Colorado.
This production facility has been designed to accommodate five high volume,
fully-automated production lines and two research and development lines. The
first of the fully-automated production lines has been delivered and installed
and is expected to be in commercial production by the end of 1997 or early 1998.
Bolder Technologies Corporation was incorporated in Colorado in 1991
and reincorporated in Delaware in 1993. The Company's executive offices are
located at 4403 Table Mountain Drive, Golden, Colorado 80403, and its telephone
number is (303) 215-7200.
6.
<PAGE> 8
"BOLDER" and "TMF" are trademarks of Bolder Technologies Corporation. This
Prospectus contains trademarks of other companies.
RISK FACTORS
The following risk factors should be considered carefully in addition
to the other information contained or incorporated by reference in this
Prospectus before purchasing the Shares offered hereby.
DEVELOPMENT STAGE COMPANY; HISTORY OF OPERATING LOSSES
Bolder was founded in 1991 and has principally been engaged in research
and development activities. The Company's revenues to date have been derived
solely from technology transfer services, license fees, federal Small Business
Innovation Research ("SBIR") research and development agreements, customer
funded research and development agreements and limited sales of prototype
batteries for evaluation purposes only. The Company has incurred operating
losses since inception and as of September 30, 1997 had an accumulated
development stage deficit of $19.8 million (unaudited). The Company expects to
incur significant losses in the future as it continues its product development
efforts and seeks to establish its manufacturing, sales and marketing
capabilities. There can be no assurance that the Company will achieve or sustain
significant revenues or profitability in the future.
EARLY STAGE OF MANUFACTURING; MANUFACTURING RISKS; POTENTIAL CAPACITY
CONSTRAINTS AND RISKS OF PROPOSED EXPANSION
To date, the Company has not manufactured its TMF batteries on a
commercial scale. Until recently, the Company's TMF batteries have been only
manufactured on its pilot manufacturing line, which is able to produce prototype
cells in quantities sufficient to enable customer sampling and testing and
product development. The Company is currently in the early stages of
transitioning production to an automated high volume production line located in
the Company's new manufacturing facility which opened in May 1997. The
implementation of the new manufacturing facility, including its customized
manufacturing equipment, will continue to require substantial engineering work
and expenses and is subject to significant risks, including risks of cost
overruns and significant delays. In addition, in order to rapidly scale up the
Company's manufacturing capacity, Bolder will need to begin fabrication of its
second automated production line before completing full qualification of the
first line. In automating its manufacturing processes, the Company has been and
will continue to be dependent on Wright Industries, a developer of automated
production lines, which has only limited experience in producing equipment for
the manufacture of batteries. A key determinant of the Company's current and
future production capacity and profitability is the production yield of its
manufacturing process. Any failure by the Company to achieve acceptable yields
of commercial quality batteries in commercial quantities, and thereby to reduce
its unit manufacturing costs, could have a material adverse effect on the
Company's business, results of operations and financial condition.
The establishment of the Company's new manufacturing facility and the
development and implementation of automated production lines will entail
significant risks and will require a
7.
<PAGE> 9
substantial investment of the Company's capital, including a significant portion
of the net proceeds of this offering. As part of its manufacturing ramp-up, the
Company will need to hire and train a substantial number of new manufacturing
workers. The availability of skilled and unskilled workers in the Denver
metropolitan area, the site of the Company's new manufacturing facility, is
limited due to a relatively low unemployment rate. There can be no assurance
that the Company will successfully develop improved processes, design required
production equipment, enter into acceptable contracts for the fabrication of
such equipment, obtain timely delivery of such equipment, implement multiple
production lines or successfully operate the new facility. There can be no
assurance that the Company will be able to successfully automate its production
on a timely basis or at all, or that such automation will result in greater
manufacturing capacity or lower manufacturing costs than the Company's pilot
production line. Failure to commence volume manufacturing on a timely basis
could damage customer relationships, cause lost opportunities and have a
material adverse effect on the Company's business, results of operations and
financial condition.
DEVELOPMENT STAGE PRODUCT
Bolder has produced prototype products that the Company believes have
performance characteristics that are suitable for a broad market. However,
additional development will be required to enable the Company to consistently
produce battery systems with these characteristics. In addition, to achieve
broad commercialization of its products, the Company will need to reduce
manufacturing costs of its battery systems. There can be no assurance that the
Company's TMF batteries can be manufactured in commercial quantities to the
performance specifications demanded by customers. In addition, the Company's
success will depend significantly on its ability to meet OEM customer
requirements by developing and introducing on a timely basis new products and
enhanced or modified versions of its existing products. OEMs often require
unique configurations or custom designs for battery systems which must be
developed and integrated in the OEM's product well before the product is
launched by the OEM. Thus, there is often substantial lead time between the
commencement of design efforts for a customized battery system and the
commencement of volume shipments of the battery system to the OEM (referred to
as the "design in time"). If the Company is unable to design, develop and
introduce products that meet OEMs' and other customers' exacting requirements on
a timely basis, its business, results of operations and financial condition
could be materially adversely affected.
UNCERTAINTY OF MARKET ACCEPTANCE
To achieve market acceptance, the Company's TMF batteries must offer
significant price and/or performance advantages over other current and potential
alternative battery technologies in a broad range of applications. There can be
no assurance that the Company's rechargeable TMF batteries will achieve or
sustain any such advantages. Even if the Company's rechargeable TMF batteries
provide meaningful price or performance advantages, there can be no assurance
that they will achieve or maintain market acceptance in any potential market
application. The success of the Company's products also will depend upon the
level of market acceptance of OEMs' and other customers' end products which
incorporate the Company's TMF batteries, over
8.
<PAGE> 10
which the Company has no control. If the Company's rechargeable TMF batteries do
not achieve and maintain significant price and/or performance advantages over
other technologies and achieve significant and sustained market acceptance, or
if customers' applications which incorporate the Company's products do not
achieve lasting market acceptance, the Company's business, results of operations
and financial condition could be materially adversely affected.
RAPID EVOLUTION OF BATTERY TECHNOLOGIES
The battery industry has experienced, and is expected to continue to
experience, rapid technological change. There can be no assurance that the
Company's products will be able to compete effectively in any of its targeted
market segments. Various companies are seeking to enhance traditional battery
technologies, such as lead acid and NiCd, and other companies have recently
introduced or are developing rechargeable batteries based on nickel metal
hydride ("NiMH"), lithium and other emerging and potential technologies. There
can be no assurance that competing technologies that outperform the Company's
batteries will not be developed and successfully introduced.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company will require substantial funds to establish and operate
commercial manufacturing facilities, to market its products and to conduct the
necessary research and development and testing of its products. The Company may
have to obtain additional funding through other financing; however, it expects
that the net proceeds of the offering of the Series A Preferred Stock, together
with existing sources of liquidity and projected cash generated from operations,
will be sufficient to fund its activities for at least the next 12 months. There
can be no assurance that additional financing will be available when needed or
on terms acceptable to the Company. If additional funds are raised by issuing
equity securities, stockholders will incur dilution. If adequate funds are not
available, the Company may be required to delay, scale back or eliminate one or
more of its development programs or otherwise curtail or discontinue the
development, manufacture or sale of its TMF battery systems.
DEPENDENCE ON STRATEGIC RELATIONSHIPS
The Company expects to rely on a limited number of strategic
relationships to accelerate the commercialization of the Company's products by
assisting in the design and development of products for certain applications, as
well as to providing manufacturing and marketing expertise. The Company
currently has strategic relationships with Johnson Controls and six VAPs located
throughout North America and Europe. There can be no assurance that the Company
will be able to enter into any other such partnerships or that existing
relationships will achieve their goals. Even if the Company successfully
initiates additional strategic partnerships, there can be no assurance that the
partnerships will achieve their goals. The success of any strategic partnership
is dependent upon the general business condition of the partner, its commitment
to the strategic partnership, the skills and experience of its employees
responsible for the strategic partnership and the partner's timely and
satisfactory performance of its obligations under the partnership. To the extent
the Company enters into strategic partnerships, the terms of the partnerships
may require the Company and its partners to share revenues and/or expenses from
certain activities or for the Company to grant to its partners licenses to
9.
<PAGE> 11
manufacture, market and/or sell products based upon its TMF technology, which
could adversely affect the Company's profitability.
COMPETITION
Competition in the battery industry is, and is expected to remain,
intense. The competitors range from development stage companies to major
domestic and international companies. Many of these companies have financial,
technical, marketing, sales, manufacturing, distribution, and other resources
significantly greater than those of the Company. In addition, many of these
companies have name recognition, established positions in the market, and long
standing relationships with OEMs and other customers. While there is significant
development work being done by these competitors on various battery systems
(including electrochemistries such as NiCd, NiMH and lithium), the Company
believes that much of this effort is focused on achieving higher energy
densities for low power applications such as portable electronics. There can be
no assurance that one or more new, higher power battery technologies will not be
introduced which could be directly competitive with or be superior to the
Company's TMF technology.
The Company believes that its primary competitors are existing
suppliers of NiCd and lead acid batteries. In applications such as portable
tools and appliances, and certain electronic and medical products, the Company's
primary competitors will be suppliers of NiCd batteries, including SANYO Energy
(USA) Corporation ("SANYO"), Panasonic Industrial Company, a division of
Matsushita Electric Corporation of America ("Panasonic"), Energizer Power
Systems, a division of Eveready Battery Company ("Energizer") and SAFT America,
Inc. ("SAFT"). All of these companies are very large and have substantial
resources and market presence. The Company expects that it will compete against
NiCd batteries in the targeted application segments on the basis of performance,
cost and ease of recycling. There can be no assurance that the Company will be
able to compete successfully against manufacturers of NiCd batteries in any of
the targeted applications.
In applications such as car starting, standby power, very small
batteries for engine starting, and a few medical and electronics applications,
the Company expects that its primary competition will be from lead acid
batteries. The primary suppliers of small lead acid batteries used in non
automotive applications are Yuasa Exide, Inc. ("Yuasa"), Exide Corporation,
Matsushita Electric Corporation of America ("Matsushita"), Hawker Energy
Products, Inc. ("Hawker"), CSB Battery of America Corp., and GS Battery USA,
Inc., a division of Japan Storage Battery Co., Limited ("GS Battery"). The
primary suppliers of automotive batteries are Johnson Controls, Inc., Exide
Corporation, GNB Inc. and Delphi Energy & Engine Management Systems (formerly
Delco), a Division of General Motors Corporation ("Delphi"). All of these
companies are very large and have substantial resources and market presence. The
Company expects that it will compete with lead acid batteries on the basis of
performance in the targeted application segments. In addition, under the terms
of its strategic partnership with Johnson Controls, the Company has granted
Johnson Controls certain license rights which will allow Johnson Controls to
compete with the Company in the lawn and garden starting, motorcycle starting,
HEV, standby power and, beginning July 1, 1999, for emergency jump-starting
batteries
10.
<PAGE> 12
for lawn and garden starting, motorcycle starting and automobile and truck
starting. There can be no assurance that the Company will be able to compete
successfully against manufacturers of traditional lead acid batteries in any of
the targeted applications or to compete successfully with Johnson Controls in
the markets where Johnson Controls has a royalty bearing license from the
Company.
MANAGEMENT OF GROWTH
The Company's transition from a development stage company to a high
volume manufacturing company could place a significant strain on the Company's
resources. If the Company's products achieve market acceptance, it will need to
increase the number of its employees and enhance its operating systems and
practices. There can be no assurance that the Company will be able to
successfully manage its transition to being a high volume manufacturing company,
including the expansion of its operations and marketing of its products, and its
failure to do so could have a material adverse effect on the Company's business,
results of operations and financial condition.
DEPENDENCE ON VALUE ADDED PARTNER NETWORK
The Company intends to channel a significant portion of its sales
through VAPs in the future. The Company currently has a VAP network of six
distributors throughout North America and Europe. The VAP agreements are subject
to minimum performance criteria and standard termination provisions. VAPs may
sell competitive products. Although the Company has established multiple sources
for VAP services for its products, any disruption of operations at certain of
the Company's VAPs or the loss of certain of the Company's VAPs could materially
adversely affect the Company's business, results of operations and financial
condition.
CUSTOMER CONCENTRATION
The Company's sales to date have been, and are expected in the future
to be, concentrated in a limited number of large customers. If any of these
customers were to decide not to purchase the Company's products in the future,
the Company's business, results of operations and financial condition could be
materially adversely affected. The timing of orders from large customers, and
shipments against those orders, can also result in significant quarter to
quarter variations in the Company's revenues and profit. In addition, there can
be no assurance that the Company will continue to secure the business of a
significant number of new customers or that demand for the Company's products
will be sufficient to ensure a broad customer base and sustainable source of
revenue. The occurrence of any of these events could have a material adverse
effect on the Company's business, results of operations and financial condition.
Through September 30, 1997, the Company has recorded a significant
portion of its revenue from one customer. Such revenue was earned by the Company
for providing research and development services under a technology transfer
arrangement. The Company's business plan does not contemplate that such services
will continue to a significant degree after the Company emerges from the
development stage, and, accordingly, such revenue from research and development
services should not be viewed as recurring or indicative of the Company's future
revenue, if any, from the sale of its batteries in commercial quantities.
FLUCTUATIONS IN QUARTERLY RESULTS
The Company's quarterly operating results can be expected to fluctuate
in the future. These fluctuations may be caused by many factors, including,
among others: the size and timing of individual purchase orders; the long sales
cycle in the OEM markets for the Company's products; market acceptance of new
products; the time required to successfully commence
11.
<PAGE> 13
commercial manufacturing using the Company's new fully-automated high volume
production line; implementation of additional automated production lines;
manufacturing yields and efficiency; changes in the Company's operating
expenses; timing of revenue recognized under the Company's technology transfer
arrangement with Johnson Controls; the mix of sales to OEMs and VAPs; product
development programs; and general industry and economic conditions. As a result
of these and other factors, the Company believes that period to period
comparisons of its results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance. It is possible
that the Company's future quarterly operating results from time to time will not
meet the expectations of market analysts or investors, which would likely have
an adverse effect on the market price of the Company's Common Stock. In
addition, there can be no assurance that the Company will achieve or sustain
profitability on a quarterly or annual basis.
DEPENDENCE ON SUPPLIERS
The Company is dependent on sole or limited source suppliers for
certain key raw materials used in its products, particularly thin lead foil and
lead oxide. The Company generally purchases sole or limited source raw materials
pursuant to purchase orders placed from time to time and has no long-term
contracts or other guaranteed supply arrangements with its sole or limited
source suppliers. There can be no assurance that the Company's suppliers will be
able to meet the Company's requirements relative to specifications and volumes
for key raw materials or that the Company will be able to locate alternative
sources of supply. There can be no assurance that the Company will be able to
purchase raw materials at an acceptable cost. In addition, the raw materials
which the Company utilizes must be of a very high quality. The Company at times
in the past has experienced delays in product development due to the delivery of
nonconforming raw materials from its suppliers.
PATENTS AND PROPRIETARY RIGHTS
The Company's ability to compete effectively will depend in part on its
ability to maintain the proprietary nature of its technology and manufacturing
processes through a combination of patent and trade secret protection, and
non-disclosure agreements. The Company holds five issued United States patents
which expire beginning in 2009 and ending in 2013. In addition, the Company has
five United States and a number of foreign patents pending. Patent applications
in the United States are maintained in secrecy until patents issue, and since
publication of discoveries in the scientific or patent literature tends to lag
behind actual discoveries, the Company cannot be certain that it was the first
creator of inventions covered by pending patent applications or the first to
file patent applications on such inventions. There can be no assurance that the
Company's pending patent applications will result in issued patents or that any
of its issued patents will afford meaningful protection against a competitor. In
addition, patent applications filed in foreign countries are subject to laws,
rules and procedures which differ from those of the United States, and thus
there can be no assurance that foreign patent applications related to issued
United States patents will issue. Furthermore, if these patent applications
issue, some foreign countries provide significantly less patent protection than
the United States.
12.
<PAGE> 14
The status of patents involves complex legal and factual questions and
the breadth of claims issued is uncertain. Accordingly, there can be no
assurance that patent applications filed by the Company will result in patents
being issued or that its patents, and any patents that may be issued to it in
the future, will afford protection against competitors with similar technology.
In addition, no assurances can be given that patents issued to the Company will
not be infringed upon or designed around by others or that others will not
obtain patents that the Company would need to license or design around. If
existing or future patents containing broad claims are upheld by the courts, the
holders of such patents could require companies to obtain licenses. If the
Company is found to be infringing third-party patents, there can be no assurance
that any necessary licenses would be available on reasonable terms, if at all.
The Company could incur substantial costs in defending itself, its
licensees, distributors or customers in litigation brought by others or
prosecuting infringement claims against third parties. If the outcome of any
such litigation were unfavorable to the Company, the Company's business,
financial condition and results of operations could be materially adversely
affected. To determine the priority of inventions, the Company may have to
participate in interference proceedings declared by the United States Patent and
Trademark Office or comparable proceedings in foreign patent offices, which
could result in substantial cost to the Company and may result in an adverse
decision as to the priority of the Company's inventions.
In addition to patent protection, the Company relies on the law of
unfair competition and trade secrets to protect its proprietary rights. The
Company considers several elements of the TMF manufacturing process to be trade
secrets. The Company attempts to protect its trade secrets and other proprietary
information through agreements with customers and suppliers, proprietary
information agreements with employees and consultants and other security
measures. However, third parties may independently develop substantially
equivalent proprietary information and techniques, or otherwise gain access to
the Company's trade secrets or disclose such technology, which could have a
materially adverse effect on the Company's business, results of operations and
financial condition. There can be no assurance that the Company's efforts to
vigorously protect its rights will be successful.
DEPENDENCE ON KEY EMPLOYEES; NEED TO ATTRACT AND RETAIN EMPLOYEES
The Company is highly dependent on its corporate officers and other
principal members of its management staff, the loss of any of whose services
might significantly delay or prevent the achievement of critical development,
manufacturing, marketing or other business objectives. In addition, the Company
relies on consultants and advisors to assist the Company in formulating its
research and development strategy. The Company has key person life insurance on
its Chief Executive Officer, Daniel S. Lankford, and its Senior Vice President,
Operations, Sandra D. Schreiber. The Company has employment contracts with Mr.
Lankford and Joseph F. Fojtasek, its Chief Financial Officer. Retaining and
attracting qualified personnel is critical to the Company's success. In order to
continue to pursue its product development and marketing plans, the Company will
be required to hire additional qualified scientific personnel to perform
research and development, manufacturing and marketing. These requirements are
also expected to demand the addition of management personnel and the development
of additional expertise by
13.
<PAGE> 15
existing management personnel. There can be no assurance that the Company will
be able to attract and retain such individuals on acceptable terms, if at all,
and the failure to do so could have a material adverse effect on the Company,
including its ability to conclude collaborations with additional corporate
partners.
ENVIRONMENTAL AND SAFETY RISKS
The Company's operations involve the storage, use and disposal of a
number of toxic and hazardous materials, including lead, lead oxide, sulfuric
acid, solvents and adhesives. As a result, the Company is required to maintain
its research and manufacturing operations in compliance with United States
federal, state, and local standards that govern the storage, use, and disposal
of various chemicals used in and waste materials produced by the manufacture of
its TMF batteries. The Company's pilot manufacturing facility and its new
manufacturing facility each include an enclosed area specifically designed for
the mixing of lead oxide paste, the pasting of the lead foil and the winding of
the cells. Employees operating in these areas are instructed in the use of
safety equipment such as gloves, protective clothing, and respirators and are
required under Occupational Safety and Health Administration ("OSHA") guidelines
to submit to blood monitoring tests on a periodic basis. The supervision and
analysis of these tests are undertaken by an outside, independent agency and the
results thereof are communicated to the Company's employees. The Company's
activities are also subject to federal, state and local environmental and safety
laws and regulations, including but not limited to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") as
amended including the regulations issued and laws enforced by the Colorado Labor
and Employment Department, the U.S. Department of Transportation, the U.S.
Department of Commerce, the U.S. Environmental Protection Agency and by state
and county health and safety agencies. There can be no assurance that the
Company will be able to operate in conformity with such laws and regulations in
the future, or that changes in such regulations will not require the Company to
incur substantial capital or operating costs to achieve or maintain compliance.
Any failure by the Company to adequately control the discharge of its hazardous
materials and wastes could also subject it to future liabilities, which could be
significant.
Lead acid batteries, including the Company's TMF battery, may develop
significant internal pressures during severe overcharge conditions due to the
release of gases as a byproduct of the chemical reaction occurring in the cell.
In order to prevent potential pressure build up, the Company's batteries
incorporate a Bunsen pressure relief valve which, under normal overcharge
conditions, will allow the venting of small amounts of gases, primarily hydrogen
and oxygen. If the batteries are subjected to abusive overcharge or
overdischarge conditions, larger amounts of these gases may be vented, which,
when mixed with air, can cause explosions. In addition, under such conditions,
toxic gases and/or sulfuric acid spray may be released. Sulfuric acid can cause
burns. While the Company maintains product liability insurance in amounts which
it believes are reasonable given the associated risks, there is no assurance
that such insurance will be adequate to cover any potential liability relating
to one or more claims of product liability, or that such insurance will be
available at an acceptable cost in the future.
14.
<PAGE> 16
CONTROL BY EXISTING STOCKHOLDERS
As of September 30, 1997, the Company's officers, directors and their
affiliates as a group beneficially owned approximately 28.1% of the Company's
outstanding Common Stock and 25.2% of the Company's Common Stock assuming
conversion of all outstanding shares of Series A Preferred Stock. As a result,
these stockholders will be able to exercise significant control over all matters
requiring stockholder approval, including the election of directors and approval
of significant corporate transactions.
EFFECT OF ANTI-TAKEOVER PROVISIONS
The Company's Board of Directors has the authority to issue up to
4,663,800 shares of undesignated preferred stock and to determine the price,
rights, preferences and privileges of those shares without any further vote or
action by the stockholders. The rights of the holders of the Company's capital
stock are subject to the rights of the holders of the Series A Preferred Stock
and will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. While the
Company has no present intention to issue any additional shares of preferred
stock, such issuance, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. In addition, the Company is subject to
the anti-takeover provisions of Section 203 of the Delaware General Corporation
Law, which prohibits the Company from engaging in a "business combination" with
an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. The application of
Section 203 also could have the effect of delaying or preventing a change of
control of the Company. Furthermore, the Company's classified Board of Directors
and certain other provisions of the Company's Certificate of Incorporation may
have the effect of delaying or preventing changes in control or management of
the Company, which could adversely affect the market price of the Company's
Common Stock and Series A Preferred Stock. See "Description of Capital Stock."
VOLATILITY OF STOCK PRICE; NO DIVIDENDS ON COMMON STOCK
The market price of the shares of Common Stock has been and is likely
to be highly volatile. Factors such as the fluctuation in the Company's
operating results, announcements of technological innovations or new commercial
products by the Company or its competitors, governmental regulation,
developments in patent or other proprietary rights of the Company or its
competitors, including litigation, developments in the Company's relationships
with current or future collaborative partners, and general market conditions may
have a significant effect on the market price of the Common Stock. The Company
has never paid any cash dividends and does not anticipate paying cash dividends
on the Common Stock in the foreseeable future.
15.
<PAGE> 17
POSSIBLE NONPAYMENT OF DIVIDENDS ON SERIES A PREFERRED STOCK; DEFICIENCY IN
FIXED CHARGES AND SERIES A PREFERRED STOCK DIVIDEND COVERAGE
The Company presently intends to pay dividends on the Series A
Preferred Stock in Common Stock, although the Company may pay dividends in cash
or a combination of Common Stock and cash. Dividends will be payable on the
Series A Preferred Stock only when, as and if declared by the Company's Board of
Directors as permitted under Delaware law. The Company has incurred net losses
since its inception and expects its losses to increase in the foreseeable
future. While the Company intends to pay dividends in Common Stock on the Series
A Preferred Stock, it is anticipated that the Company will continue to incur
losses and thus will continue to have a deficiency in fixed charges and
preferred stock dividend coverage. Dividends on the Series A Preferred Stock may
be paid only out of capital surplus (within the meaning of the Delaware General
Corporation Law) or net profits of the Company for the fiscal year in which the
dividend is declared and the preceding fiscal year. Unpaid dividends do not earn
interest. Dividends may be paid from a portion of the net proceeds of this
offering. See "Description of Capital Stock -- Series A Preferred Stock --
Dividends."
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Sales of substantial amounts of the Common Stock in the public market
after this offering could adversely affect the market price of the Common Stock.
4,910,914 of the 10,583,444 shares of Common Stock outstanding (on a fully
diluted basis assuming conversion of all outstanding shares of Series A
Preferred Stock) as of September 30, 1997 are freely tradable unless held by
affiliates of the Company. The remaining shares of Common Stock are "restricted
securities" (the "Restricted Shares") under the Securities Act. As of September
30, 1997, approximately 488,597 Restricted Shares are eligible for sale without
limitation in the public market pursuant to Rule 144(k) under the Securities
Act, and approximately 5,183,933 Restricted Shares are eligible for sale,
subject to certain limitations, in the public market pursuant to Rule 144 and
Rule 701 under the Securities Act. Holders of approximately 5,091,625 shares of
the Company's Common Stock and 49,766 shares of Common Stock issuable upon the
exercise of warrants to purchase Common Stock are entitled to certain rights
with respect to registration of such shares for offer or sale to the public. See
"Description of Capital Stock -- Outstanding Registration Rights."
NO MARKET FOR SERIES A PREFERRED STOCK
The Series A Preferred Stock is a new issue of securities with no
established trading market. The Company does not intend to apply for a listing
of the Series A Preferred Stock on the Nasdaq National Market or any other
securities exchange or trading system. There is currently no established market
for the Series A Preferred Stock and there can be no assurance as to the
liquidity of markets that may develop for the Series A Preferred Stock, the
ability of holders to sell their Series A Preferred Stock, or the price of which
holders would be able to sell their Series A Preferred Stock. The Series A
Preferred has been eligible for trading in the PORTAL Market. BT Alex. Brown
Incorporated ("Alex. Brown"), the initial purchaser of the Series A Preferred
Stock in the Rule 144A private placement, has advised the Company that it
16.
