SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULES 13d-1(a) AND AMENDMENTS THERETO FILED
PURSUANT TO RULE 13d-2(a)
U.S. Electricar, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
90328P 10 0
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(CUSIP Number)
Gray Cary Ware & Freidenrich LLP,
4365 Executive Drive, Suite 1600,
San Diego, California 92121
Telephone (619) 677-1425
Attention: Robert W. Ayling, Esq.
---------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
June 14, 1999
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
Note. Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(Continued on the following pages)
(Page 1 of 6 Pages)
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1 The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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<TABLE>
<CAPTION>
CUSIP No. 90328P 10 0
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<S> <C> <C>
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Anthony Rawlinson
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a)
(b) X
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3. SEC Use
Only.....................................................................................
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4. Source of Funds* PF
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5. Check Box If Disclosure of Legal Proceedings Is Required Pursuant To Item 2(d) or 2(e)
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6. Citizenship or Place of Organization: United Kingdom
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Number of Shares 7. Sole Voting Power 0
Beneficially by -----
Owned by Each -------------------------------------------------------------------------------------------------
Reporting Person
With: 8. Shared Voting Power 25,000,000*
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9. Sole Dispositive Power 0
-----
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10. Shared Dispositive Power 25,000,000*
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 25,000,000*
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12. Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)
13. Percent of Class Represented by Amount in Row (9) 0%
------
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14. Type of Reporting Person (See Instructions) IN
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<FN>
*Includes (i) 16,666,666 shares of Common Stock issuable upon conversion of
a $500,000 convertible promissory note to be issued July 31, 1999 at a
conversion price of $0.03 per share and (ii) 8,333,334 shares of Common Stock
issuable upon exercise of warrant at an exercise price of $0.06 per share for a
two year exercise period. These shares are subject to a Shareholders' Agreement,
which, among other restrictions, restricts the right by the Reporting Persons to
freely vote and dispose of the shares.
</FN>
</TABLE>
<PAGE>
SCHEDULE 13D
The following statement on Schedule 13D (the "Statement") with respect to the
common stock, no par value per share (the "Common Stock"), of U.S. Electricar,
Inc. (the "Issuer") is being filed on behalf of Anthony Rawlinson.
ITEM 1. Security and Issuer
This Statement relates to the Common Stock of the Issuer, U.S.
Electricar, Inc. The Issuer's principal executive offices are located
at 19850 Magellan Drive, Torrance, CA 90502.
ITEM 2. Identity and Background
(a) This Statement is being filed on behalf of Anthony Rawlinson, an
individual.
(b) The business address of Anthony Rawlinson is:
Managing Director
Global Value Investment Portfolio Management Pte. Ltd.
5 Shenton Way, # 13-01 UIC Building
Singapore 068808
Anthony Rawlinson is the managing director of Global Value
Investment Portfolio Management Pte. Ltd. Its address is 5
Shenton Way, # 13-01 UIC Building, Singapore 068808
(d)-(e) Anthony Rawlinson has not, during the last five years, been
convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors), nor has he during such
period, been a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result
of such proceeding been subject to any judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(f) United Kingdom.
ITEM 3. Source and Amount of Funds or Other Consideration.
On June 14, 1999, Jagen Pty, Ltd., Issuer and Anthony N.
Rawlinson entered into a Securities Purchase Agreement
pursuant to which Anthony Rawlinson committed to loan to the
Issuer on July 31, 1999 the principal amount of $500,000 in
exchange for a secured convertible promissory note to acquire
16,666,666
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shares of Common Stock and a warrant to purchase 8,333,334
shares of Common Stock. The loan amount will be made with Mr.
Rawlinson's funds. A copy of the Securities Purchase Agreement
is attached hereto as Exhibit 1 and incorporated herein by
reference.
ITEM 4. Purpose of the Transaction.
Mr. Rawlinson agreed to acquire the convertible secured
promissory note and the warrant identified in this Statement
for investment purposes. Mr. Rawlinson has no proposal or plan
which would result in any of the transactions or events
enumerated in paragraphs (a) through (j) of this Item 4 other
than the potential conversion of the convertible secured
promissory note and the exercise of the warrant, the
designation of a nominee to the board of the directors of the
Issuer, and an agreement by Jagen Pty, Ltd. to vote its shares
in favor of the designees of a majority of the board of
directors of the Issuer. Notwithstanding the foregoing, Mr.
Rawlinson reserves the right at any time or from time to time
to acquire additional shares of the capital stock of the
Issuer or to dispose of any shares of capital stock of the
Issuer on terms deemed appropriate by him, subject to the
Shareholders' Agreement or other agreement with Issuer.
ITEM 5. Interest in Securities of the Issuer.
(a) As of the date of this Statement, Anthony Rawlinson has
contractually agreed to loan the Issuer $500,000 on July 31,
1999. In exchange for the loan the Issuer will issue a secured
convertible promissory note, which will convert into
16,666,666 shares of Common Stock, and a warrant to purchase
8,333,334 shares of Common Stock. The aggregate 25,000,000
shares would represent 10.08% of 247,789,681 shares of Common
Stock, the number of shares that would be outstanding assuming
that the 25,000,000 shares of Common Stock that would be
outstanding upon the conversion of the convertible secured
note and the full exercise of the warrant issued to Mr.
Rawlinson was added to the 222,789,681 shares of Common Stock
outstanding as of June 15, 1999, as reported in the Issuer's
quarterly report on Form 10-Q for the fiscal quarter ended
March 31, 1999 as filed with the Securities and Exchange
Commission on June 18, 1999.
At the same time that Jagen Pty, Ltd. acquired its interest in
the Issuer, Jagen Pty, Ltd. beneficially owns an aggregate of
125,000,000 shares of the Issuer's Common Stock. This number
would represent 44.99% of 277,789,681 shares of Common Stock,
the number of shares that would be outstanding assuming that
the 55,000,000 shares of Common Stock that would be
outstanding upon the conversion of the convertible secured
note and the full exercise of the warrant issued to Jagen Pty,
Ltd. was added to the 222,789,681 shares of Common Stock
outstanding as of June 15, 1999, as reported in the Issuer's
quarterly report on Form 10-Q for the fiscal quarter ended
March 31, 1999 as filed with the Securities and Exchange
Commission on June 18, 1999.
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(b) Mr. Rawlinson has agreed to vote the 25,000,000 shares of the
Issuer's Common Stock identified in this Statement in favor of
one director to be designated by him and Jagen Pty. Ltd., and
such other directors as are designated by a majority of the
board of directors of the Issuer, as it is constituted from
time to time. Mr. Rawlinson has agreed only to dispose of the
shares in an Exempt Transfer (as defined in the Shareholders'
Agreement) or to the Issuer.
(c) None.
(d) No person other than Anthony Rawlinson has the right to
receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, any of the shares of the
Issuer's Common Stock owned or sold by Mr. Rawlinson
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Mr. Rawlinson is a party to the Securities Purchase Agreement
and a Shareholders' Agreement by and among Jagen Pty, Ltd.,
Carl Perry (the Issuer's Chief Executive Officer and the
beneficial holder of approximately 22.19% of the Issuer's
Common Stock), Anthony Rawlinson and the Issuer dated as of
June 1, 1999, a copy of which is attached hereto as Exhibit 2
and incorporated herein by reference. The Shareholders'
Agreement provides that except for the Securities Purchase
Agreement, the Shareholders' Agreement, the documents
described in such agreements, and an agreement to pay a
finders' fee to The Global Value Investment Portfolio
Management Pty, Ltd., Jagen Pty, Ltd. is not party to any
contract, arrangement, understanding or relationship with any
other person, including, without limitation, the Issuer, with
respect to the securities of the Issuer.
ITEM 7. Material to Be Filed as Exhibits.
1. Securities Purchase Agreement.
2. Shareholders' Agreement.
3. Agreement by U.S. Electricar, Inc. to pay a Finders'
Fee to The Global Value Investment Portfolio
Management Pty, Ltd.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 22, 1999
Anthony Rawlinson
/s/ Anthony Rawlinson
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[Signature]
Anthony Rawlinson
[Print Name and Title]
<PAGE>
EXHIBIT 1.
THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR
UNDER ANY STATE SECURITIES LAWS ("BLUE SKY LAWS"), AND MAY NOT BE
OFFERED OR SOLD WITHOUT REGISTRATION UNDER THE SECURITIES ACT, AND AS
REQUIRED BY BLUE SKY LAWS IN EFFECT AS TO SUCH TRANSFER, UNLESS AN
EXEMPTION FROM SUCH REGISTRATION UNDER STATE AND FEDERAL LAW IS
AVAILABLE.
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is dated for reference purposes only
as of June 1, 1999, by and between U.S. Electricar, Inc., a California
corporation (the "Corporation"), Jagen Pty Ltd., an Australian company and
Anthony N. Rawlinson, an individual ("Rawlinson" and together with Jagen Pty
Ltd., the "Investors").
