As filed with the Securities and Exchange Commission on May 11, 1998
Registration No.333-50749
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
AMENDMENT NO. 2 TO REGISTRATION STATEMENT ON
FORM S-3
UNDER THE SECURITIES ACT OF 1933
ENERGY CONVERSION DEVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 8731 38-1749884
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
No.)
1675 West Maple Road
Troy, MI 48084
(248) 280-1900
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
ROGER JOHN LESINSKI, ESQ.
Energy Conversion Devices, Inc.
1675 West Maple Road
Troy, MI 48084
(248) 280-1900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
CRAIG A. ROEDER, ESQ. SIDNEY TODRES, ESQ.
JENNER & BLOCK EPSTEIN, BECKER & GREEN, P.C.
One IBM Plaza 250 Park Avenue
Chicago, IL 60611 New York, NY 10177
(312) 222-9350 (212) 351-4500
Approximate date of proposed commencement of sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If the only 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, please 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. [ ]
<PAGE>
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 which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
ENERGY CONVERSION DEVICES, INC.
CROSS-REFERENCE SHEET
Item Number and Heading in
Form S-3 Registration Statement Location in Prospectus
------------------------------- ----------------------
1. Forepart of the Registration Statement and Outside Front Cover Page
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages Inside Front Cover Page
of Prospectus
3. Summary Information, Risk Factors and Ratio Risk Factors
of Earnings to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Outside Front Cover Page;
Plan of Distribution
6. Dilution Risk Factors
7. Selling Security-holders Inapplicable
8. Plan of Distribution Outside Front Cover Page;
Plan of Distribution
9. Description of Securities to be Registered Outside Front Cover Page;
Documents Incorporated by
Reference; Description of
Warrants
10. Interests of Named Experts and Counsel Inapplicable
11. Material Changes Risk Factors
12. Incorporation of Certain Information by Documents Incorporated by
Reference Reference
13. Disclosure of Commission Position on Inapplicable
Indemnification for Securities Act
Liabilities
<PAGE>
Subject to Completion, Dated May 11, 1998
PROSPECTUS
ENERGY CONVERSION DEVICES, INC.
2,000,000 Units
Each Unit consists of one share of Common Stock, $.01 par value,
and one Warrant to purchase one share of Common Stock, $.01 par value,
which are immediately separately transferrable.
--------------
All of the 2,000,000 Units offered hereby are being issued and sold by
Energy Conversion Devices, Inc. (the "Company"). Sales of the Units offered
hereby will be limited to "qualified institutional buyers" as defined in Rule
144A under the Securities Act of 1933, as amended. Janney Montgomery Scott Inc.
("JMS") and Nolan Securities Corporation ("Nolan") are acting as placement
agents for the Units on a best-effort basis. The offer will terminate at 5:00
P.M. Eastern Daylight Time on ________; no minimum number of Units is required
to be sold.
Each Warrant entitles the holder to purchase one share of Common Stock for
$____ on or prior to January 31, 2000, and for $__ at any time thereafter on or
prior to July 31, 2001, the expiration date of the Warrants.
The Company's Common Stock is traded on the Nasdaq Stock Market's National
Market under the symbol "ENER." On April 21, 1998, the closing price of the
Common Stock, as reported by the Nasdaq Stock Market, was $13.313 per share.
There is no public market for the Warrants and there can be no assurances that
anu such market for the Warrants will develop.
An investment in the Units offered hereby involves a high degree of Risk.
See "Risk Factors" on 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.
--------------
================================================================================
Fees and Proceeds to
Price Commissions(1) the Company (2)
- --------------------------------------------------------------------------------
Per Unit $______ $______ $_____
- --------------------------------------------------------------------------------
Total Units(3) $______ $______ $_____
================================================================================
(1) The Company has agreed to indemnify JMS and Nolan (the "Placement
Agents") against certain liabilities, including liabilities under the Securities
Act of 1933, as amended, and to issue to the Placement Agents as additional
compensation a unit purchase warrant to purchase such number of additional Units
as shall equal 4% of the number of Units sold. (See Plan of Distribution.)
(2) Before deducting expenses payable by the Company, estimated at
approximately $250,000, including reimbursement of certain expenses of the
Placement Agents.
(3) Assumes all 2,000,000 Units offered hereby are sold.
JANNEY MONTGOMERY SCOTT INC. NOLAN SECURITIES CORPORATION
Placement Agents
The date of this Prospectus is May __, 1998.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may any
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sales of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
State.
2
<PAGE>
No dealer, salesman, or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offering herein contained and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make an offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
been no change in the facts herein set forth since the date hereof.
----------
AVAILABLE INFORMATION
The Company is subject to the information 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 material may be
inspected and copies made at the regional offices of the Commission at Seven
World Trade Center, Suite 1300, New York, New York 10048, and at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago Illinois 60661-2511. This
material may also be inspected and copies made at and, upon written request
copies obtained at prescribed rates from the Public Reference Section of the
Commission at Room 1024 at its principal office, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission maintains a Web site that
contains reports, proxy and information statements and other information of
registrants that file electronically with the Commission pursuant to the EDGAR
system. The address of the Commission's Web Site is http://www.sec.gov.
The Company has filed with the Commission in Washington, D.C. a registration
statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933 with respect to the securities covered by this Prospectus. As permitted by
the rules and regulations of the Commission, this Prospectus does not contain
all of the information set forth in the Registration Statement. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement, including the exhibits filed or
incorporated as a part thereof. Statements contained herein concerning the
provisions of documents filed with, or incorporated by reference in, the
Registration Statement as exhibits are necessarily summaries of such documents
and each such statement is qualified in its entirety by reference to the copy of
the applicable documents filed with the Commission.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's (i) Annual Report on Form 10-K/A (Amendment No. 1) for the
fiscal year ended June 30, 1997, (ii) Quarterly Reports on Form 10-Q for the
periods ended September 30, 1997, December 31, 1997 and March 31, 1998, and
(iii) description of the Common Stock of the Company included in the Company's
Registration Statement on Form 8-A as filed
3
<PAGE>
with the Commission on November 27, 1968, including any amendments or reports
filed for the purpose of updating such description, are incorporated in and
made a constituent part of this Prospectus by reference. All documents filed by
the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the Exchange Act after the date of this Prospectus and prior to termination
of the offering of the Units covered by this Prospectus shall likewise be deemed
incorporated herein and made a constituent part hereof by reference from the
respective dates of filing.
Any statement contained in a 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 subsequently filed document that is also incorporated by reference
herein modifies or replaces such statement. Any statements so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Upon oral or written request, the Company will provide without charge a copy
of any document incorporated in this Prospectus by reference, exclusive of
exhibits unless specifically incorporated herein by reference, to each person to
whom this Prospectus is delivered. Requests for such documents should be
directed to the Secretary of the Company, 1675 West Maple Road, Troy, MI 48084.
TABLE OF CONTENTS
Page
----
Available Information ................................................. 3
Documents Incorporated By Reference ................................... 3
Special Note Regarding Forward-Looking Statements ..................... 5
The Company ........................................................... 5
Risk Factors .......................................................... 6
Description of Warrants ............................................... 11
Use of Proceeds ....................................................... 12
Plan of Distribution .................................................. 12
Validity of Securities ................................................ 13
Experts ............................................................... 13
4
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated herein by reference contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange
Act of 1934 (the "Exchange Act" ) which are not historical facts and involve
risks and uncertainties that could cause actual results to differ materially
from those expected and projected. These forward-looking statements concern,
among other things, the Company's expectations, plans and strategies for the
development and commercialization of products based on its technologies and are
generally identified by the use of such terms as "intends," "expects," "plans,"
"projects," "estimates," "anticipates," "should" and "believes."
All of such forward-looking statements are based on assumptions which the
Company, as of the date of this Prospectus, believes to be reasonable and
appropriate. The Company cautions, however, that the actual facts and conditions
that may exist in the future could vary materially from the assumed facts and
conditions upon which such forward-looking statements are based.
The factors discussed in this Prospectus under "Risk Factors" and in other
documents and reports filed by the Company with the Securities and Exchange
Commission pursuant to the requirements of the federal securities laws could
cause the actual facts and conditions that may exist in the future to vary
materially from the assumed facts and conditions upon which the forward-looking
statements contained herein are based.
THE COMPANY
The Company is in the business of synthesizing new materials and developing
advanced production technology and innovative products based on amorphous
(disordered) and related materials, with an emphasis on alternative energy and
advanced information technologies. The Company's products and production
technology in the field of alternative energy are being manufactured and
marketed through alliances throughout the world with major companies, such as
General Motors Corporation and Canon, Inc. In the field of information
technology, the Company's Ovonic phase change erasable optical memory technology
is licensed by major optical memory disk manufacturers, including Matsushita
Electric Industries Co., Ltd. and Sony Corporation.
The Company's principal executive offices are located at 1675 West
Maple Road, Troy, Michigan 48084, and its telephone number is (248) 280-1900.
Recent Events
On April 23, 1998, United Solar Systems Corp. ("United Solar"), the
Company's photovoltaic (solar energy) joint venture with Canon Inc. of Japan,
and Sky Station International, Inc. ("Sky Station") announced the formation of
Sky Solar, L.L.C. to manufacture photovoltaic ("PV") products for stratospheric
platforms and space
5
<PAGE>
satellites. The venture is owned 60% by United Solar, which is contributing
its proprietary PV technology to the venture, and 40% by Sky Station which is to
provide the funding to optimize United Solar's technology for stratospheric and
space ("strato-space") applications and for construction of a dedicated strato-
space PV production line. In connection with this agreement, substantial amounts
of the funding will be used for the development and construction of the
equipment which will be subcontracted by United Solar to the Company to produce
the PV products for these platforms and satellites. Final contracts for the
development and construction of this equipment are pending the successful
completion of Sky Station's funding.
In April 1998, the Company entered into a one-year financing agreement with
Standard Federal Bank for a line of credit of up to $5,000,000. This financing
bears an interest rate of prime plus 1/2%, is secured by a first interest in the
Company's accounts receivable and inventory and contains certain financial cove-
nants relating to the Company's tangible net worth, working capital and total
debt to tangible net worth. Also in April 1998, the Company entered into a
$6,000,000 credit arrangement with Finova Capital Corporation, which has two
components. One component, which has been fully utilized, provided $2,000,000
to refinance existing leased equipment (resulting in $1,200,000 net cash to the
Company), has a three-year term at the expiration of which the Company will be
required to purchase the equipment for 10% of the original cost. The second
component provides for up to $4,000,000 of financing through December 31, 1998
for the Company's sale and leaseback of equipment it acquired subsequent to June
30, 1996; at the expiration of the related five-year lease, the Company will be
required to purchase the leased equipment for 10% of the original cost.
RISK FACTORS
The following risk factors should be considered in conjunction with the
other information included and incorporated by reference in this Prospectus
before purchasing or otherwise acquiring the Units offered hereby.
History of Losses
From its founding through December 31, 1997, the Company has incurred net
losses totaling approximately $182.9 million. The Company's ability in future
years to achieve profitability will depend largely on securing additional
licensing agreements and the successful commercialization of its products as to
which there can be no assurance.
Need to Raise Additional Capital
The Company has in the past experienced substantial losses and negative
cash flow from operations and has required significant additional financing in
order to pursue the commercialization of products based on its technologies. The
Company cannot predict when or if additional financing will be needed or, if
needed, in what amounts and may seek additional financing at any time, including
the next 12 months. There can be no assurance that such additional financing
will be available or that the terms of such additional financing,
6
<PAGE>
if available, will be acceptable to the Company. Additional equity financing
by the Company may result in substantial dilution to the Company's stockholders,
including purchasers of the Units.
The Company is currently in the process of finalizing a definitive
agreement for a line of credit of up to $5 million to be secured by the
Company's inventory and accounts receivable and has line of credit of up to $6
million for the refinancing of currently or previously leased manufacturing
equipment, the sale and leaseback of certain other manufacturing equipment owned
by the Company and the purchase of additional equipment, no part of which line
has been taken down.
Dependence Upon Licensing Arrangements and Joint Ventures
In the fields of consumer rechargeable batteries, electric vehicle
batteries, scooter batteries, photovoltaics and information technologies, the
Company has entered into licensing and/or joint venture agreements with estab-
lished industrial companies. Any revenues or profits which may be derived
by the Company from these licensing and joint venture agreements will be sub-
stantially dependent upon the willingness and ability of the Company's licensees
and joint venture partners to devote their financial resources and manufacturing
and marketing capabilities to commercialize products based on the Company's
technologies. There can be no assurance that such financial resources will be
available or that such commercialization will be successful. Certain of the
Company's joint venture and business agreements contain conditions which, if not
satisfied, permit the joint venture or business partner to discontinue such
arrangements. Many of such conditions are outside of the Company's control and
there can accordingly be no assurance that such conditions will be satisfied.
There are also various business, technological and other uncertainties that
affect the Company and its joint venture partners and licensees. In fields in
which it is not presently a party to joint venture or license agreements, the
Company may be required to enter into collaborative arrangements with
established industry partners to produce products on a commercial scale. There
can be no assurance that the Company will be able to enter into such
collaborative arrangements.
Concentration of Revenues
The Company historically has entered into agreements with a relatively
small number of major customers throughout the world. For the six months ended
December 31, 1997, three major customers--General Motors Corporation, GM Ovonic
L.L.C. ("GM Ovonic") and G.P.Batteries International, Ltd. ("G.P. Batteries")--
accounted for approximately 61% of total revenue. GM Ovonic and GP Batteries
accounted for approximately 56% of total revenue for the year ended June 30,
1997.
7
<PAGE>
Competition
The Company and its affiliates compete with firms, both domestic and
foreign, that perform research and development, as well as firms that
manufacture and sell products. Some competing firms are among the largest
industrial companies in the world and have well-established business
organizations and product lines, extensive resources and large research and
development staffs and facilities. There can be no assurance that one or more
such companies will not succeed in developing technologies or products that will
become available for commercial sale prior to the Company's products, that will
have performance superior to the Company's products or that would otherwise
render the Company's products obsolete or non-competitive.
