7059
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENT FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. _______)
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)
Carl D. Perry, 19850 Magellan Drive, Torrance, CA 90502 (310) 327-2800
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 19, 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 following pages)
(Page 1 of __ 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 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>
<S> <C> <C>
Schedule 13D Forms 7060
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CUSIP No. 90328P 10 0 13D Page 2 of 6 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Carl D. Perry ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCES 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
USA
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NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED 52,882,122
BY EACH REPORTING --------------------------------------------------------------
PERSON WITH 8 SHARED VOTING POWER
-0-
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9 SOLE DISPOSITIVE POWER
52,882,122
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10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
52,882,122
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.19%
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14 TYPE OF REPORTING PERSON*
IN
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<FN>
*SEE INSTRUCTION BEFORE FILLING OUT!
</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 Carl D. Perry.
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 Carl D. Perry.
(b) The address of Mr. Perry is 510 South Burnside Avenue, Los Angeles, CA
90036.
(c) Mr. Perry's principal employment is with the Issuer where he currently
acts as the Chief Executive Officer. The address of the Issuer is 19850
Magellan Drive, Torrance, CA 90502.
(d)-(e) Mr. Perry has not, during the last five years, been convicted in any
criminal proceeding (excluding traffic violations or similar
misdemeanors), nor has Mr. Perry, 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) Mr. Perry is a citizen of the United States.
ITEM 3. Source and Amount of Funds or Other Consideration.
On March 19, 1999, Mr. Perry purchased from ITOCHU Corporation (i)
37,348,289 shares of Issuer's common stock, for an aggregate purchase
price of $1, and (ii) notes with a principal value of $4.3 million,
with $3.0 million of such principal convertible into 14,333,333 shares
of Issuer's common stock, for an aggregate purchase price of $50,000.
The purchase price for the shares and notes was paid with Mr. Perry's
personal funds. (The 51,681,622 shares of Issuer's common stock,
representing the 37,348,289 shares of Issuer's common stock acquired
directly by Mr. Perry from Itochu and the 14,333,333 shares of Issuer's
common stock issuable upon conversion of the notes, are collectively
referred to herein as the "Itochu Shares")
<PAGE>
ITEM 4. Purpose of the Transaction.
Mr. Perry acquired the shares of Common Stock identified in this
Statement for investment purposes. Mr. Perry 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. Notwithstanding the
foregoing, Mr. Perry 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 in open market
or privately negotiated transactions on terms deemed by them to be
appropriate.
ITEM 5. Interest in Securities of the Issuer.
(a) As of the date of this Statement: Mr. Perry beneficially owns
individually an aggregate of 52,882,122 shares of the Issuer's Common
Stock, representing 22.19% of the shares outstanding, based on
222,789,681 shares of Common Stock outstanding as of June 15, 1999.
(b) Subject to the qualifications set forth below, Mr. Perry has sole
voting and dispositive power with respect to the 52,882,122 shares of
the Issuer's Common Stock identified in this Statement. However, on
June 14, 1999, Mr. Perry entered into a Shareholders' Agreement dated
as of June 1, 1999 with Jagen Pty. Ltd. and Anthony Rawlinson. As set
forth more fully in the Shareholders' Agreement attached hereto as
Exhibit 1, Mr. Perry agreed to (A) vote all of the Issuer's common
stock shares held by him in favor of: (i) one director nominated by the
purchasers thereunder and the remaining directors nominated by a
majority of the Issuer's Board of Directors; (ii) Anthony Rawlinson as
the Chairman of the Issuer's Board of Directors; and (iii) if approved
by a majority of the Issuer's Board of Directors, the removal of a
director from, and the election of a director to fill a vacancy on, the
Issuer's Board of Directors; and (B) a restriction on the transfer of
the Itochu Shares except with the approval of Issuer's Board of
Directors.
(c) See Item 5.(b)
(d) No person other than Mr. Perry 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.
Perry.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Except for the Shareholders' Agreement, Mr. Perry 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.
<PAGE>
ITEM 7. Material to Be Filed as Exhibits.
1. Shareholders' Agreement.
<PAGE>
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 18, 1999
/s/ Carl Perry
---------------------------------
Carl Perry
EXHIBIT 1
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
<PAGE>
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) 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)
<PAGE>
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.
"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
<PAGE>
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 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.
<PAGE>
"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.
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
<PAGE>
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.
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
<PAGE>
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.
(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.
<PAGE>
(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.
(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
<PAGE>
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.
(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;
<PAGE>
(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 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:
<PAGE>
(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.
(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:
<PAGE>
(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 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
<PAGE>
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.
<PAGE>
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 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.
<PAGE>
(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.
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
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 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.
<PAGE>
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.
<PAGE>
(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
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
<PAGE>
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.
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 D. Perry
---------------------- ----------------------
(Signature) (Signature)
Boris Liberman, Director Carl D. Perry, President
- -------------------------- -------------------------
(Print Name and Title) (Print Name and Title)
PURCHASER
ANTHONY N. RAWLINSON
/s/ Anthony N. Rawlinson
- --------------------------
(Signature)
/s/ Carl Perry
- --------------------------
CARL PERRY