R E C I T A L S
A. The Investors desires to purchase from the Corporation, and the
Corporation desires to sell to each Investor, Common Stock on the terms and
conditions hereinafter set forth.
B. The Investors are willing to loan to the Corporation, and the
Corporation wishes to borrow from the Investors, certain sums to be converted
into rights to acquire Common Stock on the terms and conditions hereinafter set
forth.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties hereby
agree as follows:
1. Issuance of Securities, Payment and Delivery.
a. Sale of Securities. Subject to the terms and conditions of this
Agreement, Jagen Pty Ltd. agrees to purchase on June 1, 1999, or on such later
date as is agreed upon among the Investors and the Corporation (the "Closing")
and the Company agrees to sell and issue to Jagen Pty Ltd., Seventy Million
(70,000,000) shares of the Corporation's Common Stock (the "Shares") at Three
Cents per share for an aggregate purchase price of Two Million One Hundred
Thousand Dollars ($2,100,000).
b. Extension of Loans. Subject to the terms and conditions of this
Agreement, the Investors agree to loan to the Corporation:
(i) in the case of Jagen Pty Ltd., Four Hundred Thousand
Dollars ($400,000) on the Closing, in exchange for a secured convertible
promissory note to acquire 13,333,334 Shares and a Warrant to purchase
41,666,666 Shares; and
(ii) in the case of Rawlinson, Five Hundred Thousand Dollars
($500,000) on July 31, 1999, or on such later date as is agreed upon among the
Investors and the
<PAGE>
Corporation (the "Subsequent Closing"), in exchange for a secured convertible
promissory note to acquire 16,666,666 Shares and a Warrant to purchase 8,333,334
Shares.
The convertible promissory notes shall be issued in the form attached hereto as
Exhibit A and incorporated herein by reference (each, a "Note"). The warrants to
purchase shares of Common Stock into which a portion of the Notes shall convert
shall be issued in the form attached hereto as Exhibit B and incorporated herein
by reference (each, a "Warrant" and collectively with the Shares and the Notes,
the "Securities").
c. Payment and Delivery. Each Investor shall purchase Securities or
make loans, as applicable, by making payment to U.S. Electricar, Inc. in cash,
by cashiers check or wire transfer of funds, in U.S. Dollars.
2. Deliveries at Closing. At the Closing:
a. The Corporation and the Investors will deliver an executed
counterpart of:
(i) this Securities Purchase Agreement;
(ii) the Loan and Security Agreement of even date herewith;
and
(iii) the Shareholders' Agreement of even date herewith, also
executed by Carl D. Perry;
b. Jagen Pty Ltd. will provide the Corporation with a payment in the
aggregate amount of Two Million Five Hundred Thousand Dollars ($2,500,000);
c. The Corporation will deliver a share certificate evidencing
70,000,000 Shares in the name of Jagen Pty Ltd.;
d. The Corporation will deliver a Note to Jagen Pty Ltd., which will
provide that the Four Hundred Thousand Dollars ($400,000) principal amount of
debt evidenced thereby may be converted into 13,333,334 Shares and a Warrant to
purchase 41,666,666 Shares;
e. The Corporation will deliver one or more certificates of good
standing to the Investors evidencing that the Corporation is in good standing in
each jurisdiction in which it does business, owns property or has employees;
f. The Corporation will deliver an officer's certificate providing that
the representations and warranties contained in this Agreement and the Notes are
true and correct as of Closing and including a copy of the Amended and Restated
Articles of Incorporation of the Corporation certified by an officer of the
Corporation (the "Articles");
g. Jagen Pty Ltd. will deliver an officer's certificate providing that
the representations and warranties contained in this Agreement are true and
correct as of Closing;
h. Rawlinson will deliver a certificate providing that the
representations and warranties contained in this Agreement are true and correct
as of the Closing; and
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i. The Corporation will deliver a copy of its most recently prepared
unaudited financial statements (the "Financial Statements").
3. Deliveries at the Subsequent Closing. At the Subsequent Closing:
a. Rawlinson will provide the Corporation with a payment in the
aggregate amount of Five Hundred Thousand Dollars ($500,000);
b. The Corporation will deliver a Note to Rawlinson, which will provide
that the Five Hundred Thousand Dollars ($500,000) principal amount of debt
evidenced thereby may be converted into 16,666,666 Shares and a Warrant to
purchase 8,333,334 Shares;
c. The Corporation will deliver an officer's certificate providing that
the representations and warranties contained in this Agreement and the Notes are
true and correct as of the Subsequent Closing; and
d. Rawlinson will deliver a certificate providing that the
representations and warranties contained in this Agreement are true and correct
as of the Subsequent Closing.
4. Corporation's Representations and Warranties. Except as set forth on
Disclosure Schedule 4 attached hereto and incorporated herein by reference, the
Corporation hereby represents and warrants to each Investor that as of the
Closing and the Subsequent Closing:
a. Corporate Organization and Standing. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. The Corporation has the requisite corporate power to
carry on its business as presently conducted, and as proposed or contemplated to
be conducted in the future, and to enter into and carry out the provisions of
this Agreement, the Notes and the transactions contemplated under this Agreement
and the Notes.
b. Authorization. All corporate action on the part of the Corporation,
its directors and shareholders necessary for the authorization, execution,
delivery and performance of this Agreement by the Corporation and the
performance of all of the Corporation's obligations hereunder has been taken.
This Agreement, when executed and delivered by the Corporation, shall constitute
a valid and binding obligation of the Corporation, enforceable in accordance
with its terms, except as may be limited by principles of public policy, and
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The Securities, when issued in
compliance with the provisions of this Agreement, will be validly issued, fully
paid and nonassessable.
c. No Breach. The issue and sale of the Securities by the Corporation
does not and will not conflict with and does not and will not result in a breach
of any of the terms of the Corporation's incorporating documents or any
agreement or instrument to which the Corporation is a party. The consummation of
the transactions or performance of the obligations
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contemplated by this Agreement will not result in a breach of any term of, or
constitute a default under, any statute, indenture, mortgage, or other agreement
or instrument to which the Corporation or any of its subsidiaries is or are a
party or by which any of them is or are bound.
d. Pending or Threatened Claims. Neither the Corporation nor any of its
subsidiaries is a party to any action, suit or proceeding which could materially
affect its business or financial condition, and no such actions, suits or
proceedings are contemplated or have been threatened.
e. No Preemptive Rights. There are no preemptive rights of any
shareholder of the Corporation with respect to the Securities.
f. Reservation of Shares. At all times during which the Warrant may be
exercised, the Corporation shall have authorized and reserved, for the exclusive
purpose of issuance and delivery upon exercise of the Warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the Warrant
in accordance with its terms.
5. Post-Closing Covenants of the Corporation. The Corporation hereby
covenants that:
a. The Corporation shall use reasonable business efforts to file the
proxy statement for its 1999 annual shareholders' meeting on or before June 15,
1999, which proxy will nominate the following individuals to the board of
directors: Carl D. Perry, Malcolm R. Currie, Ph.D., Edwin O. Riddell, Donald H.
Dreyer, John Micek and Anthony N. Rawlinson.
b. The Corporation shall use reasonable business efforts to hold its
annual shareholders' meeting on or before July 31, 1999, at which meeting it
shall seek to (A) increase the number of authorized shares of the Corporation to
provide for sufficient shares of Common Stock to issue the Common Stock and
Warrants to purchase Common Stock described herein and (B) increase the size of
the option pool available for grant to employees and contractors of the
Corporation to twenty percent (20%) of the outstanding capital of the
Corporation.
c. The Corporation shall file amended and restated articles of
incorporation (or an amendment to its amended and restated articles of
incorporation at its discretion) increasing the number of shares of Common Stock
of the Corporation to such amount as is necessary to allow the conversion of the
Notes into Securities as soon as is practicable after shareholder approval for
such an increase.
d. The Corporation shall use the proceeds of the sale of Securities and
loans described herein (i) to pay the aggregate principal amount of a secured
promissory note payable to the Credit Managers Association of California due
April 1999; (ii) to settle outstanding debt aggregating approximately Seven
Hundred Eighty Thousand Dollars ($780,000) for up to Fifteen Cents on each
dollar of debt; (iii) to pay expenses of the Corporation incurred in the
ordinary course of business; (iv) for general working capital; and (v) in such
other manner as is determined by the Board of Directors of the Corporation in
consultation with Rawlinson.