Technology Risks
Technology Risks
Additional research and development efforts will be required before certain
of the Company's products and technologies may be manufactured and sold
commercially. There can be no assurance that such research and development
efforts will be successful or that the Company will be able to develop
commercial applications for its products and technologies. The areas in which
the Company is developing technologies and products are characterized by rapid
and significant technological change. Rapid technological development may result
in the Company's products becoming obsolete or non-competitive before the
Company is able to recover any portion of the research and development and other
expenses it has incurred to develop its products and technologies.
Manufacturing Uncertainties
In order to produce products on a commercial scale, the Company and its
joint venture partners and certain of its licensees will be required to expand
or establish manufacturing capabilities significantly greater than the
manufacturing capabilities currently being used to produce certain of the
Company's products. Although substantially all of its joint venture partners and
licensees have experience in commercial scale manufacturing, the Company has
little such experience and there can be no assurance that the Company or such
other parties will expand or establish manufacturing capabilities for
manufacturing the Company's products beyond those presently in existence.
Uncertainty of Market Acceptance
The market prices for the Company's products may exceed the prices of
competitive products based on current technologies or new products based on
technologies currently under development by competitors. There can be no
assurance that the prices of the Company's products will be perceived by
consumers as cost-effective or that the prices of such products will be
competitive with existing products or with other new products or technologies.
8
<PAGE>
Uncertainty of Patents and Protection of Proprietary Technology
The Company's ability to compete effectively will depend, in part, on its
ability to protect and maintain the proprietary nature of its technology. There
can be no assurance as to the degree of protection offered by the patents owned
by the Company, or as to the likelihood that additional patents will be issued
based upon pending patent applications. Patent applications in the United States
are maintained in secrecy until patents are issued and the Company, therefore,
cannot be certain that it was the first creator of the inventions covered by its
patents or pending patent applications, or that it was the first to file patent
applications for such inventions. The high costs of enforcing patent and other
proprietary rights may also limit the degree of protection afforded the Company.
Claims alleging the invalidity of the Company's patents, such as proceedings
which have been brought in the French and German patent offices seeking to have
certain of the Company's issued patents nullified, or other proprietary rights,
even if unfounded, may have a material adverse effect on the commercialization
of products or technologies based on such rights. The Company also relies on
unpatented proprietary technology, and there can be no assurance that others may
not independently develop the same or similar technology or otherwise obtain
access to the Company's proprietary technology. There can be no assurance that
the Company's patents or other proprietary rights will be determined to be valid
or enforceable if challenged in court or administrative proceedings or that the
Company's patents or other proprietary rights, even if determined to be valid,
will be broad enough in scope to enable the Company to prevent third parties
from producing products using similar technologies or processes. There can also
be no assurance that the Company will not become involved in disputes with
respect to the patents or proprietary rights of third parties. See " - Legal
Proceedings." An adverse outcome from such proceedings could subject the Company
to significant liabilities to third parties, require disputed rights to be
licensed from third parties, prevent the Company from collecting royalties from
licensees or require the Company to stop using such technology, any of which
would have a material adverse effect on the Company's financial condition and
business prospects.
Dependence on Key Personnel
The Company's success is highly dependent on the continued services of a
limited number of skilled managers and scientists. The loss of any of these
individuals could have a material adverse effect on the Company. In addition,
the success of the Company will depend upon, among other factors, the
recruitment and retention of additional highly skilled and experienced
management and technical personnel. There can be no assurance that the Company
will be able to retain existing employees or to attract and retain additional
personnel on acceptable terms given the competition for such personnel in
industry, universities and non-profit research institutions.
Legal Proceedings
Although there are no currently pending legal proceedings to which the
Company is a party which management believes to be material, the Company is
involved in legal proceedings arising in the normal course of business. Due to
the inherent uncertainties of legal proceedings, the outcome of any such
proceedings could be unfavorable, and the Company
9
<PAGE>
may choose to make payments, or enter into other arrangements, to settle such
proceedings or may be required to pay damages or other expenses, which could
have a material adverse effect on the Company's financial condition or results
of operations. The Company has been subject to legal proceedings in recent
years involving the validity and enforceability of certain of its patents.
While such patent-related legal proceedings have been successfully resolved
in favor of the Company, such proceedings can require the expenditure of
substantial management time and financial resources and can adversely affect
the financial performance of the companies involved. There can be no assurance
that the Company will not be a party to other legal proceedings in the future.
Concentration of Ownership
Mr. Stanford R. Ovshinsky and his wife, Dr. Iris M. Ovshinsky (executive
officers, directors and co-founders of the Company), own of record 153,420
shares and 65,601 shares, respectively (or approximately 69.8% and 29.8%,
respectively), of the outstanding shares of Class A Common Stock, which are
entitled to 25 votes per share, as compared to the Common Stock which has one
vote per share. Mr. and Dr. Ovshinsky also have the right to acquire 126,082 and
84,055 shares, respectively, of Class A Common Stock pursuant to the exercise of
presently exercisable stock options. Class A Common Stock is convertible into
Common Stock on a share-for-share basis at any time and from time to time at the
option of the holders, and will be deemed to be so converted on September 14,
1999, unless such conversion date is extended with the approval of the Company's
stockholders. As of March 31, 1998, Mr. Ovshinsky also had the right to vote
126,500 shares of Common Stock owned by Sanoh Industrial Co., Ltd. which shares,
together with the shares of Class A Common Stock and 9,989 shares of Common
Stock owned by Mr. and Dr. Ovshinsky, give Mr. and Dr. Ovshinsky voting control
over outstanding shares representing approximately 34.5% of the
combined voting power of the Company (approximately 50.5% in the event they
exercise their options to acquire Class A Common Stock).
Upon completion of this offering, assuming the sale of all 2,000,000 Units
offered hereby (without giving effect to the exercise of the Warrants), the
directors and executive officers of the Company will have voting control over
outstanding shares representing approximately 30.6% of the combined voting power
of the Company.
The Company may, from time to time in the future, grant stock options or
warrants to Mr. and Dr. Ovshinsky and other directors and executive officers of
the Company, which may increase the combined voting power of the Company
controlled by these persons.
The Company, the Company's 93.5%-owned subsidiary, Ovonic Battery Company,
Inc. ("Ovonic Battery"), and Mr. Ovshinsky are parties to an employment
agreement providing for Mr. Ovshinsky's right to vote the shares of Ovonic
Battery held by the Company following a change in control of the Company,
enabling Mr. Ovshinsky to control Ovonic Battery and direct its business and
affairs notwithstanding a change in the control of the Company.
The foregoing provisions, together with other provisions of the Company's
Certificate of Incorporation and Bylaws, may have the effect of deterring
hostile takeovers or delaying or preventing changes in the control or management
of the Company, including transactions in
10
<PAGE>
which stockholders might otherwise receive a premium for their shares over
prevailing market prices. The Company may, in the future, adopt additional
provisions by amendment of its Certificate of Incorporation or Bylaws or extend
the effectiveness of existing provisions which could have similar effects.
Possible Volatility of Stock Price
There has been a history of significant volatility in the market price of
the Company's Common Stock. The Company believes that many factors, including
actual or anticipated announcements of technological innovations, new commercial
products, actual or anticipated changes in laws and governmental regulations,
disputes relating to patents or proprietary rights, changes in business
practices and other factors may have a significant effect on the market price of
the Company's Common Stock.
Dilution
The net tangible book value per share of Common Stock at December 31, 1997
was $1.80. Giving effect to the net proceeds from the sale of the 2,000,000
Units offered hereby, the pro forma net tangible book value at December 31,
1997, would have been $___ per share (attributing no value to the Warrants
included in the Units). Purchasers of the Units will, therefore, suffer an
immediate and substantial dilution of $____ in the net tangible book value per
share of the Common Stock from the offering price (attributing no value to
the Warrants included in the Units). In addition, such purchasers will
experience dilution upon the exercise of outstanding stock options and warrants.
As of March 31, 1998, 3,166,257 shares of Common Stock were reserved for
issuance pursuant to the Company's stock option plans. In addition, 474,624
shares of Common Stock were reserved for issuance upon exercise of certain
warrants (other than the Warrants), 219,913 shares of Common Stock were reserved
for the conversion of Class A Common Stock into Common Stock and 6,021 shares of
Common Stock were reserved for conversion of Convertible Investment
Certificates. Future capital funding transactions necessary to fund the
continued operations of the Company may also result in dilution to purchasers of
the Units offered hereby.
DESCRIPTION OF WARRANTS
Each Warrant entitles the holder to purchase one share of Common Stock at
$____ per share (equal to 135% of the per Unit offering price of the Units
offered hereby) on or prior to January 31, 2000 and at $____ per share (equal to
155% of the per Unit offering price of the Units offered hereby) at any time
thereafter and on or prior to July 31, 2001, the expiration date of the
Warrants.
Warrants are issuable pursuant to a Warrant Agreement between the Company
and the State Street Bank and Trust Company as Warrant Agent. The Warrant
Agreement provides for adjustment of the exercise price of the Warrants and for
change of the number and kind of shares of Common Stock or other securities
purchasable upon exercise of the Warrants upon occurrence of certain events in
order to protect the warrantholders against dilution. The
11
<PAGE>
events requiring such adjustments and changes include stock dividends, split-
ups, combinations and reclassification.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Units offered hereby
(without giving effect to the exercise of the Warrants) are estimated to be
approximately $__ million. The Company intends to invest approximately $2.5
million of the net proceeds of this offering in United Solar Systems Corp., the
Company's joint venture with Canon Inc. of Japan, for the production and sale of
photovoltaic products, and approximately $2 million for upgrading Ovonic
Battery's production facilities, with the balance of the net proceeds to be used
for working capital, funding of the Company's ongoing product development
activities and other general corporate purposes.
PLAN OF DISTRIBUTION
The 2,000,000 Units offered hereby are being issued and sold by the
Company, for whom Janney Montgomery Scott Inc. and Nolan Securities Corporation
are acting as placement agents (the "Placement Agents"), to "qualified
institutional buyers" as defined in Rule 144A under the Securities Act of 1933.
No Units will be issued or sold to purchasers other than the foregoing
institutional buyers. The Company has agreed to pay the Placement Agents a fee
equal to six percent of the gross proceeds to the Company from the sale of the
Units. The Company has also agreed to issue the Placement Agents unit purchase
warrants (the "Placement Agent Warrants") to acquire units of the Company's
securities identical to theUnits offered hereby, in an amount equal to four
percent of the number of Units sold, at an exercise price per unit equal to 130%
of the per Unit price of the Units offered hereby. The Placement Agent Warrants
are exercisable at any time, in whole or in part, for a four-year period
commencing one year following the date of issuance. The Company has granted
demand and piggy-back registration rights, at the Company's expense (limited to
$15,000 with respect to a demand registration), for the securities issuable upon
exercise of the Placement Agent Warrants.
The Company has agreed to pay or reimburse the Placement Agents for their
reasonable expenses incurred in connection with this offering up to a maximum of
$100,000, of which $25,000 has been paid. The Company has also agreed to
indemnify the Placement Agents and certain related parties against certain civil
liabilities, including liabilities arising under the Securities Act of 1933.
The selling price of the Units offered hereby will be determined by
negotiation between the Company, the Placement Agents and the purchasers based
on the trading price of the Company's Common Stock on the NASDAQ National Market
System.
12
<PAGE>
VALIDITY OF SECURITIES
The validity of the securities being sold in the offering has been passed
upon for the Company by Jenner & Block, Chicago, Illinois.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
the Company's Annual Report on Form 10-K/A (Amendment No. 1) for the year ended
June 30, 1997 have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report, which is incorporated herein by reference, and has
been so incorporated in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Registration fee............................................ $ 21,415.64
NASD fee.................................................... 3,225.00
NASDAQ listing fees......................................... 17,500.00
Legal fees and expenses..................................... 45,000.00*
Accountants' fees and expenses.............................. 25,000.00*
Placement Agent Reimbursable Expenses....................... 100,000.00*
Miscellaneous............................................... 37,859.36*
------------
Total ................................................ $250,000.00
------------
- ----------
* Estimated
The Company will bear all of the foregoing expenses.
Item 15. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation may indemnify any person who was or is a party to or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director, officer, employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
actions, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his conduct was unlawful; provided, however, in a
suit by or in the right of the corporation no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery of the State of Delaware or the court in which such action or
suit was brought has determined upon application that, despite the adjudication
of liability but in view of all of the circumstances of the case, such person is
fairly and reasonably entitled to indemnity or such expenses deemed proper by
the court.
The Company's Certificate of Incorporation provides that the Company will
indemnify its directors and officers (and their heirs, executors and
administrators) against expenses reasonably incurred or imposed upon them in
connection with or arising out of any action, suit or proceeding in which they
may be involved or to which they may be made a party by reason of being or
having been a director or officer of the Company, or, at the Company's request,
any other corporation of which the Company is a stockholder or creditor and from
which they are not entitled to be indemnified, except in respect of matters as
to which they are finally
II-1
<PAGE>
adjudged in such action, suit or proceeding to be liable for negligence or mis-
conduct. In the event of the settlement of any such action, suit or proceeding,
the Company is obligated to provide indemnification only in connection with such
matters covered by the settlement as to which the Company is advised by counsel
that the person to be indemnified did not commit a breach of duty.
The Company's Bylaws provide that the Company will indemnify each person
who is or was a director or officer of the Company, or is or was serving as a
director or officer of another corporation or as a trustee or officer of an
association or trust of which the Company owns stock or shares or of which the
Company is a creditor, against all liabilities and expenses at any time imposed
upon or reasonably incurred by such person in connection with, arising out of or
resulting from any action, suit or proceeding in which such person may be
involved or with which such person may be threatened, by reason of his then
serving or theretofore having served as such director, trustee or officer, or by
reason of any alleged act or omission by him in any such capacity, whether or
not he is serving as such director, trustee or officer at the time any or all of
such liabilities or expenses are imposed upon or incurred by him. The matters
covered by the foregoing indemnity include amounts paid by any such person in
compromise or settlement, if such compromise or settlement is approved as in the
best interests of the Company by vote of a majority of disinterested directors
then in office or by vote of a majority of the shares of stock held by
disinterested stockholders entitled to vote at a meeting called for such
purpose. The foregoing indemnity excludes liabilities or expenses incurred in
connection with any matters as to which the person seeking indemnification is
finally adjudged in such action, suit or proceeding to be liable by reason of
negligence or misconduct in the performance of his duties as such director,
trustee or officer.