<PAGE> 18
intends to make a market in the Series A Preferred Stock. However, Alex. Brown
is not obligated to do so, and any market making with respect to the Series A
Preferred Stock may be discontinued at any time.
In recognition of the fact that the Selling Stockholders may wish to be
legally permitted to sell the Shares when each deems appropriate, the Company
has filed with the Commission a Registration Statement on Form S-3, of which
this Prospectus forms a part, with respect to, among other things, the resale of
the Shares from time to time at prevailing prices in the over-the-counter market
or in privately-negotiated transactions and has agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective until all Shares offered hereby have
been sold pursuant thereto or until such Shares are no longer, by reason of Rule
144 under the Securities Act or any other rule of similar effect, required to be
registered for the sale thereof by the Selling Stockholders.
USE OF PROCEEDS
The Company will not receive any proceeds from the sales, if any, of
the Shares by the Selling Stockholders to the public. The costs and expenses
incurred in connection with the registration under the Securities Act of the
offering described herein are estimated to be $60,000 and will be paid by the
Company. Each Selling Stockholder will pay all brokerage fees and commissions,
if any, incurred in connection with the sale of Shares by such party.
SELLING STOCKHOLDERS
The following table sets forth the name of the Selling Stockholders,
the number of shares of Series A Preferred Stock and Common Stock owned
beneficially by such Selling Stockholders as of October 8, 1997 and the number
of which may be offered pursuant to this Prospectus. This information is based
upon information provided by the Selling Stockholders. Because the Selling
Stockholders may offer all, some or none of their Common Stock, no definitive
estimate as to the number of shares thereof that will be held by the Selling
Stockholders after such offering can be provided.
17.
<PAGE> 19
<TABLE>
<CAPTION>
Number of Shares Number of
Shares of Series A of Series A Shares of Common
Preferred Stock Preferred Stock Shares of Common Stock Being
Name Beneficially Being Stock Beneficially Offered
of Selling Stockholder Owned Offered Hereby(1) Owned(2) Hereby(1)(2)(3)
---------------------- ----------------------- ----------------- ----------------------- ----------------
Number Percent Number Percent
------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
The Bank of New York 200,000 59.5% 200,000 666,666 6.6% 666,666
Firstar Trust Company 80,000 23.8% 80,000 266,666 2.7% 266,666
BT Alex. Brown Incorporated 45,000 13.4% 45,000 149,999 1.6% 149,999
Brown Brothers Harriman & Co. 11,200 3.3% 11,200 37,333 * 37,333
</TABLE>
- -------------------------
*Represents less than 1%
(1) While the Selling Stockholders have not expressed a specific intention
as to the number of shares of Series A Preferred Stock or Common Stock
to be sold, the table shows the beneficial ownership that would result
if all Shares were sold.
(2) Comprises the shares of Common Stock into which the Series A Preferred
Stock held by such Selling Stockholders are convertible at the initial
conversion rate. Also includes the shares of Common Stock otherwise
owned by such Selling Stockholders, if any. Does not include the shares
of Common Stock issuable as dividends on the Series A Preferred Stock,
although the resale of such shares is being registered hereunder. The
conversion rate and the number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock are subject to adjustment
under certain circumstances. See "Description of Capital Stock."
Accordingly, the number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock may increase or decrease
from time to time.
(3) Assumes conversion into Common Stock of the full amount of Series A
Preferred Stock held by the Selling Stockholders at the initial
conversion rate and the offering of such shares by such Selling
Stockholders pursuant to this Prospectus. The conversion rate and the
number of shares of Common Stock issuable upon conversion of the Series
A Preferred Stock is subject to adjustment under certain circumstances.
See "Description of Capital Stock". Accordingly, the number of shares
of Common Stock issuable upon conversion of the Series A Preferred
Stock may increase or decrease from time to time. Fractional shares
will not be issued upon conversion of the Series A Preferred Stock;
rather, cash will be paid in lieu of fractional shares, if any.
Because the Selling Stockholders may, pursuant to this Prospectus,
offer all or some portion of the Series A Preferred Stock and Common Stock they
presently hold or, with respect to Common Stock, have the right to acquire upon
conversion of such Series A Preferred Stock or as a dividend on such Series A
Preferred Stock, no estimate can be given as to the amount of the Series A
Preferred Stock and Common Stock that will be held by the Selling Stockholders
upon termination of any such sales. In addition, the Selling Stockholders
identified above may have sold, transferred or otherwise disposed of all or a
portion of their Series A Preferred Stock and Common Stock since the date on
which they provided the information regarding their Series A Preferred Stock and
Common Stock, in transactions exempt from the registration requirements of the
Securities Act. See "Plan of Distribution".
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Stockholders or pledgees,
donees, transferees or other successors in interest of the Selling Stockholders
may sell Shares from time to time in one or more transactions (which may involve
one or more blocked transactions) on the Nasdaq National Market, in privately
negotiated transactions or a combinations of such methods
18.
<PAGE> 20
of sale, at fixed prices or at negotiated prices. The Selling Stockholders may
effect such transactions by selling the Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concession or commissions from the Selling Stockholders or the purchasers of the
Shares for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation to a particular broker-dealer might be in
excess of customary commission).
Broker-dealers may agree with the Selling Stockholder to sell a
specified number of Shares at a stipulated price per Share and, to the extent
such a broker-dealer is unable to do so acting as agent for the Selling
Stockholders, to purchase as principals any unsold Shares at the price required
to fulfill the respective broker-dealer's commitment to the Selling Stockholder.
Broker-dealers who acquire Shares as principals may thereafter resell such
Shares from time to time in transactions (which may involve cross and block
transactions and which may involve sales to and through other broker-dealers,
including transactions of the nature described above) in the over-the-counter
market, in negotiated transactions or otherwise, at market prices prevailing at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such Shares commissions.
At any time a particular offer of Shares is made, to the extent
required, a supplemental Prospectus will be distributed which will set forth the
number of shares offered and the terms of the offering including the names or
names of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the Shares purchased from the Selling Stockholders, any
discounts, commission and other items constituting compensation from the Selling
Stockholders and any discounts, concessions or commissions allowed or reallowed
or paid to dealers.
The Selling Stockholders and any broker-dealers who act in connection
with the sale of Shares hereunder may be deemed to be "underwriters" as that
term is defined in the Securities Act, and any commissions received by them and
profit on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
Any or all of the sales or other transactions involving the Shares
described above, whether effected by the Selling Stockholders, any broker-dealer
or others, may be made pursuant to this Prospectus. In addition, any Shares that
qualify for sale pursuant to Rule 144 under the Act may be sold under Rule 144
rather than pursuant to this Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold in such jurisdictions only through registered
or licensed brokers or dealers. In addition, in certain states the Shares may
not be sold unless they have been registered or qualified for sale or an
exemption from registration or qualification requirements is available and is
complied with.
The Company entered into a Registration Rights Agreement with
Alex. Brown for the benefit of holders of the Series A Preferred Stock to
register the Shares under applicable federal and state securities laws. The
Company will use its reasonable best efforts to cause the Registration Statement
to which this Prospectus related to become effective within 60 days of the
Closing Date for the resale of the Shares and to remain effective until the
second anniversary of the Closing Date. The Company will be permitted to suspend
the use of the Prospectus which is
19.
<PAGE> 21
a part of such Registration Statement during certain periods of time and under
certain circumstances relating to pending corporate developments, public filings
with the Commission and similar events. The Company will pay all expenses of
such Registration Statement, provide to each registered holder requesting to
sell the Shares copies of such Prospectus, notify each registered holder when
such Registration Statement has become effective and take certain other actions
as are required to permit, subject to the foregoing, unrestricted resales of
such securities. A holder who sells such securities pursuant to such
Registration Statement generally will be required to be named as a selling
stockholder in the related Prospectus and to deliver a Prospectus to purchasers
and will be bound by the provisions of the Registration Rights Agreement which
are applicable to such holder (including certain indemnification provisions). If
a Registration Statement covering the Shares and Common Stock is not effective,
such Shares and Common Stock may not be sold or otherwise transferred except in
accordance with the provisions set forth under an exemption from Registration
under federal and state securities laws. The Series A Preferred Stock will not
be listed on any securities exchange or quoted in any over-the-counter market.
It is not expected that any public trading market will develop for the Series A
Preferred Stock. The Registration Rights Agreement provides for
cross-indemnification of the Selling Stockholders and the Company to the extent
permitted by law, for losses, claims, damages, liabilities and expenses arising
under certain circumstances, out of any registration of the Shares.
All costs associated with this offering will be paid by Bolder.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 25,000,000 shares of
Common Stock, $.001 par value per share, and 5,000,000 shares of Preferred
Stock, $.001 par value per share, of which 336,200 are designated Series A
Preferred Stock. As of September 30, 1997, there were approximately 132 record
holders of the Company's Common Stock.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders. The
holders of Common Stock are not entitled to cumulative voting rights with
respect to the election of directors, and as a consequence, minority
stockholders will not be able to elect directors on the basis of their votes
alone. Subject to preferences that may be applicable to any then outstanding
shares of preferred stock, holders of Common Stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors out of funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, holders of the Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities and the liquidation
preference of any then outstanding preferred stock. Holders of Common Stock have
no preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Stock. All outstanding shares of Common Stock are, and all shares of
Common Stock to be outstanding upon completion of this offering will be, fully
paid and nonassessable.
20.
<PAGE> 22
PREFERRED STOCK
The Board of Directors of the Company is empowered, without approval of
the stockholders, to cause shares of preferred stock to be issued in one or more
series and to establish the number of shares to be included in each such series
and the rights, powers, preferences and limitations of each series. Because the
Board of Directors has the power to establish the preferences and rights of each
series, it may afford the holders of any series of preferred stock preferences,
powers and rights, voting or otherwise, senior to the rights of holders of
Common Stock or other series of preferred stock. The issuance of the preferred
stock could have the effect of delaying or preventing a change in control of the
Company. The Board of Directors has no present plans to issue any of the
preferred stock, other than the Series A Preferred Stock which was issued by the
Company in October 1997.
SERIES A PREFERRED STOCK
The Series A Preferred Stock constitutes a single series of the
preferred stock of the Company consisting of 336,200 shares. All outstanding
shares of Series A Preferred Stock are duly authorized, validly issued, fully
paid and nonassessable, and the holders thereof will not have any preemptive
rights in connection therewith. The Series A Preferred Stock is not subject to
any sinking fund or other obligation of the Company to redeem or retire such
shares except as described below. Any Series A Preferred Stock converted,
redeemed or otherwise acquired by the Company will, upon cancellation of such
shares, have the status of authorized but unissued preferred stock subject to
issuance by the Board of Directors as shares of preferred stock of any one or
more other series but not as shares of Series A Preferred Stock.
Dividends
Holders of the Series A Preferred Stock are each entitled to receive,
when, as and if declared by the Board of Directors, out of the funds of the
Company legally available therefor, a semi-annual dividend payable in Common
Stock (based upon the Common Stock's then fair market value) or cash or a
combination of Common Stock and cash, at the Company's option, at an annual rate
equal to (i) $4.00 per share to the extent the dividend is paid in cash and (ii)
$4.50 per share to the extent the dividend is paid in Common Stock. The Company
has agreed to issue dividends in Common Stock only if a registration statement
covering the resale of that stock is effective. Accrued dividends on the Series
A Preferred Stock are payable semi-annually on December 31 and June 30 of each
year and, in the case of any accrued but unpaid dividends, at such additional
times and for such interim periods, if any, as determined by the Board of
Directors. Dividends on the Series A Preferred Stock are cumulative from the
Closing Date and will be payable to holders of record as they appear on the
stock books of the Company on such record dates, which shall be not more than 60
days nor less than 10 days preceding the payment dates, as shall be fixed by the
Board of Directors, provided that holders of shares of Series A Preferred Stock
called for redemption on a redemption date falling between a dividend payment
record date and the dividend payment date shall, in lieu of receiving such
dividend on the dividend payment date fixed therefor, receive an amount equal to
such dividend payment (consisting of all accumulated and unpaid dividends
through and including the redemption date)
21.
<PAGE> 23
on the date fixed for redemption (unless such holders convert such shares in
accordance with the Series A Certificate of Designation (the "Series A
Designation")). Dividends payable on the Series A Preferred Stock for any period
greater or less than a full dividend period will be computed on the basis of a
360-day year consisting of twelve 30-day months. Accrued but unpaid dividends
will not bear interest.
If dividends are not paid in full on the Series A Preferred Stock and
any other preferred stock ranking on a parity as to dividends with the Series A
Preferred Stock, all dividends declared upon shares of Series A Preferred Stock
and such other preferred stock will be declared pro rata so that in all cases
the amount of dividends declared per share on the Series A Preferred Stock and
such other preferred stock bear to each other the same ratio that accrued and
unpaid dividends per share on the shares of Series A Preferred Stock and such
other preferred stock bear to each other. Except as set forth above, unless full
cumulative dividends on the Series A Preferred Stock have been paid or funds set
aside, dividends (other than dividends paid solely in Common Stock, other stock
ranking junior as to dividends to the Series A Preferred Stock and rights to
acquire the foregoing) may not be paid or declared and set aside for payment and
other distributions may not be made upon the Common Stock or on any other stock
of the Company ranking junior to or on a parity with the Series A Preferred
Stock as to dividends nor may any Common Stock or any other stock of the Company
ranking junior to or on a parity with the Series A Preferred Stock as to
dividends be redeemed, purchased or otherwise acquired for any consideration by
the Company.
Conversion Rights
Each share of Series A Preferred Stock is convertible at the option of
the holder thereof at any time, unless previously redeemed, into that number of
shares of Common Stock equal to $50.00 divided by a conversion price per share
equal to $15.00, subject to adjustment as described below (the "Conversion
Price"). The right of conversion will terminate at the close of business on the
third business day preceding a date fixed for redemption and will be lost if not
exercised prior to that time.
In case the Company shall be a party to any transaction (including,
without limitation, a merger or consolidation; sale, lease or transfer of all or
substantially all of its assets; reclassification of the Common Stock; or
reorganization of the Company) as a result of which shares of Common Stock shall
be converted into the right to receive stock, securities or other property
(including cash or any combination thereof), each share of Series A Preferred
Stock, if not converted as a result of the transaction, shall thereafter be
convertible into the kind and amount of shares of stock and other securities and
property (including cash) receivable upon the consummation of such transaction
by a holder of that number of shares of Common Stock, or fraction thereof, into
which one share of Series A Preferred Stock was convertible immediately prior to
such transaction at the Conversion Price for each share of Series A Preferred
Stock in effect at such time. Under certain circumstances such transactions will
require the consent of the holders of Series A Preferred Stock.
22.
<PAGE> 24
The Conversion Price of the Series A Preferred Stock is subject to
adjustment upon certain events, including (i) the issuance of Common Stock as a
dividend with respect to the outstanding Common Stock, subdivisions, splits or
combinations of Common Stock, or the issuance of any shares of capital stock by
reclassification of Common Stock and (ii) the issuance to all holders of Common
Stock of rights, options or warrants to subscribe for or purchase the Common
Stock or securities convertible into or exchangeable for Common Stock, in each
case at less than the then current market price per share of Common Stock. In
the event of the distribution to holders of Common Stock of securities of the
Company (other than Common Stock) or of assets (excluding certain cash dividends
as specified in the Series A Designation) other than those mentioned in clause
(ii) above, the Company will set aside in escrow such amount of such
distribution as the holders of Series A Preferred Stock would have been entitled
to receive if they had converted such Series A Preferred Stock into Common Stock
prior to the record date for such distribution.
No adjustment of the Conversion Price of the Series A Preferred Stock
will be required to be made in any case until cumulative adjustments amount to a
change in the Conversion Price of $.05 or more, but any such adjustment that
would otherwise be required to be made shall be carried forward and taken into
account in any subsequent adjustment. The Company reserves the right, to the
extent permitted by law, to make such reductions in the Conversion Price in
addition to those required in the foregoing provision as it, in its sole
discretion, shall determine to be advisable in order that certain stock-related
distributions made by the Company to its stockholders shall not be taxable to
such stockholders.
No fractional shares or securities representing fractional shares of
Common Stock will be issued upon conversion. Any fractional shares resulting
from conversion will be paid in cash based on the closing price of the Common
Stock on the last trading day preceding the date of conversion.
Holders of shares of Series A Preferred Stock at the close of business
on a dividend payment record date will be entitled to receive the dividend
payable on such shares on the corresponding dividend payment date
notwithstanding the conversion thereof or the Company's default on payment of
the dividend due on such dividend payment date. However, for shares of Series A
Preferred Stock surrendered for conversion during the period from the close of
business on any dividend payment record date to the opening of business on the
corresponding dividend payment date, the Company shall only be required to pay
the dividend to the record holder of such shares on the dividend payment record
date. Except as provided above, no payment or adjustment will be made on account
of accrued or unpaid dividends upon conversion of shares of Series A Preferred
Stock.
Liquidation Rights
In the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of shares of Series A
Preferred Stock are each entitled to receive out of assets of the Company
available for distribution to stockholders, whether from capital surplus or
earnings, before any distribution of assets is made to holders of Common Stock
23.
<PAGE> 25
and of any other class of stock of the Company ranking junior to the Series A
Preferred Stock, liquidating distributions equal to the greater of (i) $50.00
per share of such Series A Preferred Stock or (ii) the amount per share of such
Series A Preferred Stock that would have been payable had each such share been
converted into Common Stock immediately prior to such event of liquidation,
dissolution or winding up, plus, in either case, accrued and unpaid dividends.
If upon any liquidation, dissolution or winding up of the Company, the amounts
payable with respect to the Series A Preferred Stock and any other preferred
stock ranking as to any such distribution on a parity with the Series A
Preferred Stock are not paid in full, the holders of the Series A Preferred
Stock and of such other preferred stock will share ratably in any such
distribution of assets in proportion to the full respective preferential amounts
to which they are entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of Series A
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Company. Neither a consolidation or merger of the
Company with another corporation nor a sale, transfer or lease of all or part of
the Company's assets will be considered a liquidation, dissolution or winding up
of the Company for these purposes.
Redemption Rights
Under certain circumstances, the shares of Series A Preferred Stock are
redeemable at the option of the Company, in whole or in part, at any time or
from time to time out of funds legally available therefor, at $50.00 per share,
plus in each case an amount equal to accrued and unpaid dividends, if any, to
(and including) the redemption date, whether or not earned or declared (the
"Redemption Price"). The Series A Preferred Stock may be redeemed subsequent to
October 8, 1999 (the second anniversary of the Closing Date) in the event that
the closing price of the Common Stock equals or exceeds $30.00 per share (a 100%
premium to the Conversion Price), subject to certain adjustments, for each of
the 30 consecutive trading days ending two trading days prior to the date of the
redemption notice. The Series A Preferred Stock may be redeemed subsequent to
October 8, 2000 (the third anniversary of the Closing Date) in the event that
the closing price of the Common Stock equals or exceeds $26.25 (a 75% premium to
the Conversion Price), subject to certain adjustments, for each of the 30
consecutive trading days ending two trading days prior to the date of the
redemption notice. The Redemption Price may be paid in shares of Common Stock or
cash, or in a combination of Common Stock and cash, at the Company's option. If
the Company chooses to redeem the Series A Preferred Stock with Common Stock,
the number of shares of Common Stock issuable to the holders of the Series A
Preferred Stock being redeemed will be fixed on the date the notice of
redemption is sent to such holders and will be equal to the greater of (i) the
number of shares of Common Stock issuable to such holders at the then existing
Conversion Price or (ii) the number of shares of Common Stock issuable to such
holders at the Redemption Price based upon the Common Stock's then fair market
value as determined by taking the average closing price of the Common Stock for
the 10 consecutive trading days ending two trading days prior to the date of the
redemption notice.
If the Company chooses to pay the Redemption Price in Common Stock, the
holders of the Series A Preferred Stock being redeemed must be offered the
option to sell such Common Stock in a firm commitment underwriting. If the net
proceeds per share of Common Stock to the
24.
<PAGE> 26
holders who so elect to sell in a firm commitment underwriting would be less
than $30.00 (a 100% premium to the Conversion Price) or $26.25 (a 75% premium to
the conversion price), as applicable, and the Company chooses not to supplement
the net proceeds in an amount necessary to attain the $30.00 or $26.25 per share
threshold, as applicable, then such holders may elect to retain their shares of
Series A Preferred Stock.
The Series A Preferred Stock, if not earlier redeemed, will be redeemed
on October 8, 2002 (the fifth anniversary of the Closing Date) at the Redemption
Price. If the Company chooses to pay the Redemption Price in Common Stock, the
holders must be offered the option to sell such Common Stock in a firm
commitment underwriting. If the net proceeds per share of redeemed Series A
Preferred Stock to the holders who so elect to sell in a firm commitment
underwriting would be less than the Redemption Price and the Company chooses not
to supplement the net proceeds in an amount necessary to attain the Redemption
Price threshold, then such holders may elect to retain their Series A Preferred
Stock. The Company will then have a continuing obligation to use its reasonable
best efforts to effect a firm commitment underwriting which will result in net
proceeds to such holders equal to the Redemption Price; however, the Company
will in no event be required to pay cash to redeem such Series A Preferred
Stock. If the Series A Preferred Stock is not redeemed prior to October 8, 2003
(the sixth anniversary of the Closing Date), the Board of Directors of the
Company shall be increased and the holders of Series A Preferred Stock shall
each be entitled, voting as a separate class, to elect additional directors to
the Board of Directors of the Company so that the number of additional directors
granted to the Series A Preferred Stock shall constitute not less than 20%
(rounded to the nearest whole number) of the total number of directors after
giving effect to such increase. Such right shall exist until the Series A
Preferred Stock is redeemed.
If fewer than all of the shares of Series A Preferred Stock are to be
redeemed, the shares to be redeemed shall be selected by lot or pro rata or in
some other equitable manner determined by the Board of Directors of the Company
in its sole discretion. On and after the date fixed for redemption, provided
that the Redemption Price for the shares to be redeemed has been duly paid or
provided for, dividends shall cease to accrue on the Series A Preferred Stock
called for redemption, such shares shall no longer be deemed to be outstanding
and all rights of the holders of such shares as stockholders of the Company
shall cease, except the right to receive the cash or Common Stock payable upon
such redemption, without interest thereon, upon surrender of the certificates
evidencing such shares.
In the event the Company shall redeem shares of Series A Preferred
Stock, a notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 90 days prior to the redemption
date, to each holder of record of the shares of Series A Preferred Stock to be
redeemed, at such holder's address as the same appears on the stock records of
the Company. Each such notice shall state, among other things: (i) the
redemption date; (ii) whether the Redemption Price will be paid in shares of
Common Stock or cash, or in a combination of Common Stock and cash; (iii) that
dividends on shares of Series A Preferred Stock to be redeemed shall cease to
accrue following such redemption date; (iv) that dividends accrued to and
including the date fixed for redemption will be paid as specified in said notice
and (v) if the Redemption Price will be paid in shares of Common Stock, that an
investment banking
25.
<PAGE> 27
firm mutually acceptable to the Company and the holders of a majority of the
shares of the Series A Preferred Stock being redeemed has agreed to proceed with
a firm commitment underwriting (x) for holders of Series A Preferred Stock to be
redeemed by such notice, (y) with respect to the shares of Common Stock
obtainable by such holders upon redemption of the Series A Preferred Stock being
redeemed and (z) which will yield net proceeds (after deducting underwriting
commissions and fees and other expenses of the offering) in the amounts
described above. Notice having been mailed as aforesaid, from and after the
redemption date, unless the Company shall be in default in providing cash or
Common Stock for the payment of the Redemption Price (including any accrued and
unpaid dividends to (and including) the date fixed for redemption), (1)
dividends on the shares of the Series A Preferred Stock so called for redemption
shall cease to accrue, (2) said shares shall be deemed no longer outstanding and
(3) all rights of the holders thereof as stockholders of the Company (except the
right to receive from the Company any cash or Common Stock payable upon
redemption without interest thereon) shall cease except for the rights
applicable to any Common Stock paid pursuant to the redemption.
An election by any holders to participate in an underwritten offering
shall suspend any redemption with respect to Series A Preferred Stock held by
such holders. If such holders who notified the Company that they wished to
participate in the public offering refuse to close under the underwriting
agreement despite the satisfaction of all conditions therein to their obligation
to close thereunder, or if no holder notifies the Company of any election to
participate in an underwritten offering, then the Company shall have the right
to redeem (in whole or in part) the Series A Preferred Stock scheduled for
redemption; any such required redemption shall be made no later than the date
(which shall be a business day) to be specified (not more than 20 days or less
than five days after such failure to close) to such holders by the Company. If
any underwriting does not close due to one or more of the conditions to the
sellers' obligations to close under the underwriting agreement not being
satisfied, then the notice of the Company requiring redemption of the Series A
Preferred Stock shall be rescinded.
Redemption at Option of Holder upon a Fundamental Change
If a Fundamental Change (as defined below) occurs, each holder of
Series A Preferred Stock shall have the right, at the holder's option, to
require the Company to redeem all of such holder's Series A Preferred Stock, or
any portion thereof that has an aggregate liquidation value that is a multiple
of $50.00, on the date (the "Repurchase Date") selected by the Company that is
not less than 10 nor more than 20 days after the Final Surrender Date (as
defined below), at a price per share equal to the Redemption Price. The Company
may, at its option, pay all or any portion of the Redemption Price upon a
Fundamental Change in shares of Common Stock of the Company or any successor
corporation. For purposes of calculating the number of shares of Common Stock
issuable upon such redemption, the value of any such stock will be equal to the
average of the closing prices of such Common Stock for the 10 trading days
ending two trading days prior to the Repurchase Date. Payment may not be made in
shares of Common Stock unless such shares have been, or will be no later than
the Final Surrender Date (as defined below), registered under the Securities Act
or are freely tradable pursuant to an exemption
26.
<PAGE> 28
thereunder and are listed on a United States national securities exchange or
quoted on The Nasdaq National Market at the time of payment.