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6. Investor Representations and Warranties. Each Investor represents and
warrants to the Corporation that:
a. Account. Such Investor is acquiring the Securities for investment
for its own account, and not with a view to, or for resale in connection with,
any distribution thereof, and it has no present intention of selling or
distributing any of the Securities. The Investor understands that the Securities
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act") by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment as expressed herein.
b. Access to Data. The Investor has had an opportunity to discuss the
Corporation's business, management and financial affairs with its management and
to obtain any additional information which the Investor has deemed necessary or
appropriate for deciding whether or not to purchase the Securities, including
the Articles, and has had an opportunity to receive, review and understand the
disclosures and information regarding the Corporation's financial statements,
capitalization and other business information as set forth in Corporation's
filings with the Securities and Exchange Commission which are all incorporated
herein by reference, together with all exhibits referenced therein. Investor
understands that the Financial Statements are confidential and may not be
disclosed to any third party or used by the Investor for purposes of trading in
the Corporation's publicly traded stock until such information is publicly
released by the Corporation. The Investor acknowledges that no other
representations or warranties, oral or written, have been made by the
Corporation or any agent thereof except as set forth in this Agreement.
c. No Fairness Determination. The Investor is aware that no federal,
state or other agency has made any finding or determination as to the fairness
of the investment, nor made any recommendation or endorsement of the Securities.
d. Knowledge And Experience. The Investor has such knowledge and
experience in financial and business matters, including investments in other
start-up companies, that it is capable of evaluating the merits and risks of the
investment in the Securities, and it is able to bear the economic risk of such
investment. Further, the individual executing this Agreement has such knowledge
and experience in financial and business matters that he is capable of utilizing
the information made available to him in connection with the offering of the
Securities, of evaluating the merits and risks of an investment in the
Securities and of making an informed investment decision with respect to the
Securities, including assessment of the Risk Factors set forth in the
Corporation's EDGAR filings with the SEC and incorporated herein by reference.
e. Limited Public Market. The Investor is aware that there is currently
a very limited "over-the-counter" public market for the Corporation's registered
securities and that the Corporation became a "reporting issuer" under the
Securities Exchange Act of 1934, as amended, on January 27, 1995. There is no
guarantee that a more established public market will develop at any time in the
future. The Investor understands that the Securities are all unregistered and
may not presently be sold in even this limited public market. The Investor
understands that the Securities cannot be readily sold or liquidated in case of
an emergency or other financial need.
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The Investor has sufficient liquid assets available so that the purchase and
holding of the Securities will not cause it undue financial difficulties.
f. Commissions/Finders Fees. The Investor acknowledges that
commissions/finders fees may be payable by the Corporation for the sale of the
Securities as set forth on Disclosure Schedule 6.
g. Authority. If Investor is a corporation, partnership, trust or
estate: (i) the individual executing and delivering this Agreement on behalf of
the Investor has been duly authorized and is duly qualified to execute and
deliver this Agreement on behalf of Investor in connection with the purchase of
the Securities and (ii) the signature of such individual is binding upon
Investor.
h. Investment Experience. The Investor is an "accredited investor" as
that term is defined in Regulation D promulgated by the Securities and Exchange
Commission. The term "Accredited Investor" under Regulation D refers to:
(i) A person or entity who is a director or executive officer
of the Corporation;
(ii) Any bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to Section 15 of
the Exchange Act; insurance Corporation as defined in Section 2(13) of the
Securities Act; investment Corporation registered under the Investment
Corporation Act of 1940; or a business development Corporation as defined in
Section 2(a)(48) of that Act; Small Business Investment Corporation licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance Corporation, or
registered investment adviser, or if the employee benefit plan has total assets
in excess of $5,000,000 or, if a self-directed plan, with investment decision
made solely by persons that are accredited investors;
(iii) Any private business development Corporation as defined
in Section 202(a)(22) of the Investment Advisers Act of 1940;
(iv) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the Securities
offered, with total assets in excess of $5,000,000;
(v) Any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of his purchase exceeds
$1,000,000;
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(vi) Any natural person who had an individual income in excess
of $200,000 during each of the previous two years or joint income with that
person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year;
(vii) Any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Securities offered, whose
purchase is directed by a person who has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the prospective investment; or
(viii) Any entity in which all of the equity owners are
accredited investors.
(ix) As used in this Section 4(g), the term "net worth" means
the excess of total assets over total liabilities. For the purpose of
determining a person's net worth, the principal residence owned by an individual
should be valued at fair market value, including the cost of improvements, net
of current encumbrances. As used in this Section 4(f), "income" means actual
economic income, which may differ from adjusted gross income for income tax
purposes. Accordingly, the undersigned should consider whether it should add any
or all of the following items to its adjusted gross income for income tax
purposes in order to reflect more accurately its actual economic income: Any
amounts attributable to tax-exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for depletion,
contributions to an IRA or Keogh retirement plan, and alimony payments.
7. Restrictions On Transfer/Voting Agreement. The Investor acknowledges
and agrees that the Securities shall be subject to certain restrictions on
transfer for a period of two years and subject to certain voting obligations as
more fully set forth in that Shareholders' Agreement dated on the Closing and
attached hereto as Exhibit C and incorporated herein by reference.
8. Restrictive Legends. Each certificate evidencing the Securities which
the Investor may acquire hereunder or under the Note and any other securities
issued upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event (unless no longer required in the opinion of the
counsel for the Corporation) shall be imprinted with one or more legends
substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR
AN EXEMPTION FROM REGISTRATION IS AVAILABLE. OTHER THAN IN CONNECTION
WITH TRANSFERS TO AFFILIATES (AS DEFINED IN THE SHAREHOLDERS' AGREEMENT
DATED AS OF JUNE 1, 1999 AMONG PARTIES INCLUDING THE ORIGINAL HOLDER
HEREOF AND THE COMPANY (THE "SHAREHOLDERS' AGREEMENT")), THE HOLDER OF
THESE SHARES MAY BE REQUIRED TO DELIVER TO THE COMPANY, IF THE COMPANY
SO REQUESTS, AN OPINION OF COUNSEL
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(REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) TO THE
EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (OR
QUALIFICATION UNDER STATE SECURITIES LAWS) IS AVAILABLE WITH RESPECT TO
ANY TRANSFER OF THESE SHARES THAT HAS NOT BEEN SO REGISTERED (OR
QUALIFIED).
THE COMPANY IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK. A COPY
OF THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF EACH CLASS AND
SERIES WILL BE PROVIDED TO EACH STOCKHOLDER WITHOUT CHARGE, UPON
WRITTEN REQUEST.
THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND ON VOTING RIGHTS AND
OBLIGATIONS, TO WHICH ANY TRANSFEREE AGREES BY HIS ACCEPTANCE HEREOF,
AS SET FORTH IN THE SHAREHOLDERS' AGREEMENT, DATED AS OF JUNE 1, 1999.
NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE BOOKS OF THE COMPANY
UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH
AGREEMENT AND BY AN AGREEMENT OF THE TRANSFEREE TO BE BOUND BY THE
RESTRICTIONS SET FORTH IN SUCH AGREEMENT. THE COMPANY WILL MAIL A COPY
OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE UPON THE
COMPANY'S RECEIPT OF A WRITTEN REQUEST THEREFOR.
The Corporation shall be entitled to enter stop transfer notices on its transfer
books with respect to the Securities.
9. Miscellaneous.
a. Notices. Any notice, request or other communication required or
permitted hereunder will be in writing and shall be deemed to have been duly
given if personally delivered or if telecopied or mailed by registered or
certified mail, postage prepaid, at the respective addresses of the parties as
set forth below. Any party hereto may by notice so given change its address for
future notice hereunder. Notice will be deemed to have been given when
personally delivered or when deposited in the mail or telecopied in the manner
set forth above and will be deemed to have been received when delivered.
(a) If to Jagen Pty Ltd.
9 Oxford Street
South Yarra 3141
Melbourne, Victoria
Australia
Telecopier 011 - 613 - 9826 - 5499
with a copy to:
8
<PAGE>
Gray Cary Ware & Freidenrich LLP
4365 Executive Drive, Suite 1600
San Diego, California 92121
Telecopier (619) 677-1477
Attention: Robert W. Ayling, Esq.
(b) if to Anthony N. Rawlinson
5 Shenton Way, #1301
UIC Building
Singapore 068808, Singapore
Telecopier (65) 220-5338
with a copy to:
Gray Cary Ware & Freidenrich LLP
4365 Executive Drive, Suite 1600
San Diego, California 92121
Telecopier (619) 677-1477
Attention: Robert W. Ayling, Esq.
(c) if to the Company
U.S. Electricar, Inc.
19850 South Magellan Drive
Torrance, California 90502
Attention: President
with a copy to:
Bay Venture Counsel, LLP
1999 Harrison Street, Suite 1300
Oakland, CA 94612
Attention: Donald C. Reinke, Esq.