Item 16. Exhibits
See Exhibit Index.
Item 17. Undertakings
A. Rule 415
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any mate-
rial information with respect to the plan of distribution not previously dis-
closed in the Registration Statement or any material change to such information
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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-2
<PAGE>
(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.
B. Incorporation by Reference.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this 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.
C. Indemnification.
Insofar as the indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company 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 Securities Act and will be governed by the final
adjudication of such issue.
D. Rule 430A
The Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, 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 Company pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company 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 Troy, State of Michigan, on April 22, 1998.
ENERGY CONVERSION DEVICES, INC.
By Stanford R. Ovshinsky*
--------------------------------------------
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Company in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Stanford R. Ovshinsky* Director, President and Chief May 11, 1998
- -------------------------- Executive Officer (principal --------------
Stanford R. Ovshinsky executive officer)
Stephan W. Zumsteg* Treasurer May 11, 1998
- ---------------------- (principal financial officer --------------
Stephan W. Zumsteg and principal accounting
officer)
Robert C. Stempel* Chairman of the Board of May 11, 1998
- ---------------------- Directors --------------
Robert C. Stempel
Iris M. Ovshinsky* Director May 11, 1998
- ---------------------- --------------
Iris M. Ovshinsky
II-4
<PAGE>
Nancy M. Bacon* Director May 11, 1998
- ---------------------- --------------
Nancy M. Bacon
Umberto Colombo* Director May 11, 1998
- ---------------------- --------------
Umberto Colombo
Hellmut Fritzsche* Director May 11, 1998
- ---------------------- --------------
Hellmut Fritzsche
Joichi Ito* Director May 11, 1998
- ---------------------- --------------
Joichi Ito
Director
- ---------------------- --------------
Seymour Liebman
Director
- ---------------------------
Walter J. McCarthy, Jr. --------------
Florence I. Metz* Director May 11, 1998
- ---------------------- --------------
Florence I. Metz
Director
- ----------------------
Haru Reischauer ---------------
Nathan J. Robfogel* Director May 11, 1998
- ---------------------- --------------
Nathan J. Robfogel
Stanley K. Stynes* Director May 11, 1998
- ---------------------- --------------
Stanley K. Stynes
*By /s/ Roger John Lesinski
- ---------------------------------------
Roger John Lesinski, Attorney-in-Fact
II-5
<PAGE>
EXHIBIT INDEX
PAGE OR
EXHIBIT NO. REFERENCE
- ----------- ---------
1.1 Form of Placement Agreement by and among
the Registrant, Janney Montgomery Scott Inc.
and Nolan Securities Corporation
1.2 Form of Placement Agents' Warrant Agreement
3.1 Restated Certificate of Incorporation filed
September 29, 1967 (a)
3.2 Certificate of Amendment to Certificate of Incorporation
filed September 15, 1978 increasing and extending voting
rights of the Company's Class A Common Stock and
establishing class voting with respect to other matters (b)
3.3 Certificate of Amendment to Certificate of Incorporation
filed January 7, 1982 increasing and extending voting
rights to the Company's Class A Common Stock (c)
3.4 Certificate of Amendment to Certificate of Incorporation
filed September 13, 1993 extending voting rights of the
Company's Class A Common Stock (d)
3.5 Certificate of Amendment to Certificate of Incorporation
filed February 24, 1998 increasing to 20,000,000 the
number of shares of Common Stock, par value one cent
($.01) per share *
3.6 Bylaws of the Company in effect as of July 17, 1997 (e)
3.7 Amendment to Article VIII of Bylaws *
4.1 Form of Warrant Agreement and Warrant
10.1 Agreement among the Company, Stanford R. Ovshinsky
and Iris M. Ovshinsky, relating to the automatic
conversion of Class A Common Stock into the Company's
Common Stock upon the occurrence of certain events,
dated September 15, 1964 (f)
5.1 Opinion of Jenner & Block *
23.1 Consent of Jenner & Block (included in the opinion
filed as Exhibit 5.1)
23.2 Consent of Deloitte & Touche LLP
24.1 Power of Attorney (included in the Signature Page
contained in Part II of the Registration Statement) *
II-6
<PAGE>
Notes to Exhibit List
---------------------
(a) Filed as Exhibit 2-A to the Company's Form 8-A and incorporated
herein by reference.
(b) Filed as Exhibit 3-A-2 to Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-1 (Registration No.
2-61551) and incorporated herein by reference.
(c) Filed as Exhibit 1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1981 and incorporated herein by
reference.
(d) Filed as Exhibit 3.11 to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993 and incorporated herein by
reference.
(e) Filed as Exhibit 3.10 to the Company's Annual Report on Form 10-K/A
(Amendment No. 1) for the fiscal year ended June 30, 1997 and
incorporated herein by reference.
(f) Filed as Exhibit 13-D to the Company's Registration Statement on
Form S-1 (Registration No. 2-26772) and incorporated herein by
reference.
* Previously filed with Registration Statement No. 333-50749 on April 22,
1998.
II-7
EXHIBIT 1.1
JANNEY MONTGOMERY SCOTT INC.
NOLAN SECURITIES CORPORATION
April 22, 1998
Energy Conversion Devices, Inc.
1675 West Maple Road
Troy, Michigan 48084
Attention: Stanford R. Ovshinsky
Re: Proposed Limited Public Offering on Form S-3
Ladies and Gentlemen:
We are pleased to confirm the engagement of Janney Montgomery Scott
Inc. ("JMS") and Nolan Securities Corporation ("Nolan") as co-placement agents
on a "best efforts" basis with respect to the proposed limited public offering
(the "Offering") by Energy Conversion Devices, Inc. ("ECD" or the "Company") of
up to 2 million units ("Units") comprised of 2 million shares of the Company's
common stock, $.01 par value (the "Shares") and 2 million warrants to purchase
shares of the Company's common stock $.01 par value (the "Warrants") solely to
persons who are "qualified institutional buyers" as such term is defined in Rule
144A under the Securities Act.
A. REGISTRATION STATEMENT
1. The Units (including the shares of the Company's common stock
issuable upon exercise of the Warrants) will be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and the Rules and Regulations
promulgated thereunder, pursuant to a registration statement on Form S-3
("Registration Statement") or other applicable form, to be prepared and filed by
the Company with the Securities and Exchange Commission (the "Commission").
2. The Registration Statement and any amendment thereto ("Amendment")
or other papers or instruments relating to the proposed Offering shall not be
filed with the Commission unless satisfactory, in form and substance, to JMS and
Nolan and their respective counsel. JMS and Nolan shall be provided with
sufficient copies of the proposed Registration Statement,
1
<PAGE>
related Preliminary and Final Prospectuses and all Exhibits thereto necessary
for their approval prior to filing with the Commission or dissemination to any
party.
B. BEST EFFORTS PLACEMENT; NO MINIMUM AMOUNT OF UNITS TO
BE SOLD
1. JMS and Nolan shall act as co-placement agents on a "best
efforts" basis to sell for the account of the Company up to 2 million Units to
persons who are "qualified institutional buyers" as such term is defined in Rule
144A under the Securities Act. No minimum number of Units is required to be sold
pursuant to the Offering for the closing to take place.
2. For acting as placement agents, JMS and Nolan shall receive a fee
equal to six percent (6%) of the gross proceeds of the Units sold, payable to
the order of JMS. In addition, as set forth in greater detail below, JMS and
Nolan shall receive reimbursement of expenses and JMS shall receive warrants, at
$.01 per warrant, to purchase units identical to the Units. The fee provided for
herein will not apply to any proceeds received by the Company from exercise of
the Warrants.
C. PRICING
The offering price of the Units (the "Per Unit Offering Price")
shall be determined by negotiation by and among the Company, JMS, Nolan and the
purchasers of the Units based on the closing bid price of the Company's common
stock on the Nasdaq National Market on the closing date of the Offering (the
"Closing Date").
D. WARRANTS.
The Warrants shall entitle the holders to purchase shares of the
Company's common stock at an exercise price per share equal to 135% of the Per
Unit Offering Price on or prior to January 31, 2000, and at an exercise price
per share equal to 155% of the Per Unit Offering Price at any time thereafter
and until expiration of the Warrants on July 31, 2001.
E. EXPENSES OF THE OFFERING
1. Irrespective of whether the Offering is consummated, the Company
shall be responsible for and pay all reasonable expenses directly and
necessarily incurred in connection with the offering, including, without
limitation:
2
<PAGE>
(a) the fees, costs and expenses of the Company's accountants and
attorneys;
(b) the costs of preparing, delivering and filing with the Commission
the Registration Statement, Preliminary and Final Prospectuses,
Exhibits and related documents and all amendments and supplements
thereto; and the costs of delivering all such documents to JMS and
Nolan in such reasonable quantities as they may request;
(c) the cost of preparing and delivering certificates representing the
Units;
(d) the cost and expenses, including legal fees, of registering or
qualifying the Units for offer and sale under the securities or Blue
Sky laws of the various states in which JMS and Nolan intend to
offer and sell the Units;
(e) NASD filing fees, if any;
(f) the fees and expenses of the Transfer Agent and Registrar of the
Company's common stock;
(g) the fees and expenses of the Warrant Agent for the Warrants;
(h) the reasonable fees and expenses of legal counsel to JMS and Nolan
incurred in connection with the Offering;
(i) the Company's own expenses for roadshows and tombstone advertising
expenses; and
(j) any other usual and customary expenses in connection with the
foregoing.
The expenses of JMS and Nolan will be billed on a monthly
basis and the Company's reimbursement obligation for such expenses shall not
exceed an aggregate of $100,000, inclusive of legal fees. JMS acknowledges
receipt of an advance against expenses in the amount of $25,000.
F. JMS AND NOLAN WARRANTS; REGISTRATION RIGHTS
At the Closing Date, the Company will issue to JMS and Nolan,
or their designees, warrants (the "Placement Agent Warrants") to purchase units
identical to the Units in an amount equal to four percent (4%) of
3
<PAGE>
the Units sold in the Offering. The Placement Agent Warrants shall expire five
(5) years from the effective date of the Registration Statement and shall be
exercisable commencing one year from the Closing Date, from time to time, in
whole or in part, prior to the expiration date at an exercise price per unit
equal to one hundred thirty percent (130%) of the Per Unit Offering Price.
At the written request of JMS at any time during the four-year
exercisable period, the Company, on one occasion, shall promptly prepare and
file with the Commission a registration statement (or post-effective amendment
to the Registration Statement) and such other documents as, in the opinion of
counsel to the Company and counsel to JMS, shall be required to permit a public
offering of the securities issuable upon exercise of the Placement Agent
Warrants and shall use its reasonable best efforts to cause such registration
statement to be declared effective as promptly as possible. Notwithstanding the
foregoing, ECD may postpone for up to 90 days the filing or the effectiveness of
a registration statement for a demand registration if ECD determines that such
demand registration would reasonably be expected to have an adverse effect on
any proposal or plan by ECD or any of its subsidiaries to engage in any
acquisition or disposition of assets (other than in the ordinary course of
business), merger, consolidation, tender offer, joint venture, license
arrangement or similar transaction. The Company shall pay the initial $15,000 of
the related fees and expenses, other than the fees and expenses of counsel to
JMS and any underwriting or selling commissions, and JMS shall pay the excess,
if any, of such fees and expenses.
After the Closing Date, in the event the Company determines to
register any of its securities pursuant to a registration statement filed with
the Commission other than on Form S-4 or Form S-8, the Company will so notify
JMS and Nolan in writing and JMS and Nolan shall have the right, exercisable
within 30 days after such written notice, to request that the securities
issuable upon exercise of the Placement Agent Warrants be included in such
registration statement, which the Company shall so include; provided, however,
that if the managing underwriters of an underwritten public offering advise the
Company that in their opinion the securities requested for inclusion by JMS
and/or Nolan could not be sold in an orderly manner in such underwritten
offering within a price range acceptable to the Company, then the holders of the
Placement Agent Warrants shall agree, at the request of such managing
underwriters, not to offer for sale, sell or otherwise dispose of the securities
so registered for a period beginning seven days prior to and ending 90 days
after the effective date of the underwritten offering.
The Company shall indemnify and hold harmless the holders of the
Placement Agent Warrants whose securities are included in a registration
statement filed pursuant to this Section to the identical extent as JMS and
4
<PAGE>
Nolan are indemnified under Section G hereunder and the Company shall provide
such holders with a written agreement to such effect upon request.
G. INDEMNIFICATION
The Company agrees to indemnify and hold harmless JMS and/or Nolan
and each person, if any, who controls JMS and/or Nolan within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by JMS and/or Nolan or any such
controlling person in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary or final prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or caused by 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,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to JMS and/or Nolan and furnished to the Company in
writing by JMS and/or Nolan expressly for use therein.
JMS and Nolan agree to indemnify and hold harmless the Company, its
directors, its officers who sign the 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 to the same extent as the
foregoing indemnity from the Company to JMS and Nolan, but only with reference
to the failure of JMS or Nolan to comply with the prospectus delivery
requirements of the federal securities laws in connection with the Offering and
sale of the Units or to information relating to JMS and/or Nolan furnished to
the Company in writing by JMS and/or Nolan, as the case may be, expressly for
use in the Registration Statement, any preliminary or final prospectus, or any
amendments or supplements thereto.
In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to the preceding two paragraphs, such person (the "indemnified
party") shall promptly notify the person against whom such indemnity may be
sought (the "indemnifying party") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably 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
5
<PAGE>
and disbursements of such counsel related to such proceeding. In any such
proceeding, the indemnifying party may assume the defense of any action the
subject of the first sentence of this paragraph with counsel reasonably
satisfactory to the indemnified party. In addition, 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 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. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of 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 such
indemnified parties 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 not subject to any
appeals, 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 (which shall not be unreasonably withheld or delayed), 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.