Within 30 days after the occurrence of a Fundamental Change, the
Company is obligated to mail to all holders of record of the Series A Preferred
Stock a notice (the "Company Notice") describing, among other things, the
occurrences of such Fundamental Change and of the redemption right arising as a
result thereof. The Company must cause a copy of such notice to be published in
a newspaper of general circulation in the Borough of Manhattan, the City of New
York. At least two business days prior to the Repurchase Date, the Company must
publish a similar notice stating whether and to what extent the Redemption Price
will be paid in cash or shares of Common Stock. To exercise the redemption
right, a holder of Series A Preferred Stock must surrender, on or before the
date which is, subject to any contrary requirements of applicable law, 60 days
after the date of mailing of the Company Notice (the "Final Surrender Date"),
the certificates representing the Series A Preferred Stock with respect to which
the rights is being exercised, duly endorsed for transfer to the Company,
together with a written notice of election.
The term "Fundamental Change" shall mean any of the following:
(i) a "person" or "group" (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), together with any affiliate thereof, becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
Voting Shares (as defined below) of the Company entitled to exercise
more than 60% of the total voting power of all outstanding Voting
Shares of the Company (including any Voting Shares that are not then
outstanding of which such person or group is deemed the beneficial
owner);
(ii) any consolidation of the Company with, or merger of the
Company into, any other person, any merger of another person into the
Company, or any sale, lease or transfer of all or substantially all of
the assets of the Company to another person (other than a merger (A)
which results in the holders of Common Stock of the Company immediately
prior to giving effect to such transaction owning shares of capital
stock of the surviving corporation in such transaction representing in
excess of 40% of the total voting power of all shares of capital stock
of such surviving corporation entitled to vote generally in the
election of directors and (B) in which the shares of the surviving
corporation held by such holders are, or immediately upon issuance will
be, listed on a national securities exchange or quoted on The Nasdaq
National Market and are not subject to any right of repurchase by the
issuer thereof or any third-party and are not otherwise subject to any
encumbrance as a result of such transaction, provided, that the
surviving corporation amends its charter or certificate of
incorporation to include the Series A Preferred Stock and its terms as
set forth in the Series A Designation); or
(iii) the substantial reduction or elimination of a public
market for the Common Stock of the Company as the result of the
Company's Common Stock ceasing to be approved for quotation on The
Nasdaq National Market or listed on a national securities exchange;
27.
<PAGE> 29
provided, however, that a Fundamental Change shall not occur with respect to the
Series A Preferred Stock if either (i) as of the fifteenth trading day after the
public announcement by the Company of such transaction and, if later, three days
prior to the consummation of such transaction, the last sale price of the Common
Stock is equal to at least 110% of the applicable Conversion Price in effect on
such trading days or (ii) at least 90% of the consideration (excluding cash
payments for fractional shares) in such transaction or transactions to the
holders of Common Stock consists of shares of common stock that are, or
immediately upon issuance will be, listed on a national securities exchange or
quoted on The Nasdaq National Market and, as a result of such transaction or
transactions, the Series A Preferred Stock becomes convertible into such common
stock.
For purposes of the foregoing, "Voting Shares" is defined to mean all
outstanding shares of any class or classes (however designated) of capital stock
entitled to vote generally in the election of members of the Board of Directors.
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the redemption option becomes available to holders of
the Series A Preferred Stock. The Company will comply with this rule to the
extent applicable at the time.
The foregoing provisions would not necessarily afford holders of the
Series A Preferred Stock protection upon the occurrence of events that would
constitute a change in control or in the event of highly leveraged or other
transactions involving the Company that may adversely affect such holders or
against a decline in the creditworthiness of the Company.
Voting Rights
The holders of Series A Preferred Stock have voting rights on all
matters subject to a vote of holders of Common Stock on an as-converted basis.
The holders of Series A Preferred Stock that would be required to make a filing
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act")
in connection with the acquisition of Series A Preferred Stock, however, will
not be entitled to vote in the election of directors of the Company until the
waiting period under the HSR Act has expired or been terminated. If the Series A
Preferred Stock has not been redeemed prior to October 8, 2003 (the sixth
anniversary of the Closing Date), the Board of Directors of the Company shall be
increased and the holders of Series A Preferred Stock that have not been so
redeemed shall be entitled, voting as a separate class, to elect additional
directors to the Board of Directors of the Company so that the number of
additional directors to be elected by the Series A Preferred Stock shall
constitute not less than 20% (rounded to the nearest whole number) of the total
number of directors after giving effect to such increase. Such right shall exist
until the Series A Preferred Stock is redeemed.
Without the vote or consent of the holders of at least two-thirds of
the shares of Series A Preferred Stock then outstanding, voting as a separate
class, the Company may not (i) create or issue or increase the authorized number
of shares of any class or series of stock ranking senior to the Series A
Preferred Stock either as to dividends or upon liquidation or create, authorize
or issue any class or series of common stock of the Company other than the
Common Stock,
28.
<PAGE> 30
(ii) amend, alter or repeal any of the provisions of the Company's certificate
of incorporation so as to affect adversely the preferences, special rights or
powers of the Series A Preferred Stock, or the holders thereof, (iii) authorize
any reclassification of the Series A Preferred Stock, or increase the number of
shares of the Series A Preferred Stock, (iv) create, authorize or issue any
securities convertible into capital stock prohibited by clause (i), (v) amend
the Series A Designation or (vi) issue any shares of Series A Preferred Stock at
any time after October 8, 1997.
OUTSTANDING REGISTRATION RIGHTS
Pursuant to an existing agreement between the Company and certain of
its stockholders, the holders (or their permitted transferees) of approximately
5,091,625 shares of Common Stock and 49,766 shares of Common Stock issuable upon
the exercise of warrants to purchase Common Stock (the "Holders") are entitled
to certain rights with respect to the registration of such shares under the
Securities Act. If the Company proposes to register any of its securities under
the Securities Act, either for its own account or for the account of other
security holders, the Holders are entitled to notice of the registration and are
entitled to include, at the Company's expense, such shares therein, provided,
among other conditions, that the underwriters have the right to limit the number
of such shares included in the registration. In addition, certain of the Holders
may require the Company, on not more than two occasions, to file a registration
statement under the Securities Act, at the Company's expense, with respect to
their shares of Common Stock, and the Company is required to use its best
efforts to effect the registration, subject to certain conditions and
limitations. However, the Holders may not require the Company to file any such
registration statement within 90 days of the effective date of any prior
registration statement covering the Company's Common Stock, and the Company may
defer the filing of such registration statement for up to 120 days. Further,
certain of the Holders may require the Company, at its expense, to register
their shares of Common Stock on a Form S-3 when such form becomes available to
the Company, subject to certain conditions and limitations.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the "Delaware Law"), an anti-takeover law. In general,
the statute prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
For purposes of Section 203, a "business combination" includes a merger, asset
sale or other transaction resulting in a financial benefit to the interested
stockholder, and an "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years prior, did own) 15% or
more of the corporation's voting stock.
The Company's Certificate of Incorporation (the "Certificate of
Incorporation") also requires that any action required or permitted to be taken
by stockholders of the Company must be effected at a duly called annual or
special meeting of the stockholders and may not be effected by a consent in
writing. Special meetings of the stockholders of the Company may be called
29.
<PAGE> 31
only by the Board of Directors, the Chairman of the Board or the Chief Executive
Officer. The Certificate of Incorporation also provides that the authorized
number of Directors may be changed only by resolution of the Board of Directors,
and that Directors can only be removed for cause by a majority vote of the
stockholders. In addition, the Certificate of Incorporation provides for the
classification of the Board of Directors into three classes, only one of which
shall be elected at any given annual meeting. These provisions may have the
effect of delaying, deterring or preventing a change in control of the Company,
depressing the market price of Common Stock or discouraging hostile takeover
bids in which stockholders of the Company could receive a premium for their
shares of Common Stock.
LIMITATION ON DIRECTORS' LIABILITY
The Certificate of Incorporation limits the liability of the Company's
directors to the Company or its stockholders (in their capacity as directors but
not in their capacity as officers) to the fullest extent permitted by Delaware
law. Specifically, directors of the Company will not be personally liable for
monetary damages for breach of a director's fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, (iii)
for unlawful payments of dividends or unlawful stock repurchases or redemptions
as provided in Section 174 of the Delaware General Corporation Law or (iv) for
any transaction from which the director derived an improper personal benefit.
The inclusion of this provision in the Certificate of Incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefited the Company and its
stockholders.
TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company acts as transfer agent and
registrar for the Common Stock and for the Series A Preferred Stock.
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities
offered hereby are being passed upon for the Company by Cooley Godward LLP,
Boulder, Colorado.
EXPERTS
The financial statements and schedules of the Company incorporated by
reference in this Prospectus and elsewhere in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
30.
<PAGE> 32
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO
DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information ................................................. 3
Documents Incorporated by Reference ................................... 3
The Company ........................................................... 5
Risk Factors .......................................................... 7
Use of Proceeds ....................................................... 17
Selling Stockholders .................................................. 17
Plan of Distribution .................................................. 18
Legal Matters ......................................................... 30
Experts ............................................................... 30
</TABLE>
================================================================================
================================================================================
[LOGO OF BOLDER
TECHNOLOGIES
CORPORATION APPEARS
HERE]
336,200 SHARES OF SERIES A
CONVERTIBLE PREFERRED STOCK,
INDETERMINATE NUMBER OF
SHARES OF COMMON STOCK
ISSUED ON CONVERSION THEREOF
AND
453,870 SHARES OF
COMMON STOCK
----------
PROSPECTUS
----------
DECEMBER 5, 1997
================================================================================
<PAGE> 33
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by the Registrant in
connection with the sale of the Common Stock being registered, none of which
will be borne by the Selling Stockholders. All the amounts shown are estimates
except for the SEC registration fee.
<TABLE>
<S> <C>
SEC Registration fee............................. $ 6,465
Legal fees and expenses.......................... $15,000
Accounting fees and expenses..................... $15,000
Miscellaneous.................................... $23,535
-------
Total................................... $60,000
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law, the
Registrant has broad powers to indemnify its Directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Act").
The Registrant's Bylaws provide that the Registrant will indemnify its
directors and executive officers and may indemnify its other officers, employees
and agents to the fullest extent permitted by Delaware law. The Registrant is
also empowered under its Bylaws to enter into indemnification agreements with
its directors and officers and to purchase insurance on behalf of any person it
is required or permitted to indemnify.
In addition, the Registrant's Restated Certificate of Incorporation
provides that to the fullest extent permitted by Delaware law, the Registrant's
directors will not be liable for monetary damages for breach of the directors'
fiduciary duty of care to the Registrant and its stockholders. This provision in
the Restated Certificate of Incorporation does not eliminate the duty of care,
and in appropriate circumstances equitable remedies such as an injunction or
other forms of non-monetary relief would remain available under Delaware law.
Each director will continue to be subject to liability for breach of the
director's duty of loyalty to the Registrant, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
any transaction from which the director derived an improper personal benefit,
for improper transactions between the director and the Registrant and for
improper distributions to stockholders and loans to directors and officers. This
provision also does not affect a director's responsibilities under any other
laws, such as the federal securities law or state or federal environmental laws.
II-1
<PAGE> 34
The Registrant has entered into indemnification agreements with each of
its directors and officers under which the Registrant has indemnified each of
them against expenses and losses incurred for claims brought against them by
reason of their being a director or officer of the Registrant, and the
Registrant maintains directors' and officers' liability insurance.
There is no pending litigation or proceeding involving a director or
officer of the Registrant as to which indemnification is being sought, nor is
the Registrant aware of any pending or threatened litigation that may result in
claims for indemnification by any director or officer.
At present, there is no pending litigation or proceeding involving a
Director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or Director.
The Registrant has an insurance policy covering the officers and
Directors of the Registrant with respect to certain liabilities, including
liabilities arising under the Act or otherwise.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3(i).2 to the
Registrant's Registration Statement on Form SB-2 (Registration
No. 333-2500-D)).
4.2 Certificate of Designation of the Series A Preferred Stock.
4.3 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3(ii).2 to the Registrant's Registration
Statement on Form SB-2 (Registration No. 333-2500-D)).
4.4 Specimen stock certificate representing shares of Series A
Preferred Stock.
4.5 Specimen stock certificate representing shares of Common Stock
(incorporated by reference to Exhibit 4.2 to the Registrant's
Registration Statement on Form SB-2 (Registration No.
333-2500-D)).
5.1 Opinion of Cooley Godward LLP.
10.1 Purchase Agreement, dated October 3, 1997, between the
Registrant and BT Alex. Brown Incorporated.
10.2 Registration Rights Agreement, dated October 8, 1997, between
the Registrant and BT Alex. Brown Incorporated.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24 Power of Attorney (included on pages 4 and 5).
</TABLE>
II-2
<PAGE> 35
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of
the Act;
(b) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the registration statement;
(c) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
registration statement;
Provided however, that paragraphs (1)(a) and (1)(b) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") that are incorporated by reference in
the Registration Statement.
(2) For the purpose of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 36
(5) That, for purposes of determining any liability under the
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective.
(6) Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 15 or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(7) (a) For purposes of determining any liability under the Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective.
(b) For the purpose of determining any liability under the
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to the
initial bona fide offering thereof.
II-4
<PAGE> 37
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Golden, State of Colorado, on December 5, 1997.
BOLDER TECHNOLOGIES, INC.
By: /s/ Daniel S. Lankford
------------------------------------
Daniel S. Lankford
Chairman of the Board, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL THE PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Daniel S. Lankford and Joseph
F. Fojtasek, and each of the them, as his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments and registration statements filed pursuant
to Rule 462) to this Registration Statement, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Daniel S. Lankford Chairman of the Board, December 5, 1997
- ------------------------------- Chief Executive Officer and Director
Daniel S. Lankford (Principal Executive Officer)
/s/ Joseph F. Fojtasek Chief Financial Officer, Vice President, December 5, 1997
- ------------------------------- Finance and Administration, Treasurer
Joseph F. Fojtasek and Secretary (Principal Financial and
Accounting Officer)
/s/ William R. Bottoms Director December 5, 1997
- -------------------------------
William R. Bottoms
/s/ William D. Connor Director December 5, 1997
- -------------------------------
William D. Connor
/s/ Carl S. Stutts Director December 5, 1997
- -------------------------------
Carl S. Stutts
</TABLE>
II-5
<PAGE> 38
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3(i).2 to the
Registrant's Registration Statement on Form SB-2 (Registration
No. 333-2500-D)).
4.2 Certificate of Designation of the Series A Preferred Stock.
4.3 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3(ii).2 to the Registrant's Registration
Statement on Form SB-2 (Registration No. 333-2500-D)).
4.4 Specimen stock certificate representing shares of Series A
Preferred Stock.
4.5 Specimen stock certificate representing shares of Common Stock
(incorporated by reference to Exhibit 4.2 to the Registrant's
Registration Statement on Form SB-2 (Registration No.
333-2500-D)).
5.1 Opinion of Cooley Godward LLP.
10.1 Purchase Agreement, dated October 3, 1997, between the
Registrant and BT Alex. Brown Incorporated.
10.2 Registration Rights Agreement, dated October 8, 1997, between
the Registrant and BT Alex. Brown Incorporated.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24 Power of Attorney (included on pages 4 and 5).
</TABLE>
<PAGE> 1
EXHIBIT 4.2
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
SERIES A CONVERTIBLE PREFERRED STOCK
($.001 PAR VALUE)
(LIQUIDATION PREFERENCE $50.00 PER SHARE)
OF
BOLDER TECHNOLOGIES CORPORATION
______________________
PURSUANT TO SECTION 151(g) OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
______________________
THE UNDERSIGNED, being the President and Chief Executive Officer of
Bolder Technologies Corporation, a Delaware corporation (the "Company"), DOES
HEREBY CERTIFY that, pursuant to the provisions of Section 151(g) of the
General Corporation Law of the State of Delaware and pursuant to authority
conferred upon the Board of Directors by the provisions of the Amended and
Restated Certificate of Incorporation of the Company (the "Certificate of
Incorporation), the Board of Directors of the Company has duly adopted
resolutions providing for the issuance of a series of its preferred stock and
fixing the relative powers, designations, preferences and rights of such stock
and the qualifications, limitations and restrictions thereof. These
resolutions are as follows:
RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of the Certificate
of Incorporation, the issuance of a series of preferred stock, par value $.001
per share, which shall consist of three hundred thirty-six thousand two hundred
(336,200) of the five million (5,000,000) shares of preferred stock that the
Company now has authority to issue, be, and the same hereby is, authorized, and
the Board of Directors hereby fixes the powers, designations, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof, of the shares of such
series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Certificate of
Incorporation that may be applicable to the preferred stock of this series) as
follows:
1
<PAGE> 2
1. NUMBER OF SHARES AND DESIGNATION. Three hundred thirty-six
thousand two hundred (336,200) shares of the preferred stock, $.001 par value
per share, of the Company are hereby constituted as a series of the preferred
stock designated as Series A Convertible Preferred Stock, par value $.001 per
share (the "Series A Preferred Stock").
2. DEFINITIONS. For purposes of the Series A Preferred Stock, in
addition to those terms otherwise defined herein, the following terms shall
have the meanings indicated:
(a) "BOARD OF DIRECTORS" shall mean the board of
directors of the Company or any committee authorized by such Board of Directors
to perform any of its responsibilities with respect to the Series A Preferred
Stock.
(b) "BUSINESS DAY" shall mean any day other than a
Saturday, Sunday or a day on which state or federally chartered banking
institutions in the State of Colorado are authorized or obligated by law or
executive order to close.
(c) "CLOSING PRICE" of a security with respect to any day
shall mean the average of the daily closing prices for the ten (10) consecutive
Trading Dates commencing twelve (12) Trading Dates before such day. The
closing price for each Trading Date shall be the reported last sales price,
regular way, for the security or, in case no sale takes place on such day, the
average of the reported closing bid and asked prices, regular way, for the
security in either case as reported on the New York Stock Exchange or the
principal national securities exchange on which the security is listed or
admitted to trading, or, if not listed or admitted to trading on any national
securities exchange, on The Nasdaq Stock Market, Inc. ("Nasdaq") National
Market, or if such security is not quoted on such The Nasdaq National Market,
the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by Nasdaq. If the Closing Price cannot be
so determined, then the Closing Price shall be determined:
(i) by the written agreement of the Company and
the holders of shares of Series A Preferred Stock representing a majority of
the Common Shares then obtainable from the conversion of outstanding shares of
Series A Preferred Stock, or
(ii) in the event that no such agreement is
reached within twenty (20) days after the event giving rise to the need to
determine the Closing Price, by the agreement of two arbitrators, one of whom
shall be selected by the Company and the other of whom shall be selected by
such majority holders or
(iii) if the two arbitrators so selected fail to
agree within twenty (20) days, by a third arbitrator selected by the mutual
agreement of the other two (with all costs and expenses of any arbitrators to
be paid by the Company).
The Company shall cooperate to permit any determination under the preceding
clauses (i), (ii) or (iii).
(d) "COMMON STOCK" shall mean the Common Stock of the
Company, par value $.001 per share.
2
<PAGE> 3
(e) "COMMON SHARES" shall have the meaning set forth in
Section 7 hereof.
(f) "COMPANY NOTICE" shall have the meaning set forth in
paragraph (d) of Section 5.
(g) "CONVERSION PRICE" shall mean the Conversion Price
per Common Share into which the Series A Preferred Stock is convertible, as
such Conversion Price may be adjusted pursuant to Section 7 hereof. The
initial Conversion Price shall be ($15.00).
(h) "DIVIDEND PAYMENT DATE" shall have the meaning set
forth in paragraph (a) of Section 3 hereof.
(i) "DIVIDEND PAYMENT RECORD DATE" shall have the meaning
set forth in paragraph (a) of Section 3 hereof.
(j) "DIVIDEND PERIODS" shall mean the interval beginning
on the most recent Dividend Payment Date and ending on and including the day
immediately preceding the next succeeding Dividend Payment Date.
(k) "FUNDAMENTAL CHANGE" shall have the meaning set forth
in paragraph (c) of Section 8 hereof.
(l) "INITIAL DIVIDEND PERIOD" shall mean the interval
beginning on the Issue Date to and including December 31, 1997.
(m) "ISSUE DATE" shall mean the first date on which
shares of the Series A Preferred Stock are issued.
(n) "PERSON" shall mean any individual, association,
partnership, corporation, a government or a political subdivision thereof, a
governmental agency or other entity, and shall include any agency successor (by
merger or otherwise) of such entity.
(o) "TRADING DATE" with respect to Common Shares means
(i) if the Common Shares are listed or admitted for trading on the New York
Stock Exchange or another national securities exchange, a day on which the New
York Stock Exchange or such other national securities exchange is open for
business, or (ii) if the Common Shares are quoted on The Nasdaq National
Market, a day on which trades may be made on The Nasdaq National Market, or
(iii) otherwise, any Business Day.
(p) "TRANSFER AGENT" means the American Stock Transfer &
Trust Company, or such other agent or agents of the Company as may be
designated by the Board of Directors of the Company as the transfer agent for
the Series A Preferred Stock.
3. DIVIDENDS.
(a) Holders of the Series A Preferred Stock are entitled
to receive, when, as and if declared by the Board of Directors, out of the
funds of the Company legally available
3
<PAGE> 4
therefor, a semi-annual dividend payable in Common Stock or cash or a
combination of Common Stock and cash, at the Board of Directors' option (except
that if in the preceding 6 months the Company has paid cash dividends on any
preferred stock other than the Preferred Stock with respect to which the
Company had the option to pay dividends in Common Stock, such semi-annual
dividend on the Preferred Stock shall be paid in cash), from the Issue Date for
the Initial Dividend Period and for each Dividend Period thereafter, at an
annual rate equal to (i) $4.00 per share of Series A Preferred Stock to the
extent the dividend is paid in cash and (ii) $4.50 per share of Series A
Preferred Stock to the extent the dividend is paid in Common Stock (and, in the
case of any accrued but unpaid dividends, upon liquidation as provided under
Section 4 hereof, upon redemption as provided under Section 5 hereof and upon
conversion as provided under Section 7 hereof). Notwithstanding the above, the
Company will not declare and cause to be paid dividends on the Series A
Preferred Stock in shares of Common Stock until a registration statement
covering the resale of such shares of Common Stock has been filed with the
Securities and Exchange Commission and has been declared effective thereby. If
December 31 and June 30 of each year (each a "Dividend Payment Date") or any
other Dividend Payment Date shall be on a day other than a Business Day, then
the Dividend Payment Date shall be on the next succeeding Business Day.
Dividends on the Series A Preferred Stock will be cumulative from the Issue
Date, whether or not in any Dividend Period or Periods there shall be funds of
the Company legally available for the payment of such dividends, whether or not
such dividends are declared, and whether or not there are other legal or
contractual restrictions on the declaration or payment of such dividends.
Dividends will be payable to holders of record as they appear on the stock
books of the Company on the Dividend Payment Record Date (the "Dividend Payment
Record Date"), which shall be not more than 60 days nor less than 10 days
preceding the Dividend Payment Dates thereof, as shall be fixed by the Board of
Directors. The amount of dividends payable per share of Series A Preferred
Stock for each full semi-annual Dividend Period shall be computed by dividing
the annual dividend rate by two. Dividends on the Series A Preferred Stock
shall accrue (whether or not declared) on a daily basis from the Issue Date in
the amounts described above. Accrued dividends for each Dividend Period shall
accumulate to the extent not paid on the Dividend Payment Date first following
the Dividend Period for which they accrue. As used herein, the term "accrued"
with respect to dividends includes both accrued and accumulated dividends.
(b) If, and to the extent, the Board of Directors elects
to pay dividends on the Series A Preferred Stock in Common Stock, the number of
shares of Common Stock that shall be issued in payment of such dividend shall
be equal to the amount of such dividend specified in (a) of this Section 3 for
dividends payable in Common Stock divided by the Closing Price as of the
relevant Dividend Payment Date. No fractional shares of Common Stock shall be
issued in connection with such a dividend, but, in lieu of any fraction of a
share of Common Stock that would otherwise be issuable in respect of the
aggregate number of shares of Series A Preferred Stock held by the holder
thereof, the holder shall have the right to receive an amount in cash equal to
the same fraction of the Closing Price as of the Dividend Payment Date for such
dividend.
(c) Holders of shares of Series A Preferred Stock called
for redemption on a redemption date falling between the close of business on a
Dividend Payment Record Date and
4
<PAGE> 5
the opening of business on the corresponding Dividend Payment Date shall, in
lieu of receiving such dividend payment on the Dividend Payment Date fixed
therefor, receive an amount equal to such dividend payment (consisting of all
accumulated and unpaid dividends through and including the redemption date) on
the date fixed for redemption (unless such holder converts such shares of
Series A Preferred Stock in accordance with Section 7 hereof). If a conversion
of shares of Series A Preferred Stock occurs between a Dividend Payment Record
Date and the corresponding Dividend Payment Date, the dividends payable on the
conversion date under Section 7 hereof shall be calculated through and
including such conversion date. If, for whatever reason (i) any share of Series
A Preferred Stock has not been converted pursuant to Section 7 hereof on a
conversion date, or (ii) all payments have not been made with respect to any
share of Series A Preferred Stock as required by Section 5 on a redemption date
or all payments have not been made with respect to any share of Series A
Preferred Stock as required by Section 8 on a repurchase date (other than
because of a failure by the holder thereof to tender such shares for payment on
such date) then, notwithstanding any other provision hereof, dividends shall
continue to accrue on such outstanding shares until paid.
(d) If the Company shall, after the Issue Date, fix a
record date for the making of a Distribution on Common Stock to holders of its
Common Stock (other than any distribution referred to in Section 7(d) hereof
and cash dividends paid out of retained earnings of the Company determined
under generally accepted accounting principles consistently applied), the
Company shall set aside in an escrow reasonably acceptable to the holders of a
majority of the Series A Preferred Stock, the Distribution on Common Stock to
which they would have been entitled if they had converted all of the Series A
Preferred Stock held by them for the Company's Common Stock immediately prior
to the record date for the purpose of determining stockholders entitled to
receive such Distribution on Common Stock and any such Distribution on Common
Stock shall thereafter be distributed from time to time out of such escrow to
persons converting the Series A Preferred Stock (immediately upon conversion)
to the extent such Distribution on Common Stock relates to the shares of Series
A Preferred Stock then being converted. As used herein, the term "Distribution
on Common Stock" means a distribution to holders of the Common Stock (including
any such distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of (i) assets (including any
cash dividends or distributions), (ii) evidences of indebtedness or other
securities of the Company or of any entity other than the Company or (iii)
subscription rights, options or warrants to purchase any of the foregoing
assets or securities, whether or not such rights, options or warrants are
immediately exercisable.