Telecopier (510) 834-7440
b. Survival. The representations, warranties, covenants and agreements
made herein shall survive the closing of the transactions contemplated hereby.
c. Successors and Assigns. Except as otherwise expressly provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties.
d. Applicable Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and
9
<PAGE>
interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.
e. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. This Agreement may be executed by facsimile.
f. Title and Subtitles. The titles of the Sections and subsections of
this Agreement are for the convenience of reference only and are not to be
considered in construing this Agreement.
g. Attorney's Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which it may be
entitled.
h. Waiver. The provisions of this Agreement may be waived, altered,
amended or repealed, in whole or in part, only upon the written consent of the
Corporation and the Investor. No waiver by any party hereto of any breach of
this Agreement by any other party shall operate or be construed as a waiver of
any other or subsequent breach. No waiver by any party hereto of any breach of
this Agreement by any other party hereto shall be effective unless it is in
writing and signed by the party claimed to have waived such breach.
i. Remedies Cumulative; Specific Performance. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
the Corporation to this Agreement of any covenant, obligation or other provision
set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (A) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (B) an injunction restraining such breach or threatened
breach.
j. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith to achieve the closest comparable terms as is possible.
In the event that the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (a) such provision shall be excluded from
this Agreement, (b) the balance of the Agreement shall be interpreted as if such
provision were so excluded and (c) the balance of the Agreement shall be
enforceable in accordance with its terms.
k. Venue. Any action, arbitration, or proceeding arising directly or
indirectly from this Agreement or any other instrument or security referenced
herein shall be litigated or arbitrated, as appropriate, in the State of
California.
l. Entire Agreement. This Agreement and the Exhibits, Schedules and
other documents referred to herein constitute the entire agreement between the
parties hereto pertaining
10
<PAGE>
to the subject matter hereof, and any and all other written or oral agreements
regarding the subject matter hereof existing between the parties hereto are
expressly canceled.
11
<PAGE>
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
INVESTOR
JAGEN PTY, LTD. U.S. ELECTRICAR, INC.
By: /s/ Boris Liberman By: /s/ Carl Perry
------------------ --------------
(Signature) (Signature)
INVESTOR
/s/ Anthony N. Rawlinson
- ------------------------
Anthony N. Rawlinson
<PAGE>
EXHIBIT 2.
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (the "Agreement") is dated as of
June 1, 1999, by and among Jagen Pty, Ltd. ("Jagen") and Anthony Rawlinson
("Rawlinson" and together with Jagen, the "Purchasers"), Carl D. Perry ("Perry")
and U.S. Electricar, Inc., a California corporation (the "Company"). Capitalized
terms not otherwise defined herein shall have the meanings specified in the
Securities Purchase Agreement, dated of even date herewith by and between the
Company and the Purchasers (the "Purchase Agreement").
R E C I T A L S:
A. This Agreement shall become effective on the date of, and
simultaneously with, the Closing (the "Effective Date");
B. On the Effective Date Jagen acquired 70,000,000 shares of
the Company's Common Stock (the "Shares") and a Convertible Note the principal
amount of which is convertible into 13,333,334 Shares and a Warrant to purchase
41,666,666 Shares (the "Warrant Shares") and Rawlinson agreed to extend a loan
for $500,000 upon the Subsequent Closing, to be evidenced by a Convertible Note
the principal amount of which is convertible into 16,666,666 Shares and a
Warrant to purchase 8,333,334 Warrant Shares;
C. The parties hereto desire to restrict the sale, assignment,
transfer, encumbrance or other disposition of the Shares (as defined below), to
provide for certain rights and obligations in respect to the Shares and by the
Company and Perry, all as hereinafter provided;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms have the
following meanings:
"Agreement" shall have the meaning set forth in the preamble.
"Affiliate" shall mean, with respect to any specified Person,
any other Person directly or indirectly controlling, controlled by or under
direct or indirect common control with such specified Person. For the purposes
of this definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise.
Without limiting the foregoing, (i) all directors and officers of a Person that
is a corporation, and all managing members of a Person that is a limited
liability company, shall be deemed Affiliates of such Person for all purposes
hereunder, and (ii) in the case of an individual, Affiliate shall include (a)
members of such specified Person's immediate family (as defined in Instruction 2
of Item 404(a) of Regulation S-K under the Securities Act) and (b)
<PAGE>
trusts, the trustee and all beneficiaries of which are such specified Person or
members of such Person's immediate family as determined in accordance with the
foregoing clause (a).
"Appropriately Adjusted" shall mean appropriately adjusted for
stock splits, stock dividends, combinations, recapitalizations, and the like.
"Approved Plan" shall mean a stock option or other equity
participation plan for the Company's employees which has been approved by a
majority of the Board of Directors and the shareholders of the Company. The
Company's existing Stock Option Plans as identified in the Company's filings
with the Securities and Exchange Commission ("SEC Filings") shall constitute an
Approved Plan hereunder.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Business Day" shall mean a day other than a Saturday or
Sunday or any federal holiday.
"Charter Documents" shall mean the Amended and Restated
Articles of Incorporation and By-Laws of the Company, each as filed as Exhibits
to SEC Filings available on EDGAR or otherwise provided to the Purchasers.
"Company" shall have the meaning set forth in the preamble.
"Convertible Notes" shall mean the Secured Convertible
Promissory Notes issued by the Company to Jagen and Rawlinson.
"Effective Date" shall have the meaning set forth in the
recitals.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder.
"Exempt Transfer" shall mean(i) Transfers by a Purchaser
directly or indirectly to, or for the benefit of, himself, his spouse, parents,
siblings, children, grandchildren, other close relatives, or any of the
foregoing of an Affiliate, to another Purchaser or to a legally organized
charitable organization; (ii) Transfers by a Purchaser to his heirs, executors,
personal representatives or other assigns as a result of his death, if
applicable; (iii) Transfers after the second anniversary of the Effective Date
so long as Purchaser is not in default under the provisions of this Agreement;
(iv) Transfers after the Company has become listed on a Permitted Exchange (as
defined below); (v) Transfers approved by a disinterested majority of the Board
of Directors, including but not limited to Transfers in connection with a sale
or merger of the Company approved by a disinterested majority of the Board of
Directors; or (vi) with respect to Perry, any Transfer of Shares other than the
Shares acquired from the Itochu Corporation (the "Itochu Shares"), provided,
however that the Itochu Shares may be transferred under paragraph (v) above.
<PAGE>
"Itochu Debt" shall mean all debt covered by and perfected
pursuant to those two certain UCC-Financing Statements identified by file
numbers 99082C0625 and 99082C0635 as filed with the California Secretary of
State on March 22, 1999.
"Permitted Exchange" shall mean the New York Stock Exchange,
the American Stock, the Nasdaq National Market or the Nasdaq Small Cap Market.
"Person" shall mean an individual or a corporation,
partnership, limited liability company, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Preemptive Rights Notice" shall have the meaning set forth in
Article III(b).
"Pro Rata Share" shall mean the percentage X/Y where "X"
equals the number of Shares that are owned immediately prior to the proposed
Transfer by Purchaser and "Y" equals the number of issued and outstanding Shares
in the Company on a fully diluted basis immediately prior to the triggering
event.
"Public Offering" shall mean a public offering of common stock
by the Company (other than (i) pursuant to a registration statement on Form S-8
or otherwise relating to equity securities issuable exclusively under an
Approved Plan, or (ii) pursuant to a merger, consolidation or reorganization).
"Purchase Agreement" shall have the meaning set forth in the
recitals.
"Purchasers" shall have the meaning set forth in the preamble.
"Registrable Securities" shall mean (i) the Shares purchased
under the Purchase Agreement or loan balances converted into Shares pursuant to
promissory notes contemplated thereby or (ii) any other shares of Common Stock
of the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of (including
but not limited to shares of Common Stock issued upon a stock split), such
Shares; provided, however, that the foregoing definition shall exclude in all
cases Registrable Securities held by a person other than a Transferee.
Notwithstanding the foregoing, Shares shall only be treated as Registrable
Securities if and so long as they have not been (A) sold to or though a broker
or dealer or underwriter in a public distribution or a public securities
transaction, or (B) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Section 4(1)
thereof so that all transfer restrictions, and restrictive legends with respect
thereto, if any, are removed upon the consummation of such sale.
"SEC" shall mean the Securities and Exchange Commission.
"Qualified Public Offering" shall mean a Public Offering in
which (i) the gross proceeds to the Company from the shares of Common Stock sold
are at least $10 million, (ii) the minimum public offering price is at least
Twenty Cents( $0.20) per share (Appropriately
<PAGE>
Adjusted), and (iii) immediately after such offering the Common Stock of the
Company is listed for trading on a Permitted Exchange.
"Qualified Reorganization" shall mean a merger or
consolidation with or into another corporation or a sale of the shares of this
Company's Common Stock or a sale of all or substantially all of this Company's
properties and assets in which the shareholders of this Company receive cash or
marketable securities equal to a per share valuation of at least Twenty cents
($0.20) per share (Appropriately Adjusted).
