U.S. Securities and Exchange Commission
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended AUGUST 31, 1996 Commission File Number 1-13776
---------------- -----------
GREENMAN TECHNOLOGIES, INC.
----------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 71-0724248
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7 KIMBALL LANE, BUILDING A, LYNNFIELD, MA 01940
- ----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (617) 224-2411
___________________________________________________
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Number of shares outstanding as of October 14, 1996
Common Stock, $.01 par value, 5,621,083 shares
GREENMAN TECHNOLOGIES, INC.
FORM 10-QSB
QUARTERLY REPORT
AUGUST 31, 1996
TABLE OF CONTENTS
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (*)
Unaudited Condensed Consolidated Balance Sheets
as of May 31, 1996 and August 31, 1996 3
Unaudited Condensed Consolidated Statements of Loss for
the three months ended August 31, 1995 and 1996 4
Unaudited Condensed Consolidated Statements of Cash
Flows for the three months ended August 31, 1995 and 1996 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7-9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
* The financial information at May 31, 1996 has been taken from audited
financial statements at that date and should be read in conjunction therewith.
All other financial statements are unaudited.
GREENMAN TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 31, August 31,
1996 1996
---- ----
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................................... $ 153,172 $ 106,664
Accounts receivable, trade, less allowance for doubtful accounts
of $31,751 and $23,772 as of May 31, 1996 and August 31,1996................ 605,255 633,128
Inventory .................................................................... 525,279 430,442
Loan receivable, related party (Note 3)...................................... 500,000 --
Other current assets.......................................................... 242,607 98,537
---------- ---------
Total current assets 2,026,313 1,268,771
---------- ---------
Property and equipment,at cost:
Land....................................................................... 223,785 223,785
Buildings.................................................................. 910,400 910,400
Machinery and equipment.................................................... 2,026,131 2,184,976
Furniture and fixtures..................................................... 88,276 89,050
Motor vehicles............................................................. 33,932 64,822
Leasehold improvements..................................................... 895,958 923,505
---------- ----------
4,178,482 4,396,538
Less accumulated depreciation and amortization........................... (507,991) (597,861)
---------- ----------
3,670,491 3,798,677
---------- ----------
Other assets:
Equipment deposits............................................................ 1,883,400 1,883,400
Goodwill, net................................................................. 465,246 452,784
Non-competition agreement, net................................................ 272,222 243,056
Note receivable .............................................................. 150,000 150,000
Licensing Fee................................................................. 100,000 100,000
Other......................................................................... 71,311 64,809
--------- ---------
2,942,179 2,894,049
--------- ---------
$ 8,638,983 $7,961,497
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, related parties................................................ $ 1,378,253 $2,083,556
Notes payable, bank, current portion ......................................... 140,289 114,286
Accounts payable.............................................................. 718,770 639,621
Accrued expenses, other....................................................... 680,318 817,468
Obligations under capital leases, current..................................... 311,679 336,560
--------- ---------
Total current liabilities................................................... 3,229,309 3,991,491
Notes payable, bank, non-current portion........................................ 475,008 505,371
Notes payable, related parties, non-current portion............................. 578,897 65,772
Obligations under capital leases................................................ 819,943 842,814
--------- ---------
Total liabilities........................................................... 5,103,157 5,405,448
Stockholders' equity (Notes 4 and 5):
Preferred stock, $1.00 par value, 1,000,000 shares authorized, no shares issued
and outstanding............................................................ -- --
Common stock, $.01 par value, 20,000,000 shares authorized; 5,076,083 shares
issued and outstanding at May 31, 1996 and August 31,1996.................. 50,761 50,761
Additional paid-in capital.................................................... 7,183,519 7,468,722
Accumulated deficit........................................................... (3,698,454) (4,963,434)
---------- -----------
Total stockholders' equity.............................................. 3,535,826 2,556,049
---------- -----------
$ 8,638,983 $ 7,961,497
============ ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated
financial statements.