(e) The amount of dividends payable on the Series A
Preferred Stock for the Initial Dividend Period and any other Dividend Period
shorter or longer than a full Dividend Period shall be computed on the basis of
a 360-day year consisting of twelve 30-day months. Holders of shares of Series
A Preferred Stock shall not be entitled to any dividends, whether payable in
cash, property or stock, in excess of the cumulative and other dividends herein
provided. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments on the Series A Preferred Stock
that may be in arrears.
5
<PAGE> 6
(f) So long as any shares of the Series A Preferred Stock
are outstanding, no dividends, except as described in the next succeeding
sentence, shall be declared or paid or set apart for payment on any class or
series of stock of the Company ranking, as to dividends, on a parity with the
Series A Preferred Stock, for any period unless full cumulative dividends have
been or contemporaneously are declared and paid, or declared and an amount
sufficient for the payment thereof set apart for such payment, on the Series A
Preferred Stock for all Dividend Periods terminating on or prior to the date of
payment, or setting apart for payment, of such dividends on such parity stock.
When dividends are not paid in full or a sum sufficient for such payment is not
set apart, as aforesaid, upon the shares of the Series A Preferred Stock and
any other class or series of stock ranking on a parity as to dividends with the
Series A Preferred Stock, all dividends declared upon shares of the Series A
Preferred Stock and all dividends declared upon such other stock shall be
declared pro rata so that the amounts of dividends per share declared on the
Series A Preferred Stock and such other stock shall in all cases bear to each
other the same ratio that accrued dividends per share on the shares of the
Series A Preferred Stock and on such other stock bear to each other.
(g) So long as any shares of the Series A Preferred Stock
are outstanding, no other stock of the Company ranking on a parity with the
Series A Preferred Stock as to dividends or upon liquidation, dissolution or
winding up shall be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund or
otherwise for the purchase or redemption of any shares of any such stock) by
the Company unless the full cumulative dividends, if any, accrued on all
outstanding shares of the Series A Preferred Stock shall have been paid or set
apart for payment for all past Dividend Periods.
(h) So long as any shares of the Series A Preferred Stock
are outstanding, no dividends (other than dividends or distributions paid in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Common Stock or other stock ranking junior to the Series A Preferred Stock,
as to dividends and upon liquidation, dissolution or winding up) shall be
declared or paid or set apart for payment and no other distribution shall be
declared or made or set apart for payment, in each case upon the Common Stock
or any other stock of the Company ranking junior to the Series A Preferred
Stock as to dividends or upon liquidation, dissolution or winding up, nor shall
any Common Stock nor any other such stock of the Company ranking junior to the
Series A Preferred Stock as to dividends or upon liquidation, dissolution or
winding up be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund or otherwise for
the purchase or redemption of any shares of any such stock) by the Company
except by conversion into or exchange for stock of the Company ranking junior
to the Series A Preferred Stock as to dividends and upon liquidation,
dissolution or winding up unless, in each case the full cumulative dividends,
if any, accrued on all outstanding shares of the Series A Preferred Stock and
any other stock of the Company ranking on a parity with the Series A Preferred
Stock as to dividends shall have been paid or set apart for payment for all
past Dividend Periods and all past dividend periods with respect to such other
stock.
4. LIQUIDATION PREFERENCE. (a) In the event of any
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, before any payment or
6
<PAGE> 7
distribution of the assets of the Company (whether capital or surplus) shall be
made to or set apart for the holders of Common Stock or any other series or
class or classes of stock of the Company ranking junior to the Series A
Preferred Stock upon liquidation, dissolution or winding up, the holders of the
shares of Series A Preferred Stock shall be entitled to receive from the assets
of the Company, whether represented by capital, surplus, reserves or earnings,
payment in cash or other assets, if the holders of a majority of the shares of
Series A Preferred Stock have agreed to accept the distribution hereunder in
assets of the Company, in an amount (the "Preferred Liquidation Value") equal
to the greater of (i) $50.00 per share, or (ii) the amount per share of Series
A Preferred Stock that would have been payable had each such share been
converted to Common Shares immediately prior to such event of liquidation,
dissolution or winding-up pursuant to Section 7 hereof, plus, in either case,
an amount per share equal to all dividends (whether or not earned or declared)
accrued and unpaid thereon to the date of final distribution to such holders;
but such holders shall not be entitled to any further payment. No payment on
account of any liquidation, dissolution or winding up of the Company shall be
made to the holders of any class or series of stock ranking on a parity with
the Series A Preferred Stock in respect of the distribution of assets upon
dissolution, liquidation or winding up unless there shall likewise be paid at
the same time to the holders of the Series A Preferred Stock like proportionate
amounts determined ratably in proportion to the full amounts to which the
holders of all outstanding shares of Series A Preferred Stock and the holders
of all outstanding shares of such parity stock are respectively entitled with
respect to such distribution. If, upon any liquidation, dissolution or winding
up of the Company, the assets of the Company, or proceeds thereof,
distributable among the holders of the shares of Series A Preferred Stock shall
be insufficient to pay in full the preferential amount aforesaid and
liquidating payments on any other shares of stock ranking, as to liquidation,
dissolution or winding up, on a parity with the Series A Preferred Stock, then
such assets, or the proceeds thereof, shall be distributed among the holders of
shares of Series A Preferred Stock and any such other stock ratably in
accordance with the respective amounts that would be payable on such shares of
Series A Preferred Stock and any such other stock if all amounts payable
thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Company with one or more corporations or other
entities, (ii) a sale, lease, exchange or transfer of all or any part of the
Company's assets or (iii) a statutory share exchange shall not be deemed to be
a liquidation, dissolution or winding up, voluntary or involuntary.
(b) Subject to the rights of the holders of shares of any
series or class of stock ranking on a parity with or prior to the Series A
Preferred Stock upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Company, after payment shall have
been made in full to the holders of Series A Preferred Stock, as provided in
this Section 4, any other series or class or classes of stock ranking junior to
the Series A Preferred Stock upon liquidation, dissolution or winding up shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of Series A Preferred Stock shall not be entitled to share therein.
(c) Written notice of any liquidation, dissolution or
winding up of the Company, stating the payment date or dates when and the place
or places where the amounts distributable in such circumstances shall be
payable, shall be given by first class mail, postage
7
<PAGE> 8
prepaid, not less than thirty (30) calendar days prior to any payment date
stated therein, to the holders of record of the Series A Preferred Stock at
their respective addresses as the same shall appear on the books of the
Transfer Agent.
5. REDEMPTION.
(a) Any redemption of Series A Preferred Stock pursuant
to this Section 5 shall be at a price equal to $50.00 per share of Series A
Preferred Stock, plus in each case an amount equal to accrued and unpaid
dividends, if any, to (and including) the redemption date, whether or not
earned or declared (the "Redemption Price"). The Redemption Price may be paid
in cash or, at the Company's option, subject to the provisions of this Section
5, in Common Shares or in a combination of Common Shares and cash. If, and to
the extent, the Company elects to pay the Redemption Price for the Series A
Preferred Stock in Common Shares, then such number of Common Shares payable to
a holder of Series A Preferred Stock shall be equal to the greater of (i) the
number of Common Shares into which the shares of Series A Preferred Stock held
by the holder of such Series A Preferred Stock could be converted as of the
date on which notice of such redemption is given by the Company or (ii) the
number of Common Shares determined by dividing the Redemption Price payable to
such holder of Series A Preferred Stock by the Closing Price as of the date on
which notice of such redemption is given by the Company.
(b) At any time on or after October 8, 1999 (and not
before) and prior to October 8, 2002, if the daily closing price (as referred
to in the second sentence of the definition of "Closing Price" in Section 2) of
the Common Shares has been $30.00 (a 100% premium to the Conversion Price) or
higher for the 30 consecutive Trading Dates commencing 32 Trading Dates before
the date of the notice of redemption under Section 5(d), the Company may at its
option (subject to the other provisions of this Section 5) redeem all or a
portion of the outstanding Series A Preferred Stock pursuant to this Section
5(b).
(c) At any time on or after October 8, 2000 (and not
before) and prior to October 8, 2002, if the daily closing price (as referred
to in the second sentence of the definition of "Closing Price" in Section 2) of
the Common Shares has been $26.25 (a 75% premium to the Conversion Price) or
higher for the 30 consecutive Trading Dates commencing 32 Trading Dates before
the date of the notice of redemption under Section 5(d), the Company may at its
option (subject to the other provisions of this Section 5) redeem all or a
portion of the outstanding Series A Preferred Stock pursuant to this Section
5(b).
(d) On October 8, 2002 (or, if such date is not a
Business Day, the next succeeding Business Day), the Company shall (subject to
the other provisions of this Section 5) redeem all the outstanding Series A
Preferred Stock pursuant to this Section 5(d); provided, that if the Company
intends to elect in accordance with this Section 5 to pay the Redemption Price
in Common Shares and, having used its reasonable best efforts to do so, has not
been able to arrange for the firm commitment underwriting referred to in
Section 5(e)(xi) below prior to such date, the Company shall not be required to
redeem the Series A Preferred Stock for cash on such date but shall be required
to (i) redeem for the Redemption Price payable in Common Shares all Series A
Preferred Stock held by holders who waive the firm commitment underwriting
8
<PAGE> 9
requirements herein, and (ii) if any Series A Preferred Stock is not so
redeemed, to continue to use its reasonable best efforts to arrange for such
firm commitment underwriting as promptly as practicable thereafter and shall
effect the redemption of all outstanding shares of Series A Preferred Stock
upon arranging for such firm commitment underwriting.
(e) In the event the Company shall elect to redeem shares
of Series A Preferred Stock pursuant to Section 5(b) or 5(c) or shall be
required to redeem shares of Series A Preferred Stock pursuant to Section 5(d),
a notice of such redemption shall be given by the Company (a "Company Notice")
by first class mail, postage prepaid, mailed not less than 30 nor more than 90
calendar days prior to the redemption date, to each holder of record of the
shares to be redeemed, at such holder's address as the same appears on the
stock records of the Company. Each such notice shall state:
(i) the redemption date;
(ii) the number of shares of Series A Preferred
Stock to be redeemed and, if less than all the shares held by such holder are
to be redeemed, the number of such shares to be redeemed from such holder;
(iii) the Redemption Price;
(iv) whether the Redemption Price will be paid in
Common Shares or cash, or in a combination of Common Shares and cash;
(v) the place or places where certificates for
such shares of Series A Preferred Stock are to be surrendered for payment of
the Redemption Price;
(vi) that payment will be made upon presentation
and surrender of such Series A Preferred Stock;
(vii) the then current Conversion Price and the
date on which the right to convert such shares of Series A Preferred Stock will
expire;
(viii) that dividends on the shares to be redeemed
shall cease to accrue following such redemption date;
(ix) whether such redemption is at the option of
the Company;
(x) that dividends accrued to and including the
date fixed for redemption will be paid as specified in said notice on the
shares to be redeemed; and
(xi) if the Redemption Price will be paid in
Common Shares, that an investment banking firm mutually acceptable to the
Company and the holders of a majority of the shares of Series A Preferred Stock
has agreed to proceed with a firm commitment underwriting (A) for holders of
Series A Preferred Stock to be redeemed under this Section 5 by such notice,
(B) with respect to the Common Shares obtainable by such holders upon
redemption of the Series A Preferred Stock and (C) that will yield net proceeds
(after deducting underwriting
9
<PAGE> 10
commissions and fees and other expenses of the offering) (which net proceeds
may be supplemented by the Company, at its option, to meet the following
threshold amounts) (1) in the case of a redemption under Section 5(b), for such
holders for such Common Shares equal to at least $30.00 (a 100% premium to the
Conversion Price) for each Common Share sold, (2) in the case of a redemption
under Section 5(c), for such holders for such Common Shares equal to at least
$26.25 (a 75% premium to the Conversion Price) for each Common Share sold, and
(3) in the case of a redemption under Section 5(d), for such holders of such
redeemed Series A Preferred Stock equal to the Redemption Price for each
redeemed share of Series A Preferred Stock.
Notice having been mailed as aforesaid, from and after the redemption
date, unless the Company shall be in default in providing money or Common
Shares for the payment of the Redemption Price (including any accrued and
unpaid dividends to (and including) the date fixed for redemption), (1)
dividends on the shares of the Series A Preferred Stock so called for
redemption shall cease to accrue, (2) said shares shall be deemed no longer
outstanding, and (3) all rights of the holders thereof as stockholders of the
Company (except the right to receive from the Company any moneys or Common
Shares payable upon redemption without interest thereon) shall cease except for
the rights applicable to any Common Shares paid pursuant to the redemption.
Neither the failure to mail a Company Notice required by this paragraph (e) nor
any defect in the mailing thereof to a particular holder, shall affect the
sufficiency of the notice or the validity of the proceedings for redemption
with respect to any other holder. If the Company chooses to redeem the Series
A Preferred Stock for cash, its obligation to provide moneys in accordance with
this paragraph shall be deemed fulfilled if, on or before the redemption date,
the Company shall deposit with a bank or trust company having an office or
agency in Denver, Colorado or New York, New York, and having a capital and
surplus of at least $50,000,000, the principal amount of funds necessary for
such redemption, in trust for the account of the holders of the shares to be
redeemed (and so as to be and continue to be available therefor), with
irrevocable instructions and authority to such bank or trust company that such
funds be applied to the redemption of the shares of Series A Preferred Stock so
called for redemption. Any interest accrued on such funds shall be paid to the
Company from time to time. Any funds so deposited and unclaimed at the end of
two years from such redemption date shall be released or repaid to the Company,
after which, subject to any applicable laws relating to escheat or unclaimed
property, the holder or holders of such shares of Series A Preferred Stock so
called for redemption shall look only to the general funds of the Company for
payment of the Redemption Price.
Upon surrender in accordance with said notice of the certificates for
any such shares so redeemed (properly endorsed or assigned for transfer, if the
Board of Directors shall so require and the notice shall so state), such shares
shall be redeemed by the Company at the applicable Redemption Price aforesaid.
If fewer than all the outstanding shares of Series A Preferred Stock are to be
redeemed, shares to be redeemed shall be selected by the Company from
outstanding shares of Series A Preferred Stock not previously called for
redemption by lot or pro rata (as near as may be) or by any other equitable
method determined by the Company in its sole discretion. If fewer than all the
shares represented by any certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
10
<PAGE> 11
Notwithstanding the foregoing, if the Company Notice of redemption has
been given pursuant to this Section 5 and any holder of shares of Series A
Preferred Stock shall, prior to the close of business on the third Business Day
preceding the redemption date, give written notice to the Company pursuant to
Section 7(b) or 7(c) hereof of the conversion of any or all of the shares to be
redeemed held by such holder (accompanied by a certificate or certificates for
such shares, duly endorsed or assigned to the Company), then the conversion of
such shares to be redeemed shall become effective as provided in Section 7.
(f) In the case of a redemption under Section 5(b),
Section 5(c) or Section 5(d) hereof, if the Redemption Price will be paid, in
whole or in part, in Common Shares, within 20 days after the receipt of the
Company Notice described in Section 5(e) hereof, each holder of Series A
Preferred Stock shall notify the Company whether or not it elects to
participate in such underwritten offering (the failure to timely provide the
required notice being deemed an election not to participate in such
underwritten offering for purposes of this Section 5). As soon as practicable
thereafter, the Company and the holders wishing to participate in such
underwritten offering will, using such investment banking firm, proceed with a
registration, qualification and offering of the Common Shares obtainable upon
conversion of the Series A Preferred Stock held by such holders wishing to
participate and subject to required redemption by the Company under the notice
given under Section 5(e) hereof. It shall be a condition to the obligation of
selling holders to close under such firm commitment underwriting that such
underwriting shall net to the holders wishing to participate in such
underwritten offering an amount (after deducting underwriting commissions and
fees and other expenses of the underwriting) at least equal to the amounts
stated in Section 5(e)(xi)(C)(1), (2) or (3), as the case may be.
(g) An election by any holders under the first sentence
of Section 5(f) hereof to participate in an underwritten public offering shall
suspend any redemption under this Section 5 with respect to Series A Preferred
Stock held by such holders. If such holders who notified the Company that they
wished to participate in the public offering refuse to close under the
underwriting agreement despite the satisfaction of all conditions therein to
their obligation to close thereunder, then the Company shall redeem the Series
A Preferred Stock held by such holders scheduled for redemption in accordance
with the notice given under Section 5(e) hereof; any such required redemption
shall be made no later than the date (which shall be a Business Day) to be
specified (not more than 20 days or less than 5 days after such failure to
close) to such holders by the Company. If any underwriting under Section 5(f)
does not close due to one or more of the conditions to the sellers' obligations
to close under the underwriting agreement not being satisfied, then the notice
of the Company requiring redemption of the Series A Preferred Stock described
in Section 5(e) hereof shall be rescinded with respect to the shares held by
the holders electing to participate in such offering, subject, in the case of a
redemption pursuant to Section 5(d) hereof, to an obligation of the Company to
use its reasonable best efforts to arrange as promptly as practicable
thereafter for another firm commitment underwriting for the Common Shares
issuable in connection with such redemption and to effect the redemption of all
outstanding shares of Series A Preferred Stock upon arranging for such firm
commitment underwriting.
11
<PAGE> 12
(h) Neither the Company nor any of its subsidiaries shall
repurchase any outstanding shares of Series A Preferred Stock unless the
Company on the same terms either (i) offers to purchase all of the then
outstanding shares of Series A Preferred Stock or (ii) offers to purchase
shares of Series A Preferred Stock from the holders thereof in proportion to
the respective number of shares of Series A Preferred Stock held by each
holder. In any such repurchase by the Company, if all shares of Series A
Preferred Stock are not being repurchased, then the number of shares of Series
A Preferred Stock to be repurchased shall be allocated among all shares of
Series A Preferred Stock held by holders who accept the Company's repurchase
offer so that the shares of Series A Preferred Stock are repurchased from such
holders in proportion to the respective number of shares of Series A Preferred
Stock held by each such holder who accepts the Company's offer (or in such
other proportion as agreed by all such holders who accept the Company's offer).
Nothing in this Section 5(h) shall (i) obligate a holder of shares of Series A
Preferred Stock to accept the Company's repurchase offer or (ii) prevent the
Company from redeeming shares of Series A Preferred Stock in accordance with
the terms of Sections 5(a) through (g) hereof.
6. SHARES TO BE RETIRED. Any share of Series A Preferred Stock
converted, redeemed or otherwise acquired by the Company shall be retired and
canceled and shall upon cancellation be restored to the status of authorized
but unissued shares of preferred stock, subject to reissuance by the Board of
Directors as shares of preferred stock of one or more other series but not as
shares of Series A Preferred Stock.
7. CONVERSION. Holders of shares of Series A Preferred Stock
shall have the right to convert all or a portion of such shares (including
fractions of such shares) into fully paid and non-assessable shares of Common
Stock or any capital stock or other securities into which such Common Stock
shall have been changed or any capital stock or other securities resulting from
a reclassification thereof (such shares, the "Common Shares"), as follows:
(a) Subject to and upon compliance with the provisions of
this Section 7, a holder of shares of Series A Preferred Stock shall have the
right, at the option of such holder, at any time after the expiration of 60
days following the last date of original issuance of the Series A Preferred
Stock, to convert any of such shares (or fractions thereof) into the number of
fully paid and non-assessable shares of Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing (x) the
product of (i) the number of shares to be converted and (ii) $50.00 per share
by (y) the Conversion Price, and by surrender of such shares, such surrender to
be made in the manner provided in paragraph (b) of this Section 7; provided,
however, that the right to convert shares called for redemption pursuant to
Section 5 shall terminate at the close of business on the third Business Day
preceding the date fixed for such redemption, unless the Company shall default
in making payment of the amount payable upon such redemption. Subject to the
following provisions of this Section 7(a), any share of Series A Preferred
Stock may be converted, at the option of its holder, in part into Common Shares
under the procedures set forth above. If a part of a share of Series A
Preferred Stock is converted, then the Company will convert such share into the
appropriate number of Common Shares (subject to paragraph (c) of this Section
7) and issue a fractional share of Series A Preferred Stock evidencing the
remaining interest of such holder. The Common Shares issuable upon conversion
12
<PAGE> 13
of the shares of Series A Preferred Stock, when such Common Shares shall be
issued in accordance with the terms hereof, shall be duly authorized, validly
issued, fully paid and non-assessable Common Shares held by the holders
thereof.
(b) In order to exercise the conversion right, the holder
of each share of Series A Preferred Stock (or fraction thereof) to be converted
shall surrender the certificate representing such share, duly endorsed or
assigned to the Company or in blank, at the office or agency of the Transfer
Agent in New York, NY, accompanied by written notice to the Company that the
holder thereof elects to convert the holder's Series A Preferred Stock or a
specified portion thereof. Unless the shares issuable on conversion are to be
issued in the same name as the name in which such share of Series A Preferred
Stock is registered, each share surrendered for conversion shall be accompanied
by instruments of transfer, in form satisfactory to the Company, duly executed
by the holder or such holder's duly authorized attorney and an amount
sufficient to pay any required transfer or similar tax (or evidence reasonably
satisfactory to the Company demonstrating that such taxes have been paid).
Within five (5) Business Days after receipt of any share of Series A
Preferred Stock and an election to convert all or a portion of such share of
Series A Preferred Stock under this Section 7, the Company will pay, out of
funds legally available therefor, to the holder of such share of Series A
Preferred Stock full cumulative dividends, if any, accrued to the effective
date of conversion of such share of Series A Preferred Stock and relating to
the portion of such share to be converted; provided, however, that if a share
of Series A Preferred Stock is surrendered for conversion between a Dividend
Payment Record Date and a Dividend Payment Date, the Company shall only be
obligated to pay such full cumulative dividends to the record holder of such
share of Series A Preferred Stock on the Dividend Payment Record Date.
As promptly as practicable after the surrender of certificates for
shares of Series A Preferred Stock as aforesaid and in any event within five
(5) Business Days thereafter (unless such conversion is in connection with an
underwritten public offering of Common Shares as specified in a written notice
provided to the Company, in which event concurrently with such conversion) the
Company shall issue and shall deliver at such office to such holder, or on his
or her written order, a certificate or certificates for the number of Common
Shares issuable upon the conversion of such shares in accordance with the
provisions of this Section 7, and any fractional interest in respect of a
Common Share arising upon such conversion shall be settled as provided in
paragraph (c) of this Section 7.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificate or
certificates for shares of Series A Preferred Stock shall have been surrendered
and such notice received by the Company as aforesaid (except that if such
conversion is in connection with an underwritten public offering of Common
Shares, then such conversion shall be deemed to have been effected upon such
surrender), and the person or persons in whose name or names any certificate or
certificates for Common Shares shall be issuable upon such conversion shall be
deemed to have become the holder or holders of record of the shares represented
thereby at such time on such date, and such conversion shall be at the
Conversion Price in effect at such time on such date, unless the stock transfer
books of the
13
<PAGE> 14
Company shall be closed on that date, in which event such person or persons
shall be deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the
date and at the time referred to above. All Common Shares delivered upon
conversion of the Series A Preferred Stock will, upon delivery, be duly
authorized, validly issued and fully paid and non-assessable.
(c) In connection with the conversion of any shares of
Series A Preferred Stock, fractions of such shares may be converted; however,
no fractional shares or securities representing fractions of Common Shares
shall be issued upon conversion of the Series A Preferred Stock. Instead of
any fractional interest in a Common Share that would otherwise be deliverable
upon the conversion of a share of Series A Preferred Stock (or fraction
thereof), the Company shall pay to the holder of such share an amount in cash
(computed to the nearest cent) equal to the daily closing price (as referred to
in the second sentence of the definition of "Closing Price") of a Common Share
on the Trading Date immediately preceding the date of conversion multiplied by
the fraction of a share of Common Stock represented by such fractional
interest. If more than one share (or fraction thereof) of Series A Preferred
Stock shall be surrendered for conversion at one time by the same holder, the
number of full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series A Preferred
Stock (or fractions thereof) so surrendered.
(d) The Conversion Price shall be adjusted from time to
time as follows:
(i) STOCK DIVIDENDS AND STOCK SPLITS. If at any
time after the Issue Date, (i) the Company shall fix a record date for the
issuance of any dividend payable in Common Shares or (ii) the number of Common
Shares shall be increased by a subdivision or split-up of Common Shares, then,
on the record date fixed for the determination of holders of Common Shares
entitled to receive such dividend or immediately after the effective date of
such subdivision or split-up, as the case may be, the number of shares to be
delivered upon surrender of any share of Series A Preferred Stock for
conversion will be appropriately increased so that each holder of Series A
Preferred Stock thereafter will be entitled to receive the number of Common
Shares that such holder would have owned immediately following such action had
such share of Series A Preferred Stock been surrendered for conversion
immediately prior thereto, and the Conversion Price will be appropriately
adjusted. The time of occurrence of an event giving rise to an adjustment made
pursuant to this paragraph d(i) shall, in the case of a subdivision or
split-up, be the effective date thereof and shall, in the case of a stock
dividend, be the record date thereof.
(ii) COMBINATION OF STOCK. If the number of
Common Shares outstanding at any time after the Issue Date shall have been
decreased by a combination of the outstanding Common Shares, then, immediately
after the effective date of such combination, the number of shares to be
delivered upon surrender of any share of Series A Preferred Stock for
conversion will be appropriately decreased so that each holder of Series A
Preferred Stock thereafter will be entitled to receive the number of Common
Shares that such holder would have owned immediately following such action had
such share of Series A Preferred Stock been
14
<PAGE> 15
surrendered for conversion immediately prior thereto, and the Conversion Price
will be appropriately adjusted.