"Remaining Shares" shall have the meaning set forth in Section
2.5.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
"Shares" shall mean, collectively, (a) all of the shares of
any class of capital stock of the Company including, without limitation, the
Common Stock, the Preferred Stock and any shares which may be issued by reason
of stock splits, reverse stock splits, stock dividends or other
recapitalizations of the Company, (b) all shares issuable under options,
warrants, convertible promissory notes and other rights of any kind to purchase
any class of such capital stock, and (c) all shares issuable under securities
convertible into or exchangeable for any of the securities described in clause
(a) or clause (b). Shares with respect to a Purchaser shall also include the
Common Shares and Warrant Shares and any Shares now owned or hereafter acquired
by a Purchaser, including any interest of a spouse or Affiliate of a Purchaser
in any of the Shares, whether that interest is asserted pursuant to marital
property laws, contract or otherwise. Notwithstanding the foregoing, Shares
shall not include the Warrant Shares for purposes of determining a Purchaser's
Pro Rata Share under the preemptive rights established in Article III, and shall
not include the Itochu Shares after they are Transferred in an Exempt Transfer.
"Term" shall mean a period of not less than five years from
the date of this Agreement, which period shall terminate when the Investors or
Transferees own Shares representing less than five percent (5%) of the
outstanding Shares of the Corporation or when seventy-five percent (75%) of the
Shares of the Investors or Transferees have been registered pursuant to Article
V.
"Transfer" shall mean (i) when used as a noun: any direct or
indirect transfer, sale, assignment, pledge, hypothecation, encumbrance, gift,
bequest, devise, descent or other disposition and (ii) when used as a verb: to
directly or indirectly, whether voluntary or by operation of law, transfer,
sell, assign, pledge, hypothecate, encumber, gift, bequest, devise, descent or
otherwise dispose of.
"Transferee" shall mean any Person to whom Shares have been
Transferred in compliance with the terms of this Agreement.
<PAGE>
ARTICLE II.
RESTRICTIONS ON TRANSFERS/SHARE ACQUISITIONS
Section 2.1 Transfers in Contravention of this Agreement. Any
attempt to Transfer, or purported Transfer of, any Shares in violation of the
terms of this Agreement shall be null and void and neither the Company nor any
transfer agent shall register upon its books any such Transfer. A copy of this
Agreement shall be filed with the Secretary of the Company and kept with the
records of the Company.
Section 2.2 Permitted Transfers. The Purchasers shall not, and
Perry in the case of the Itochu Shares, shall not Transfer any Shares (other
than Transfers to the Company) except for Exempt Transfers and with respect to
Exempt Transfers under clauses (i) through (iv) of such definition only if (a)
the certificates representing such Shares issued to the Transferee bear the
legend provided in Section 2.3, if required by such Section, and (b) the
Transferee (if not already a party hereto) has executed and delivered to each
other party hereto, as a condition precedent to such Transfer, an instrument or
instruments, reasonably satisfactory to such parties, confirming that the
Transferee agrees to be bound by the terms of this Agreement in the same manner
as such Transferee's transferor, except as otherwise specifically provided in
this Agreement.
Section 2.3 Legend. Each Purchaser hereby agrees that each
outstanding certificate or instrument representing Shares issued or issuable to
it or any certificate issued in exchange for or upon conversion of any similarly
legended certificate, shall bear a legend reading substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR
AN EXEMPTION FROM REGISTRATION IS AVAILABLE. OTHER THAN IN CONNECTION
WITH TRANSFERS TO AFFILIATES, THE HOLDER OF THESE SHARES MAY BE
REQUIRED TO DELIVER TO THE COMPANY, IF THE COMPANY SO REQUESTS, AN
OPINION OF COUNSEL (REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO
THE COMPANY) TO THE EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT (OR QUALIFICATION UNDER STATE SECURITIES LAWS) IS
AVAILABLE WITH RESPECT TO ANY TRANSFER OF THESE SHARES THAT HAS NOT
BEEN SO REGISTERED (OR QUALIFIED).
THE COMPANY IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK. A COPY
OF THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF EACH CLASS AND
SERIES WILL BE PROVIDED TO EACH STOCKHOLDER WITHOUT CHARGE, UPON
WRITTEN REQUEST.
THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND ON VOTING RIGHTS AND
OBLIGATIONS, TO WHICH ANY TRANSFEREE AGREES BY HIS ACCEPTANCE
<PAGE>
HEREOF, AS SET FORTH IN THE SHAREHOLDERS' AGREEMENT, DATED AS OF JUNE
1, 1999. NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE BOOKS OF THE
COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF
SUCH AGREEMENT AND BY AN AGREEMENT OF THE TRANSFEREE TO BE BOUND BY THE
RESTRICTIONS SET FORTH IN SUCH AGREEMENT. THE COMPANY WILL MAIL A COPY
OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE UPON THE
COMPANY'S RECEIPT OF A WRITTEN REQUEST THEREFOR.
Section 2.4 Acquisitions. Except pursuant to the Purchase
Agreement, the Convertible Notes, the exercise of Warrants issued under the
Convertible Notes or a Purchaser's preemptive rights set forth in Article III
below, a Purchaser shall not acquire any Shares before the second anniversary of
the date of this Agreement without the consent of this Company's Board of
Directors.
ARTICLE III.
PREEMPTIVE RIGHTS
(a) Until the Company is listed on a Permitted Exchange, if
the Company shall issue any (i) shares of capital stock, (ii) rights, options or
warrants directly or indirectly to purchase shares of its capital stock or (iii)
securities convertible directly or indirectly into such capital stock (other
than (A) any such equity or any such rights to acquire equity which are issued
or issuable and outstanding as of the date of this Agreement, (B) any stock
options or equity issued or issuable in connection with any stock option plan or
other compensatory plan approved by the Board of Directors for the benefit of
employees, officers, directors or consultants of the Company, or (C) pursuant to
a merger, consolidation or acquisition of assets or technology or in connection
with any strategic relationship approved by the Board of Directors), then each
Purchaser shall be entitled to participate in such issuance on the same terms
and conditions, on a Pro Rata Share basis in respect of such Purchaser's Shares,
so that following such issuance, each Purchaser, if it has elected to acquire
the new securities to be issued, will have (or in the case of the issuance of
options, warrants, rights or convertible securities, have the right to acquire)
the same percentage of beneficial ownership of the Common Stock of the Company
as such Purchaser had by reason of its ownership of Shares (excluding the
Warrant Shares) immediately prior to such issuance.
(b) The Company shall provide a written notice (the
"Preemptive Rights Notice") of any such issuance to each Purchaser, and each
Purchaser may elect to purchase such securities in any such issuance by giving
written notice to the Company together with payment in full within fifteen (15)
Business Days following the date of the Preemptive Rights Notice. If, subsequent
to the date of the Preemptive Rights Notice, the Company alters the price or
other significant terms and conditions of the offering that a reasonable
investor would consider material to the decision to purchase such securities, or
the Company has not sold such securities within 90 days after the date of the
Preemptive Rights Notice, the Company shall provide another Preemptive Rights
Notice to each Purchaser with respect to any subsequent issuance and will
otherwise comply with the provisions of this Article III to the extent
applicable to such issuance.
<PAGE>
(c) The rights set forth in this Article III shall also
terminate upon the consummation of a Qualified Public Offering or Qualified
Reorganization. Notwithstanding the foregoing, the Company shall not be required
to offer or issue any shares to the Purchaser under paragraph III(a) above if
counsel for the Company reasonably concludes that there is not an available
securities law exemption for an offer or issuance to the Purchaser.
ARTICLE IV.
CORPORATE GOVERNANCE AND VOTING
(a) Until a Qualified Public Offering or Qualified
Reorganization, the Purchasers and their Transferees shall have the right to
submit one designee and a majority of the board of directors shall submit the
remaining designees to be (i) elected to the Corporation's Board of Directors
until the Corporation's next shareholder's meeting in the case of a vacancy on
the board of directors, (ii) nominated, recommended for election by the Board of
Directors of the Corporation in the case of board seats to be filled in a
shareholders' meeting and (iii) included for election in the Corporation's
future proxy statements. Perry, the Purchasers and their Transferees shall vote
their Shares in favor of such designees.
(b) Until a Qualified Public Offering or Qualified
Reorganization, so long as the Purchasers or their Transferees shall own
beneficially and of record at least 75,000,000 Shares (Appropriately Adjusted),
and so long as he is willing to serve, Perry shall vote their Shares in favor of
Anthony Rawlinson as the Chairman of the Corporation's Board of Directors.