3
GREENMAN TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS
<TABLE>
<CAPTION>
Three Months Ended August 31,
-----------------------------
1995 1996
----- ----
<S> <C> <C>
Net sales..................................................... $ 660,211 $ 886,866
Cost of sales................................................. 560,449 726,039
------------ ------------
Gross profit ................................................. 99,762 160,827
------------ ------------
Operating expenses:
Research and development ................................ 9,765 67,085
Selling, general and administrative (Note 4).............. 216,522 1,230,146
------------- ------------
Total operating expenses.............................. 226,287 1,297,231
------------- ------------
Operating loss................................................ (126,525) (1,136,404)
------------- ------------
Other income (expense):
Interest expense.......................................... (118,908) (95,298)
Other, net (Note 4)....................................... 7,651 (33,278)
------------- -------------
Other income (expense), net........................... (111,257) (128,576)
------------- -------------
Net loss...................................................... $ (237,782) $ (1,264,980)
============= =============
Net loss per share (Note 2)................................... $ (.06) $ (.25)
======== ========
Shares used in calculation of net loss per share.............. 4,097,333 5,076,083
========= =========
</TABLE>
See accompanying notes to unaudited condensed
consolidated financial statements.
4
GREENMAN TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended August 31,
-----------------------------
1995 1996
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (237,782) $ (1,264,980)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization......................... 36,952 131,498
Common stock warrants and options issued for services
rendered ........................................... -- 285,203
Decrease (increase) in assets:
Accounts receivable................................ 134,466 (27,873)
Inventory.......................................... 32,280 94,837
Other current assets............................... 5,530 144,070
Deferred offering costs............................ (124,945) --
(Decrease) increase in liabilities:
Accounts payable................................... (156,229) (79,149)
Accrued expenses................................... (177,153) 137,150
---------- ---------
Net cash used for operating activities......... (486,881) (579,244)
----------- ---------
Cash flows from investing activities:
Increase in notes receivable.............................. (57,094) --
Repayment of loan receivable.............................. -- 500,000
Purchase of property and equipment........................ (2,388) (93,556)
(Increase) decrease in other assets....................... (11,390) 6,502
------------ ---------
Net cash used for investing activities......... (70,872) 412,946
------------ ---------
Cash flows from financing activities:
Proceeds from notes payable............................... -- 46,550
Repayment of notes payable................................ (1,211) (42,190)
Proceeds from notes payable related parties............... -- 200,000
Repayment of notes payable related parties................ -- (7,822)
Principal payments on obligations under capital leases.... (61,617) (76,748)
Net proceeds on sale of preferred stock................... 600,000 --
------------ ---------
Net cash provided by financing activities............... 537,172 119,790
------------ ---------
Net decrease in cash.......................................... (20,581) (46,508)
Cash and cash equivalents at beginning of period.............. 109,778 153,172
------------ ---------
Cash and cash equivalents at end of period.................... $ 89,197 $ 106,664
============ =========
Supplemental cash flow information:
Machinery and equipment acquired under capital leases..... $ -- $ 124,500
Interest paid............................................. 12,000 44,953
</TABLE>
See accompanying notes to unaudited condensed consolidated
financial statements.
5
GREENMAN TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996
1. BASIS OF PRESENTATION
The consolidated financial statements include the results of the Company
for the three months ended August 31, 1995 and the Company and it's wholly-owned
subsidiary, DuraWear for the three months ended August 31, 1996. All significant
intercompany accounts and transactions are eliminated in consolidation.
The financial statements are unaudited and should be read in conjunction
with the financial statements and notes thereto for the fiscal year ended May
31, 1996 included in the Company's Form 10-KSB. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles has been condensed or omitted
pursuant to the Securities and Exchange Commission ("SEC") rules and
regulations, although the Company believes the disclosures which have been made
are adequate to make the information presented not misleading.
The results of operations for the periods reported are not necessarily
indicative of those that may be expected for a full year. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
which are necessary for a fair statement of operating results for the interim
periods presented have been made.
2. NET LOSS PER SHARE
Net loss per share is based on the weighted average number of common
shares outstanding during the period.
A staff accounting bulletin issued by the Securities and Exchange
Commission requires that common stock, options, warrants and other potentially
dilutive instruments issued within one year prior to the initial filing of a
registration statement for an initial public offering be treated as outstanding
for all periods prior to the effective date of the registration for purposes of
the net loss per share computation.