(iii) REORGANIZATION. If any capital
reorganization of the Company, or any reclassification of the Common Stock, or
any consolidation of the Company with or merger of the Company with or into any
other corporation or any sale, lease or other transfer of all or substantially
all of the assets of the Company to any other person (including any individual,
partnership, joint venture, corporation, trust or group thereof) shall be
effected in such a way that the Common Shares shall be converted into the right
to receive stock, securities or other property (including cash or any
combination thereof), then, upon surrender of the Series A Preferred Stock for
conversion in accordance with the terms of this Section 7, each holder shall
have the right to receive the kind and amount of stock and other securities and
property receivable (including cash or any combination thereof) upon such
reorganization, reclassification, consolidation, merger or sale, lease or other
transfer by a holder of the number of Common Shares that such holder of the
Series A Preferred Stock would have been entitled to receive upon surrender of
the Series A Preferred Stock for conversion pursuant to this Section 7 had the
Series A Preferred Stock been surrendered for conversion immediately prior to
such reorganization, reclassification, consolidation, merger or sale, lease or
other transfer. As a condition to any such transaction, the Company shall
require such person to confirm in writing the rights of the holders of Series A
Preferred Stock pursuant to this paragraph (d)(iii).
(iv) RIGHTS OFFERING. If the Company at any time
after the Issue Date shall issue or sell or fix a record date for the issuance
of rights, options or warrants to all holders of Common Shares entitling the
holders thereof to subscribe for or purchase or otherwise acquire Common Shares
(or securities convertible into or exchangeable for Common Shares), in any such
case, at a price per share (or having a conversion price or exchange value per
share) that, together with the value (if for consideration other than cash, as
determined in good faith by the Board of Directors) of any consideration paid
for any such rights, options or warrants is less than the Closing Price of the
Common Shares as of the date of such issuance or sale or as of such record
date, then, immediately after such record date, the number of shares to be
delivered upon surrender of the Series A Preferred Stock for conversion shall
be appropriately increased so that each holder thereafter will be entitled to
receive the number of Common Shares determined by multiplying the number of
Common Shares such holder would have been entitled to receive immediately
before the date of such issuance or sale on such record date by a fraction, the
numerator of which will be the number of Common Shares outstanding on such date
plus the number of additional Common Shares offered for subscription or
purchase (or into which the convertible securities so offered are initially
convertible) and the denominator of which will be the number of Common Shares
outstanding on such date plus the number of Common Shares that the aggregate
offering price of the total number of shares so offered for subscription or
purchase would purchase at such Closing Price, and the Conversion Price shall
be appropriately adjusted. Notwithstanding the foregoing, rights issued by the
Company to all holders of its Common Shares entitling the holders thereof to
subscribe for or purchase securities of the Company, which rights (i) are
deemed to be transferred with such Common Shares, (ii) are not immediately
exercisable, and (iii) are also issued in respect of future issuances of
Common Shares pursuant to a stockholder rights plan or similar plan of the
Company, in each case in
15
<PAGE> 16
clauses (i) through (iii) until the occurrence of a specified event or events,
shall for purposes of this paragraph (d) of this Section 7 not be deemed issued
until the occurrence of the earliest such specified event.
(v) NO ADJUSTMENTS TO EXERCISE PRICE. No
adjustment in the number of Common Shares issuable upon conversion and
consequently the Conversion Price in accordance with the provisions of Sections
7(d)(i)-(iv) above need be made if such adjustment would amount to a change in
such Conversion Price of less than $.05; provided, however, that the amount by
which any adjustment is not made by reason of the provisions of this section
shall be carried forward and taken into account at the time of any subsequent
adjustment in the Conversion Price; and provided further, that adjustment shall
be required and made in accordance with the provisions of this Section 7 not
later than such time as may be required in order to preserve the tax free
nature of a distribution to the holder of any Common Share. Anything in this
Section 7 to the contrary notwithstanding, the Company shall be entitled to the
extent permitted by law to make such reductions in the Conversion Price, in
addition to those required by this Section 7, as it in its sole discretion
shall determine to be advisable in order to avoid or diminish any income tax to
any holder of Common Share resulting from any dividend or distribution of
capital stock or rights or warrants to purchase capital stock or from any event
treated as such for income tax purposes or for any other reasons.
(vi) READJUSTMENTS, ETC. If an adjustment is made
under Sections 7(d)(i)-(iv) above, and the event to which the adjustment
relates does not occur, then any adjustments in the Conversion Price or Common
Shares to be delivered upon surrender of the Series A Preferred Stock for
conversion that were made in accordance with such paragraphs shall be adjusted
back to the Conversion Price and the number of Common Shares to be delivered
upon surrender of the Series A Preferred Stock for conversion that were in
effect immediately prior to the record date for such event (subject to the
effect of any subsequent intervening adjustments).
(e) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file in the custody of its Secretary or an
Assistant Secretary at its principal office and with the Transfer Agent an
officers' certificate setting forth the adjusted number of Common Shares to be
delivered upon surrender of the Series A Preferred Stock for conversion and the
Conversion Price after such adjustment, the method of calculation thereof and a
brief statement of the facts requiring such adjustment and upon which such
adjustment is based. Promptly after each such adjustment, the Company shall
cause a copy of such certificate to be mailed to the holder of each share of
Series A Preferred Stock at his or her last address as shown on the stock books
of the Company. Each such officers' certificate shall be made available at all
reasonable times for inspection by each holder of Series A Preferred Stock.
(f) In any case in which paragraph (d) of this Section 7
provides that an adjustment shall become effective immediately after a record
date for an event and the date fixed for conversion pursuant to Section 7
occurs after such record date but before the occurrence of such event, the
Company may defer until the actual occurrence of such event (A) issuing to the
holder of any share of Series A Preferred Stock surrendered for conversion the
additional
16
<PAGE> 17
Common Shares issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Shares issuable upon such
conversion before giving effect to such adjustment and (B) paying to such
holder any amount in cash in lieu of any fraction pursuant to paragraph (c) of
this Section 7.
(g) The Company covenants that it will at all times
reserve and keep available, free from preemptive rights, out of the aggregate
of its authorized but unissued Common Shares the maximum number of Common
Shares into which all shares of the Series A Preferred Stock from time to time
may be converted, but Common Shares held in the treasury of the Company may, in
its discretion, be delivered upon any conversion of shares of Series A
Preferred Stock.
Before taking any action that would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Shares
issuable upon conversion of the Series A Preferred Stock, the Company will take
any corporate action that may in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue Common Shares at such
adjusted Conversion Price, which shares, when issued, shall be fully-paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.
Prior to the delivery of any securities that the Company shall be
obligated to deliver upon conversion of the Series A Preferred Stock, the
Company will endeavor in good faith and as expeditiously as possible to comply
with all federal and state laws and regulations thereunder requiring the
registration of such securities with, or any approval of or consent to the
delivery thereof by, any governmental authority.
(h) The Company will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
the shares of Series A Preferred Stock (or any other securities issued on
account of the Series A Preferred Stock pursuant hereto) or Common Shares on
conversion of the Series A Preferred Stock pursuant hereto; provided, however,
that the Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of shares of Series A
Preferred Stock (or any other securities issued on account of the Series A
Preferred Stock pursuant hereto) or Common Shares in a name other than the name
in which the shares of Series A Preferred Stock with respect to which such
Common Shares are issued were registered, and the Company shall not be required
to make any issue or delivery unless and until the person requesting such issue
or delivery has paid to the Company the amount of any such tax.
(i) If:
(i) the Company shall authorize the issuance to
all holders of Common Shares of rights or warrants to subscribe for or purchase
Common Shares or any other subscription rights or warrants; or
(ii) the Company shall authorize the distribution
to all holders of Common Shares of evidences of its indebtedness or assets
(other than cash dividends payable out of retained earnings, distributions
excluded from the operation of subparagraph (d)(iv) of this
17
<PAGE> 18
Section 7, stock dividends or securities issued pursuant to any stockholder
rights plan or any similar plan of the Company); or
(iii) there shall be any capital reorganization or
reclassification of the Common Shares (other than a subdivision, split-up or
combination of the outstanding Common Shares, an increase in the authorized
capital stock of the Company not involving the issuance of any shares thereof,
or a change in par value of the Common Shares), or any other consolidation or
merger to which the Company is a party (other than a consolidation or merger
with a subsidiary in which the Company is the continuing entity and that does
not result in any reclassification or change in the Common Shares outstanding)
or a sale, lease or transfer of all or substantially all of the assets of the
Company; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company; or
(v) there shall be any other event that would
result in an adjustment pursuant to paragraph (d) of this Section 7 of the
Conversion Price or the number of Common Shares that may be issuable upon the
conversion of the Series A Preferred Stock;
then the Company will cause to be filed with the Transfer Agent and to be
mailed to each holder of Series A Preferred Stock by first class mail addressed
to such holder at the address appearing in the stock records of the Company, at
least twenty (20) days (or ten (10) days in any case specified in clauses (i)
or (ii) above) before the applicable record or effective date hereinafter
specified, a notice stating (A) the date as of which the holders of Common
Shares of record entitled to receive any such rights, warrants or distributions
are to be determined or (B) the date on which any such consolidation, merger,
sale, lease, transfer, dissolution, liquidation or winding-up is expected to
become effective, and the date as of which it is expected that holders of
Common Shares of record will be entitled to exchange their Common Shares for
securities or other property, if any, deliverable upon such reorganization,
reclassification, consolidation, merger, sale, lease, transfer, dissolution,
liquidation or winding-up. Such notice shall also state whether such
transaction will result in any adjustment in the Conversion Price and, if so,
shall state what the adjusted Conversion Price will be and when it will become
effective. The failure to give such notice or any defect therein shall not
affect the legality or validity of any distribution, right, warrant,
consolidation, merger, sale, lease, transfer, dissolution, liquidation or
winding-up or the vote upon any such action.
8. REDEMPTION AT OPTION OF HOLDER UPON A FUNDAMENTAL CHANGE. (a)
If a Fundamental Change (as defined in paragraph (c) of this Section 8) occurs,
each holder of Series A Preferred Stock shall have the right, at the holder's
option, to require the Company to redeem all of such holder's Series A
Preferred Stock, or any portion thereof that has an aggregate liquidation value
that is a multiple of $50.00, on the date (the "Repurchase Date") selected by
the Company that is not less than 10 nor more than 20 days after the Final
Surrender Date (as defined in paragraph (b) of this Section 8), at a price per
share equal to the Redemption Price. The Company may, at its option, pay all
or any portion of such Redemption Price upon a Fundamental Change in Common
Shares, provided that if the Company elects to pay all or any
18
<PAGE> 19
portion of the repurchase price in Common Shares, the holders of Series A
Preferred Stock electing to sell their shares of Series A Preferred Stock to
the Company pursuant to this Section 8 must be given the opportunity to sell
the Common Shares received from the Company pursuant to this Section 8 in a
firm commitment underwriting by an investment banking firm mutually acceptable
to the Company and the holders of a majority of such shares. For purposes of
calculating the number of Common Shares issuable upon such redemption, the
value of any such Common Shares will be equal to the Closing Price of such
Common Shares as of the Repurchase Date. Payment may not be made in Common
Shares unless (i) the issuance or resale of such shares has been, or will be
registered on or prior to the Final Surrender Date (as defined in paragraph (b)
of this Section 8) under the Securities Act of 1933, as amended, or such shares
are freely tradable pursuant to an exemption thereunder and (ii) such shares
are listed on a United States national securities exchange or quoted on the
National Market of NASDAQ at (or immediately after) the time of payment.
(b) Within 30 days after the occurrence of a Fundamental
Change, the Company must mail to all holders of record of the Series A
Preferred Stock a Company Notice containing the information set out in
paragraph (e) of Section 5, except that, for purposes of this Section 8 only,
instead of stating that a redemption is occurring at the option of the Company,
the Company Notice shall describe the occurrence of such Fundamental Change and
of the redemption right arising as a result thereof. The Company must cause a
copy of such notice to be published in a newspaper of general circulation in
the Borough of Manhattan, the City of New York. At least two Business Days
prior to the Repurchase Date, the Company must publish a similar notice stating
whether and to what extent the Redemption Price will be paid in cash or Common
Shares. To exercise the redemption right, a holder of Series A Preferred Stock
must surrender, on or before the date that is, subject to any contrary
requirements of applicable law, 60 days after the date of mailing of the
Company Notice (the "Final Surrender Date"), the certificate or certificates
representing the Series A Preferred Stock with respect to which the right is
being exercised, duly endorsed for transfer to the Company, together with a
written notice of election.
(c) The term "Fundamental Change" shall mean any of the
following:
(i) a "person" or "group" (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), together with any affiliates thereof, becoming the
"beneficial owners" as defined in Rule 13d-3 under the Exchange Act) of Voting
Shares (as defined in this Section 8) of the Company entitled to exercise more
than 60% of the total voting power of all outstanding Voting Shares of the
Company (including any Voting Shares that are not then outstanding of which
such person or group is deemed the beneficial owner);
(ii) any consolidation of the Company with, or
merger of the Company into, any other person, any merger of another person
(other than a wholly-owned subsidiary of the Company) into the Company, or any
sale, lease or transfer of all or substantially all of the assets of the
Company to another person (other than a merger (A) that results in the holders
of Common Stock of the Company immediately prior to giving effect to such
transaction owning shares of capital stock of the surviving corporation in such
transaction representing in excess of
19
<PAGE> 20
40% of the total voting power of all shares of capital stock of such surviving
corporation entitled to vote generally in the election of directors and (B) in
which the shares of the surviving corporation held by such holders are, or
immediately upon issuance will be, listed on a national securities exchange or
quoted on the National Market of NASDAQ, are not subject to any right of
repurchase by the issuer thereof or any third party and are not otherwise
subject to any encumbrance as a result of such transaction, provided, that the
surviving corporation amends its charter or certificate of incorporation to
include the rights of the Series A Preferred Stock and its terms as set forth
herein); or
(iii) the substantial reduction or elimination of a
public market for the Common Shares as the result of the Common Shares ceasing
to be approved for quotation on the National Market of NASDAQ or listed on a
national securities exchange;
provided, however, that a Fundamental Change shall not occur under clause (i)
or (ii) above if either, (x) as of the fifteenth (15th) Trading Date after the
public announcement by the Company of such transaction and, if later, three
days prior to the consummation of such transaction, the Closing Price is at
least equal to 110% of the Conversion Price then in effect on such dates or (y)
in the case of clause (ii) above, at least 90% of the consideration (excluding
cash payments for fractional shares) in such transaction or transactions to the
holders of Common Shares consists of shares of common stock that are, or
immediately upon issuance will be, listed on a national securities exchange or
quoted on the National Market of NASDAQ, and as a result of such transaction or
transactions, the Series A Preferred Stock becomes convertible into such common
stock.
(d) An election by a holder of Series A Preferred Stock
to have the Company redeem shares of Series A Preferred Stock pursuant to
subsection 8(a) shall become irrevocable at the close of business on the
relevant Repurchase Date.
(e) The Company agrees that it will not complete any
Fundamental Change described in subsection 8(c) unless proper provision has
been made to satisfy its obligations under this Section 8.
For purposes of this Section 8, "Voting Shares" is defined to mean all
outstanding shares of any class or classes (however designated) of capital
stock entitled to vote generally in the election of members of the Board of
Directors.
9. RANKING. Any class or classes of stock of the Company shall
be deemed to rank:
(a) prior to the Series A Preferred Stock, as to
dividends or as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of Series A
Preferred Stock.
(b) on a parity with the Series A Preferred Stock, as to
dividends or as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different
20
<PAGE> 21
from those of the Series A Preferred Stock, if the holders of such class of
stock and the Series A Preferred Stock shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in proportion to their respective amounts of accrued
and unpaid dividends per share or liquidation prices, without preference or
priority of one over the other; and
(c) junior to the Series A Preferred Stock, as to
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock shall be Common Stock or if the holder of Series A
Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such stock.
10. VOTING RIGHTS. (a) In addition to the voting rights provided
below, the holders of Series A Preferred Stock will have voting rights on all
matters subject to a vote of holders of Common Stock as if such shares of
Series A Preferred Stock were converted into the applicable number of Common
Shares consistent with Section 7 hereof; provided, however, that
notwithstanding the foregoing provisions of this Section 10(a), any holder of
Series A Preferred Stock that would be required to make a filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") in
connection with the acquisition of Series A Preferred Stock shall not be
entitled, pursuant to the provisions of this Section 10(a), to vote in the
election of directors of the Company until (i) such holder has notified the
Company in writing of its election to exercise its right to vote in the
election of directors of the Company pursuant to the provisions of this Section
10(a), (ii) the required filings under the HSR Act have been made and (iii) the
waiting period under the HSR Act applicable to the election by such holder
described in (i) of this Section 10(a) has expired or been terminated.
(b) Notwithstanding (a) above of this Section 10, so long
as any shares of the Series A Preferred Stock remain outstanding, the consent
of the holders of at least two-thirds (2/3) of the shares of Series A Preferred
Stock outstanding at the time, voting separately as a class, given in person or
by proxy either in writing (as permitted by law and the Certificate of
Incorporation and By-laws of the Company) or at any special or annual meeting,
shall be necessary to permit, effect or validate any one or more of the
following:
(i) the authorization, creation or issuance, or
any increase in the authorized or issued amount, of any class or series of
stock ranking prior to the Series A Preferred Stock as to dividends or the
distribution of assets upon liquidation, dissolution or winding up;
(ii) the creation, authorization or issuance of
any class or series of common stock other than the class of Common Stock
presently authorized for issuance under the Certificate of Incorporation as in
effect on October 8, 1997, subject to changes to the terms thereof hereafter
made to the Certificate of Incorporation; provided that (A) there shall be no
more than one class (and there shall be no separate series) of Common Stock and
(B) the Company will not permit the par value or the determined or stated value
of any shares of the Common Stock receivable upon the conversion of the shares
of Series A Preferred Stock to
21
<PAGE> 22
exceed the amount payable therefor upon such conversion and (C) the Company
will not take any action that results in any adjustment of the current
Conversion Price under this Certificate if the total number of shares of Common
Stock then available for issuance upon conversion of all shares of Series A
Preferred Stock (and upon conversion of all other then outstanding shares of
the Company's capital stock convertible into Common Stock) would be
insufficient to satisfy all such conversion rights;
(iii) the amendment, alteration or repeal, whether
by merger, consolidation or otherwise, of any of the provisions of the
Certificate of Incorporation of the Company that would adversely affect any
right, preference, privilege or voting power of the Series A Preferred Stock or
of the holders thereof; provided, however, that any increase in the amount of
authorized preferred stock or the creation and issuance of other series of
preferred stock, or any increase in the amount of authorized shares of such
series or of any other series of preferred stock, in each case ranking on a
parity with or junior to the Series A Preferred Stock with respect to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to adversely affect such rights,
preferences or voting powers;
(iv) the authorization of any reclassification of
the Series A Preferred Stock;
(v) any increase in the number of shares of
Series A Preferred Stock authorized for issuance;
(vi) the creation, authorization or issuance of
any series or class of stock or any other obligation or security convertible
into any capital stock which capital stock is prohibited under clauses (i) or
(ii) above;
(vii) the amendment of this Certificate of
Designations; or
(viii) at any time after October 8, 1997, the
issuance of any shares of Series A Preferred Stock (excluding the issuance of
share certificates upon transfers or exchanges of shares by holders (other than
the Company) or upon replacement of lost, stolen, damaged or mutilated share
certificates.
(c) ADDITIONAL VOTING RIGHTS.
(i) If on the sixth anniversary of the Issue Date
any shares of the Series A Preferred Stock are outstanding, the size of the
Board of Directors of the Company shall be increased by such number
representing not less than 20% (rounded to the nearest whole number) of the
total number of directors after giving effect to the increase in the size of
the Board of Directors contemplated by this paragraph and during the period
(hereinafter in this Section 10 called the "Class Voting Period") commencing
upon such date and ending on the date on which no shares of Series A Preferred
Stock remain outstanding, the holders of at least two-thirds (2/3) of the then
outstanding shares of Series A Preferred Stock, by the affirmative vote in
person or by proxy at a special meeting of holders of Series A Preferred Stock
called for such
22
<PAGE> 23
purpose (or at any adjournment thereof) by holders of at least 25% of the then
outstanding shares of Series A Preferred Stock or at any annual meeting of
stockholders, or by written consent delivered to the Secretary of the Company,
with the holders of the Series A Preferred Stock voting as a separate class and
with each share of Series A Preferred Stock having one vote, shall be entitled,
as a class, to the exclusion of the holders of all other classes or series of
capital stock of the Company, to elect such additional number of directors of
the Company.
(ii) At any time when such voting right under this
Section 10(c) shall have vested in the holders of shares of Series A Preferred
Stock entitled to vote thereon, and if such right shall not already have been
initially exercised, an officer of the Company shall, upon the written request
of at least 25% of the holders of record of shares of the Series A Preferred
Stock then outstanding, addressed to the Secretary of the Corporation, call a
special meeting of holders of shares of the Series A Preferred Stock. Such
meeting shall be held at the earliest practicable date upon the notice required
for special meetings of stockholders at the place for holding annual meetings
of stockholders of the Company or, if none, at a place designated by the
Secretary of the Company. If such meeting shall not be called by the proper
officers of the Company within 30 days after the personal service of such
written request upon the Secretary of the Company, or within 30 days after
mailing the same within the United States, by registered mail, addressed to the
Secretary of the Company at its principal office (such mailing to be evidenced
by the registry receipt issued by the political authorities), then the holders
of record of at least 25% of the shares of Series A Preferred Stock then
outstanding may designate in writing any person to call such meeting at the
expense of the Company, and such meeting may be called by such person so
designated upon the notice required for special meetings of stockholders and
shall be held at the same place as is elsewhere provided in this paragraph or,
if none, at a place designated by the person selected to call the meeting. Any
holder of shares of Series A Preferred Stock then outstanding that would be
entitled to vote at such meeting shall have access to the stock books of the
Company for the purpose of causing a meeting of stockholders to be called
pursuant to the provisions of this paragraph.
(iii) Any director who shall have been elected by
the holders of Series A Preferred Stock pursuant to this Section 10(c) may be
removed at any time during the Class Voting Period, by the vote of the holders
of at least two-thirds (2/3) of all of the then outstanding shares of Series A
Preferred Stock, voting as a separate class in person or by proxy at a special
meeting of holders of shares of Series A Preferred Stock called for such
purpose by the holders of at least 25% of the then outstanding shares of Series
A Preferred Stock. Any director who shall have been elected by the holders of
Series A Preferred Stock may not be removed at any time during the Class Voting
Period without the consent of the holders of at least two-thirds (2/3) of all
of the then outstanding shares of Series A Preferred Stock. Any vacancy
created by the removal, death or resignation of a director elected by the
holders of Series A Preferred Stock may be filled during the Class Voting
Period by the holders of at least two-thirds (2/3) of all of the then
outstanding shares of Series A Preferred Stock by vote in person or by proxy at
a special meeting of holders of shares of Series A Preferred Stock of the
Company called for such purpose by holders of at least 25% of the then
outstanding shares of Series A Preferred Stock.
23
<PAGE> 24
(iv) The term of any director elected pursuant to
the provisions of this Section 10(c) shall in all events expire at the end of
the Class Voting Period and the size of the Board of Directors shall be reduced
accordingly.
11. RECORD HOLDERS. The Company and the Transfer Agent may deem
and treat the record holder of any shares of Series A Preferred Stock as the
true and lawful owner thereof for all purposes, and neither the Company nor the
Transfer Agent shall be affected by any notice to the contrary.
12. NOTICES. Except as may otherwise be provided for herein, all
notices referred to herein shall be in writing, and all notices hereunder shall
be deemed to have been given upon receipt, in the case of a notice of
conversion given to the Company as contemplated in Section 7(b) hereof, or, in
all other cases, upon the earlier of receipt of such notice or three Business
Days after the mailing of such notice if sent by registered mail (unless
first-class mail shall be specifically permitted for such notice under the
terms of this Certificate of Designations) with postage prepaid, addressed: if
to the Company, to its offices at 4403 Table Mountain Drive, Golden, Colorado
80403 (Attention: Secretary) or to an agent of the Company designated as
permitted by this Certificate of Designations, or, if to any holder of the
Series A Preferred Stock, to such holder at the address of such holder of the
Series A Preferred Stock as listed in the stock record books of the Company
(which may include the records of any transfer agent for the Series A Preferred
Stock); or to such other address as the Company or holder, as the case may be,
shall have designated by notice similarly given.
13. RIGHTS PLAN. The Company's ability to adopt a rights plan if
so authorized by the Company's Amended and Restated Certificate of
Incorporation shall not be limited or restricted in any respect by the
provisions of this Certificate, except as provided in Section 7(d)(iv) herein.
IN WITNESS WHEREOF, this Certificate has been signed by Daniel S.
Lankford of the Company, as of the 7th day of October, 1997.
BOLDER TECHNOLOGIES CORPORATION
By: /s/ Daniel S. Lankford
-------------------------------------
Daniel S. Lankford
President and Chief Executive Officer
24
<PAGE> 1
EXHIBIT 4.4
NUMBER SHARES
PA
SERIES A CONVERTIBLE [BOLDER TECHNOLOGIES CORPORATION LOGO] SERIES A CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK
INCORPORATED UNDER THE SEE REVERSE FOR
LAWS OF THE STATE OF DELAWARE CERTAIN DEFINITIONS
CUSIP 097519 20 1
THIS CERTIFIES THAT
SPECIMEN
is the record holder of
FULLY PAID AND NONASSESSABLE SHARES OF SERIES A CONVERTIBLE PREFERRED
STOCK, $.001 PAR VALUE PER SHARE, OF
BOLDER TECHNOLOGIES CORPORATION
transferable on the books of the Corporation in person or by duly authorized
attorney on surrender of this certificate properly endorsed. This certificate
shall not be valid until countersigned and registered by the Transfer Agent and
Registrar.
WITNESS the facsimile seal of the Corporation and the signatures of its duly
authorized officers.
Dated:
/s/ JOSEPH F. FOJTASEK
SECRETARY
[SEAL]
/s/ DANIEL S. LANKFORD
PRESIDENT
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE> 2
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued,
is registered in the name of Cede & Co. or in such other name as is requested
by an authorized representative of DTC (and any payment is made to Cede & Co.
or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
THE SHARES EVIDENCED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT, AS SET
FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER, (1) REPRESENTS THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT); (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE OF THE SHARES EVIDENCED HEREBY AND THE LAST DATE
ON WHICH BOLDER TECHNOLOGIES CORPORATION (THE "COMPANY") OR ANY "AFFILIATE" (AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF
THE SHARES (THE "RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE
SHARES EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH
SHARES EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO AMERICAN STOCK
TRANSFER & TRUST COMPANY, AS TRANSFER AGENT, A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
SHARES EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THE SHARES EVIDENCED HEREBY ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE SHARES EVIDENCED HEREBY BEFORE THE RESTRICTION TERMINATION DATE, THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THESE SHARES TO AMERICAN STOCK TRANSFER &
TRUST COMPANY, AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE).
IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSES (C), (D) OR (E) ABOVE, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO AMERICAN STOCK TRANSFER & TRUST
COMPANY, AS TRANSFER AGENT, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON ANY TRANSFER OF THE SHARES EVIDENCED HEREBY UPON THE RESTRICTION
TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.
The Corporation shall furnish without charge to each stockholder who so
requests a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock of the
Corporation or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Such request shall be made to
the Corporation's Secretary at the principal office of the Corporation.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR DESTROYED THE
CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A
REPLACEMENT CERTIFICATE.
<TABLE>
<S> <C>
NOTICE OF ELECTION TO CONVERT
(CONVERTIBLE INTO COMMON STOCK)
The undersigned hereby irrevocably elects to convert
FOR
- --------------------------------------------------------------------shares CONVERSION
of Series A Cumulative Convertible Preferred Stock, represented by the
within certificate into shares of Common Stock of BOLDER USE
TECHNOLOGIES CORPORATION (as such shares may be constituted on the conversion
date) in accordance with the provisions of the Certificate ONLY
of Incorporation, as amended, of the Corporation.
Dated-------------------------------------
-----------------------------------
Signature
</TABLE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT - as tenants by the ------ ----------
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to Minors
right of survivorship
and not as tenants Act
in common ------------------
(State)
UNIF TRF MIN ACT Custodian (until age )
------ -----
(Cust)
under Uniform Transfers
--------
(Minor)
to Minors Act
-------------
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, hereby sell, assign and transfer unto
----------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
- ----------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Shares
- ----------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
Attorney
- --------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated
---------------------------------
X -------------------------------------------
X -------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By --------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LETTERHEAD]
December 5, 1997
Bolder Technologies Corporation
4403 Table Mountain Parkway
Golden, Colorado 80403
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Bolder Technologies Corporation (the "Registrant") of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission covering the offering of (i) up to 336,200
shares of the Registrant's Series A Convertible Preferred Stock, par value $.001
per share (the "Preferred Shares"), (ii) up to 453,870 shares of the
Registrant's Common Stock, par value $.001 per share, issuable as dividends on
the Preferred Shares, and (iii) an indeterminate number of shares of the
Registrant's Common Stock, par value $.001 per share, issuable upon conversion
of the Preferred Shares (all such shares being hereinafter collectively referred
to as the "Shares").
In connection with this opinion, we have (i) examined the Registration Statement
and the related Prospectus, and (ii) reviewed the Registrant's Certificate of
Incorporation and Bylaws, as amended, and such other documents, records,
certificates, memoranda and other instruments as we deem necessary as a basis
for this opinion. We also have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof, and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when issued and sold in accordance with the Registration
Statement, will be validly issued, fully paid and nonassessable.
<PAGE> 2
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
By: /s/ James H. Carroll
---------------------------
James H. Carroll
<PAGE> 1
EXHIBIT 10.1
336,200 SHARES
SERIES A CONVERTIBLE PREFERRED STOCK
BOLDER TECHNOLOGIES CORPORATION
PURCHASE AGREEMENT
October 3, 1997
BT Alex. Brown Incorporated
One South Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
BOLDER Technologies Corporation, a Delaware corporation (the
"Company"), confirms its agreement with BT Alex. Brown Incorporated (the
"Initial Purchaser") with respect to the sale by the Company and the purchase
by the Initial Purchaser of 336,200 shares of the Company's Series A
Convertible Preferred Stock (the "Preferred Stock").
The Preferred Stock is convertible into shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), at any time after 60 days
following the latest date of the original issuance thereof, unless previously
redeemed or repurchased, at a conversion price (the "Conversion Price") equal
to $15.00 per share, subject to adjustment as described therein. The Common
Stock issuable upon conversion of the Preferred Stock is sometimes hereinafter
referred to as the "Underlying Stock."
The Company understands that the Initial Purchaser proposes to make an
offering of the Preferred Stock on the terms and in the manner set forth herein
and agrees that the Initial Purchaser may resell, subject to the conditions set
forth herein, all or a portion of the Preferred Stock to purchasers
("Subsequent Purchasers") at any time after the date of this Agreement. The
Preferred Stock will be offered and sold through the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon exemption therefrom. Pursuant to the terms of the
Preferred Stock, investors that acquire Preferred Stock may only resell or
otherwise transfer such Preferred Stock if such Preferred Stock are hereafter
registered under the Securities Act or if an exemption from the registration
requirements of the Securities Act is available (including the exemption
afforded by Rule 144A ("Rule 144A") of the rules and regulations promulgated
under the Securities Act by the Securities and Exchange Commission (the
"Commission")).
<PAGE> 2
The Company has prepared and delivered to the Initial Purchaser copies
of a preliminary offering memorandum dated July 23, 1997 (the "Preliminary
Offering Memorandum"), and has prepared and will deliver to the Initial
Purchaser, on the date hereof, copies of a final offering memorandum dated
October 3, 1997 (the "Offering Memorandum"), setting forth information
regarding the Company, the Preferred Stock and the Underlying Stock. Each of
the Preliminary Offering Memorandum and the Offering Memorandum are to be used
by the Initial Purchaser in connection with their solicitation of purchases of,
or offering of, the Preferred Stock. "Offering Memorandum," unless stated to
the contrary, means, with respect to any date or time referred to in this
Agreement, the most recent offering memorandum (whether the Preliminary
Offering Memorandum or the Offering Memorandum, or any amendment or supplement
to such documents), including exhibits thereto and any documents incorporated
therein by reference, which has been prepared and delivered by the Company to
the Initial Purchaser in connection with their solicitation of purchasers of,
or offering of, the Preferred Stock. The Company hereby confirms that it has
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and sale of the Preferred Stock.
Holders (including subsequent transferees) of the Preferred Stock will
have the registration rights set forth in the Registration Rights Agreement
(the "Registration Rights Agreement"). Pursuant to the Registration Rights
Agreement, the Company has agreed to file with the Commission a shelf
registration statement on Form S-3 pursuant to Rule 415 under the Securities
Act (the "Shelf Registration Statement") to cover public resales of the
Underlying Stock by the Holders thereof. The Company has also agreed to file
with the Commission a registration statement on Form S-3 to register the resale
of the Preferred Stock.
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Offering Memorandum. For purposes hereof,
"Rules and Regulations" means the rules and regulations adopted by the
Commission under the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included," "stated," or described"
in the Offering Memorandum (or other references of like import) shall be deemed
to mean and include all such financial statements and schedules and other
information which is incorporated in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Exchange Act which is incorporated by reference in the Offering Memorandum.
All references in this Agreement to information which is "required to be set
forth in an amended or supplemented Offering Memorandum" shall be deemed to
refer to information which would be subject to disclosure by the Company to
Holders of the Preferred Stock pursuant to Rule 144A(d)(4) under the Securities
Act.
-2-
<PAGE> 3
Section 1. Representations and Warranties. The Company
represents and warrants to, and agrees with, the Initial Purchaser as of the
date hereof, and as of the Closing Date, as follows:
(a) The Offering Memorandum, as of its date, together
with each amendment or supplement thereto, as of its date, contains all the
information that, if requested by a prospective purchaser, would be required to
be provided pursuant to Rule 144A(d)(4) under the Securities Act. The Offering
Memorandum does not, and at the Closing Date will not, and any amendment or
supplement thereto, if any, as of its date, will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The preceding sentence does not apply to
information contained in or omitted from the Preliminary Offering Memorandum or
the Offering Memorandum (or any supplement or amendment thereto) in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of any Initial Purchaser specifically for use therein (the "Initial
Purchaser's Information"). The parties acknowledge and agree that the Initial
Purchaser's Information consists solely of the last paragraph at the bottom of
the front cover page concerning the terms of the offering by the Initial
Purchaser, the legend concerning overallotment and trading activities of the
Initial Purchaser on the inside front cover page and the first, second and
sixth paragraphs under the caption "Plan of Distribution" in the Offering
Memorandum. The Company is subject to Sections 13 or 15(d) of the Exchange
Act.
(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and corporate authority to own or lease its
properties and conduct its business as described in the Offering Memorandum.
The Company is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such qualification or
licensing, except where the failure to be so qualified or licensed would not
have a material adverse effect on the condition, financial or otherwise,
results of operations or business of the Company, taken as a whole (a "Material
Adverse Effect"). The Company has no subsidiaries, corporate or otherwise.
(c) The information set forth under the caption
"Capitalization" in the Offering Memorandum is true and correct. The Company
is not a party to or bound by any instrument, agreement or other arrangement,
including, but not limited to, any voting trust agreement, stockholders'
agreement or other agreement or instrument, affecting the securities or rights
or obligations of securityholders of the Company or providing for any of them
to issue, sell, transfer or acquire any capital stock, rights, warrants,
options or other securities of the Company, except for this Agreement and as
set forth in the Offering Memorandum. The Preferred Stock and the Company's
other capital stock conform in all material respects to all statements with
respect thereto contained in the Offering Memorandum.
-3-
<PAGE> 4
(d) All issued and outstanding shares of capital stock or
other securities evidencing equity ownership of the Company have been duly
authorized and validly issued and are fully paid and non-assessable, as
applicable; and none of such securities were issued in violation of the
preemptive rights of any securityholder of the Company or similar contractual
rights granted by the Company. The issuance of the Preferred Stock has been
duly authorized and, when validly issued, delivered and paid for in the manner
contemplated by this Agreement, will be duly authorized, validly issued, fully
paid and non-assessable. The shares of Common Stock issuable upon conversion
of the Preferred Stock will, upon such issuance, be duly authorized, validly
issued, fully paid and non-assessable, and the Company has duly authorized and
reserved for issuance upon conversion of the Preferred Stock the shares of
Common Stock issuable upon such conversion. The Preferred Stock and the
Underlying Stock are not and will not under existing agreements by which the
Company is bound be subject to any preemptive or other similar rights of any
securityholder of the Company; all corporate action required to be taken for
the authorization, issuance and sale of the Preferred Stock and the Underlying
Stock has been duly and validly taken; and the certificates representing the
Preferred Stock and the Underlying Stock will be in due and proper form. Upon
the issuance and delivery pursuant to the terms of this Agreement of the
Preferred Stock to be sold by the Company hereunder and thereunder, the Initial
Purchaser will acquire good and marketable title thereto free and clear of any
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever.
(e) The historical financial statements of the Company
together with the related notes thereto incorporated by reference in the
Preliminary Offering Memorandum and the Offering Memorandum fairly present in
all material respects the financial position, income, changes in stockholders'
equity, cash flow and results of operations of the Company at the respective
dates and for the respective periods to which they apply and such historical
financial statements have been prepared in conformity with generally accepted
accounting principles and the Rules and Regulations, consistently applied
throughout the periods involved. Except as described in the Offering
Memorandum, there has been no material adverse change or development involving
a prospective material adverse change in the condition, financial or otherwise,
results of operations or business of the Company taken as a whole, whether or
not arising in the ordinary course of business, since the date of the financial
statements included in the Offering Memorandum and the outstanding debt,
property, both tangible and intangible, and business of the Company conform in
all material respects to the descriptions thereof contained in the Offering
Memorandum. Financial information set forth in the Offering Memorandum under
the headings "Offering Memorandum Summary - Summary Financial Data,"
"Capitalization" and "Selected Financial Data" and the information incorporated
by reference in the Offering Memorandum under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
fairly present in all material respects, on the basis stated in the Offering
Memorandum, the information set forth therein and have been derived from or
compiled on a basis consistent with that of the audited financial statements
included in the Offering Memorandum.
-4-
<PAGE> 5
(f) Since the respective dates as of which information is
given in the Offering Memorandum, except as otherwise stated or contemplated
therein, (i) there have been no transactions entered into by the Company, other
than those in the ordinary course of business, which are material with respect
to the Company, and (ii) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(g) The Company has filed all tax returns required to be
filed by it in any jurisdiction, other than those filings being contested in
good faith, and has paid all federal, state, local and foreign taxes shown to
be due on such returns or claimed to be due from such entities, other than
those (i) currently payable without penalty or interest or (ii) being contested
in good faith, in either case, for which the Company is liable, and has
established adequate reserves in the Company's financial statements (in
accordance with generally accepted accounting principles) for such taxes which
are not due and payable.
(h) The Company maintains liability, casualty and other
insurance (subject to customary deductions and retentions) with responsible
insurance companies against such risk as is customary for companies engaged in
similar businesses as the Company operates (which may include self-insurance in
comparable form to that maintained by such responsible companies).
(i) There is no action, suit, proceeding, litigation or
governmental proceeding pending or, to the knowledge of the Company, threatened
against, or involving the properties or businesses of, the Company which (i)
questions the validity of the capital stock of the Company or of this Agreement
or the Registration Rights Agreement or of any action taken or to be taken by
the Company pursuant to or in connection with this Agreement or the
Registration Rights Agreement or (ii) would be reasonably likely to result in a
Material Adverse Effect, except as set forth in the Offering Memorandum.
(j) The Company has full legal right, power and authority
to authorize, issue, deliver and sell the Preferred Stock and the Underlying
Stock upon conversion of the Preferred Stock, to enter into this Agreement and
the Registration Rights Agreement and to consummate the transactions provided
for in such agreements; and this Agreement has been duly and properly
authorized, executed and delivered by the Company and, when the Company has
duly executed and delivered the Registration Rights Agreement (assuming the due
execution and delivery therein by the Initial Purchaser), this Agreement and
the Registration Rights Agreement will each constitute a legal, valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms, except to the extent that enforcement thereof may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or similar laws now or
-5-
<PAGE> 6
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and except to the extent that rights to
indemnification and contribution contained in this Agreement may be limited by
federal or state securities laws or the public policy relating thereto.
(k) None of the Company's issue and sale of the Preferred
Stock and the Underlying Stock upon the conversion of the Preferred Stock, the
execution or delivery of this Agreement and the Registration Rights Agreement,
its performance hereunder and thereunder, its consummation of the transactions
contemplated herein and therein or the conduct by it of its businesses as
described in the Offering Memorandum or any amendments or supplements thereto
conflicts or will conflict with or results or will result in any breach or
violation of any of the terms or provisions of, or constitutes or will
constitute a default under, or results or will result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon any property
or assets of the Company pursuant to the terms of, (i) the Certificate of
Incorporation or by-laws of the Company, (ii) any license, contract, indenture,
mortgage, deed of trust, voting trust agreement, stockholders' agreement, note,
loan or credit agreement or other agreement or instrument to which the Company
is a party or by which it is or may be bound or to which its properties or
assets is or may be subject, or any indebtedness, or (iii) any statute,
judgment, decree, order, rule or regulation applicable to the Company of any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body, having jurisdiction over the Company or any of
their respective activities or properties except, in the case of clauses (ii)
and (iii), such defaults, impositions and violations that would not have a
Material Adverse Effect.
(l) No consent, approval, authorization or order of, and
no filing with, any court, arbitrator, regulatory body, government agency or
other body, domestic or foreign, is required for the execution, delivery or
performance of this Agreement, the Registration Rights Agreement (execution and
delivery only) or the transactions contemplated hereby or thereby.
(m) The Company has no material contingent obligations
which are not disclosed in the Company's financial statements which are
included in the Offering Memorandum.
(n) Except as disclosed in the Offering Memorandum, the
Company is not or with the giving of notice or lapse of time or both, will not
be, in violation of or in default under its Certificate of Incorporation or
by-laws or under any agreement, lease, contract, indenture or other instrument
or obligation to which it is a party or by which it, or any of its properties,
is bound and which default would have a Material Adverse Effect.
-6-
<PAGE> 7
(o) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions
herein contemplated (except such additional steps as may be required by the
Commission, or such additional steps as may be necessary to qualify the
Securities for sale by the Initial Purchaser under state securities or Blue Sky
laws) has been obtained or made and is in full force and effect.
(p) The Company holds all material licenses, certificates
and permits from governmental authorities which are necessary to the conduct of
its businesses; and the Company has no knowledge that either the Company has
infringed any patents, patent rights, trade names, trademarks or copyrights,
which infringement is material to the business of the Company taken as a whole.
The Company knows of no material infringement by others of patents, patent
rights, trade names, trademarks or copyrights owned by or licensed to the
Company.
(q) The Company is not an "investment company" within the
meaning of such term under the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(s) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any liability; the Company has not incurred
and does not expect to incur liability under (i) Title IV of ERISA with respect
to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
-7-
<PAGE> 8
(t) The Company believes that it is in material
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours. There are no pending investigations involving
the Company by the U.S. Department of Labor or any other governmental agency
responsible for the enforcement of such federal, state, local or foreign laws
and regulations. Except as otherwise disclosed in the Offering Memorandum,
there is no unfair labor practice charge or complaint against the Company
pending before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or threatened against or
involving the Company. Except as otherwise disclosed in the Offering
Memorandum, no representation question exists respecting the employees of the
Company, and no collective bargaining agreement or modification thereof is
currently being negotiated by the Company. No grievance or arbitration
proceeding is pending under any expired or existing collective bargaining
agreements of the Company. Except as disclosed in the Offering Memorandum, no
material labor dispute with the employees of the Company exists or, to the
knowledge of the Company, is imminent.
(u) Neither the Company nor any of its affiliates has
taken or will take, directly or indirectly, any action designed to or which has
constituted or which might be expected to cause or result in, under the
Exchange Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Preferred Stock
or otherwise.
(v) The Company has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and personal
property which are material to its business, in each case, except as disclosed
in the Offering Memorandum, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects and other restrictions that
would have a Material Adverse Effect.
(w) Arthur Andersen LLP, who have certified certain of
the financial statements included as part of the Offering Memorandum, are
independent certified public accountants of the Company as required by the
Securities Act and the Rules and Regulations.
(x) The Preferred Stock satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act, and the Preferred
Stock are eligible for trading in the Private Offerings, Resale and Trading
through Automated Linkages ("PORTAL") market. The Company's Common Stock is
listed on the Nasdaq Stock Market (National Market).
(y) Other than payments required or allowed by applicable
law of the United States, neither the Company nor, to the knowledge of the
Company, any officer, director or employee of the Company or any other person
acting on behalf of the Company or for the benefit of the Company, has at any
time during the last five years, (i)
-8-
<PAGE> 9
made any unlawful gift or contribution to any candidate for federal, state,
local or foreign political office, or failed to disclose fully any such gift or
contribution in violation of law, or (ii) made any payment to any federal,
state, local or foreign governmental officer or official, which would be
reasonably likely to subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding (domestic or foreign). The
Company's internal accounting controls are sufficient to cause the Company to
comply with the Foreign Corrupt Practices Act of 1977, as amended.
(z) The minute books of the Company have been made
available to the Initial Purchaser, contain a complete summary of all meetings
and actions of the directors and stockholders of the Company since the time of
their respective incorporation and reflect all transactions referred to in such
minutes accurately in all respects.
(aa) The Company has not been notified or is not otherwise
aware that it is potentially liable, or is considered potentially liable, under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or any similar law ("Environmental Laws"). To the best of
the Company's knowledge, the Company is in substantial compliance with all
applicable existing Environmental Laws, except for such instances of
non-compliance which would not have a Material Adverse Effect. The term
"Hazardous Material" means (i) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, (ii) any "hazardous waste" as defined by the Resource Conservation
and Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv)
any polychlorinated biphenyl and (v) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulation under or
within the meaning of any other Environmental Law. To the best of the
Company's knowledge, no disposal, release or discharge of "Hazardous Material"
in material violation of applicable Environmental Laws has occurred on, in, at
or about any of the facilities or properties of the Company.
(bb) Assuming the accuracy of the statements contained in
Sections 2(b) and 2(c) hereof, neither the Company nor any affiliate (as such
term is defined in Rule 501(b) under the Securities Act) of the Company has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any "security" (as defined in the
Securities Act), which is or will be integrated with the sale of the Preferred
Stock in a manner that would require the registration of the Preferred Stock
under the Securities Act. The Company has not incurred any liability for a
fee, commission, or other compensation on account of the employment of a broker
or finder in connection with the transactions contemplated by this Agreement
other than as contemplated hereby.
(cc) None of the Company, any affiliate (as such term is
defined in Rule 501 (b) under the Securities Act) of the Company and any other
person acting on its or their behalf has engaged, in connection with the
offering of the Preferred Stock, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act.
-9-
<PAGE> 10
Section 2. Sale to the Initial Purchaser.
(a) On the basis of the representations, warranties and
agreements contained herein, and subject to the terms and conditions set forth
herein, the Company agrees to issue and sell to the Initial Purchaser and the
Initial Purchaser agrees to purchase the Preferred Stock as set forth on
Schedule A attached hereto.
(b) The Initial Purchaser has advised the Company that it
is its intention, as promptly as it deems appropriate after the Company shall
have furnished the Initial Purchaser with copies of the Offering Memorandum, to
resell the Preferred Stock pursuant to the procedures and upon the terms set
forth in the Offering Memorandum, including not to solicit any offer to buy or
offer to sell the Preferred Stock by means of any form of general solicitation
or general advertising (within the meaning of Regulation D under the Securities
Act) or in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act. The Initial Purchaser warrants and agrees with the
Company that it has solicited and will solicit offers (the "Exempt Resales")
for Preferred Stock only from, and will offer Preferred Stock only to, persons
that it reasonably believes to be "Qualified Institutional Buyers" or "QIBs" in
transactions that meet the requirements for an exemption from the registration
requirements of the Securities Act under Rule 144A. The QIBs are referred to
herein as "Eligible Purchasers." The Initial Purchaser represents and warrants
that it is not a pension or welfare plan (as defined in Section 3 of ERISA) and
is not acquiring the Preferred Stock on behalf of a pension or welfare plan.
The Company acknowledges and agrees that the Initial Purchaser may sell
Preferred Stock to any affiliate of the Initial Purchaser and any such
affiliate may sell Preferred Stock purchased by it to the Initial Purchaser.
The Initial Purchaser agrees that, prior to or simultaneously with the
confirmation of sale by it to any Subsequent Purchaser of any of the Preferred
Stock purchased from the Company pursuant hereto, the Initial Purchaser shall
furnish to that Subsequent Purchaser a copy of the Offering Memorandum (and any
amendment thereof or supplement thereto that the Company shall have furnished
to the Initial Purchaser prior to the date of such confirmation of sale). In
addition to the foregoing, the Initial Purchaser agrees and understands that
the Company and, for purposes of the opinions to be delivered to the Initial
Purchaser pursuant to Sections 5(b) and (c) hereof, counsel to the Company and
to the Initial Purchaser, respectively, may rely upon the accuracy and truth of
the representations, warranties and covenants in this Section 2 and the Initial
Purchaser hereby consent to such reliance.
(c) The Initial Purchaser hereby represents and warrants
to, and agrees with, the Company that (i) it is a QIB within the meaning of
Rule 144A under the Securities Act; (ii) no form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) has been or will be used by the Initial
-10-
<PAGE> 11
Purchaser or any of its representatives in connection with the offer and sale
of any of the Preferred Stock including, but not limited to, articles, notices
or 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 general advertising
except pursuant to a registered public offering as provided in the Registration
Rights Agreement; and (iii) it will otherwise act in accordance with the terms
and conditions set forth in this Agreement in connection with the placement of
the Preferred Stock contemplated hereby.
Section 3. Delivery of and Payment for the Preferred Stock.
Delivery of, and payment for, the Preferred Stock shall be made at 9:30 a.m.,
Baltimore, Maryland time, on October 8, 1997, or at such other date or time,
not later than ten full business days thereafter, as shall be agreed by the
Initial Purchaser and the Company (such date and time being referred to herein
as the "Closing Date"). Delivery of, and payment for, the Preferred Stock
shall be made at the offices of BT Alex. Brown Incorporated, Baltimore,
Maryland, or any such other place as shall be agreed by the Initial Purchaser
and the Company. Payment shall be made to the Company by wire transfer of same
day funds payable to the order of the Company, against delivery to the Initial
Purchaser of certificates for the Preferred Stock to be purchased by it. The
Company shall make the certificates for the Preferred Stock available for
examination and packaging by the Initial Purchaser not later than 10:00 a.m.
(Baltimore, Maryland time) on the last business day prior to the Closing Date
at the offices of BT Alex. Brown Incorporated, Baltimore, Maryland.
Section 4. Covenants and Agreements of the Company. The Company
covenants and agrees with the Initial Purchaser as follows:
(a) The Company will furnish promptly to the Initial
Purchaser and counsel for the Initial Purchaser, without charge, as many copies
of the Preliminary Offering Memorandum and the Offering Memorandum (and of any
amendments or supplements thereto) as may be reasonably requested; to furnish
to the Initial Purchaser on the date hereof a copy of the independent
accountants' report included by reference in the Offering Memorandum signed by
the accountants rendering such report; and the Company hereby consents to the
use of the Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments and supplements thereto, in connection with Exempt Resales of the
Preferred Stock.
(b) The Company will notify the Initial Purchaser
promptly, and confirm such advice in writing, of (x) any filing made by the
Company of information relating to the offering of the Preferred Stock with any
securities exchange or any other regulatory body in the United States or any
other jurisdiction, and (y) prior to the completion of the placement of the
Preferred Stock by the Initial Purchaser as evidenced by a notice in writing
from the Initial Purchaser to the Company, any material adverse changes or
developments involving any material prospective change in the condition,
-11-
<PAGE> 12
financial or otherwise, results of operations or business of the Company taken
as a whole, in or affecting the earnings, business affairs or business
prospects of the Company which (i) make any statement of a material fact made
in the Offering Memorandum false or misleading in any material respect or (ii)
if not disclosed in the Offering Memorandum, would constitute a material
omission therefrom. In such event or if during such time any event shall occur
as a result of which it is necessary, in the reasonable opinion of the Company,
its counsel, the Initial Purchaser or counsel for the Initial Purchaser, to
amend or supplement the Offering Memorandum in order that the Offering
Memorandum not include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances then existing, the Company will
forthwith amend or supplement the Offering Memorandum by preparing and
furnishing to each Initial Purchaser an amendment or amendments of, or a
supplement or supplements to, the Offering Memorandum (in form and substance
satisfactory in the reasonable opinion of counsel for the Initial Purchaser) so
that, as so amended or supplemented, the Offering Memorandum will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a Subsequent Purchaser,
not misleading.