(c) Each Purchaser, its Transferees and Perry shall vote all
of the Shares they own beneficially or of record in favor of the removal (with
or without cause) of any director designated by the Board of Directors if a
majority of the Board of Directors then in office request such director's
removal in writing for any reason. None of Purchasers, their Transferees and
Perry shall vote the Shares they own beneficially or of record in favor of the
removal (with or without cause) of any director unless such removal shall be at
the request of the Board of Directors or the Purchasers, as the case may be, who
nominated such director. Any vacancy created or existing on the Company's Board
of Directors shall be filled by a successor Director who shall be designated and
elected in the manner by which his or her predecessor was designated and elected
as provided above.
(c) Until a Qualified Reorganization, during the Term of this
Agreement, the Corporation shall not increase the size of the board of directors
of the Corporation above seven (7) members without the consent of a majority in
interest of the Purchasers and their Transferees.
(d) Each Purchaser and its Transferees shall refrain from
voting the Shares held beneficially or of record by it in favor of, and shall
vote such Shares against any (i) sale, transfer or other assignment or
hypothecation of this Company's assets or merger, reorganization or similar sale
of this Company or (ii) amendment, modification, change or termination to any
provision of this Company's Charter Documents unless such action is recommended
or approved by a majority of the Board of Directors then in office or pursuant
to a unanimous written consent of the Board of Directors.
<PAGE>
(e) Perry shall refrain from (i) demanding payment for or (ii)
foreclosing on the Company's assets pursuant to the Itochu Debt without the
consent of a majority in interest of the Purchasers and their Transferees so
long as the Purchasers and their Transferees own 25,000,000 or more Shares
(Appropriately Adjusted) during the Term of this Purchase Agreement.
ARTICLE V.
REGISTRATION RIGHTS
Section 5.1 Request for Registration.
(a) If the Company shall receive at any time after the second
anniversary of the date of this Agreement and during the Term of this Agreement,
at a time when the Shares are listed on a Permitted Exchange, a written request
from the Purchasers or their Transferees that the Company file a registration
statement under the Securities Act covering the registration of at least fifty
percent (50%) of the Registrable Securities then outstanding (or a lesser
percent if the anticipated aggregate offering price, net of underwriting
discounts and commissions, would exceed $10,000,000), then the Company shall,
within twenty (20) days of the receipt thereof, give written notice of such
request to all Purchasers or their Transferees and shall, subject to the
limitations of subsection 5.1(b), use its best efforts to effect as soon as
practicable, the registration under the Securities Act of all Registrable
Securities which the Purchasers or their Transferees request to be registered
within thirty (30) days of the mailing of such notice by the Company.
(b) If the Purchasers or their Transferees initiating the
registration request hereunder ("Initiating Holders") intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 5.1 and the Company shall include such information in the written
notice referred to in subsection 5.1(a). In such event, the right of any
Purchaser or Transferee to include Registrable Securities in such registration
shall be conditioned upon such Purchaser's or Transferee's participation in such
underwriting and the inclusion of such Purchaser's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Purchaser or Transferee) to the extent provided
herein. All Initiating Holders, Purchasers and Transferees proposing to
distribute their securities through such underwriting shall (together with the
Company as provided in subsection 5.1(e)) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section 5.1, if the
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Initiating Holders shall so advise all Purchasers or Transferees holding
Registrable Securities which would otherwise be underwritten pursuant thereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated in proportion (as nearly as practicable) to the
amount of Registrable Securities of the Company held by each Purchaser or
Transferee; provided, however, that the number of shares of Registrable
Securities to be included in such underwriting shall not be reduced unless all
other securities are first entirely excluded from the underwriting.
<PAGE>
(c) Notwithstanding the foregoing, if the Company shall furnish to
Initiating Holders requesting a registration statement pursuant to this Section
5.1 a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than one hundred twenty (120) days after receipt of the
request of the Initiating Holders; provided, however, that the Company may not
utilize this right more than once in any twelve (12) month period.
(d) In addition, the Company shall not be obligated to effect, or to
take any action to effect, any registration pursuant to this Section 5.1:
(i) after the Company has effected in the aggregate two (2)
registrations pursuant to this Section 5.1 and Section 5.3 and such
registrations have been declared or ordered effective;
(ii) during the period starting with the date ninety (90) days
prior to the Company's good faith estimate of the date of filing of, and ending
on a date one hundred eighty (180) days after the effective date of, a
registration subject to Section 5.2 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
(iii) If the Initiating Holders propose to dispose of shares
of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 5.3 below.
Section 5.2 Company Registration.
If (but without any obligation to do so) the Company proposes to
register (including for this purpose a registration effected by the Company for
shareholders other than the Purchasers) any of its stock under the Securities
Act in connection with the public offering of such securities (other than a
registration on Form S-4, Form S-8 or any successors forms, or any registration
on any form which does not include substantially the same information as would
be required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each
Purchaser or its Transferees written notice of such registration. Upon the
written request of each Purchaser or its Transferees given within fifteen (15)
days after mailing of such notice by the Company, the Company shall, subject to
the provisions of Section 5.7, cause to be registered under the Securities Act
all of the Registrable Securities that such Purchaser or its Transferees has
requested to be registered.
Section 5.3 Form S-3 Registration.
In case the Company shall receive from any Purchasers or their
Transferees a written request that the Company effect a registration on Form S
3, and any related qualification or
<PAGE>
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Purchasers and their
Transferees; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of the Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Purchaser or Transferee joining in
such request given within fifteen (15) days after receipt of such written notice
from the Company; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
Section 5.3:
(i) if Form S-3 is not available for such offering;
(ii) if the Purchasers or their Transferees propose to sell
Registrable Securities at an aggregate price to the public of less than
$1,000,000;
(iii) if the Company shall furnish a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than one hundred twenty (120)
days after receipt of the request under this Section 5.3; provided, however,
that the Company shall not utilize this right more than once in any twelve (12)
month period;
(iv) if the Company has already effected two registrations on
either Form S-3 or Form S-1 (or any combination thereof) for the Purchasers or
their Transferees pursuant to Section 5.1 or this Section 5.3;
(v) in any particular jurisdiction in which the Company would
be required to qualify to do business or to execute a general consent to service
of process in effecting such registration, qualification or compliance;
(vi) during the period ending one hundred eighty (180) days
after the effective date of a registration statement subject to Section 5.1 or
5.2;
(vii) prior to the second anniversary of the date of this
Agreement and thereafter, if the Shares are not listed on a Permitted Exchange,
provided, however that this exception does not apply to rights of the Purchasers
or their Transferees under Section 5.2 hereof; or
(viii) after all of the Registrable Securities shall have been
lawfully sold by the holder thereof to the public.
<PAGE>
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Purchasers or their Transferees. Registration effected pursuant to this
Section 5.3 shall not be counted as demands for registration registrations
effected pursuant to Section 5.2.
Section 5.4 Obligations of the Company.
Whenever required under this Section 5 to effect the registration of
any Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use all reasonable efforts to cause such
registration statement to become effective, and keep such registration statement
effective for up to one hundred twenty (120) days. The Company shall not be
required to file, cause to become effective or maintain the effectiveness of any
registration statement (other than a registration statement on Form S-3 pursuant
to Section 5.3) that contemplates a distribution of securities on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement for up to one hundred twenty (120) days.
(c) Furnish to the Purchaser or its Transferees such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonable requested by the Purchaser or its
Transferees, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Purchaser or its
Transferee participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
(f) Notify each Purchaser or its Transferee of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make
<PAGE>
the statements therein not misleading in the light of the circumstances then
existing, such obligation to continue for one hundred twenty (120) days and file
any supplements or amendments as required under Section 5.4(b) to update the
prospectus for such event.
(g) Cause all such Registrable Securities registered pursuant hereunder
to be listed on each securities exchange or market on which similar securities
issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Use its best efforts to furnish, at the request of any Purchaser or
its Transferee requesting registration of Registrable Securities pursuant to
this Section 5, on the date that such Registrable Securities are delivered to
the underwriters for sale in connection with a registration pursuant to this
Section 5, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective:
(i) an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Purchaser or its Transferees requesting
registration of Registrable Securities and
(ii) a letter dated such date, from the independent certified
public accountants of the Company, in form and substance as is customarily given
by independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Purchaser or
its Transferees requesting registration of Registrable Securities.
(j) To the extent reasonably necessary to effect the registration of
any Registrable Securities, make available for inspection by each seller of
Registrable Securities, any underwriter participating in any distribution
pursuant to such registration statement, and any attorney, accountant or other
agent retained by such seller or underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement.
Section 5.5 Furnish Information.
It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Section 5 with respect to the Registrable
Securities of any selling Purchaser or its Transferee that such Purchaser or its
Transferee shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Purchaser or its Transferee's Registrable Securities. The Company shall have no
obligation with respect to any registration requested pursuant to Section 5.1 or
Section 5.3 of this Agreement if, as a result of the
<PAGE>
application of the preceding sentence, the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 5.1(a) or subsection
5.3(b)(2), whichever is applicable.
Section 5.6 Expenses of Registration.