3. LOAN RECEIVABLE, RELATED PARTY
In January 1996, the Company made a $500,000 advance under a
non-interest bearing loan agreement to a company owned by one of its directors.
On June 26, 1996, this advance was returned to the Company in its entirety.
4. COMMON STOCK OPTIONS AND WARRANTS
The Company accounts for the fair value of its common stock options and
warrants in accordance with FASB Statement 123, "Accounting for Stock-Based
Compensation". The compensation cost associated with the issuance of 1,081,233
common stock options and warrants issued for services rendered during the
quarter ended August 31, 1996 was $285,203.
5. SUBSEQUENT EVENTS
On September 16, 1996, the Company sold 545,000 shares of common stock
to three foreign investors at $1.51 per share. Net proceeds were $715,965 after
deducting commissions and expenses of $106,985.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following information should be read in conjunction with the
unaudited condensed consolidated financial statements and the notes thereto
included in Item 1 of the Quarterly Report, and the audited consolidated
financial statements and notes thereto and Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in the Company's Form
10-KSB filed for the fiscal year ended May 31, 1996.
OVERVIEW
GreenMan Technologies, Inc. (the "Company" or "GreenMan") was
incorporated under the laws of the State of Arkansas on September 16, 1992 and
reincorporated under the laws of the State Delaware on June 27, 1995. The
Company was formed to primarily develop, manufacture and sell "environmentally
friendly" plastic and thermoplastic rubber parts and products that are
manufactured using recycled materials and/or are themselves partially or wholly
recyclable.
The Company's Molding operation (the "Molding operation"), located in
Malvern, Arkansas, provides injection molding manufacturing services to
customers' specifications in the production of plastic and thermoplastic rubber
parts for such products as stereo components and speakers, water filters and
pumps, plumbing components and automotive accessories. The facility also
conducts research and development on the Company's GreenMan Environmental
Materials ("GEM") Stock and tests the use of these materials in the manufacture
of a variety of possible products.
The Company's Molding operation is scheduled to commence the manufacture
of the Company's first consumer product, a GEM Stock trash container, in the
Fall of 1996. Future proposed products, to be manufactured utilizing injection
molding, will also be produced at the Molding operation, which management
expects to result in a gradual transition from contract/custom molding
(manufacture products for third parties) to captive molding (manufacture
products under the GreenMan name) activities.
The Company's Recycling operation (the "Recycling operation"), located
in Jackson, Georgia, was established to develop low-cost sources of rubber and
plastic waste (made from recycled plastics and crumb rubber from tires) for use
in the production of the Company's GEM Stock and to develop markets for
end-products to be made using the GEM Stock.
The Company has targeted several markets with products incorporating
significant amounts of recovered crumb rubber and plastic waste, including the
building industry with anti-fatigue floor mats, roofing products and timbers;
the lawn and garden market with landscape timbers and fencing; the consumer
products market with trash containers, recycling totes and storage containers;
and the transportation industry with nose cones, barriers, railroad ties and
railway crossing mats. Through an agreement with Crumb Rubber Technologies,
Inc., ("CRT"), the Company gains the capability to produce crumb rubber that can
be combined with recycled plastic waste and virgin plastic to produce the
Company's GEM Stock which will be used in the production of the Company's
proposed consumer and industrial products, sold as a merchant chemical to other
users of crumb rubber or sold in its raw state. Through an agreement with BFI
Tire Recyclers of Georgia, Inc., a wholly owned subsidiary of Browning-Ferris
Industries ("BFI"), the Company has secured a multi-year supply of waste tires
to feed the Company's Jackson, Georgia crumb rubber processing operation.
In October 1995, the Company completed its initial public offering and
received net proceeds of approximately $5,370,000 after underwriting commissions
and other issuance costs paid at the closing.