(c) The Company agrees that if the delivery of the
Offering Memorandum is required at any time in connection with the sale of the
Preferred Stock and if at such time any events shall have occurred as a result
of which the Offering Memorandum as then amended or supplemented would include
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when the Offering Memorandum is
delivered, not misleading, or if for any other reason it shall be necessary at
such time to amend or supplement the Offering Memorandum in order to comply
with any law, the Company will notify the Initial Purchaser immediately
thereof, and to promptly prepare and furnish to the Initial Purchaser an
amended Offering Memorandum or a supplement to the Offering Memorandum so that
statements in the Offering Memorandum, as so amended or supplemented, will not,
in light of the circumstances under which they were made when it is so
delivered, be misleading, or so that the Offering Memorandum will comply with
applicable law. The Initial Purchaser's delivery of any such amendment or
supplement shall not constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) The Company agrees to not amend or supplement the
Offering Memorandum without the consent of the Initial Purchaser, which consent
shall not be unreasonably withheld, and to promptly advise the Initial
Purchaser when any document filed under the Exchange Act which is incorporated
into the Offering Memorandum shall have been filed with the Commission.
(e) The Company agrees, during the five-year period
following the Closing Date, to furnish to the Initial Purchaser all reports and
other communications
-12-
<PAGE> 13
furnished to shareholders and copies of all reports, documents, information and
financial statements filed with the Commission or any national securities
exchange on which any class of securities of the Company shall be listed.
(f) The Company will use the proceeds from the sale of
the Preferred Stock in the manner described in the Offering Memorandum.
(g) The Company will, in connection with the offering of
the Preferred Stock, make its officers, employees, independent accountants and
legal counsel reasonably available upon request by the Initial Purchaser.
(h) The Company will use its reasonable best efforts to
do and perform all things required to be done and performed under this
Agreement by it that are within its control prior to or after the Closing Date
and to use reasonable efforts to satisfy all conditions precedent on its part
to the delivery of the Preferred Stock.
(i) None of the Company, its affiliates (as defined in
Rule 501(b) under the 1933 Act) or any person (other than the Initial Purchaser
and their respective affiliates, as to whom the Company makes no
representation) acting on its behalf will engage, in connection with the
offering of the Preferred Stock, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933 Act, nor will any
person acting on its or their behalf, directly or indirectly, make offers or
sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Preferred Stock under
the Securities Act.
(j) The Company will not, so long as the Preferred Stock
are outstanding, be or become, or be or become owned by, an open-end investment
company, unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act, and
will not be or become, or be or become owned by, a closed-end investment
company required to be registered, but not registered thereunder.
(k) The Company agrees that no future offer and sale of
debt securities of the Company of any class will be made if, as a result of the
doctrine of "integration" referred to in Rule 502 under the Securities Act,
such offer and sale would render invalid (for the purpose of (i) the sale of
the Preferred Stock by the Company to the Initial Purchaser, (ii) the resale of
the Preferred Stock by the Initial Purchaser to Subsequent Purchasers or (iii)
the resale of the Preferred Stock by such Subsequent Purchasers to others) the
exemption from the registration requirements of the Securities Act provided by
Section 4(2) thereof or by Rule 144A.
(l) So long as any of the Preferred Stock or Common Stock
issued upon the conversion of the Preferred Stock are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the Company
will, during any period in which it is not subject to and in compliance with
Sections 13 or 15(d) of the Exchange Act,
-13-
<PAGE> 14
provide to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities, upon
the request of such holder or prospective purchaser, any information required
to be provided by Rule 144A(d)(4) under the Securities Act. This covenant is
intended to be for the benefit of the holders, and prospective purchasers
designated by such holders, from time to time of such restricted securities.
(m) The Company will comply with the provisions of the
Registration Rights Agreement;
(n) The Company will maintain a transfer agent and, if
necessary under the laws of the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for the Common
Stock.
(o) The Company will use its reasonable efforts to permit
the Preferred Stock to be designated as PORTAL securities in accordance with
the rules and regulations adopted by the National Association of Securities
Dealers, Inc. relating to the PORTAL market.
Prior to the Closing Date, the Company shall have filed a Certificate
of Designation with respect to the Preferred Stock that is in form and
substance reasonably satisfactory to Piper & Marbury L.L.P.
Section 5. Payment of Expenses. The Company hereby agrees to
pay all of the expenses and fees incident to the performance of its obligations
under this Agreement and the Registration Rights Agreement, including,
regardless of whether any sale of the Preferred Stock to the Initial Purchaser
is consummated: (i) the fees and expenses of accountants and counsel for the
Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing (including mailing and handling charges),
and delivery to the Initial Purchaser of each Preliminary Offering Memorandum
and the Offering Memorandum and any amendments and supplements thereto, (iii)
all costs and expenses incurred in connection with the reproduction of this
Agreement, the Registration Rights Agreement and such other documents as may be
required in connection with the offering, purchase, sale and delivery of the
Preferred Stock, (iv) the printing, issuance and delivery of the Preferred
Stock, (v) costs and expenses of travel, food and lodging of Company personnel
in connection with the "road show," information meetings and presentations,
(vi) fees and expenses of the transfer agent and registrar, (vii) all costs
related to the qualification, if applicable, of the Preferred Stock and the
shares of Common Stock issuable upon conversion of the Preferred Stock under
state securities laws, (viii) any fees incurred in connection with the
designation of the Preferred Stock as PORTAL securities in connection with the
PORTAL market and designation of the Underlying Stock for quotation on the
Nasdaq Stock Market (National Market), and (ix) all other costs and expenses
incident to the performance of its obligations hereunder which are not
specifically otherwise provided for in this Section. The Initial Purchaser
-14-
<PAGE> 15
shall pay its own costs and expenses, including costs and expenses of its
counsel, any transfer taxes on Preferred Stock which it may sell and expenses
incident to its sale of Preferred Stock.
Section 6. Conditions of the Initial Purchaser's Obligations.
The obligations of the Initial Purchaser hereunder are subject to the
continuing accuracy of the representations and warranties of the Company herein
as of the date hereof and as of the Closing Date as if they had been made on
and as of the Closing Date; and the performance by the Company on and as of the
Closing Date of its covenants and obligations hereunder and to the following
further conditions:
(a) The Initial Purchaser shall not have advised the
Company that the Offering Memorandum, or any supplement or amendment thereto,
contains an untrue statement of fact which is material, or omits to state a
fact which is material and is required to be stated therein or is necessary to
make the statements, in light of the circumstances under which they were made,
not misleading. No order suspending the sale of the Preferred Stock in any
jurisdiction shall have been issued on the Closing Date and no proceedings for
that purpose shall have been instituted or shall be contemplated.
(b) At Closing Date, the Initial Purchaser shall have
received the favorable opinion of Cooley Godward LLP, counsel to the Company,
dated the Closing Date, addressed to the Initial Purchaser and in form and
substance reasonably satisfactory to Piper & Marbury L.L.P., to the effect
that:
(i) The Company is a corporation validly existing
and in good standing under the laws of the State of Delaware.
(ii) The Company has the full corporate power and
corporate authority to own, lease and operate its business as described in the
Offering Memorandum.
(iii) The outstanding shares of capital stock of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable and to such counsel's knowledge were not issued in violation
of any preemptive rights. The Preferred Stock has been duly authorized and,
upon issuance and delivery against payment therefor, in accordance with the
terms of this Agreement, will be validly issued, fully paid and non-assessable.
(iv) The shares of Common Stock initially issuable
upon conversion of the Preferred Stock (i) have been duly authorized and
validly reserved for issuance upon such conversion, and such shares, when
issued and delivered upon such conversion in the manner provided for by the
Preferred Stock, will be validly issued, fully paid and non-assessable and (ii)
will conform to the description thereof contained in the Offering Memorandum.
-15-
<PAGE> 16
(v) The Preferred Stock and the shares of Common
Stock issuable upon conversion of the Preferred Stock, to the best of such
counsel's knowledge, are not subject to preemptive or other similar rights.
(vi) There is no restriction upon the voting or
transfer of any capital stock of the Company pursuant to the Company's
Certificate of Incorporation or by-laws, in each case as amended, or in any
agreement or other instrument to which the Company is a party of which such
counsel has knowledge except as described in the Offering Memorandum; and no
holders of securities of the Company have rights to the registration thereof
under any agreement known to such counsel except as described in the
Registration Rights Agreement and the Offering Memorandum.
(vii) This Agreement and the Registration Rights
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, and have been duly executed and delivered by the Company.
(viii) Assuming the accuracy of the Company's
representations and warranties set forth in subparagraph (a) of Section 1, the
accuracy of the Initial Purchaser's representations and warranties set forth in
subparagraphs (b) and (c) of Section 2, and compliance with the procedures set
forth in Section 7 hereof, and in reliance upon the acknowledgments,
representations and agreements made, or deemed to be made, by each purchaser of
Preferred Stock as set forth in the Offering Memorandum, the offer and sale of
the Preferred Stock to the Initial Purchaser or the initial offer and resale of
the Preferred Stock by the Initial Purchaser, in each case, in the manner
contemplated by this Agreement and the Offering Memorandum are exempt from the
registration requirements of the Securities Act it being understood that no
opinion is expressed as to any subsequent resale of any such Preferred Stock.
(ix) The Preferred Stock, the Common Stock
issuable upon the conversion of the Preferred Stock and the Registration Rights
Agreement conform in all material respects to the descriptions thereof
contained in the Offering Memorandum, and the form of certificate used to
evidence the Preferred Stock is in due and proper form under Delaware law.
(x) To the best of such counsel's knowledge, and
except as disclosed in the Offering Memorandum, there is no action, suit or
proceeding at law or in equity or by or before any governmental instrumentality
or other agency now pending or threatened against the Company which would
require disclosure in the Offering Memorandum.
(xi) The information in the Offering Memorandum
under the caption "Description of Capital Stock" to the extent that it
constitutes matters of law, summaries of legal matters, the Company's
Certificate of Incorporation, bylaws or legal proceedings, or legal
conclusions, fairly summarizes the matters referred to therein. To
-16-
<PAGE> 17
the best of such counsel's knowledge, there are no statutes or regulations that
are required to be described in the Offering Memorandum that are not described
as required.
(xii) To the best of such counsel's knowledge,
there are no franchises, contracts, indentures, mortgages, loan or credit
agreements, notes, leases or other instruments required to be described or
referred to in the Offering Memorandum, other than those described or referred
to therein.
(xiii) To the best of such counsel's knowledge, no
authorization, consent, approval of or qualification with, any governmental
authority to required for the performance by the Company of its obligations
under this Agreement or the Registration Rights Agreement, except such as may
be required under state or other blue sky laws in connection with the purchase
and distribution of the Preferred Stock (as to which we express no opinion) by
the Initial Purchaser and except such as have been made or obtained.
(xiv) The Registration Rights Agreement is a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except (a) as the enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganizations, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at laws), (b) rights to indemnity and
contribution thereunder may be limited by federal or state securities laws or
the policies underlying such laws, and (c) subject to general equity principles
and to limitations on the availability of equitable relief, including specific
performance.
(xv) The Company is not and will not become, as a
result of the consummation of the transactions contemplated by the offer and
sale of the Preferred Stock, and application of the net proceeds therefrom as
described in the Offering Memorandum, an "investment company" as such term is
defined in the 1940 Act.
(c) On or prior to the Closing Date, the Initial
Purchaser shall have received from Piper & Marbury L.L.P., counsel for the
Initial Purchaser, such opinion or opinions with respect to the validity of the
Preferred Stock, the Underlying Stock, the Offering Memorandum and other
related matters as the Initial Purchaser may request and Piper & Marbury L.L.P.
shall have received such papers and information as they request to enable it to
pass upon such matters.
(d) Cooley Godward LLP shall state in the opinion letter
contemplated by Section 6(b) that such counsel has participated in conferences
with officers and other representatives of each of the Company and
representatives of the independent public accountants for the Company and the
Initial Purchaser, at which conferences the contents of the Offering Memorandum
and related matters were discussed, and, although such counsel is not passing
upon, and does not assume any responsibility for, the accuracy,
-17-
<PAGE> 18
completeness or fairness of the statements contained in the Offering Memorandum
and have made no independent check or verification thereof, on the basis of the
foregoing, no facts have come to the attention of such counsel which has lead
them to believe that the Offering Memorandum, as of its date contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in light of the circumstances in which they were made, except that
such counsel need express no opinion or belief with respect to the financial
statements and related notes, the pro forma financial information and other
financial, statistical or accounting data included the Offering Memorandum or
excluded therefrom).
(e) At the Closing Date, the Initial Purchaser shall have
received a certificate of the Company signed by the principal executive officer
and by the chief financial or chief accounting officer of the Company, in their
capacities as such, dated the Closing Date, to the effect that each of such
persons has carefully examined the Offering Memorandum, this Agreement and the
Registration Rights Agreement, and that:
(i) the representations and warranties of the
Company in this Agreement and the Registration Rights Agreement are true and
correct, as if made on and as of the Closing Date, and the Company has complied
with all agreements and covenants and satisfied all conditions contained in
this Agreement and the Registration Rights Agreement on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the qualification or
exemption from qualification of the Preferred Stock shall have been issued and
no proceedings for that purpose shall have been commenced or, to the knowledge
of the Company, be contemplated;
(iii) since the date of the most recent financial
statements included in the Offering Memorandum, there has been no material
adverse change in the condition, financial or otherwise, results of operation
or business of the Company, taken as a whole, except as set forth in the
Offering Memorandum;
(iv) none of the Offering Memorandum or any such
amendment or supplement includes any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; and
(v) subsequent to the respective dates as of
which information is given in the Offering Memorandum: (a) the Company has not
incurred up to and including the Closing Date, other than in the ordinary
course of its business, any material liabilities or obligations, direct or
contingent, except as disclosed in the Offering Memorandum; (b) the Company has
not paid or declared any dividends or other distributions on its capital stock;
(c) the Company has not entered into any material transactions not in the
ordinary course of business, except as disclosed in the Offering Memorandum;
(d) there has not been any material change in the capital stock; (e) the
-18-
<PAGE> 19
Company has not sustained any material loss or damage to its property or
assets, whether or not insured; and (f) there is no litigation which is pending
or to the best of the Company's knowledge threatened against the Company or any
affiliated party of any of the foregoing which would be reasonably likely to
have a Material Adverse Effect and which is required to be set forth in an
amended or supplemented Offering Memorandum which has not been set forth.
(f) On or before the date hereof the Initial Purchaser
shall have received a letter, dated such date, addressed to the Initial
Purchaser and the Company in form and substance satisfactory in all respects to
the Initial Purchaser and Piper & Marbury L.L.P., from Arthur Andersen LLP
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Offering
Memorandum including the following:
(i) confirming that they are independent
certified public accountants with respect to the Company within the meaning of
the Securities Act and the Exchange Act and the applicable Rules and
Regulations;
(ii) stating that it is their opinion that the
consolidated financial statements of the Company included in the Offering
Memorandum or incorporated by reference therein comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act; and
(iii) stating that they have compared specific
dollar amounts, numbers of shares, percentages of revenues and earnings,
statements and/or other financial information pertaining to the Company set
forth in the Offering Memorandum in each case to the extent that such amounts,
numbers, percentages, statements and information may be derived from the
general accounting records, including work sheets, of the Company and excluding
any questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures need not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement.
(g) At the Closing Date, the Initial Purchaser shall have
received from Arthur Andersen LLP a letter, dated as of the Closing Date to the
effect that they reaffirm that statements made in the letter furnished pursuant
to subsection (f) of this Section 6, except that the specified date referred to
shall be a date not more than five (5) days prior to the Closing Date to the
further effect that they have carried out procedures as specified in clause
(iii) of subsection (f) of this Section 6 with respect to certain amounts,
percentages and financial information as specified by the Initial Purchaser and
deemed to be a part of the Offering Memorandum and have found such amounts,
percentages and financial information to be in agreement with the records
specified in such clause (iii).
-19-
<PAGE> 20
(h) At the Closing Date, Piper & Marbury L.L.P. shall
have been furnished with such documents and opinions as they may require for
the purpose of enabling them to pass upon the issuance and sale of the
Preferred Stock as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Preferred
Stock and with respect to the shares of Common Stock issuable upon conversion
of the Preferred Stock as herein contemplated shall be satisfactory in form and
substance to the Initial Purchaser and Piper & Marbury L.L.P.
(i) The Preferred Stock shall have been approved by the
National Association of Securities Dealers, Inc. for trading in the PORTAL
market.
(j) Trading in the Common Stock shall not have been
suspended by the Nasdaq Stock Market (National Market) at any time after
October 2, 1997.
(k) Subsequent to the execution and delivery of this
Agreement and until the Closing Date there shall not have occurred any of the
following: (i) trading in securities generally on the New York Stock Exchange,
the American Stock Exchange, the Nasdaq Stock Market (National Market) or the
over-the-counter market shall have been suspended or limited, or minimum prices
shall have been established on either of such exchanges or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, or trading in securities of the Company on any
exchange or in the over-the-counter market shall have been suspended or (ii)
any moratorium on commercial banking activities shall have been declared by
Federal or New York State authorities or (iii) an outbreak or escalation of
hostilities or a declaration by the United States of a national emergency or
war or such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the
financial markets in the United States shall be such) as to make it, in the
judgment of the Initial Purchaser, impracticable or inadvisable to proceed with
the offering or the delivery of the Preferred Stock on the terms and in the
manner contemplated in the Offering Memorandum.
(l) The Company and the Initial Purchaser shall have
executed and delivered the Registration Rights Agreement on the Closing Date.
(m) If any event shall have occurred that requires the
Company under Section 4(b) hereof to prepare an amendment or supplement to the
Offering Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchaser shall have been given a reasonable opportunity to comment
thereon, and copies thereof delivered to the Initial Purchaser.
(n) There shall not have occurred any invalidation of
Rule 144A under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the Exchange
Securities Act by the Commission or
-20-
<PAGE> 21
any amendment or proposed amendment thereof by the Commission which in the
judgment of the Initial Purchaser would materially impair the ability of the
Initial Purchaser to purchase, hold or effect resales of the Preferred Stock as
contemplated hereby.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to the Initial Purchaser.
If any condition to the Initial Purchaser's obligations hereunder to
be fulfilled prior to or at the Closing Date is not so fulfilled, the Initial
Purchaser may terminate this Agreement upon notice to the Company, and such
termination shall be without liability of any party to any other party or if
the Initial Purchaser so elect, they may waive any such conditions which have
not been fulfilled or extend the time for their fulfillment.
Section 7. Subsequent Offers and Resales of the Preferred Stock.
Each of the Initial Purchaser and the Company hereby
establishes and agrees to observe the following procedures in connection with
the offer and sale by the Initial Purchaser of the Preferred Stock.
(i) Offers have been and will be, and sales of
the Preferred Stock will be, made by the Initial Purchaser only to
institutional investors that are reasonably believed to qualify as Qualified
Institutional Buyers pursuant to Rule 144A under the Securities Act.
(ii) The Preferred Stock have been and will be
offered by the Initial Purchaser only by approaching prospective Subsequent
Purchasers on an individual basis. No general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act will be
used in connection with the offering of the Preferred Stock. The Initial
Purchaser agrees with respect to resales made in reliance upon Rule 144A, other
than through the PORTAL Market of any of the Preferred Stock purchased from the
Company hereunder, to deliver either with the confirmation of such resale or
otherwise prior to settlement of such resale a notice to the effect that the
resale of such Preferred Stock has been made in reliance upon the exemption
from the registration requirements of the Securities Act provided by Rule 144A.
(iii) In connection with the original distribution
of the Preferred Stock, the Company agrees that, prior to any offer or resale
of the Preferred Stock by the Initial Purchaser, the Initial Purchaser and its
counsel shall have the right to make reasonable inquiries into the business of
the Company. The Company agrees to provide answers to each prospective
Subsequent Purchaser of Preferred Stock who so requests information concerning
the Company (to the extent such information is available or can be acquired and
made available to prospective Subsequent Purchasers without unreasonable effort
or expense and to the extent the provision thereof is not prohibited by
-21-
<PAGE> 22
applicable law) and the terms and conditions of the offering of the Preferred
Stock, as provided in the Offering Memorandum.
Section 8. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Initial Purchaser (for purposes of this Section 8, "Initial Purchaser" shall
include the officers, directors, partners and employees who control the Initial
Purchaser ("controlling person") within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act) from and against any and
all losses, claims, damages, expenses or liabilities, joint or several (and
actions, proceedings, suits and litigation in respect thereof), whatsoever, as
the same are incurred, to which the Initial Purchaser or any such controlling
person may become subject, under the Securities Act, the Exchange Act or any
other statute or at common law or otherwise insofar as such losses, claims,
damages, expenses or liabilities arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Offering Memorandum (as from time to time amended and supplemented) or (ii) the
omission or alleged omission therefrom of 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; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, expense or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged
omission made in the Offering Memorandum or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or through the Initial Purchaser specifically for use in the
preparation thereof. The indemnity agreement shall be in addition to any
liability which the Company may have at common law or otherwise.
(b) The Initial Purchaser will indemnify and hold
harmless the Company, each of its directors, each of its executive officers,
each person, if any, who controls the Company within the meaning of the
Securities Act, against any losses, claims, damages or liabilities to which the
Company, or any such director, officer, 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) any untrue statement or alleged untrue statement of
any material fact contained in the Preliminary Offering Memorandum, the
Offering Memorandum or any amendment or supplement thereto, or (ii) the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made; and will reimburse
any legal or other expenses reasonably incurred by the Company, or any such
director, officer, or controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that the Initial Purchaser will be liable in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Preliminary Offering
-22-
<PAGE> 23
Memorandum, the Offering Memorandum or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through the Initial Purchaser specifically for use in the
preparation thereof. This indemnity agreement will be in addition to any
liability which the Initial Purchaser may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice. In case any such proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred (or within 30 days of presentation) the fees and
expenses of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) and by the Company in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. In
addition, the indemnifying party will not, without the prior written consent of
the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party
is an actual or potential party to such claim, action or proceeding) unless
such settlement,
-23-
<PAGE> 24
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8
is unavailable (other than by reason of the exceptions set forth in this
Section 8) to or insufficient to hold harmless an indemnified party under
Section 8(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 shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Initial Purchaser on the other from the offering of the
Preferred Stock. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the Initial
Purchaser on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchaser on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total commissions received by the
Initial Purchaser. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the Initial
Purchaser on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchaser agree that it would not be just
and equitable if contributions pursuant to this Section 8(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 8(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 8(d) shall 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 subsection (d), (i) the Initial Purchaser shall not be
required to contribute any amount in excess of the commissions applicable to
the Preferred Stock purchased by the Initial Purchaser, and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
-24-
<PAGE> 25
(e) In any proceeding relating to the Preliminary
Offering Memorandum, the Offering Memorandum or any supplement or amendment
thereto, each party against whom contribution may be sought under this Section
8 hereby consents to the jurisdiction of any court already having jurisdiction
over the Company.
(f) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 8 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of the Initial Purchaser or any person
controlling the Initial Purchaser, the Company, its directors or executive
officers or any persons controlling the Company, (ii) acceptance of any
Preferred Stock and payment therefor hereunder, and (iii) any termination of
this Agreement. A successor to the Initial Purchaser, to the Company, its
directors or executive officers, or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 8.
Section 9. Representations and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto
shall be deemed to be representations, warranties and agreements at the Closing
Date, and the agreements of the Company and the provisions with respect to the
payment of expenses contained in Sections 5 and 10 and the respective indemnity
agreements contained in Section 8 hereof shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Initial Purchaser, the Company or any controlling person, and shall survive
termination of this Agreement or the issuance and delivery of the Preferred
Stock to the Initial Purchaser.
Section 10. Termination.
(a) Subject to subsection (b) of this Section 10, the
Initial Purchaser shall have the right to terminate this Agreement, by notice
to the Company, at any time at or prior to the Closing Date (i) if any domestic
or international event or act or occurrence has disrupted, or in the Initial
Purchaser' opinion will in the immediate future disrupt the financial markets;
(ii) if the United States shall have become involved in a war or major
hostilities, or there shall have been an escalation in an existing war or major
hostilities, or a national emergency shall have been declared in the United
States; (iii) if the Company shall have sustained a loss material or
substantial to the Company by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in the Initial Purchaser's opinion, make it
inadvisable to proceed with the delivery of the Preferred Stock; or (iv) if
there shall have been such a material adverse change in the general market,
political or economic
-25-
<PAGE> 26
conditions in the United States or elsewhere, as in the Initial Purchaser's
judgment would make it inadvisable to proceed with the offering, sale and/or
delivery of the Preferred Stock.
(b) If this Agreement is terminated by the Initial
Purchaser in accordance with the provisions of Section 10(a), such termination
shall be without liability of any party to any other party provided that
Sections 5 and 8 hereof shall survive such termination and remain in full force
and effect.
Section 11. Default by the Company. If the Company shall fail at
the Closing Date to sell and deliver the number of Preferred Stock which it is
obligated to sell hereunder on such date, then this Agreement shall terminate
without any liability on the part of any non-defaulting party other than
pursuant to Section 5, Section 8 and Section 10 hereof. No action taken
pursuant to this Section 11 shall relieve the Company from liability, if any,
in respect of such default.
Section 12. Notices. All notices and communications hereunder,
except as herein otherwise specifically provided, shall be given in writing and
shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Initial Purchaser shall be
directed to BT Alex. Brown Incorporated, 1 South Street, Baltimore, Maryland
21202, Attention: General Counsel, with a copy to Piper & Marbury L.L.P.,
Attention: Stephen A. Riddick, Esq. Notices to the Company shall be directed
to the Company at 4403 Table Mountain Drive, Golden, Colorado 80403, Attention:
Mr. Daniel S. Lankford, President and Chief Executive Officer, with a copy to
Cooley Godward LLP, Attention: James H. Carroll, Esq.