(a) All expenses (other than underwriting discounts and commissions)
incurred in connection with registrations, filings or qualifications pursuant to
Section 5.1, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of one
counsel for the selling Purchaser or its Transferees selected by them with the
approval of the Company not to exceed $15,000 for such counsel, which approval
shall not be unreasonably withheld, shall be borne by the Company; provided,
however, that the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 5.1 if the registration
request is subsequently withdrawn at the request of the Purchaser or its
Transferees of a majority of the Registrable Securities to be registered (in
which case all participating Purchaser or its Transferees shall bear such
expenses), unless the Purchaser or its Transferees of a majority of the
Registrable Securities agree to forfeit their right to one demand registration
pursuant to Section 5.1 or Section 5.3 as the case may be, or unless the
registration request is withdrawn due to a material adverse change in the
Company's financial condition or business which was not known by the selling
Purchaser or its Transferees at the time the registration was requested.
(b) All expenses (other than underwriting discounts and commissions)
incurred in connection with two registrations, filings or qualifications of
Registrable Securities pursuant to Section 5.2 for each Purchaser or its
Transferee, including (without limitation) all registration, filing, and
qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of one
counsel for the selling Purchaser or its Transferees selected by them with the
approval of the Company, not to exceed $5,000 for such counsel, which approval
shall not be unreasonably withheld, shall be borne by the Company.
(c) All expenses (other than underwriting discounts and commissions)
incurred in connection with a registration requested pursuant to Section 5.3,
including (without limitation) all registration, filing, qualification,
printers' and accounting fees and the reasonable fees and disbursements of one
counsel for the selling Purchaser or its Transferee or Purchaser or its
Transferees selected by them with the approval of the Company, not to exceed
$10,000 for such counsel, which approval shall not be unreasonably withheld, and
counsel for the Company shall be borne by the Company.
(d) All underwriting discounts and commissions incurred in connection
with registrations in connection with each registration statement under Section
5 shall be borne by the participating sellers (and the Company, if the Company
is a seller) in proportion to the number of shares sold by each, or as they
otherwise may agree.
<PAGE>
Section 5.7 Underwriting Requirements.
In connection with any offering involving an underwriting of shares of
the Company's capital stock, the Company shall not be required under Section 5.2
to include any of the Purchaser or its Transferees' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by Purchaser or its Transferees to be included
in such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata among the selling shareholders according to the total amount of securities
entitled to be included therein owned by each selling shareholder or in such
other proportions as shall mutually be agreed to by such selling shareholders)
but in no event shall (i) any shares being sold by a Purchaser or its Transferee
exercising a demand registration right set forth in Section 5.1 be excluded from
such offering and (ii) the amount of securities of the selling Purchaser or its
Transferees included in the offering be reduced below ten percent (10%) of the
total amount of securities included in such offering, unless such offering is
the first public offering of the Company's securities made after the date of
this Agreement, in which case, except as provided in (i) the selling
shareholders may be excluded if the underwriters make the determination
described above and no other shareholder's securities are included. For purposes
of the preceding parenthetical concerning apportionment, for any selling
shareholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and shareholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling shareholder," and any pro rata reduction with
respect to such "selling shareholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling shareholder," as defined in this sentence.
Section 5.8 Delay of Registration.
No Purchaser or its Transferee shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 5.
Section 5.9 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 5:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Purchaser or its Transferee, any underwriter (as defined in the
Securities Act) for such Purchaser or its Transferee and each person, if any,
who controls such Purchaser or its Transferee or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
<PAGE>
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto,
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or
(iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law;
and the Company will pay to each such Purchaser or its Transferee, underwriter
or controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 5.9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable to any Purchaser
or its Transferee, underwriter or controlling person for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Purchaser or its Transferee, underwriter or controlling person.
(b) To the extent permitted by law, each selling Purchaser or
Transferee will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the Securities Act, any
underwriter, any other Purchaser or Transferee selling securities in such
registration statement and any controlling person of any such underwriter or
other Purchaser or Transferee, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons may become
subject, under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Purchaser or
Transferee expressly for use in connection with such registration; and each such
Purchaser or Transferee will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection 5.9(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 5.9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Purchaser or Transferee, which
consent shall not be unreasonably withheld; provided, that in no event shall any
indemnity under
<PAGE>
this subsection 5.9(b) exceed the net proceeds from the offering received by
such Purchaser or Transferee, except in the case of willful fraud by such
Purchaser or Transferee.
(c) Promptly after receipt by an indemnified party under this Section
5.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 5.9, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
5.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 5.9.
(d) If the indemnification provided for in this Section 5.9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations;
provided, that in no event shall any contribution by a Purchaser or Transferee
under this Subsection 5.9(d) exceed the net proceeds from the offering received
by such Purchaser or Transferee, except in the case of willful fraud by such
Purchaser or Transferee. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control; provided, however, that except as expressly provided in the
underwriting agreement, the obligations of the persons selling shares pursuant
to such underwriting agreement to indemnify the underwriters shall not be
considered to conflict with the
<PAGE>
indemnification obligations between the Company and the Purchasers or
Transferees under this Section 5.9.
(f) The obligations of the Company and Purchasers or Transferees under
this Section 5.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 5, and otherwise.
Section 5.10 Reports Under Securities Exchange Act of 1934.
With a view to making available to the Purchasers or Transferees the
benefits of Rule 144 promulgated under the Securities Act and any other rule or
regulation of the SEC that may at any time permit a Purchaser or its Transferees
to sell securities of the Company to the public without registration or pursuant
to a registration on Form S 3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public so long as the
Company remains subject to the periodic reporting requirements under Sections 13
or 15(d) of the Exchange Act;
(b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the Exchange Act, as is necessary to enable the
Purchasers or Transferees to utilize Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of the
fiscal year in which the first registration statement filed by the Company for
the offering of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and Exchange Act; and
(d) furnish to any Purchaser or Transferee, so long as the Purchaser
owns any Registrable Securities or the Transferee owns at least 50,000,000
shares of Registrable Securities (Appropriately Adjusted), forthwith upon
request (i) a written statement by the Company that it has complied with the
reporting requirements of SEC Rule 144 (at any time after ninety (90) days after
the effective date of the first registration statement filed by the Company),
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S 3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Purchaser
or its Transferees of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
Section 5.11 Termination of Registration Rights. Notwithstanding the
foregoing provisions of this Article V, the rights to registration and the
designation of Shares as Registrable Securities shall terminate as to any
particular securities and any particular Purchaser or Transferee when (i) all
such securities shall have been lawfully sold by the holder thereof to the
public, (ii) on
<PAGE>
the fifth anniversary of the date the Shares are listed on a Permitted Exchange
or (iii) on such date as such securities may both be sold pursuant to Rule 144
without registration during any three (3) month period and are listed on a
Permitted Exchange.
Section 5.12 Assignability of Registration Rights. Notwithstanding
anything to the contrary in this Article V, the registration rights set forth in
this Article V are only assignable to the original Transferee of a Purchaser,
and only provided that such assignee Transferee promptly agrees in writing to be
bound by the terms and conditions of this Agreement.
ARTICLE VI.
ADDITIONAL OBLIGATIONS OF THE CORPORATION
Section 6.1 Increase in Authorized Shares. Until the second anniversary
of this Agreement, the Corporation shall not increase the authorized number of
shares of Common Stock of the Corporation above 500,000,000 (Appropriately
Adjusted) without the consent of a majority in interest of the Purchasers or
their Transferees.
Section 6.2 Financial Statements. The Corporation shall provide current
financial statements to the Purchasers within thirty (30) Business Days of a
reasonable request for such financial statements.
Section 6.3 Filings. The Corporation shall provide reasonable
assistance to the Purchasers or their Transferees, at the expense of the
Corporation, in filing such reports and filings as are required under Sections
13(d), 13(g) and 16 of the Securities Act of 1934, as amended, and the rules
promulgated thereunder.
Section 6.4 Inspection. Until a Qualified Reorganization and only
during the Term of this Agreement, Company shall permit a Purchaser or a
Transferee holding all of a Purchaser's Shares acquired under the Purchase
Agreement and the promissory notes contemplated thereby, so long as such
Transferee continues to hold at least 50% of the Shares acquired from Purchaser,
at such person's expense, to visit and inspect the Company's properties, to
examine its books of account and records and to discuss the Company's affairs,
finances and accounts with its officers, all at such reasonable times as may be
requested by the Purchaser or Transferee; provided, however, that the Company
shall not be obligated pursuant to this Section 6.4 to provide access to any
information which it reasonably considers to be a trade secret or similar
confidential information.
ARTICLE VII.