If the indemnification provided for in the first or second paragraph
of this Section G is unavailable to an indemnified party, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and JMS and/or Nolan on the other hand from the offering
of the Units 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 Company on the one hand and of JMS and/or Nolan on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and JMS and/or Nolan on the other hand in connection with the offering of the
6
<PAGE>
Units shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Units (before deducting expenses) received by
the Company and the fee paid to JMS and Nolan bear to the aggregate offering
price of the Units. The relative fault of the Company on the one hand and JMS
and/or Nolan on the other hand shall be determined by references 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 or by JMS and/or Nolan and the parties' relative intent,
knowledge, access to information supplied by the Company or by JMS and/or Nolan
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, JMS and Nolan agree that it would not be just or
equitable if contribution pursuant to this Section G were determined by pro rata
allocation or by any other method of allocation that does not take account of
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,
claims, damages and liabilities 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 such action or claim.
Notwithstanding the provisions of this Section G, JMS and/or Nolan shall not be
required to contribute any amount in excess of the aggregate fee paid to JMS and
Nolan by the Company. 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 remedies provided for in this Section G are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section
G shall remain operative and in full force and effect regardless of any
termination of this Agreement.
H. DISSEMINATION OF INFORMATION
During the pendency of the Offering, the Company agrees and
undertakes to consult with JMS and Nolan prior to distribution to third parties
of any financial information, news releases and/or other publicity regarding the
Company, its business or any terms of the Offering. Copies of all documents
7
<PAGE>
which the Company or its public relations advisors intend to distribute during
the pendency of the Offering will be provided to JMS and Nolan for review prior
to such distribution.
I. TERMINATION OF PLACEMENT
In the event that the proposed Offering is, for any reason,
terminated prior to the effective date of the Registration Statement, the
Company agrees, acknowledges and undertakes to remain responsible for payment of
all expenses as provided in Section E above, limited, however, with respect to
JMS and Nolan, to their accountable out-of-pocket expenses.
J. DUE DILIGENCE INVESTIGATION
1. The Company shall supply and deliver to JMS and Nolan and their
respective legal counsel at their respective offices, all information required
to enable them to make such investigation of the Company and its business
prospects as they shall desire and shall make available to them such persons as
they deem reasonably necessary or appropriate in order to verify or substantiate
any information regarding the Company.
2. It is expressly understood and agreed that JMS, Nolan and their
respective legal counsel will be undertaking a thorough review of all the
Company's contractual commitments and operational practices and in the event
that these do not meet with the approval of JMS and/or Nolan, JMS and Nolan will
not proceed with the Offering. JMS and Nolan agree to hold in confidence and not
disclose confidential information of ECD or its affiliates to any person or
entity without the prior written consent of ECD. For purposes of this Agreement,
confidential information does not include: matters of public knowledge;
information rightfully received by JMS and/or Nolan from a third party without a
duty of confidentiality to ECD; information independently developed by JMS or
Nolan; or information required by law to be disclosed (provided that JMS and
Nolan will give ECD prior written notice of any disclosure so required).
K. REPRESENTATIONS, WARRANTIES AND COVENANTS
The Company hereby represents and warrants to, and covenants with,
JMS and Nolan as follows:
1. The Company will not issue any Units until the Registration
Statement has been declared effective and no stop order suspending the
8
<PAGE>
effectiveness of the Registration Statement shall be in effect, and no
proceedings for such purpose shall be pending before or, to ECD's knowledge,
threatened by the Commission at the time the Units are issued.
2. (i) As of the date that the Units are issued, each part of the
Registration Statement, when such part became effective, will not contain and
each such part, as amended and supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the prospectus, as amended and supplemented,
if applicable, will comply in all material respects with the Securities Act and
the applicable rules and regulations of the Commission thereunder and (iii) the
prospectus, as amended and supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
3. The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Registration Statement and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company.
4. The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Registration Statement.
5. The shares of common stock of ECD outstanding prior to the Offering
have been duly authorized and are validly issued, fully paid and non-assessable.
The Units, when issued and delivered as contemplated by this Agreement, will be
validly issued, fully paid and non-assessable and the issuance of such Units
will not be subject to any preemptive or similar right.
6. This Agreement has been duly authorized, executed and delivered by
ECD.
7. ECD shall keep effective the registration under the Securities Act
of the Company's common stock issuable upon exercise of the Warrants in order
that the holders of Warrants shall, upon exercise of the Warrants, receive
shares fully registered under the Securities Act upon exercise of the Warrants.
9
<PAGE>
8. The execution and delivery by ECD of, the performance of its
obligations under, and the consummation of the transactions contemplated by,
this Agreement will not contravene any provision of (i) the certificate or
articles of incorporation or by-laws of ECD or (ii) applicable law, rule or
regulation or any agreement or other instrument binding upon ECD, or any
judgment, order or decree of any governmental body or agency or court having
jurisdiction over ECD, and all consents, approvals, authorizations,
registrations, filings or qualifications of or with any court or governmental
body or agency of the United States or any state thereof required for the
execution and delivery by ECD of, the performance by ECD of its obligations
under, and the consummation by ECD of the transactions contemplated by, this
Agreement have been or will be obtained or made and are or will be in full force
and effect, except as may be required by state securities or Blue Sky laws in
connection with the offer and sale of the Units.
9. Each preliminary prospectus filed as part of the Registration
Statement or any amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, will comply in all material respects with Securities Act and the
rules and regulations of the Commission thereunder.
10. No person is or will be entitled, directly or indirectly, to
compensation from the Company or any of its affiliate for services as a finder
in connection with the Offering.
11. JMS and Nolan shall have received such additional documents,
certificates, opinions of counsel and other deliveries as it may reasonably
request and as are customary to effect a closing of the matters herein
contemplated.
L. TERM OF AGREEMENT
This Agreement shall terminate: (i) at any time upon the mutual
agreement of the parties; (ii) upon notice given by ECD, JMS or Nolan, as the
case may be, if any party material breaches any of the provisions hereof; (iii)
upon notice given by ECD to JMS and Nolan, if ECD determines for any reason not
to consummate this Offering on the terms and conditions specified in this
Agreement and in the prospectus; provided, however, that if ECD terminates this
Agreement pursuant to the immediately preceding clause (iii), ECD shall pay to
JMS and Nolan a pro rata amount of the fee specified in Section B if, during the
first twelve (12) months following the date of such termination, ECD issues any
securities on a private- placement basis to any investor previously contacted by
either JMS or Nolan in connection with this Offering, (the
10
<PAGE>
"Investors"). For purposes of this provision, JMS and Nolan shall provide ECD
with a list of all such Investors. .
During the first twenty four (24) months following the date of the Closing
of the Offering, if a purchaser of Units in the Offering acquires any additional
securities of ECD on a private placement basis from ECD, and JMS and Nolan are
not designated as ECD's agent for such placement or are designated on an
unreasonable or unacceptable basis, ECD shall pay to JMS and Nolan a cash fee
equal to 3% of the gross proceeds raised thereby.
M. LAWS AND JURISDICTION TO GOVERN
This Agreement shall be construed and enforced in accordance with
the laws of the State of New York and the parties agree to submit themselves to
the jurisdiction of the courts of the State of New York which shall be the sole
tribunal in which any parties may institute and maintain a legal proceeding
against the other party arising from any dispute in this Agreement. In the event
any party initiates a legal proceeding in a jurisdiction other than in the
courts of the State of New York, the other party may assert as a complete
defense and as a basis for dismissal of such legal proceeding that the legal
proceeding was not initiated and maintained in the courts of the State of New
York in accordance with the provisions of this Section M.
N. MISCELLANEOUS
The letter dated April 17, 1998 by JMS to ECD relating to
arrangements set forth herein shall terminate upon execution of this agreement,
except that the indemnification provisions contained therein shall remain
operative and full force and effect with respect to acts occurring prior to the
date of this Agreement. The provisions of Section G shall apply with respect to
acts occurring on and after the date of this Agreement.
11
<PAGE>
If the foregoing is acceptable to you, please sign and return two
copies of this letter, retaining the original and one copy for your records.
Very truly yours,
JANNEY MONTGOMERY SCOTT INC.
By: ______________________________
Name:
Title:
NOLAN SECURITIES CORPORATION
By: ______________________________
Name:
Title:
Accepted and Agreed:
ENERGY CONVERSION DEVICES, INC.
By: ________________________________
Stanford R. Ovshinsky
President
12
EXHIBIT 1.2
PLACEMENT AGENTS' WARRANT AGREEMENT
PLACEMENT AGENTS' WARRANT AGREEMENT, dated as of this ____ day
of May 1998, by and between Energy Conversion Devices, Inc. (the "Company"),
Janney Montgomery Scott Inc. ("JMS") and Nolan Securities Corporation ("Nolan"
and, together with JMS, collectively, the "Placement Agents").
W I T N E S S E T H:
WHEREAS, the Company proposes to make a public offering ("Offering") of
shares of its common stock, $.01 par value ("Common Stock") and common stock
purchase warrants ("Warrants"), each Warrant exercisable to purchase one share
of Common Stock, in units ("Units"), each Unit consisting of one share of Common
Stock
and one Warrant; and
WHEREAS, the Units have been registered under a registration statement on
Form S-3 declared effective by the Securities and Exchange Commission (the
"SEC") on May ___, 1998 (the "Registration Statement"); and
WHEREAS, in connection with the Offering, the Company has agreed to issue
to the Placement Agents, at $.01 per warrant, warrants to purchase an aggregate
of _____ units identical to the Units (such warrants, the "Placement Agent
Warrants", and the units purchasable upon exercise of the Placement Agent
Warrants, the "Underlying Units");
NOW, THEREFORE, the Placement Agents and Company hereby agree as follows:
SECTION 1. Definitions. The following terms as used in this Agreement
shall have the meanings set forth below:
(a) "Business Day" means a day other than a Saturday, Sunday
or other day on which banks in the State of New York are authorized by law to
remain closed;
(b) "Exercise Date" means the date on which the Company shall
have received both (i) a Placement Agent Warrant Certificate evidencing
Placement Agent Warrants, with the exercise form thereon duly executed, and (ii)
payment in cash, or by official bank or certified check made payable to the
Company, of an amount in lawful money of the United States of America equal to
the Exercise Price for the Underlying Units, plus transfer taxes, if any;
(c) "Exercise Price" means the purchase price for an
Underlying Unit payable upon exercise of a Placement Agent Warrant Certificate,
which price shall be $__________ per Unit, subject to adjustment as provided in
Section 4 hereof.
(d) "Placement Agent Warrant Certificate" means a certificate
evidencing Placement Agent Warrants substantially in the form of Exhibit A
hereto;
<PAGE>
(e) "Holder"means a person or entity in whose name a Placement
Agent Warrant Certificate is registered upon the books to be maintained by the
Company for such purpose.
(f) "Notice Event" means (i) any authorization by the Company
of the issuance to all holders of shares of Common Stock of rights, options or
warrants to subscribe for or purchase shares of Common Stock or of any other
subscription rights or warrants, or (ii) any authorization by the Company of the
distribution to all holders of shares of Common Stock of evidences of its
indebtedness or assets (other than cash dividends or distributions payable out
of consolidated earnings or earned surplus or dividends payable in shares of
Common Stock), (iii) any consolidation or merger to which the Company is a party
and for which approval of stockholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of a Placement Agent Warrant (other than a change in par value, or
from par value to no par value. or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange offer for
shares of Common Stock, (iv) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company. or (v) any proposal by the Company to
take any other action that would require an adjustment, pursuant to Section 4
hereof, of the Exercise Price or in the number of Underlying Units deliverable
upon exercise of a Placement Agent Warrant Certificate;
(g) "Transfer Agent" means State Street Bank and Trust
Company, as transfer agent for the Common Stock;
(h) "Underlying Securities" means, collectively, the
Underlying Shares and Underlying Warrants constituting the Underlying Units;
(i) "Underlying Shares" means the shares of Common Stock,
subject to adjustment from time to time as provided herein, constituting part of
the Underlying Units;
(j) "Underlying Warrants" means the Warrants, subject to
adjustment from time to time as provided herein, constituting part of the
Underlying Units;
(k) "Underlying Warrant Shares" means the shares of Common
Stock issuable upon exercise of the Underlying Warrants;
(l) "Warrant Agent" means State Street Bank and Trust
Company, as warrant agent for the Warrants;
(m) "Warrant Agreement" means that Warrant Agreement, dated as
of the date hereof, by and between the Company and the Warrant Agent;
2
<PAGE>
SECTION 2. Exercise of Placement Agent Warrants.
(a) Time of Exercise. Subject to the provisions of Section 4
hereof, the Placement Agent Warrants may be exercised from time to time, upon
the terms and subject to the conditions set forth herein, on or after 9:00 am.,
New York City time, on the first anniversary hereof and at or before 5:00 pm.,
New York City time, on May __, 2003, at which time the Placement Agent Warrants
shall expire (the "Expiration Date"), or, if the Expiration Date is not a
Business Day, at or before 5:00 pm. on the next following Business Date.
(b) Manner of Exercise.
(i) The Placement Agent Warrants may be exercised by a Holder,
in whole or in part, to purchase Underlying Units in such amounts as may be
elected, upon surrender of the Placement Agent Warrant Certificate with the
subscription form thereon duly executed, to the Company at its corporate office
at 1675 West Maple Road, Troy, Michigan 48084, together with the Exercise Price
for the number of Underlying Units to be purchased, in lawful money of the
United States, or by certified check or bank draft payable in United States
Dollars to the order of the Company and upon compliance with and subject to the
conditions set forth herein.
(ii) Upon receipt of a Placement Agent Warrant Certificate
with the subscription form thereon duly executed and accompanied by payment of
the Exercise Price for the number of Underlying Units subscribed for, the
Company, subject to Section 6(b), shall cause to be issued and delivered,
promptly to the Holder, certificates for the Underlying Securities in such
denominations as the Holder shall request.