On October 10, 1995, the Company acquired all of the outstanding common
stock of DuraWear Corporation ("DuraWear"). DuraWear was incorporated under the
laws of the State of Delaware on September 5, 1972 and was reincorporated under
the laws of the State of Alabama on December 7, 1990. DuraWear which is located
in Birmingham, Alabama, manufactures, installs and markets a diverse range of
high quality ceramic, polymer composite, and alloy steel materials engineered to
resist severely abrasive and corrosive conditions typically encountered in bulk
material handling systems in such industries as paper and pulp, mining, coal
handling and grain storage and transportation.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 1996 COMPARED TO THE THREE MONTHS ENDED
AUGUST 31, 1995
Net sales for the three months ended August 31,1996 were $886,866 as
compared to $660,211 for the three months ended August 31, 1995. The increase of
$226,655 or 34% is due to the inclusion of DuraWear sales of $468,405 which
offsets a 37% decrease in contract molding and assembly business. The decrease
in contract molding and assembly business is attributable to the cyclical nature
of the business of several large customers which resulted in lower orders from
these customers. The effort to secure additional custom molding business from
new customers is ongoing and will continue until the Company concludes the
transition from custom to captive molding. The Company anticipates the
commencement of production of a GEM Stock trash container during the second
fiscal quarter and continues to identify and evaluate additional captive molding
opportunities. The Company has taken steps to reduce operating expenses in its
molding operations during this transition period.
Gross profit for the three months ended August 31,1996 was $160,827 or
18% of net sales as compared to $99,762 or 15% of net sales for the three months
ended August 31, 1995. This improvement in gross profit was primarily due to the
inclusion of the DuraWear's sales which generated a 46% gross margin while the
molding and assembly operations experienced a lower gross margin due to the
impact of decreased volumes.
Research and development expenditures were $67,085 during the three
months ended August 31, 1996 as compared to $9,765 for the same 1995 period. The
significant increase is attributable to the Company's ongoing efforts to
indentify new proprietary products and expand the applications of existing
product lines.
Selling, general and administrative expenses were $1,230,146 for the
three months ended August 31,1996, or 139% of sales as compared to $216,522, or
33% of sales, for the same 1995 period. The increase of $1,013,624 was primarily
attributable to the inclusion of DuraWear's operating expenses of $251,645,
which included $29,166 relating to amortization of the three-year
non-competition agreement and $12,462 relating to goodwill amortization. In
addition, the Company initiated a significant financial public relations
campaign during the quarter ended August 31, 1996 which resulted in a one time
charge of approximately $200,000. This campaign consisted of newsprint articles,
television features and the mailing of over 100,000 financial information
packages to qualified individuals and brokers. The Company also recognized a
$255,070 non-cash expense in connection with the issuance of common stock
warrants and options in accordance with SFAS No. 123, "Accounting for
Stock-Based Compensation". The results for the quarter ended August 31, 1996
also reflect $135,231 of costs associated with the Company's recycling operation
which has not yet begun generating revenue and is operating under limited
conditions as both equipment and processes continue to be evaluated and refined
in order to maximize the production capabilities of that facility. In addition,
the Company's expenses increased due to the addition of new employees, increased
corporate development and marketing activities and increased expenses related to
the Company's becoming a public company in October 1995.
As a result of the foregoing, the operating loss for the three months
ended August 31,1996 increased by $1,009,879 to $1,136,404 or 128% of sales as
compared to an operating loss of $126,525, or 19% of sales for the comparable
1995 period.
The Company experienced a net loss of $1,264,980, or $.25 per share for
the quarter ended August 31, 1996 as compared to a net loss of $237,782, or $.06
per share for the quarter ended August 31, 1995.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has satisfied its capital requirements
through the sale of common and preferred stock to investors, loans from
affiliated and unaffiliated lenders, the acquisition of machinery and equipment
through capital leases and notes payable, and the issuance of common stock and
common stock options and warranst in lieu of cash for services rendered.
During June 1996, the Company borrowed $200,000 from Palomar Medical
Technologies, Inc. ("Palomar"), a company of which two of the Company's
directors also hold positions as directors and/or officers. The note payable
bears interest at 10% per annum with principal and interest due at the earlier
of (1) the tenth business day following the consummation by the Company of a
minimum $3,000,000 of additional financing or (2) on January 1, 1997. In
addition, the Company agreed to grant warrants to purchase 100,000 shares of the
Company's common stock at an exercise price of $3.88 per share.