MISCELLANEOUS
Section 7.1 No Inconsistent Agreements. Each party hereto
hereby consents to the termination of any other prior written or oral agreement
or understanding restricting, conditioning or limiting the ability of any party
to transfer or vote Shares other than the Carl Perry Equity Side Letter executed
in May 1999. Each Purchaser represents and agrees that, as of the
<PAGE>
Effective Date, there is no (and from and after the Effective Date it will not,
and will cause its Affiliates not to, enter into any) agreement with respect to
any securities of the Company or any of its Affiliates (and from and after the
Effective Date Purchaser shall not take, or permit any of its Affiliates to
take, any action) that is inconsistent in any material respect with the
provisions in this Agreement.
Section 7.2 Recapitalization, Exchanges, etc. If any capital
stock or other securities are issued in respect of, in exchange for, or in
substitution of, any Shares by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Shares or any other change in capital
structure of the Company, then appropriate adjustments shall be made with
respect to the relevant provisions of this Agreement so as to fairly and
equitably preserve, as far as practicable, the original rights and obligations
of the parties hereto under this Agreement and the terms "Common Stock", and
"Shares," each as used herein, shall be deemed to include shares of such capital
stock or other securities, as appropriate. Without limiting the foregoing,
whenever a particular number of Shares is specified herein, such number shall be
adjusted to reflect stock dividends, stock-splits, combinations or other
reclassifications of stock or any similar transactions.
Section 7.3 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, and their
respective successors and permitted assigns; provided that (i) neither this
Agreement nor any rights or obligations hereunder may be transferred or assigned
by the Company (except by operation of law in any merger or Qualified
Reorganization); (ii) neither this Agreement nor any rights or obligations
hereunder may be transferred or assigned by a Purchaser or Perry except to any
Person to whom it has Transferred Shares in compliance with this Agreement and
who has become bound by this Agreement pursuant to Section 2.2 hereof; and (iii)
the rights of the parties under Articles III and Articles V hereof may not be
assigned to any Person except as explicitly provided therein. If any party
hereto shall acquire additional Shares, such Shares shall, except as otherwise
expressly provided herein, be held subject to (and entitled to all the benefits
of) all of the terms of this Agreement, it being expressly understood that such
additional Shares are not subject to (i) Article III for determining a
Purchaser's Pro Rata Share or (ii) Article V for purposes of registration
rights.
Section 7.4 No Waivers; Amendments.
(a) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
(b) This Agreement may not be amended or modified, nor may any
provision hereof be waived, other than by a written instrument signed by (i) the
Company, (ii) the holders of 66% of the Shares held by Purchasers and their
direct or indirect Transferees and (iii) Perry or his Transferees.
<PAGE>
The parties hereto shall use their best efforts not to effect
any amendments to the Charter Documents that would circumvent the provisions of
this Section 7.4(b).
Section 7.6 Notices. Any notice, request or other
communication required or permitted hereunder will be in writing and shall be
deemed to have been duly given if personally delivered or if telecopied or
mailed by registered or certified mail, postage prepaid, at the respective
addresses of the parties as set forth below. Any party hereto may by notice so
given change its address for future notice hereunder. Notice will be deemed to
have been given when personally delivered or when deposited in the mail or
telecopied in the manner set forth above and will be deemed to have been
received when delivered.
(a) If to Jagen
9 Oxford Street
South Yarra 3141
Melbourne, Victoria
Australia
Telecopier 011-613-9826-5499
with a copy to:
Gray Cary Ware & Freidenrich LLP
4365 Executive Drive, Suite 1600
San Diego, California 92121
Telecopier (619) 677-1477
Attention: Robert W. Ayling, Esq.
(b) if to Rawlinson
5 Shenton Way, #1301
UIC Building
Singapore 068808, Singapore
Telecopier (65) 220-5338
with a copy to:
Gray Cary Ware & Freidenrich LLP
4365 Executive Drive, Suite 1600
San Diego, California 92121
Telecopier (619) 677-1477
Attention: Robert W. Ayling, Esq.
(c) if to the Company
<PAGE>
U.S. Electricar, Inc.
19850 South Magellan Drive
Torrance, California 90502
Attention: President
with a copy to:
Bay Venture Counsel, LLP
1999 Harrison Street, Suite 1300
Oakland, CA 94612
Attention: Donald C. Reinke, Esq.
Telecopier (510) 834-7440
Section 6.10 Consistency. In the event of a conflict between
this Agreement on the one hand and the Charter Documents or any agreement
relating to the securities of the Company on the other hand, the terms and
provisions of this Agreement shall be deemed to set forth the true intentions of
the parties (to the extent permitted by applicable law) and shall supersede the
terms of any other agreement.
Section 6.11 Confidentiality The Purchasers shall not at any
time (a) disclose the Company's business plans and objectives, financial
projections, marketing plans, technical data, patentable and unpatentable
designs, concepts, ideas, inventions, know-how and other trade secrets of the
Company (the Confidential Information") to any Person whatsoever, (b) examine or
make copies of any reports or other documents, papers, memoranda, or extracts
containing Confidential Information, nor (c) utilize for their own benefit or
for the benefit of any other party other than the Company any such Confidential
Information except:
(i) Information which such party can show was
rightfully in its possession at the time of disclosure by the Company.
(ii) Information which such party can show was
received from a third party who lawfully developed the information independently
of the Company or obtained such information from the Company under conditions
which did not require that it be held in confidence.
(iii) Information which, at the time of disclosure,
is in the public domain.
Section 6.12 Applicable Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law.
Section 6.13 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. This Agreement may be executed by
facsimile.
<PAGE>
Section 6.14 Title and Subtitles. The titles of the Sections
and subsections of this Agreement are for the convenience of reference only and
are not to be considered in construing this Agreement.
Section 6.15 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith to achieve the closest comparable
terms as is possible. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
<PAGE>
SIGNATURE PAGE TO
SHAREHOLDERS' AGREEMENT
PURCHASER U.S. ELECTRICAR, INC.
JAGEN PTY, LTD.
By: /s/ Boris Liberman By: /s/ Carl Perry
------------------ --------------
(Signature) (Signature)
PURCHASER
ANTHONY N. RAWLINSON
/s/ Anthony N. Rawlinson
- ------------------------
(Signature)
/s/ Carl Perry
- --------------
CARL PERRY
<PAGE>
<TABLE>
EXHIBIT 3.
<CAPTION>
Gray Cary Ware _ Freidenrich LLP
<S> <C>
4365 Executive Drive, Suite 1600, San Diego, CA 92121-2189 ROBERT W. AYLING
Phone 619-677-1400 Fax 619-677-1477 www.graycary.com Admitted to practice in California
Writer's Direct Dial: 619-677-1425
Internet: [email protected]
June 1, 1999
Mr. Carl Perry
Chairman and CEO
U.S. Electricar, Inc.
5 Thomas Mellon Circle, Suite 305
San Francisco, CA 94134
Re: Agreement by U.S. Electricar, Inc. to pay a Finders Fee to The Global
Value Investment Portfolio Management Pte. Ltd. ("Global")
Dear Sir:
This letter will confirm the agreement of U.S. Electricar, Inc. (sometimes "the
Company") to pay Global a two percent (2%) Finders Fee in connection with the
acquisition of up to $3 million of U.S.Electricar common stock by Jagen Pty Ltd
("Jagen") and Anthony Rawlinson, both investments expected to close before July
31, 1999. The finder's fee is payable on the entire amount recieved from Jagen
and Anthony Rawlinson, is to be paid in U.S Dollars to Global's bank account (to
be provided), and free of any commissions and charges, within 5 days of receipt
of funds. Because funding will occur in two tranches, the first portion of the
finders fee is due and payable within five days of the reciept of up to $2.5
million (whether structured as equity or convertible debt or both) from Jagen
and a second tranche, (again, whether structured as equity or convertible debt
or both) of up to $500,000 from Anthony Rawlinson. The total fee due Global
under this agreement is sixty thousand dollars ($60,000).
Please confirm the agreement of U.S. Electricar to pay Global its Finders Fee on
this transaction by signing below and sending a fax copy to me at the address
above and a copy to the following
Mr. Boris Liberman
Jagen Pty. Ltd.
9 Oxford Street
South Yarra 3141
Melbourne, VIC, Australia
Fax 011 61 3 9826 5499
SILICON VALLEY SAN DIEGO SAN FRANCISCO AUSTIN LA JOLLA IMPERIAL VALLEY MEXICO
</TABLE>
<PAGE>
Carl Perry, CEO
June 23, 1999
Page Two
and to:
Bay Venture Counsel, LLP
Lake Merritt Plaza Building
1999 Harridan Street, Suite 1300
Oakland, CA 94612
Attention: Donald C. Rienke, Esq.
Very truly yours,
GRAY CARY WARE & FREIDENRICH LLP
/s/ Robert W. Ayling
Robert W. Ayling
RWA:clc
U.S. ELECTRICAR, INC.
By: /s/ Carl Perry
-------------------------------------
Carl Perry
Title: Chairman and Chief Executive
-------------------------------------
Dated: June 3, 1999
-------------------------------------