(iii) In the event a Holder shall subscribe for less than all
of the Underlying Units purchasable, the Company shall execute a new Placement
Agent Warrant Certificate exercisable for the balance of the Underlying Units
purchasable and shall deliver such new Placement Agent Warrant Certificate to
the exercising Holder.
(iv) A Placement Agent Warrant Certificate shall be deemed to
have been exercised immediately prior to the close of business on the Exercise
Date, and the person entitled to receive the Underlying Units shall be treated
for all purposes as the holder of the Underlying Securities constituting such
Underlying Units as of the close of business on the Exercise Date.
(v) The Company covenants and agrees that it will pay, when
due and payable, any and all taxes that may be payable with respect to the issue
of the Placement Agent Warrants or the Underlying Securities deliverable upon
exercise thereof. The Company shall not, however, be required to pay any tax
that may be payable in
3
<PAGE>
respect of any transfer or assignment of Placement Agent Warrants or
the Underlying Securities.
SECTION 3. Covenants
(a) Reservation of Shares of Common Stock. The Company
covenants that it will at all times reserve and keep available, free from
preemptive rights, out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of the Placement Agent Warrants and Underlying Warrants,
such number of shares of Common Stock as shall equal the aggregate of the
Underlying Shares and Underlying Warrant Shares and that the shares so reserved
shall, at the time of delivery, be duly and validly issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof. The Company further covenants that the Underlying Warrants
issuable upon exercise of the Placement Agent Warrants shall be validly issued
and the legal, valid and binding obligations of the Company.
(b) Registration.
(i) The Company shall advise each Holder or its transferee,
whether the Holder holds a Placement Agent Warrant Placement Agent Warrant and
holds the Underlying Securities, by written notice at least four weeks prior to
the filing of any post-effective amendment to the Registration Statement or of
any new registration statement or post-effective amendment thereto covering any
securities of the Company for its own account or for the account of others and
will, for a period of four years commencing one year from the effective date of
the Registration Statement, upon the request of any such Holder, include in any
such post-effective amendment or registration statement, such information as may
be required to permit a public offering by such Holder of all or any of the
Underlying Securities or Underlying Warrant Shares (the "Registrable
Securities"). The Company shall supply prospectuses and such other documents as
the Holders may request in order to facilitate the public sale or other
disposition of the Registrable Securities, use its best efforts to register and
qualify the Registrable Securities for sale in such states as such Holders
designate and do any and all other acts and things which maybe necessary or
desirable to enable such Holders to consummate the public sale or other
disposition of the Registrable Securities, and shall indemnify the Holders in
the manner provided in subparagraph (c) below. The Holders shall furnish
information and indemnification as set forth in subparagraph (c) below except
that the maximum amount which may be recovered from any Holder shall be limited
to the amount of proceeds received by the Holder from the sale of the
Registrable Securities.
(ii) JMS may on one occasion subsequent to May ____, 1999 give
notice to the Company that it desires to register under
4
<PAGE>
the Act all or any of the Underlying Securities in which event the Company will
promptly and no later than 30 days after receipt of such notice, file a
post-effective amendment to the Registraiton Statement or a new registration
statement to the end that the Underlying Securities and/or Underling Warrant
Shares may be publicly sold as promptly as practicable thereafter, and the
Company will use its best efforts to cause such registration to become and
remain effective (including the taking of such steps as are necessary to obtain
the removal of any stop order); provided, that JMS shall furnish the Company
with appropriate information. Within ten days after receiving such notice, the
Company shall give notice to the other Holders advising that the Company is
proceeding with such post-effective amendment or registraiton statement and
offering to include therein the Underlying Securities and/or Underlying Warrant
Shares of such other Holders, provided that the Holders shall furnish the
Company with such appropriate information (relating to the intentions of such
Holders) in connection therewith as the Company shall reasonably request in
writing. All costs and expenses of such post-effective amendment or new
registration statement shall be borne by the Company, except that the Holders
shall bear the fees of their own counsel and any underwriting discounts or
commissions applicable to any of the securities sold by them. The Company will
maintain such registration statement or post-effective amendment current for a
period of at least six months (and for up to an additional three months if
requested bythe Holders) from the effective date thereof. The Company shall
supply prospectuses, and such other documents as the Holders may request in
order to facilitate the public sale or other disposition of the Registrable
Securities, use its best efforts to register and quality any of the Registrable
Securities for sale in such states as such Holders designate and furnish
indemnification in the manner provided below.
(c) Indemnification.
(i) In the event the Company shall file a post-effective
amendment to the Registration Statement or a new registraiton statement for the
public offering of the Underlying Securities and/or Underlying Warrant Shares,
the Company shall indemnify and hold harmless such Holder whose Underlying
Securities and/or Underlying Warrant Shares are included therein (such Holder
being hereinafter called the "Distributing Holder"), and each person, if any,
who controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such securities and each person,
if any, who controls (within the meaning of the Act) any such underwriter,
against any losses, claims, damages or liabilities, joint or several, to which
the Distributing Holder, any such controlling person or any such underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in
5
<PAGE>
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any materials fact contained in any such registraiton
statement or any preliminary prospectus or final prospectus constituting a part
thereof or any amendment or supplement thereto, or arise out of or are based
upon the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; and will reimburse
the Distributing Holder and each such controlling person and underwriter for any
legal or other expenses reasonably incurred by the Distributing Holder or such
controlling person or underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registraiton statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder, for use in the preparation thereof.
(ii) The Distributing Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers who have signed said
registration statement and such officers who have signed said registraiton
statement and such amendments and supplements thereto, each person, if any, who
controls the Company (within the meaning of the 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 Act or otherwise, insofar as
such losses, claims, damages or liabilities arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in said
registration statement, said preliminary prospectus, said final prospectus, or
said amendment or supplement, or arise out of or are based upon 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 each case
to the extent, but only to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was made in said registraiton
statement, said preliminary prospectus, said final prospectus or said amendment
or supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
(iii) Promptly after receipt by an indemnified party under
this subparagraph (c) of notice of the commencement of any
6
<PAGE>
action, such indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party, give the indemnifying party notice of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this subparagraph (c).
(iv) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
subparagraph (c) for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(d) SEC Reports. So long as the Placement Agent Warrants
remain outstanding, the Company shall cause copies of all quarterly and annual
financial reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 19334 ("SEC
Report") to be mailed to each Holder at his or her address appearing in the
register maintained by the Company for such purpose, in each case, within 15
days of filing with the SEC. If the Company is not subject to the requirements
of the aforesaid Section 13 or 15(d), the Company shall nevertheless continue to
cause SEC Reports, comparable to those which it would be required to file
pursuant to the aforesaid Section 13 or 15(d) if it were subject to the
requirements of either such Section, to be so filed with the SEC (but only if
the SEC permits such filings) and mailed to each Holder, in each case, within
the same time periods as would have applied (including under the preceding
sentence) had the Company been subject to the requirements of the aforesaid
Section 13 or 15(d).
SECTION 4. Adjustment of Exercise Price and Number of Underlying
Securities. The number of Underlying Securities purchasable upon the exercise of
the Placement Agent Warrants and the Exercise Price shall be subject to
adjustment from time to time as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (i) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock- (whether shares of Common Stock or of capital stock
of any other class), (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares, or (iv) issue by reclassification of its shams of Common Stock any
shares of capital stock of the Company, the Exercise Price in effect and the
number of Underlying Shares issuable upon exercise of a Placement Agent Warrant
immediately prior to such action shall be adjusted so that the
7
<PAGE>
Holder shall be entitled to receive the number of shares of capital stock of the
Company at the same aggregate Exercise Price that the Holder would have owned
immediately following such action had such Placement Agent Warrant been
exercised immediately prior thereto. An adjustment made pursuant to this
paragraph shall become effective immediately after the record date in the case
of a dividend and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification It as a result of an
adjustment made pursuant to this paragraph, the Holder thereafter shall become
entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive) shall determine the allocation of the adjusted Exercise Price
between or among shares of such classes of capital stock.
(b) Reclassification Combinations, Mergers. etc, In case of
any reclassification or change of outstanding shares of Common Stock issuable
upon exercise of the Placement Agent Warrants (other than as set forth in
paragraph (a) above and other than a change in par value, or from par value to
no par value, or from no par value to par value or as a result of a subdivision
or combination), or in case of any consolidation or merger of the Company with
or into another corporation or entity (other than a merger in which the Company
is the continuing corporation and which does not result in any reclassification
or change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Placement Agent Warrants), or in the case of any
sale or conveyance of all or substantially all of the assets of the Company
followed by a related distribution to holders of shares of Common Stock of cash,
securities or other property, then as a condition of such reclassification,
change, consolidation, merger, or sale of assets, the Company or such a
successor corporation or entity, as the case may be, shall forthwith make lawful
and adequate provision whereby each Holder shall have the right thereafter to
receive on exercise of a Placement Agent Warrant the kind and amount of shares
of stock and other securities and property receivable upon such
reclassification, change. consolidation, merger, or sale of assets, by a holder
of the number of shares of Common Stock issuable upon exercise of such Placement
Agent Warrant immediately prior to such reclassification, change, consolidation,
merger, or sale of assets, and enter into a supplemental warrant agreement so
providing. Such provisions shall include provision for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 4. If the issuer of securities deliverable upon exercise of a
Placement Agent Warrant under the supplemental warrant agreement is an affiliate
of the formed or surviving corporation or other entity, that issuer shall join
in the supplemental warrant agreement. The above provisions of this subparagraph
(b) shall similarly apply to successive reclassifications and changes of shares
of Common Stock and to successive consolidations or mergers.
(c) In the event that at any time, as a result of an
adjustment made pursuant to this Section 4, each Holder shall become entitled to
receive any securities of the Company other than the Underlying Securities,
thereafter the number of such other securities so receivable upon exercise of a
Placement Agent Warrant and the Price applicable to such exercise shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares of Common
Stock contained in this Section 4.
8
<PAGE>
(d) Notice of Change in Exercise Price. Upon any adjustment of
the Exercise Price pursuant to Section 4, the Company shall promptly thereafter
(i) cause to be prepared a certificate of the President and Chief Financial
Officer of the Company setting forth the adjusted Exercise Price and, in
reasonable detail, the method of calculation and the facts upon which such
calculations are based, and setting forth the number of Underlying Securities
(or portion thereof) issuable after such adjustment, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein absent
manifest error, provided that if a Holder reasonably requests, the Company shall
engage a firm of independent public accountants of recognized standing selected
by the Board of Directors of the Company (who may be the regular auditors of the
Company) to prepare and file such certificate in lieu of the certificate of the
President and Chief Financial Officer, in which case such certificate shall be
conclusive evidence of the matters set forth therein absent manifest error, and
(ii) send to each Holder at the address appearing on the registry books
maintained by the Company written notice of such adjustments by first-class
mail, postage prepaid.
(e) Notice of Certain Events. With respect to any Notice
Event, the Company shall cause to be given to each Holder at such Holder's
address appearing on the registry books maintained by the Company, at least 20
days prior to the applicable record date hereinafter specified, or promptly in
the case of events for which there is no record date, by first class mail,
postage prepaid, a written notice stating (i) the date as of which the holders
of record of the Common Stock entitled to receive any such rights, options,
warrants or distribution is to be determined, (ii) the initial expiration date
set forth in any tender offer or exchange offer for shares of Common Stock, or
(iii) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this subsection or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution, or
liquidation or winding up, or the vote upon any action, provided that each
Holder shall retain any right to damages from the Company with respect to such
failure.
SECTION 5. Change in Number of the Underlying Warrants and the Underlying
Warrant Purchase Price. Under the Warrant Agreement, the Company may elect, upon
any adjustment of the exercise price of the Warrants, to adjust the number of
Warrants outstanding in lieu of adjusting the number of shares of Common Stock
purchasable upon the exercise of each Warrant, so that each Warrant outstanding
after such adjustment shall represent the right to purchase one share of Common
Stock. In such a case (i) the Underlying Warrant Purchase Price shall become
that price (calculated to the nearest 1/1,000 of one cent) determined by
multiplying the Underlying Warrant Purchase Price in effect immediately prior to
such adjustment by a fraction, the numerator of which shall be the exercise
price of the Warrants in effect immediately prior to such adjustment and the
denominator of which shall be the exercise price of the Warrants in
9
<PAGE>
effect immediately after such adjustment and (ii) each Underlying Warrant under
this Placement Agent Warrant that has not been purchased pursuant to the
exercise of such Placement Agent Warrant prior to such adjustment of the number
of Warrants shall become that number of Underlying Warrants (calculated to the
nearest tenth) determined by multiplying the number one by a fraction. the
numerator of which shall be the exercise price of the Warrants in effect
immediately prior to such adjustment and the denominator of which shall be the
exercise price of the Warrants in effect immediately after such adjustment. Upon
each adjustment of such Underlying warrants pursuant to this Section 5. the
Company shall, as promptly as practicable, cause to be distributed to each
Holder, on the date of such adjustment, Placement Agent Warrant Certificates
evidencing, subject to Section 6(b) hereof, the number of additional Underlying
Warrants to which such Holder shall be entitled as a result of such adjustment
or, at the option of the Company, cause to be distributed to such Holder in
substitution and replacement for the Placement Agent Warrant Certificates held
by such Holder prior to the date of adjustment (and upon surrender thereof, if
required by the Company) new Placement Agent Warrant Certificates evidencing the
number of Underlying Warrants to which such Holder shall be entitled after such
adjustment.
SECTION 6. Other-Provisions Relating to Rights of a Holder.
(a) Holder not Stockholder. A Holder, as such, shall not be
entitled to vote or receive dividends or be deemed a holder of Common Stock or
Warrants of the Company for any purpose, nor shall anything contained in this
Agreement be construed to confer upon the Holder, as such, any rights of a
holder of Common Stock or Warrants of the Company or the right to vote or give
or withhold consent to any action by the Company (whether upon any
recapitalization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings or other action
affecting holders of Common Stock or Warrants (except for notices provided for
in this Agreement), receive dividends or subscription rights, or otherwise until
the Underlying Units shall be deliverable upon exercise of the Placement Agent
Warrant Certificate.