Section 13. Parties. This Agreement shall inure to the benefit
of and shall be binding upon the Initial Purchaser and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto and their respective successors, heirs and legal
representatives, and the controlling persons and officers and directors
referred to in Sections 8 and 9 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof is intended to be for the sole and exclusive benefit of the
Initial Purchaser and the Company and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Preferred Stock from the Initial Purchaser shall be deemed to
be a successor by reason merely of such purchase.
Section 14. Governing Law and Time. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF DELAWARE. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME UNLESS
OTHERWISE SPECIFIED.
-26-
<PAGE> 27
Section 15. Entire Agreement; Amendments. This Agreement
constitutes the entire agreement of the parties hereto and supersedes all prior
written or oral agreements, understandings and negotiations with respect to the
subject matter hereof. This Agreement may not be amended except in a writing
signed by the Initial Purchaser and the Company.
-27-
<PAGE> 28
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the Initial Purchaser and the Company in accordance with its
terms.
Very truly yours,
BOLDER TECHNOLOGIES CORPORATION
By: /s/ DANIEL S. LANKFORD
----------------------------------------------
Daniel S. Lankford
President and Chief Executive Officer
Confirmed and accepted as of
the date first above written.
BT ALEX. BROWN INCORPORATED
By: /s/ DAVID M. GRAY
--------------------------------
David M. Gray
Managing Director
-28-
<PAGE> 29
SCHEDULE A
<TABLE>
<CAPTION>
PURCHASE PRICE TO
INITIAL PURCHASER PRICE PUBLIC
----------------- ----------- --------
<S> <C> <C>
BT Alex. Brown Incorporated . . . . . . . . . . . . . . $47.00* $50.00
</TABLE>
* The purchase indicated above reflects a 6% commission paid to the Initial
Purchaser, which commission applied to $12,810,000.00 of the gross proceeds
of this offering. Notwithstanding the foregoing, a 3% commission was paid
to the Initial Purchaser with respect to $4,000,000.00 of the gross
proceeds of this offering.
-29-
<PAGE> 1
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of October 8, 1997, by and among BOLDER Technologies
Corporation, a Delaware corporation (the "Company") and BT Alex. Brown
Incorporated (the "Initial Purchaser") pursuant to the Purchase Agreement dated
as of October 3, 1997 between the Company and the Initial Purchaser (the
"Purchase Agreement") for the purchase of 336,200 shares of the Company's
Series A Convertible Preferred Stock (the "Preferred Stock"). In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Purchase
Agreement.
The Company agrees with the Initial Purchaser, (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the holders from time to time of
the Preferred Stock (including the Initial Purchaser) and the holders from time
to time of the Common Stock issued upon conversion of the Preferred Stock (each
of the foregoing a "Holder" and together the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
Affiliate: "Affiliate" means, with respect to any specified person,
(i) any other person directly or indirectly controlling or controlled by, or
under direct or indirect common control with, such specified person or (ii) any
officer or director of such other person. For purposes of this definition, the
term "control" (including the terms "controlling," "controlled by" and "under
common control with") of a person means the possession direct or indirect, of
the power (whether or not exercised) to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in the City of New York are
authorized or obligated by law or executive order to close.
Effectiveness Period: The period commencing with the date hereof and
ending on the earlier of the date that is two years after the later of the
initial date of original issuance of the Preferred Stock and the date that all
Registrable Securities have ceased to be Registrable Securities.
Effectiveness Target Date: See Section 2(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
- 1 -
<PAGE> 2
Filing Date: See Section 2(a) hereof.
Holder: See the second paragraph of this Agreement.
Initial Purchaser: See the first paragraph of this Agreement.
Initial Shelf Registration: See Section 2(a) hereof.
Losses: See Section 5 hereof.
Majority of Registrable Securities: A majority of the then outstanding
aggregate principal amount of Registrable Securities. For purposes of this
calculation, Registrable Securities which have been converted into shares of
Common Stock shall be deemed to bear the principal amount at which such
Registrable Securities were converted.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Purchase Agreement: See the first paragraph of this Agreement.
Record Holder: With respect to any Damages Payment Date relating to
the Common Stock, each Person who is a registered holder of Common Stock 15
days prior to such Damages Payment Date.
Registrable Securities: The Preferred Stock and each share of Common
Stock into which the Preferred Stock is convertible or converted upon original
issuance thereof, and at all times subsequent thereto, and any Common Stock or
Preferred Stock issued with respect thereto upon any stock dividend, split or
similar event, until, in the case of any share of Common Stock or Preferred
Stock, (i) it is effectively registered under the Securities Act and disposed
of in accordance with the Registration Statement covering it, (ii) it is
salable by the holder thereof pursuant to Rule 144(k) or (iii) it is sold to
the public pursuant to Rule 144, and, as a result of the event or circumstance
described in any of the foregoing clauses (i) through (iii), the legends with
respect to transfer restrictions required under the Purchase Agreement (other
than any such legends required solely as the consequences or the fact that the
Registrable Securities are owned by, or were previously owned by, the Company
or an Affiliate of the Company) are removed or removable in accordance with the
terms of the Purchase Agreement.
- 2 -
<PAGE> 3
Registration Expenses: See Section 5 hereof.
Registration Statement: Any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulations hereafter adopted
by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
Selling Holder: A Holder offering to sell Registrable Securities.
Shelf Registration: See Section 2(a) hereof.
Special Counsel: Piper & Marbury L.L.P., or such other successor
counsel as shall be specified by the Holders of a majority of the Registrable
Securities, the fees and expenses of which will be paid by the Company pursuant
to Section 5 hereof.
Subsequent Shelf Registration: See Section 2(b) hereof.
Suspension Period: See Section 2(c).
2. Shelf Registration.
(a) The Company shall prepare and file with the SEC, as
soon as practicable but in any event on or prior to the date 60 days following
the latest date of original issuance of the Preferred Stock (the "Filing
Date"), a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 of the Securities Act (a "Shelf Registration")
registering the resale from time to time by Holders thereof of all of the
Registrable Securities (the "Initial Shelf Registration"). The Initial Shelf
Registration shall be on an appropriate SEC Registration Statement form
permitting registration of such Registrable Securities for resale by such
Holders in the manner or manners designated by them. The Company shall use its
best efforts to cause the Initial Shelf Registration to be declared effective
under the Securities Act as soon as practicable but in any event on or prior to
the date 90 days following the Filing Date (the "Effectiveness Target Date"),
and shall use its best efforts to keep the Initial Shelf Registration
continuously effective under the Securities Act, subject to the provisions of
Section 2(c), until
- 3 -
<PAGE> 4
the earlier of the expiration of the Effectiveness Period or the date a
Subsequent Shelf Registration (as defined below) covering all of the
Registrable Securities has been declared effective under the Securities Act.
Subject to the right of the Company to have the Initial Shelf Registration not
be effective, or not to be updated, amended or supplemented, for periods of
time set forth in Section 2(c), the Company further agrees to use its best
efforts to prevent the happening of any event that would cause the Initial
Shelf Registration to contain a material misstatement or omission or to be not
effective and usable for resale of the Registrable Securities during the
Effective Period.
(b) If the Initial Shelf Registration or any subsequent
Shelf Registration ceases to be effective for any reason as a result of the
issuance of a stop order by the SEC at any time during the Effectiveness
Period, the Company shall use its best efforts to obtain the prompt withdrawal
of any order suspending the effectiveness thereof, and in any event shall
within 30 days of such cessation of effectiveness amend the Shelf Registration
in a manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional Shelf Registration
covering all of the Registrable Securities (a "Subsequent Shelf Registration").
If a Subsequent Shelf Registration is filed, the Company shall use its best
efforts to cause the Subsequent Shelf Registration to be declared effective as
soon as practicable after such filing and to keep such Registration Statement
continuously effective until the end of the Effectiveness Period.
(c) In the event (A) of the happening of any event of the
kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi)
hereof or (B) that, in the good faith judgment of the Company, it is advisable
to suspend the use of the Prospectus for a discrete period of time due to
pending material corporate developments or similar material events that have
not yet been publicly disclosed and as to which the Company believes public
disclosure will be prejudicial to the Company, the Company shall deliver a
certificate in writing, signed by an authorized executive officer of the
Company, to the Special Counsel and the Initial Purchaser, to the effect of the
foregoing and thereafter the use of the Prospectus shall be suspended, and the
Company, subject to the terms of this Section 2(c), shall thereafter not be
required to maintain the effectiveness or update the Shelf Registration. The
Company will use its best efforts to ensure that the use of the Prospectus may
be resumed as soon as practicable, in the case of suspension under Section
2(c)(A), and, in the case of a pending development or event referred to in
Section 2(c)(B) hereof, as soon as, in the good faith-judgment of the Company,
public disclosure of such material corporate development or similar material
event would not have a material adverse effect on the Company. Notwithstanding
the foregoing, the Company shall not under any circumstances be entitled to
exercise its right under this Section 2(c) to suspend the use of the Prospectus
(whether as a result of events referred to in Section 2(c)(A) hereof or as a
result of the pending development or event referred to in Section 2(c)(B)
hereof) more than one (1) time in any three (3) month period, and the periods
in which the use of the Prospectus is suspended shall not exceed 30 days in any
three-month period (a "Suspension Period").
3. Registration Procedures. In connection with the Company's
registration obligations under Section 2 hereof, the Company shall effect such
registrations to permit the sale
- 4 -
<PAGE> 5
of the Registrable Securities in accordance with the intended method or methods
of disposition thereof, and pursuant thereto the Company shall as expeditiously
as possible:
(a) Prepare and file with the SEC a Registration
Statement or Registration Statements on any appropriate form under the
Securities Act available for the sale of the Registrable Securities by the
Holders thereof in accordance with the intended method or methods of
distribution thereof and shall include all required financial statements, and
use its best efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; provided, that before filing
any such Registration Statement or Prospectus or any amendments or supplements
thereto the Company shall furnish within a reasonable time period to each
Selling Holder (if requested by such Selling Holder), the Initial Purchaser,
the Special Counsel and the Managing Underwriters of such offering, if any,
copies of all such documents proposed to be filed, which documents will be
subject to the review of each Selling Holder (if requested by such Selling
Holder), the Initial Purchaser, the Special Counsel and such Managing
Underwriters, and the Company shall not file any such Registration Statement or
amendment thereto or any Prospectus or any supplement thereto to which the
Holders of a majority of the Registrable Securities covered by such
Registration Statement, the Initial Purchaser or the Special Counsel shall
reasonably object in writing within five Business Days after the receipt
thereof. In addition, the Company shall use its best efforts to reflect in each
such document referenced in this paragraph so filed with the SEC such comments
as the Initial Purchaser, Special Counsel and the Managing Underwriters, if
any, may propose.
(b) Subject to Section 2(c), prepare and file with the
SEC such amendments and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration Statement continuously
effective for the applicable period specified in Section 2; cause the related
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions then
in force) under the Securities Act and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such Registration Statement during the applicable period in accordance with the
intended methods or disposition by the sellers thereof set forth in such
Registration Statement as so amended or such Prospectus as so supplemented. The
Company shall ensure that (i) any Shelf Registration and any amendment thereto
and any Prospectus forming a part thereof and any amendment or supplement
thereto complies in all material respects with the Act and the rules and
regulations thereunder, (ii) any Shelf Registration and any amendment thereto
does not, when it becomes effective, 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 and (iii) any Prospectus forming part of
any Shelf Registration, and any amendment or supplement to such Prospectus,
does not include an untrue statement or a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(c) Notify the Holders, the Initial Purchaser, the
Special Counsel and the Managing Underwriters, if any, promptly, and (if
requested by any such person) confirm such
- 5 -
<PAGE> 6
notice in writing, (i) when a Prospectus, any Prospectus supplement, a
Registration Statement or a post-effective amendment to a Registration
Statement has been filed with the SEC, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or related
Prospectus or for additional information, (iii) 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 or threatening
of any proceedings for that purpose, (iv) 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 Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceedings for such
purpose, (v) of the existence of any fact or happening of any event which makes
any statement of a material fact in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue or which would require the making of any changes in the
Registration Statement or Prospectus in order that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any 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 omit to state any 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, and (vi) of the Company's determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) Use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification (or exemption from qualification) of any
of the Registrable Securities for sale in any jurisdiction, at the earliest
possible moment.
(e) If requested by the Initial Purchaser or the Holders
of a Majority of the Registrable Securities being sold, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to
Registration Statement such information as the Initial Purchaser, the Special
Counsel, or such Holders and the Company agree should be included therein, and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters proposed to be incorporated in such Prospectus
supplement or post-effective amendment.
(f) Furnish to each Selling Holder (if requested by such
Selling Holder), the Special Counsel, the Initial Purchaser, and each Managing
Underwriter, if any, without charge, at least one conformed copy of the
Registration Statement or Statements and any amendment thereto, including
financial statements but excluding schedules, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits.
(g) Deliver to each Selling Holder, the Special Counsel
and the Initial Purchaser in connection with any offering of Registrable
Securities, without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each
- 6 -
<PAGE> 7
preliminary prospectus) and any amendment or supplement thereto as such persons
may reasonably request; and the Company hereby consents to the use of such
Prospectus or each amendment or supplement thereto by each of the Selling
Holders of Registrable Securities and the Underwriters, if any, in connection
with any offering and sale of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable
Securities, to register or qualify or cooperate with the Selling Holders and
the Special Counsel in connection with any registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Managing Underwriter reasonably
requests in writing, keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable Registration Statement, provided, that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified (ii) take any action that would
subject it to general service of process in suits or to taxation in any such
jurisdiction where it is not then so subject.
(i) Cause the Registrable Securities covered by the
applicable Registration Statement to be registered with or approved by such
other governmental agencies in addition to the SEC or authorities within the
United States as may be necessary to enable the Selling Holder or Holders
thereof to consummate the disposition of such Registrable Securities.
(j) During the Effectiveness Period (subject to the
provisions of Section 2(c)), immediately upon the existence of any fact or the
occurrence of any event as a result of which a Registration Statement shall
contain any untrue statement of a material fact or omit to state any 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, or a
Prospectus shall contain any untrue statement of a material fact or omit to
state any 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, promptly prepare and file a post-effective amendment to
each Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required document
(such as a Current Report on Form 8-K) that would be incorporated by reference
into the Registration Statement so that the Registration Statement shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, in light of the circumstances under which they were made, and
so that the Prospectus will not contain any untrue statement of a material fact
or omit to state any 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, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, and in the case of a
post-effective amendment to a Registration Statement use its best efforts to
cause it to become effective as soon as practicable.
- 7 -
<PAGE> 8
(k) Enter into such agreements and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection, whether or
not an underwriting agreement is entered into.
(l) Make available for inspection by a representative of
the Holders of Registrable Securities being sold and any attorney or accountant
retained by such Selling Holders or underwriter, financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the executive officers, directors and employees of the
Company and its subsidiaries to supply all information reasonably requested by
any such representative, attorney or accountant in connection with such
disposition; provided, however, that any information that is reasonably and in
good faith designated by the Company in writing as confidential at the time of
delivery of such information shall be kept confidential by such persons, unless
(i) disclosure of such information is required by court or administrative order
or is necessary to respond to inquiries of regulatory authorities, (ii)
disclosure of such information is required by law (including any disclosure
requirements pursuant to federal securities laws in connection with the filing
of any Registration Statement or the use of any prospectus referred to in this
Agreement), (iii) such information becomes generally available to the public
other than as a result of disclosure or failure to safeguard by any such person
or (iv) such information becomes available to any such person from a source
other than the Company and such source is not bound by a confidentiality
agreement.
(m) Comply with all applicable rules and regulations of
the SEC in all material respects and make generally available to its
securityholders earning statements (which need not be audited) satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company commencing after the effective date of a
Registration Statement, which statements shall cover said 12-month periods.
(n) Cooperate with the Selling Holders of Registrable
Securities, the Initial Purchaser and the Special Counsel to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and enable such
Registrable Securities to be in such denominations and registered in such names
as the Holders may request.
(o) Not later than the effectiveness date of any
Registration Statement hereunder, provide a CUSIP number for the Registrable
Securities registered under such Registration Statement, and provide the
transfer agent for the Common Stock with printed certificates for the
Registrable Securities which are in a form eligible for deposit with The
Depository Trust Company.
- 8 -
<PAGE> 9
(p) Cause all shares of Common Stock covered by the
Registration Statement to be listed or quoted on, each securities exchange or
quotation system on which the Company's Common Stock is then listed or quoted
no later than the date the Registration Statement is declared effective, and,
in connection therewith, to the extent applicable, to make such findings under
the Exchange Act (e.g., the filing of a Registration Statement on Form 8-A) and
to have such filings declared effective thereunder.
(q) Cooperate and assist in any filing required to be
made with the National Association of Securities Dealers, Inc.
The Company may require each Holder of securities to be sold pursuant
to any Registration Statement to furnish to the Company such information
regarding the Holder and the distribution of such securities as the Company may
from time to time reasonably require for inclusion in such Registration
Statement. Any Holder who fails to provide such information shall not be
entitled to use the Prospectus.
4. Registration Expenses. All fees and expenses incident to the
Company's obligations under this Agreement shall be borne by the Company
whether or not any of the Registration Statements become effective. Such fees
and expenses shall include, without limitation, (i) all registration and filing
fees (including, without limitation, fees and expenses with respect to filings
required to be made with the National Association of Securities Dealers, Inc.),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities in a form eligible for deposit with The
Depository Trust Company, (iii) reasonable fees and disbursements of counsel
for the Company and the Special Counsel in connection with the Shelf
Registration (provided that the Company shall not be liable for the fees and
expenses of more than one separate firm for all parties (other than the
Company) participating in any transaction hereunder), and (iv) fees and
disbursements of all independent certified public accountants referred to in
Section 3(k)(iii) hereof (including the expenses of any special audit and "cold
comfort" letters required by or incident to such performance). In addition, the
Company shall pay the fees and expenses incurred in connection with the listing
or quotation of the securities to be registered on any securities exchange or
quotations system on which similar securities issued by the Company are then
listed and the fees and expenses of any person, including special experts,
retained by the Company.
5. Indemnification.
(a) Indemnification by the Company. The Company shall
indemnify and hold harmless each Holder, the directors, officers and employees
of each such Holder and each person, if any, who controls any such Holder
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) from and against all losses, liabilities, damages and
expenses (including without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) (collectively, "Losses"), arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or
- 9 -
<PAGE> 10
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the
circumstances under which they were made, except insofar as such Losses arise
out of or are based upon the information relating to any Holder furnished to
the Company in writing by any Holder expressly for use therein. The Company
shall also indemnify each underwriter, their officers and directors, and each
person who controls such person (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent and with
the same limitations as provided above with respect to the indemnification of
the Holders or Registrable Securities.
(b) Indemnification by Holder of Registrable Securities.
Each Holder, agrees severally and not jointly to indemnify and hold harmless
the Company, its directors, its officers who sign a Registration Statement and
each person, if any, who controls the Company (within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act), from and
against all losses arising out of or based upon any untrue statement of a
material fact contained in any Registration Statement, Prospectus or arising
out of or based upon any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, in light of
the circumstances under which they were made, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
relating to such Holder so furnished in writing by such Holder to the Company
expressly for use in such Registration Statement or Prospectus. In no event
shall the liability of any Selling Holder of Registrable Securities hereunder
be greater in amount than the dollar amount of the proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing, but failure so to notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof. The
indemnifying party, upon request of the indemnified party, shall retain counsel
satisfactory to the indemnified party to represent the indemnified party and
any others the indemnifying party may designate in such proceeding and shall
pay the fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention to such counsel (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them, or (iii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action. It is
- 10 -
<PAGE> 11
understood that the indemnifying party shall not, in respect of the legal
expenses or any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
indemnified parties under Section 5(a) or 5(b) hereof who are parties to such
proceeding or proceedings, and that all such fees and expenses shall be
reimbursed as they are incurred. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) Contribution. If the indemnification provided for in
this Section 5 is unavailable (other than by reason of the exceptions set forth
herein) to an indemnified party under Section 5(a) or 5(b) hereof in respect of
any Losses or is insufficient to hold such indemnified party harmless, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such Losses, (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party or parties on the other hand or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
Losses, as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the initial placement of the Preferred Stock pursuant to the Purchase
Agreement. Benefits received by the Initial Purchaser shall be deemed to be
equal to the total purchase discounts and commissions received by them pursuant
to the Purchase Agreement and benefits received by any other Holders shall be
deemed to be equal to the value of receiving the Common Stock into which the
Preferred Stock is convertible registered under the Securities Act. Benefits
received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in such
Losses. The relative fault of the Holders on the one hand and the Company on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Holders or by the Company and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Holders' respective obligations to contribute pursuant to this
paragraph are several in proportion to the respective number of Registrable
Securities they have sold pursuant to a Registration Statement, and not joint.
- 11 -
<PAGE> 12
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the Losses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding this
Section 5(d), an indemnifying party that is a Selling Holder of Registrable
Securities shall not be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities sold by
such indemnifying party and distributed to the public were offered to the
public exceeds the amount of any damages which such indemnifying party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement obligations of
the Company hereunder shall be in addition to any liability the Company may
otherwise have hereunder, under the Purchase Agreement or otherwise.
The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Holder or any person controlling any Holder, or the Company, its officers
or directors or any person controlling the Company and (iii) the sale of any
Registrable Securities by any Holder.
6. Information Requirements.
(a) The Company shall file the reports required to be
filed by it under the Securities Act and the Exchange Act, and if at any time
the Company is not required to file such reports, it will, upon the request of
any Holder of Registrable Securities, make publicly available other information
so long as necessary to permit sales pursuant to Rule 144 and Rule 144A under
the Securities Act. The Company further covenants that it will cooperate with
any Holder of Registrable Securities and take such further reasonable action as
any Holder of Registrable Securities may reasonably request (including, without
limitation, making such reasonable representations as any such Holder may
reasonably request), all to the extent required from time to time to enable
such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144 and
Rule 144A under the Securities Act. Notwithstanding the foregoing, nothing in
this Section 6 shall be deemed to require the Company to register any of its
securities under any section of the Exchange Act.
(b) The Company shall file the reports required to be
filed by it under the Exchange Act and shall comply with all other requirements
set forth in the instructions to the
- 12 -
<PAGE> 13
appropriate SEC Registration Statement form permitting registration of the
Registrable Securities for resale by the Holders thereof in the manner or
manners designated by them.
7. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of
its obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason or a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(b) No Conflicting Agreements. The Company has not
entered, as of the date hereof and shall not, on or after the date of this
Agreement, enter into any agreement with respect to its securities which
conflicts with the rights granted to the Holders of Registrable Securities in
this Agreement. The Company represents and warrants that the rights granted to
the Holders of Registrable Securities hereunder do not in any way conflict with
the rights granted to the holders of the Company's securities under any other
agreements.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of Holders of a Majority of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders of Registrable Securities may be given by
Holders of at least a majority of the Registrable Securities being sold by such
Holders; provided, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing and shall be
deemed given (i) when made, if made by hand delivery, (ii) upon confirmation,
if made by telecopier or (iii) one business day after being deposited with a
reputable next-day courier, postage prepaid, to the parties as follows:
(x) if to a holder of Registrable Securities, at
the most current address given by such holder to the Company in accordance with
the provisions of Section 7(e):
- 13 -
<PAGE> 14
(y) if to the Company, to:
BOLDER Technologies Corporation
4403 Table Mountain Drive
Golden, Colorado 80403
Attention: Daniel S. Lankford
Telecopy No.: (303) 215-7200
with a copy to:
Cooley Godward LLP
2595 Canyon Blvd., Suite 250
Boulder, Colorado 80302
Attention: James H. Carroll
Telecopy No.: (303) 546-4099
and
(z) if to the Special Counsel to:
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
Attention: Stephen A. Riddick
Telecopy No.: (410) 576-1763
or to such other address as such person may have furnished to the other persons
identified in this Section 7(d) in writing in accordance herewith.
(e) Owner of Registrable Securities. The Company will
maintain, or will cause its registrar and transfer agent to maintain, a
register with respect to the Registrable Securities in which all transfers of
Registrable Securities of which the Company has received notice will be
recorded. The Company may deem and treat the person in whose name Registrable
Securities are registered in such register of the Company as the owner thereof
for all purposes, including, without limitation, the giving of notices under
this Agreement.
(f) Approval of Holders. Whenever the consent or approval
of Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) (other than the
Initial Purchaser or subsequent holders of Registrable Securities if such
subsequent holders are deemed to be such affiliates solely by reason of their
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
- 14 -
<PAGE> 15
(g) Successors and Assigns. Any person who purchases any
Registrable Securities from an Initial Purchaser shall be deemed, for purposes
of this Agreement to be an assignee of such Initial Purchaser. The Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties and shall inure to the benefit of and be binding upon each
holder of any Registrable Securities.
(h) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF DELAWARE WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
(k) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect, and shall
in no way be affected, impaired or invalidated thereby, and the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, illegal, void or unenforceable.
(l) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings among the parties with
respect to such subject matter.
(m) Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the
court, shall be entitled to recover reasonable attorneys' fees in addition to
any other available remedy.
- 15 -
<PAGE> 16
(n) Further Assurances. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things reasonably necessary, proper or
advisable under applicable law, and execute and deliver such documents and
other papers, as may be required to carry out the provisions of this Agreement
and the other documents contemplated hereby and consummate the make effective
the transactions contemplated hereby.
(o) Termination. This Agreement and the obligations of
the parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Sections 2(d), 4 or 5 hereof,
each of which shall remain in effect in accordance with their terms.
- 16 -
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
BOLDER TECHNOLOGIES CORPORATION
By: /s/ DANIEL S. LANKFORD
--------------------------------
Name: Daniel S. Lankford
Title: President and Chief Executive Officer
Accepted as of the date first above written:
BT ALEX. BROWN INCORPORATED
By: /s/ DAVID M. GRAY
-----------------------------------
David M. Gray
Managing Director
- 17 -
<PAGE> 1
EXHIBIT 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 covering the registration
of 336,200 shares of Series A Preferred Stock and related shares of common
stock of our reports dated February 4, 1997, included in BOLDER Technologies
Corporation's Form 10-KSB for the year ended December 31, 1996 and to all
references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Denver, Colorado,
December 4, 1997.