(b) Fractional Shares or Warrants. Anything contained herein
to the contrary notwithstanding, the Company shall not be required to issue any
fractional shares of Underlying Shares or Underlying Warrants in connection with
the exercise of a Placement Agent Warrant Certificate. In any case where a
Holder would, except for the provisions of this Section 6(b), be entitled under
the terms of this Agreement to receive a fraction of an Underlying Share or
Underlying Warrant upon the exercise of a Placement Agent Warrant Certificate,
the Company shall round-up to the next highest Underlying Shares and the next
highest Underlying Warrant, as the case may be.
(c) Holder Absolute Owner. Prior to due presentment for
registration of transfer of any Placement Agent Warrant Certificate, the Company
may deem and treat the Holder as the absolute owner thereof.
10
<PAGE>
SECTION 7. Exchange and Transfer of Placement Agent Warrants
(a) Request. At the request of the Holder, a Placement Agent
Warrant Certificate may be divided split up, combined or exchanged for one or
more other Placement Agent Warrant Certificates of like tenor to purchase a like
aggregate number of Underlying Units. The request shall be in writing delivered
to the Company at its office in Troy, Michigan accompanied by the Placement
Agent Warrant Certificate[s] to be so divided, split up, combined or exchanged
at said office. Upon any such surrender, the Company shall execute and deliver
to the person entitled thereto new Placement Agent Warrant Certificate[s] as so
requested. The Company may require the surrendering Holder to pay a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection therewith.
(b) Assignment; Replacement of Placement Agent Warrant
Certificates. The Placement Agent Warrants may not be sold, transferred,
assigned, or hypothecated, in whole or in part, for a period of one year from
the effective date of the Offering, except to officers of the Placement Agents.
Thereafter, the Placement Agent Warrants may be sold, transferred, assigned or
hypothecated, in whole or in part, subject to federal and state securities laws.
Any permitted assignment shall be made by surrender of the Placement Agent
Warrant Certificate to the Company at its principal office with the form of
assignment attached thereto duly executed and with funds sufficient to pay any
transfer tax, in which event the Company shall, without charge, execute and
deliver a new Placement Agent Warrant Certificate in the name of the assignee so
named. Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of a Placement Agent Warrant Certificate and
(in the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and (in the cast of mutilation) upon surrender and cancellation
of such Placement Agent Warrant Certificate, the Company will execute and
deliver a new Placement Agent Warrant Certificate of like tenor and date and any
such lost, stolen or destroyed Placement Agent Warrant Certificate shall
thereupon become void. Any such new Placement Agent Warrant Certificate executed
and delivered shall constitute an additional contractual obligation on the part
of the Company, whether or not the Placement Agent Warrant Certificate so lost,
stolen, destroyed or mutilated shall be at any time enforceable by anyone.
SECTION 8. Other Matters.
(a) Taxes and Charges. The Company will from time to time
promptly pay, subject to the provisions of paragraph (v) of Section 2(b), all
taxes and charges that may be imposed upon the Company in respect of the
issuance or delivery, but not the transfer, of the Placement Agent Warrants or
the Underlying Securities.
(b) Notices to Company. Notice or demand pursuant to this
Agreement to be given or made by a Holder to or on the Company shall be deemed
given or made if delivered or sent by registered or certified mail, postage
11
<PAGE>
prepaid, return receipt requested, and addressed, until another address is
designated in writing by the Company, or by facsimile transmission, as follows:
Energy Conversion Devices, Inc.
1675 West Maple Road
Troy, Michigan 48084
Attention: Roger J. Lesinski, Esq.
Facsimile No.: (248) 280-1456
(c) Notices to the Placement Agents. Notice or demand pursuant
to this agreement to be given or made by the Company to the Placement Agents
shall be deemed given or made if delivered or sent by registered or certified
mail, postage prepaid, return receipt requested, and addressed, until another
address is designated in writing, or by facsimile transmission, as follows:
(i) if to JMS:
Janney Montgomery Scott Inc.26 Broadway
New York, New York 10004
Attention: Herbert M. Gardner
Facsimile No.: (212) 510-0683
(ii) if to Nolan:
Nolan Securities, Inc.
1201 Elm Street
Suite 3500
Dallas, Texas 75270
Attention: C. William Dedmon, Jr.
Phone No.: (214) 651-1800
Facsimile No.: (214) 658-9441
12
<PAGE>
(d) Notices to Holders. Notice to Holders provided for in this
Agreement shall be deemed given or made by the Company if delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, to the
Holder's address appearing on the registry books maintained by the Company for
Holders of Placement Agent Warrant Certificates.
(e) Governing Law. The validity, interpretation and
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflicts of laws principles thereof.
(f) Exclusive Benefit. Nothing in this Agreement expressed or
nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to any person or corporation other
than the Company, JMS, Nolan, and the Placement Agents' Warrant Holders any
right, remedy or claim hereunder, and all covenants, conditions, stipulations,
promises and agreements contained in this Agreement shall be for the sole and
exclusive benefit of such persons and their successors, survivors and permitted
assigns hereunder. This Agreement is for the benefit of and is enforceable by
any subsequent Placement Agents' Warrant Holder.
(g) Headings. The article headings herein am for convenience
only and are not part of this Agreement and shall not affect the interpretation
hereof.
(THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
ENERGY CONVERSION DEVICES, INC.
By: --------------------------------
JANNEY MONTGOMERY SCOTT INC.
By: --------------------------------
Herbert M. Gardner
Senior Vice President
NOLAN SECURITIES, CORPORATION
By: --------------------------------
Senior Vice President
14
<PAGE>
EXHIBIT A
No.__________
PLACEMENT AGENTS' WARRANT CERTIFICATE
ENERGY CONVERSION DEVICES, INC.
This warrant certificate certifies that ______________________, or its
registered assigns, is the registered holder of a Placement Agent Warrant
representing the right to purchase _____ Units (the "Underlying Units") of
securities of Energy Conversion Devices, Inc. (the "company") each Underlying
Unit consisting of one share of the Company's common stock, $.01 par value (each
an Underlying Share and, collectively the "Underlying Shares") and one warrant
to purchase one share of the Company's common stock issuable under the Warrant
Agreement between the Company and State Street Bank and Trust Company as warrant
agent. (each an "Underlying Warrant" and, collectively, the "Underlying
Warrants"). This Placement
Agent Warrant expires on May ___, 2003 (the "Expiration Date".
This Placement Agent Warrant entitles the registered holder
(the"Holder") upon exercise from time to time from 9:00 am., New York City time
on or after May ____, 1999 until 5:00 p.m New York City time on the Expiration
Date to purchase Underlying Units at $_______ per Underlying Unit (the "Exercise
Price") in lawful money of the United States of America upon surrender of this
certificate and payment of the Exercise Price. The Exercise Price, and the
number of Underlying Shares and Underlying Warrants issuable upon exercise of
this Placement Agent Warrant are subject to adjustment upon the occurrence of
certain events set forth in the Placement Agents' Warrant Agreement.
This Placement Agent Warrant may not be exercised after 5:00 p.m. on
the Expiration Date and to the extent not exercised by such tirne shall become
void.
This warrant certificate shall be governed by and construed in
accordance with the internal laws of the State of New York.
IN WITNESS WHEREOF, Energy conversion Devices, Inc. has caused this
warrant certificate to be signed by its President and its Secretary.
Dated: ----------------
ENERGY CONVERSION DEVISIONS, INC.
------------------------------------
President
A-1
<PAGE>
------------------------------------
Treasurer
A-2
<PAGE>
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and
transfers unto ______________ whose address is ________________________and whose
social security or other identifying number is ______________________ the right
to purchase __________ Underlying Units evidenced by the within Placement Agent
Warrant, and hereby irrevocably constitutes and appoints the Secretary of the
Company as his, her or its attorney-in-fact to transfer the same on the books of
the Company with full power of substitution and resubstitution. If said number
of Underlying Units is less than all of the Underlying Units purchasable
hereunder, the undersigned requests that a new Placement Agent Warrant
Certificate representing the right to purchase the balance of such Underlying
Units be registered in the name of _______________ whose address is
________________ and whose social security or other identifying number is
_______________ and that such Placement Agent Warrant Certificate be delivered
to ___________ whose address is ______________________.
Dated: ----------
SUBSCRIPTION FORM
The undersigned hereby irrevocably elects to exercise the right,
represented by this Placement Agent Warrant Certificate, to purchase ________
Underlying Units and tenders payment herewith in the amount of $_______. The
undersigned requests that a certificate for the Underlying Shares and Underlying
Warrants constituting the Underlying Units be registered in the name of
____________, whose address is ___________________ and whose social security or
other identifying number is ______________. If said number of Underlying Sham
and/or Underlying Warrants is less than all of the Underlying Shares and/or
Underlying Warrants purchasable hereunder, the undersigned requests that a new
Placement Agent Warrant Certificate representing the right to purchase the
balance of such Underlying Shares and Underlying Warrants be registered in the
name of _______________________ whose address is ________________ and whose
social security or other identifying number is ____________ and that such
Placement Agent Warrant Certificate be delivered to ____________________, whose
address is ___________________.
Dated: ----------- ------------------------------------
Signature
A-3
EXHIBIT 4.1
WARRANT AGREEMENT
AGREEMENT, dated as of this ___ day of May, 1998, by and between
ENERGY CONVERSION DEVICES, INC., a Delaware corporation (the "Company"), and
STATE STREET BANK AND TRUST COMPANY, as warrant agent (the "Warrant Agent").
W I T N E S S E T H
WHEREAS, the Company proposes to make a public offering (the "Public
Offering") of units (the "Units"), each Unit consisting of one share of Common
Stock (as defined in Section 1 hereof) and one warrant (the "Warrants") of the
Company to purchase one share of Common Stock; and
WHEREAS, in relation to the Public Offering, the Company has filed a
registration statement on Form S-3 (Registration No. 333-50749) (as amended or
supplemented, the "Registration Statement") and a related prospectus (as amended
or supplemented, the "Prospectus") with the Securities and Exchange Commission;
and
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer and exchange of the Warrants, the issuance of
certificates representing the Warrants, the exercise of the Warrants, and the
rights of the registered holders thereof (the "Registered Holders");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the Registered
Holders and the Warrant Agent, the parties hereto hereby agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall
have the following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean the common stock, par value $.01 per
share, of the Company.
(b) "Corporate Office" shall mean the office of the Warrant Agent (or
its successor), which office is c/o Boston EquiServe, 150 Royall Street, canton,
MA 02021 as of the date hereof.
(c) "Exercise Date" shall mean, as to any Warrant, the date on which
the Warrant Agent shall have received both (a) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof or his attorney duly authorized in writing, with the
appropriate signature guarantees, as described in the Warrant Certificate, and
(b) payment in cash, or by official bank or certified check made
1
<PAGE>
payable to the Company, of an amount in lawful money of the United States of
America equal to the Exercise Price plus transfer taxes, if any.
(d) "Exercise Price" shall mean the purchase price to be paid upon
exercise of the Warrants (each Warrant exercisable to purchase one share of
Common Stock) in accordance with the terms hereof, which price shall be $____
per share (equal to 135% of the offering price of the Units) on or prior to
January 31, 2000, and $____ per share (155% of the offering price of the Units)
on or prior to July 31, 2001, the Warrant Expiration Date (defined below),
subject to adjustment from time to time pursuant to the provisions of Section 9
hereof.
(e) "Registered Holder" shall mean the person in whose name any
certificate representing Warrants shall be registered on the books maintained by
the Warrant Agent pursuant to Section 7 hereof.
(f) "Transfer Agent" shall mean State Street Bank and Trust Company,
as the Company's transfer agent, or its authorized successor, as such.
(g) "Warrant Expiration Date" shall mean 5:00 P.M. (New York City
time) on July 31, 2001, provided that, if in the State of New York, such date
shall be a holiday or a day on which banks are authorized to close, then 5:00
P.M. (New York City time) on the next following day which in the State of New
York is not a holiday or a day on which banks are authorized to close.
SECTION 2. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act on behalf of the Company in accordance with the
instructions hereinafter set forth, and the Warrant Agent hereby accepts such
appointment.
SECTION 3. Warrants and Issuance of Warrant Certificates.
(a) A Warrant shall initially entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase one share of Common
Stock upon the exercise thereof, in accordance with the terms hereof, subject to
modification and adjustment as provided in Section 9 hereof.
(b) From time to time, up to the Warrant Expiration Date, the
Transfer Agent shall execute and deliver stock certificates in required whole
number denominations representing up to an aggregate of 2,000,000 shares of
Common Stock, subject to adjustment as described herein, upon the exercise of
Warrants in accordance with this Agreement.
(c) From time to time, up to the Warrant Expiration Date, the Warrant
Agent shall execute and deliver Warrant Certificates in required whole number
denominations to the persons entitled thereto in connection with any transfer or
exchange permitted under this Agreement; provided that no Warrant Certificates
shall be issued except (i) those initially issued hereunder; (ii) those issued
upon the exercise of fewer than all Warrants represented by any Warrant
Certificate, to evidence any unexercised Warrants held by the exercising
2
<PAGE>
Registered Holder; (iii) those issued upon any transfer or exchange pursuant to
Section 7 hereof; (iv) those issued in replacement of lost, stolen, destroyed or
mutilated Warrant Certificates pursuant to Section 8 hereof; and (v) at the
option of the Company, in such form as may be approved by its Board of
Directors, to reflect (a) any adjustment or change in the number of shares of
Common Stock purchasable upon exercise of the Warrants made pursuant to Section
9 hereof and (b) other modifications approved by Registered Holders in
accordance with Section 16 hereof.
SECTION 4. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby incorporated
herein) and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed,
engraved or typed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange or securities association on which
or through which the Warrants may be listed, or to conform to usage. The Warrant
Certificates shall be dated the date of issuance thereof (whether upon initial
issuance, transfer, exchange or in lieu of mutilated, lost, stolen, or destroyed
Warrant Certificates) and issued in registered form.
Warrants shall be numbered serially with the letter W.
(b) Warrant Certificates shall be executed on behalf of the Company
by its Chairman of the Board, President or any Vice President and by its
Secretary or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon, shall have imprinted thereon a facsimile of the
Company's seal and shall be countersigned by an authorized signatory of the
Warrant Agent. In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such officer of the Company before
the date of issuance of the Warrant Certificates and issue and delivery thereof,
such Warrant Certificates may nevertheless be issued and delivered with the same
force and effect as though the person who signed such Warrant Certificates had
not ceased to be such officer of the Company. After execution by the Company,
Warrant Certificates shall be delivered by the Warrant Agent to the Registered
Holders.
SECTION 5. Exercise. Each Warrant may be exercised by the Registered
Holder thereof at any time after the effective date of the Registration
Statement and until the Warrant Expiration Date, upon the terms and subject to
the conditions set forth herein and in the applicable Warrant Certificate. A
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the Exercise Date and the person entitled to receive the securities
deliverable upon such exercise shall be treated for all purposes as the holder
of such securities upon exercise of the Warrant Certificate as of the close of
business on the Exercise Date. As soon as practicable on or after the Exercise
Date, the Warrant Agent shall deposit the proceeds received from the exercise of
a Warrant, and promptly after clearance of checks received in payment of the
Exercise Price pursuant to such Warrants, cause to be issued and delivered by
the Transfer Agent, to the person or persons entitled to
3
<PAGE>
receive the same, a certificate or certificates for the securities deliverable
upon such exercise (plus a certificate for any remaining unexercised Warrants of
the Registered Holder, if applicable). Notwithstanding the foregoing, in the
case of payment made in the form of a check drawn on an account of such
investment banks and brokerage houses as the Company shall approve, certificates
shall immediately be issued without any delay. Upon the exercise of any Warrant
and clearance of the funds received, the Warrant Agent shall promptly remit the
payment received for the Warrant to the Company or as the Company may direct in
writing.
SECTION 6. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issuance
upon exercise of Warrants, such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants and payment of the Exercise Price in compliance with this Warrant
Agreement and the Warrant Certificate shall, at the time of delivery, be duly
and validly issued, fully paid, nonassessable and free from all taxes, liens and
charges with respect to the issue thereof (other than those which the Company
shall promptly pay or discharge).
(b) The Company will use reasonable efforts to obtain appropriate
approvals or registrations under state "blue sky" securities laws with respect
to the exercise of the Warrants; provided, however, that the Company shall not
be obligated to file any general consent to service of process, consent to
taxation or qualify as a foreign corporation in any jurisdiction. With respect
to any such securities laws, however, Warrants may not be exercised by, or
shares of Common Stock issued to, any Registered Holder in any state in which
such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
Warrants, or the issuance or delivery of any shares upon exercise of the
Warrants; provided, however, that, if shares of Common Stock are to be delivered
in a name other than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no such delivery
shall be made unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized to requisition
the Transfer Agent from time to time for certificates representing shares of
Common Stock required to be issued upon exercise of the Warrants, and the
Company will authorize the Transfer Agent to comply with all such proper
requisitions.
SECTION 7. Exchange and Registration of Transfer.
Subject to the restrictions on transfer contained in the Warrant
Certificates:
4
<PAGE>
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may be
transferred in whole or in part. Warrant Certificates to be exchanged shall be
surrendered to the Warrant Agent at its Corporate Office, and upon satisfaction
of the terms and provisions herein, the Company shall execute, and the Warrant
Agent shall countersign, issue and deliver in exchange therefor, the Warrant
Certificate or Certificates which the Registered Holder making the exchange
shall be entitled to receive.
(b) The Warrant Agent shall keep books at its office, in which it
shall register Warrant Certificates and the transfer thereof in accordance with
its regular practice. Upon due presentment for registration of transfer of any
Warrant Certificate at its office, the Company shall execute and the Warrant
Agent shall issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate number of Warrants.
(c) The Warrant Certificates shall be transferable only on the books
of the Company maintained at the office of the Warrant Agent designated for such
purpose upon delivery thereof duly endorsed by the Holder or by his duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer, which endorsement shall be
guaranteed by a member firm of a national securities exchange, a commercial bank
(not a savings bank or a savings and loan association) or trust company located
in the United States or a member of the National Association of Securities
Dealers, Inc. (hereafter, "Signatures Guaranteed"). In all cases of transfer by
an attorney, the original power of attorney, duly approved, or a copy thereof,
duly certified, shall be deposited and remain with the Warrant Agent. In case of
transfer by executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced, and may be
required to be deposited and remain with the Warrant Agent in its discretion.
(d) A service charge may be imposed by the Warrant Agent upon the
Registered Holder for any exchange or registration of transfer of Warrant
Certificates. The Company may require payment by a Registered Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
(e) Prior to due presentment for registration of transfer thereof,
the Company and the Warrant Agent may deem and treat the Registered Holder of
any Warrant Certificate
as the absolute owner thereof and of each Warrant represented thereby
(notwithstanding any notations of ownership or writing thereon made by anyone
other than a duly authorized officer of the Company or the Warrant Agent) for
all purposes and shall not be affected by any notice to the contrary. The
Warrants, which the Company intends to publicly offer with the Common Stock,
will be separately transferable immediately following the completion of the
Public Offering.
5
<PAGE>
SECTION 8. Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership and loss, theft,
destruction or mutilation of any Warrant Certificate and (in case of loss, theft
or destruction) of indemnity satisfactory to them, and (in the case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall (in the absence of notice to the Company and/or
Warrant Agent that the Warrant Certificate has been acquired by a bona fide
purchaser) countersign and deliver to the Registered Holder in lieu thereof a
new Warrant Certificate of like tenor representing an equal aggregate number of
Warrants. Registered Holders requesting a substitute Warrant Certificate will be
required to comply with such other reasonable regulations, including the
submission of an affidavit, and pay such other reasonable charges, including
payment for a surety bond, as the Warrant Agent may prescribe.
SECTION 9. Adjustment of Exercise Price and Number of Shares of
Common Stock or Warrants.
(a) Subject to the exceptions referred to in Section 9(g) below, in
the event the Company shall, at any time or from time to time after the date
hereof, issue any shares of Common Stock as a stock dividend to the holders of
Common Stock, or subdivide or combine the outstanding shares of Common Stock
into a greater or lesser number of shares (any such sale, issuance, subdivision
or combination being herein called a "Change of Shares"), then, and thereafter
upon each Change of Shares, the Exercise Price in effect immediately prior to
such Change of Shares shall be changed to a price (including any applicable
fraction of a cent) determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such Change of
Shares and the denominator of which shall be the sum of the number of shares of
Common Stock outstanding immediately after such Change of Shares. Such
adjustment shall be made successively whenever such Change of Shares.
Upon each adjustment of the Exercise Price pursuant to this Section
9, the total number of shares of Common Stock purchasable upon the exercise of
each Warrant shall (subject to the provisions contained in Section 9(b) hereof)
be such number of shares (calculated to the nearest tenth) purchasable at the
Exercise Price immediately prior to such adjustment multiplied by a fraction,
the numerator of which shall be the Exercise Price in effect immediately prior
to such adjustment and the denominator of which shall be the Exercise Price in
effect immediately after such adjustment.
(b) The Company may elect upon any adjustment of the Exercise Price
hereunder, to adjust the number of Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the exercise
of each Warrant as hereinabove provided, so that each Warrant outstanding after
such adjustment shall represent the right to purchase one share of Common Stock.
Each Warrant held of record prior to such adjustment of the number of Warrants
shall become that number of Warrants (calculated to the nearest tenth)
determined by multiplying the number one by a fraction, the numerator of which
shall be the Exercise Price in effect immediately prior to such adjustment and
the
6
<PAGE>
denominator of which shall be the Exercise Price in effect immediately after
such adjustment. Upon each adjustment of the number of Warrants pursuant to this
Section 9, the Company shall, as promptly as practicable, cause to be
distributed to each Registered Holder of Warrant Certificates, on the date of
such adjustment, Warrant Certificates evidencing, subject to Section 11 hereof,
the number of additional Warrants to which such Holder shall be entitled as a
result of such adjustment or, at the option of the Company, cause to be
distributed to such Holder in substitution and replacement for the Warrant
Certificates held by him prior to the date of adjustment (and upon surrender
thereof, if required by the Company) new Warrant Certificates evidencing the
number of Warrants to which such Holder shall be entitled after such adjustment.
(c) In case of any reclassification, capital reorganization or other
similar change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock), or in
case of any sale or conveyance to another corporation of the property of the
Company as, or substantially as, an entirety (other than a sale/leaseback,
mortgage or other financing transaction), the Company shall cause effective
provision to be made so that each holder of a Warrant then outstanding shall
have the right thereafter, by exercising such Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock that might have been purchased upon exercise of such Warrant
immediately prior to such reclassification, capital reorganization or other
similar change, consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 9. The
foregoing provisions shall similarly apply to successive reclassifications,
capital reorganizations and other changes of outstanding shares of Common Stock
and to successive consolidations, mergers, sales or conveyances.
Neither the authorization or issuance by the Company of additional
shares of its Common Stock, Class A Common Stock, par value $.01 per share, or
any new class of capital stock, nor the modification of the voting rights
attributable thereto, shall be deemed to constitute a reclassification, capital
reorganization or other similar change of the outstanding shares of the Common
Stock for purposes of this Section 9.
(d) Irrespective of any adjustments or changes in the Exercise Price
or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore issued, unless the Company shall
exercise its option to issue new Warrant Certificates pursuant to Section 3(c)
hereof, need not be amended or replaced, but certificates thereafter issued
shall bear an appropriate legend or other notice of any adjustments.
7
<PAGE>
(e) After each adjustment of the Exercise Price pursuant to this
Section 9, the Company will promptly prepare a certificate signed by the
Chairman or President, the Secretary or an Assistant Secretary, of the Company
setting forth: (i) the Exercise Price as so adjusted, (ii) the number of shares
of Common Stock purchasable upon exercise of each Warrant after such adjustment,
and, if the Company shall have elected to adjust the number of Warrants, the
number of Warrants to which the Registered Holder of each Warrant shall then be
entitled, and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate with the Warrant
Agent and cause a brief summary thereof to be sent by ordinary first class mail
to each Registered Holder at his last address as it shall appear on the registry
books of the Warrant Agent. The affidavit of an officer of the Warrant Agent or
the Secretary or an Assistant Secretary of the Company that such notice has been
mailed shall, in the absence of fraud, be prima facie evidence of the facts
stated therein.
(f) For purposes of Section 9(a) and 9(b) hereof, the following
provisions (A) and (B) shall also be applicable:
(A) The number of shares of Common Stock outstanding at any
given time shall include shares of Common Stock owned or held by or
for the account of the Company and the sale or issuance of such
treasury shares shall not be considered a Change of Shares for
purposes of said sections.
(B) No adjustment of the Exercise Price shall be made unless
such adjustment would require an increase or decrease of at least
$.02 in such price; provided that any adjustments which by reason of
this clause (B) are not required to be made shall be carried forward
and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment(s) so
carried forward, shall require an increase or decrease of at least
$.02 in the Exercise Price then in effect hereunder.
(g) As used in this Section 9, the term "Common Stock" shall mean and
include the Common Stock authorized on the date of the original issue of the
Warrants and shall also include any capital stock of any class of the Company
thereafter authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in dividends and in
the distribution of assets upon the voluntary liquidation, dissolution or
winding up of the Company; provided, however, that the shares issuable upon
exercise of the Warrants shall include only shares of such class designated in
the Company's Certificate of Incorporation as Common Stock on the date of the
original issue of the Warrants or (i), in the case of any reclassification,
change, consolidation, merger, sale or conveyance of the character referred to
in Section 9(c) hereof, the stock, securities or property provided for in such
section or (ii), in the case of any reclassification or change in the
outstanding shares of Common Stock issuable upon exercise of the Warrants as a
result of a subdivision or combination or consisting of a change in par value,
or from par value to no par value, or from no par value to par value, such
shares of Common Stock as so reclassified or changed.
8
<PAGE>
(h) Any determination as to whether an adjustment in the Exercise
Price in effect hereunder is required pursuant to Section 9, or as to the amount
of any such adjustment, if required, shall be binding upon the Registered
Holders of the Warrants and the Company if made in good faith by the Board of
Directors of the Company.
(i) If and whenever the Company shall declare any dividends or
distributions payable otherwise than in cash out of earnings or earned surplus
(determined in accordance with generally accepted accounting principles,
consistently applied) or grant to all holders of Common Stock, as such, rights
or warrants to subscribe for or to purchase, or any options for the purchase of,
Common Stock or securities convertible into or exchangeable for or carrying a
right, warrant or option to purchase Common Stock, the Company shall notify each
of the then Registered Holders of the Warrants of such event prior to its
occurrence to enable such Registered Holders to exercise their Warrants and
participate as holders of Common Stock in such event.
SECTION 10. Fractional Warrants and Fractional Shares.
(a) Regardless of whether or not the number of shares of Common Stock
purchasable upon the exercise of each Warrant is adjusted pursuant to Section 9
hereof, the Company shall nevertheless not be required to issue fractions of
shares upon exercise of the Warrants or otherwise, or to distribute certificates
that evidence fractional shares. With respect to any fraction of a share called
for upon any exercise hereof, the Company shall pay to the Registered Holder an
amount in cash equal to such fraction multiplied by the current market price per
share on the last business day prior to the date of exercise. The current market
price per share shall be determined, with respect to any date, as follows:
(1) if the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange or listed for
trading on the Nasdaq National Market System ("NMS"), the current market
price per share on any date shall be the last reported sale price of the
Common Stock on such exchange or system on the last business day prior to
such date; or
(2) if the Common Stock is listed in the over-the-counter market
(other than on NMS) or admitted to unlisted trading privileges thereon,
the current market price per share for any date shall be the mean of the
last reported bid and asked prices reported by the National Quotation
Bureau, Inc. on the last business day prior to such date; or
(3) if the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current market price per share shall be an amount determined in such
reasonable manner as may be prescribed by the Board of Directors of the
Company.
SECTION 11. Warrant Holders Not Deemed Stockholders. No
Registered Holder shall, as such, be entitled to vote or to receive dividends or
be deemed the holder of Common Stock that may at any time be issuable upon
exercise of such Warrants for
9
<PAGE>
any purpose whatsoever, nor shall anything contained herein be construed to
confer upon the holder of Warrants, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue or
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger or conveyance or otherwise), or to receive notice
of meetings, or to receive dividends or subscription rights, until such
Registered Holder shall have exercised such Warrants and been issued shares of
Common Stock in accordance with the provisions hereof.
SECTION 12. Rights of Action. All rights of action with respect to
this Agreement are vested in the respective Registered Holders of the Warrants,
and any Registered Holder of a Warrant, without consent of the Warrant Agent or
of the holder of any other Warrant, may, on his own behalf and for his own
benefit, enforce against the Company his right to exercise his Warrants for the
purchase of shares of Common Stock in the manner provided in the Warrant
Certificate and this Agreement.
SECTION 13. Agreement of Warrant Holders. Every holder of a Warrant,
by his acceptance thereof, consents and agrees with the Company, the Warrant
Agent and every other holder of a Warrant that:
(a) The Warrants are transferable only on the registry books of the
Warrant Agent by the Registered Holder thereof in person or by his
attorney-in-fact duly authorized in writing and only if the Warrant Certificates
representing such Warrants are surrendered at the office of the Warrant Agent,
duly endorsed or accompanied by a proper instrument of transfer satisfactory to
the Warrant Agent and the Company in their sole discretion, together with
payment of any applicable transfer taxes; and
(b) The Company may deem and treat the person in whose name the
Warrant Certificate is registered as the Registered Holder thereof and as the
absolute, true and lawful owner of the Warrants represented thereby for all
purposes, and the Company shall not be affected by any notice or knowledge to
the contrary, except as otherwise expressly provided in Section 8 hereof.
SECTION 14. Cancellation of Warrant Certificates. If the Company
shall purchase or acquire any Warrant or Warrants, whether upon exercise
thereof, open market purchase, redemption or otherwise, upon presentation
thereof to the Warrant Agent, the Warrant Certificate or Warrant Certificates
evidencing the same shall thereupon be cancelled by the Warrant Agent and
retired. The Warrant Agent shall also cancel Warrant Certificates surrendered to
the Warrant Agent following exercise of any or all of the Warrants represented
thereby or delivered to it for transfer, split-up, combination or exchange.
SECTION 15. Concerning the Warrant Agent. The Warrant Agent acts
hereunder as agent and in a ministerial capacity for the Company, and its duties
shall be determined solely by the provisions hereof. The Warrant Agent shall
not, by issuing and
10
<PAGE>
delivering Warrant Certificates or by any other act hereunder, be deemed to make
any representations as to the validity, value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued upon
exercise of any Warrant is fully paid and nonassessable.
The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and concurrently pay the Company, as provided in Section
5, all moneys received by the Warrant Agent upon the exercise of such Warrants.
The Warrant Agent shall, upon request of the Company from time to time, deliver
to the Company such complete reports of registered ownership of the Warrants and
such complete records of transactions with respect to the Warrants and the
shares of Common Stock as the Company may request. The Warrant Agent shall also
make available to the Company for inspection by its agents or employees, from
time to time as it may request, such original books of accounts and record as
may be maintained by the Warrant Agent in connection with the issuance and
exercise of Warrants hereunder, such inspections to occur at the Warrant Agent's
office as specified in Section 17 hereof, during normal business hours.
The Warrant Agent shall not at any time be under any duty or
responsibility to any Registered Holder to make or cause to be made any
adjustment of the Exercise Price
provided in this Agreement, or to determine whether any fact exists which may
require any such adjustments, or with respect to the nature or extent of any
such adjustment, when made, or with respect to the method employed in making the
same. It shall not (i) be liable for any recital or statement of facts contained
herein or for any action taken, suffered or omitted by it in reliance on any
Warrant Certificate or other document or instrument believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in any Warrant Certificate, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or willful
misconduct.
The Warrant Agent may at any time consult with counsel satisfactory
to it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or
demand of the Company shall be sufficiently evidenced by an instrument signed by
the Chairman of the Board, President, any Vice President, its Secretary, or
Assistant Secretary (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable for any action
taken, suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable compensation,
as stated in the fee agreement, for its services hereunder and to reimburse it
for its reasonable
11
<PAGE>
out-of-pocket expenses hereunder; it further agrees to indemnify the Warrant
Agent and save it harmless against any and all losses, expenses and liabilities,
including judgments, costs and counsel fees, for anything done or omitted by the
Warrant Agent in the execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's negligence
or willful misconduct.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own negligence or willful misconduct), upon 30 days'
prior written notice to the Company and the Company may discharge the Warrant
Agent from its duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or willful misconduct) upon 30
days' prior written notice to the Warrant Agent. At least 15 days prior to the
date such resignation or discharge is to become effective, the Warrant Agent
shall cause a copy of such notice of resignation or discharge to be mailed to
the Registered Holder of each Warrant Certificate at the Company's expense. Upon
such resignation or discharge, or any inability of the Warrant Agent to act as
such hereunder, the Company shall appoint a new warrant agent in writing. If the
Company shall fail to make such appointment within a period of 15 days after it
has been notified in writing of such resignation by the resigning Warrant Agent,
or within a period of 15 days after the Warrant Agent has been notified by the
Company of such discharge, then the Registered Holder of any Warrant Certificate
may apply to any court of competent jurisdiction for the appointment of a new
warrant agent. Any new warrant agent, whether appointed by the Company or by
such a court, shall be a bank or trust company having a capital and surplus, as
shown by its last published report to its stockholders, of not less than
$10,000,000 or a stock transfer company. After acceptance in writing of such
appointment by the new warrant agent is received by the Company, the Warrant
Agent's resignation or discharge shall be deemed to be effective and such new
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment the Company
shall file notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Registered Holder of each
Warrant Certificate.
Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged or any corporation resulting from any consolidation
to which the Warrant Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent shall be a
successor warrant agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent to
be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
12
<PAGE>
The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
SECTION 16. Modification of Agreement.
(a) Subject to the provisions of Section 5(b) hereof, the parties
hereto may by supplemental agreement make any changes or corrections in this
Agreement (i) that they shall deem appropriate to cure any ambiguity or to
correct any defective or inconsistent provision or manifest mistake or error
herein contained or (ii) that they may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Warrant Certificates;
provided, however, that except as otherwise indicated in this Section and this
Agreement, this Agreement shall not otherwise be modified, supplemented or
altered in any respect except with the consent in writing of the Registered
Holders of Warrant Certificates representing not less than a majority of the
Warrants then outstanding.
(b) The Company shall have the right to reduce the Exercise Price on
not less than thirty days' prior written notice to the Registered Holders of the
Warrants.
SECTION 17. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail, postage
prepaid as follows: if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Warrant
Agent; if to the Company, at 1675 West Maple Road, Troy, Michigan 48084,
Attention: Corporate Secretary; if to the Warrant Agent, at its Corporate
Office.
SECTION 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without reference to principles of conflict of laws.
SECTION 19. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and the Warrant Agent (and their respective
successors and assigns) and the holders from time to time of Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy or claim, in equity or at law, or
to impose upon any other person any duty, liability or obligation.
SECTION 20. Termination. This Agreement shall terminate on the
earliest to occur of (i) the Expiration Date of all the Warrants, (ii) the date
upon which all Warrants have been exercised and (iii) the date on which the
Company certifies to the
13
<PAGE>
Warrant Agent that no Warrants are outstanding; provided however, that
notwithstanding any such termination, the Warrant Agent shall be obligated to
deliver funds to the Company in accordance with this Agreement.
SECTION 21. Counterparts. This Agreement may be executed in all
counterparts, all of which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
ENERGY CONVERSION DEVICES, INC.
By: __________________________
Nancy M. Bacon
Senior Vice President
STATE STREET BANK AND
TRUST COMPANY
By: __________________________
Authorized Officer
14
<PAGE>
CERTIFICATE
NUMBER W _________ ____________WARRANTS
NOT EXERCISABLE AFTER 5:00 P.M.,
(NEW YORK CITY TIME), ON JULY 31, 2001,
ENERGY CONVERSION DEVICES, INC.
COMMON STOCK
PURCHASE WARRANTS CUSIP _________
THIS CERTIFIES THAT: ______________________________________ or
registered assigns is the registered holder (the "Registered Holder") of the
number of Warrants set forth above, each of which represents the right to
purchase one fully paid and nonassessable share of common stock, par value $.01
per share (the "Common Stock"), of Energy Conversion Devices, Inc., a Delaware
corporation (the "Company"), at any time until the Expiration Date hereinafter
referred to, by surrendering this Warrant Certificate, with the exercise form
set forth hereon duly executed with signatures guaranteed as provided below, at
the office maintained pursuant to the Warrant Agreement hereinafter referred to
for that purpose by State Street Bank and Trust Company, or its successor as
warrant agent (any such warrant agent being herein called the "Warrant Agent"),
and by paying in full the sum of $_____ per share, on or prior to January 31,
2000 and $____ per share after January 31, 2000 and on or prior to July 31, 2001
(the "Exercise Price"), plus transfer taxes, if any. Payment of the Exercise
Price shall be made in United States currency, by certified check or money order
payable to the order of the Company.
Upon certain events provided for in the Warrant Agreement hereinafter
referred to, the Exercise Price and the number of shares of Common Stock
issuable upon the exercise of each Warrant are required to be adjusted.
No Warrant may be exercised after 5:00 P.M. (New York City time) on
the expiration date (the "Expiration Date") which will be July 31, 2001. After
the Expiration Date, all Warrants evidenced hereby shall thereafter become void,
and the holders thereof shall have no rights thereunder.
Prior to the Expiration Date, subject to any applicable laws, rules
or regulations restricting transferability and to any restriction on
transferability that may appear on this Warrant Certificate in accordance with
the terms of the Warrant Agreement hereinafter referred to, the Registered
Holder shall be entitled to transfer this Warrant Certificate in whole
1
<PAGE>
or in part upon surrender of this Warrant Certificate at the office of the
Warrant Agent maintained for that purpose with the form of assignment set forth
hereon duly executed, with signatures guaranteed by a member firm of a national
securities exchange, a commercial bank, a savings bank or a savings and loan
association or a trust company located in the United States, a member of the
National Association of Securities Dealers, Inc. or other eligible guarantor
institution which is a participant in a signature guarantee program (as such
terms are defined in Reg. 240.17Ad-15 under the Securities Exchange Act of 1934)
applicable to the Warrant Agent. Upon any such transfer, a new Warrant
Certificate or Warrant Certificates representing the same aggregate number of
Warrants will be issued in accordance with the instructions in the form of
assignment.
Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, there shall be issued to the Registered Holder a new
Warrant Certificate in respect of the Warrants not exercised.
Prior to the Expiration Date, the Registered Holder shall be entitled
to exchange this Warrant Certificate, with or without other Warrant
Certificates, for another Warrant
Certificate or Warrant Certificates for the same aggregate number of Warrants,
upon surrender of this Warrant Certificate at the office maintained for such
purpose by the Warrant Agent.
No fractional shares will be issued upon the exercise of Warrants. As
to any final fraction of a share, which the Registered Holder of one or more
Warrant Certificates, the rights under which are exercised in the same
transaction, would otherwise be entitled to purchase upon such exercise, the
Company shall pay the cash value thereof determined as provided in the Warrant
Agreement.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement between the Company and the Warrant Agent (the "Warrant
Agreement") and is subject to the terms and provisions contained in said Warrant
Agreement, to all of which terms and provisions the Registered Holder consents
by acceptance hereof.
This Warrant Certificate shall not entitle the Registered Holder to
any of the rights of a stockholder of the Company, including, without
limitation, the right to vote, to receive dividends and other distributions, or
to attend or receive any notice of meetings of stockholders or any other
proceedings of the Company.
This Warrant Certificate shall not be valid for any purpose until it
shall have been countersigned by the Warrant Agent.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed under its corporate seal.
DATED: COUNTERSIGNED:
STATE STREET AND TRUST COMPANY
WARRANT AGENT
BY: ____________________________
AUTHORIZED OFFICER
ENERGY CONVERSION DEVICES, INC.
BY: _____________________________
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
- -----------------------------
SECRETARY
3
<PAGE>
EXERCISE FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
___________ Warrants represented by this Warrant Certificate, and to purchase
the securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of:
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
==================================
==================================
[please print or type name and address]
and be delivered to:
==================================
==================================
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated above.
Accepted and Agreed To:
X______________________________ Address:
==========================
==========================
Social Security or Tax Payer
Identification Number
--------------------------
Signature Guaranteed
--------------------------
A-1
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, ______________________________________ hereby sells, assigns
and transfers unto:
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
==================================
==================================
[please print or type name and address]
_______________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints __________________
- ---------------------------------------------------------------------
Attorney-in-fact to transfer this Warrant Certificate on the books of the
Company, with full power of substitution in the premises.
Dated: __________________________ Signature(s) Guaranteed:
Signed: _________________________ __________________________
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
THE SIGNATURE TO THE ASSIGNMENT OR THE EXERCISE FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK, TRUST COMPANY OR SAVINGS BANK OR SAVINGS AND
LOAN ASSOCIATION OR A MEMBER FIRM OF THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK
EXCHANGE, PACIFIC STOCK EXCHANGE OR MIDWEST STOCK EXCHANGE.
A-2
EXHIBIT 23.2
[DELOITTE & TOUCHE LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Energy Conversion Devices, Inc. on Form S-3 of our report dated September 26,
1997 included in the Annual Report on Form 10-K/A (Amendment No. 1) of Energy
Conversion Devices, Inc. for the year ended June 30, 1997 and to the reference
to us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
Deloitte & Touche LLP
Detroit, Michigan
May 11, 1998