On September 16, 1996, the Company sold 545,000 shares of common stock
to three foreign investors at $1.51 per share. Net proceeds were $715,965 after
deducting commissions and expenses of $106,985. Approximately $521,000 of the
proceeds were utilized to repay loans from Palomar.
At August 31, 1996, the Company had cash of $106,664, a working capital
deficit of $2,722,720, net capital of $2,556,049 and accumulated losses of
$4,963,434.
Based on the Company's operating plans, management believes that the
available working capital together with revenues from operations, the sale of
common stock and the purchase of equipment through lease financing arrangements,
will be sufficient to meet the Company's cash requirements through the second
quarter of fiscal 1997. The Company expects that additional financing will be
required after this time in order to fund continued growth. Management has
identified and is currently evaluating several immediate financing alternatives
and diligently working to determine the feasibility of each alternative. The
Company has commenced the offering of 7% convertible debentures in an effort to
raise up to $3,000,000 in gross proceeds. As of the date of this report no funds
have been received and no assurance can be given that such financing will be
concluded in the near future on favorable terms, if at all. If the Company is
unable to obtain additional financing, its ability to maintain its current level
of operations could be materially and adversely affected and the Company may be
required to adjust its operating plans accordingly.
FACTORS AFFECTING FUTURE RESULTS
The Company's revenue and operating results may fluctuate from quarter
to quarter and from year to year due to a combination of factors, including (i)
completion of the Company's crumb rubber facility and production of crumb rubber
in commercial quantities at a price that will be competitive in the market; (ii)
the Company's ability to secure additional customers for its products thereby
reducing its reliance on a few major customers; (iii) the Company's ability to
integrate and manage the operations of DuraWear, its recently acquired
subsidiary; (iv) market acceptance of the Company's proposed GEM Stock material
and GreenMan consumer products, (v) ability to obtain raw materials from
suppliers on terms acceptable to the Company; and (vi) general economic
conditions. The Company's plans and objectives, are based on assumptions that
the Company will be successful in completing its crumb rubber facility, that it
will produce crumb rubber at a price that will be competitive in the market,
that the Company will be successful in receiving additional financing to fund
future growth and that there will be no material adverse change in the Company's
operations or business.
Assumptions relating to the foregoing involve judgments with respect to,
among other things, future economic, competitive and market conditions all of
which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. As a result of the foregoing, there can be no
assurance that the Company will be able to achieve or sustain profitability on a
quarterly or annual basis. In light of the significant uncertainties inherent in
the Company's business, forward looking statements made in this report should
not be regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
9
PART II - OTHER INFORMATION
AUGUST 31, 1996
<TABLE>
<S> <C>
Item 1. Legal Proceedings
There has been no significant changes in legal proceedings during
the quarter ended August 31, 1996.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.42 -- Promissory Note issued in June 1996 by GreenMan Technologies, Inc.
to Palomar Medical Technologies, Inc.
(b) Exhibit 10.43 -- Common Stock Purchase Warrant issued in June 1996 to Palomar Medical
Technologies, Inc.
(c) Exhibit 10.44 -- Form of Offshore Stock Subscription Agreement dated September 16, 1996
between GreenMan Technologies, Inc. and certain foreign investors.
(d) Exhibit 11 -- Statement regarding net loss per share.
(e) Exhibit 27 -- Financial Data Schedule
(b) There were no reports on Form 8-K filed during the three months ended August 31,1996
</TABLE>
10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934 , the
Registrant certifies that it has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
By: GreenMan Technologies, Inc.
/s/ Maurice E. Needham
----------------------------------------
MAURICE E. NEEDHAM
CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF
THE BOARD
<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
--------- -------- ----
<S> <C> <C>
/s/ Maurice E. Needham Chief Executive Officer and October 14, 1996
- ----------------------
MAURICE E. NEEDHAM Chairman of the Board
(Principal Executive Officer)
/s/ Joseph E. Levangie Chief Financial Officer and Director October 14, 1996
- ---------------------- (Principal Financial Officer and
JOSEPH E. LEVANGIE Principal Accounting Officer)
</TABLE>
11
EXHIBIT 11
GREENMAN TECHNOLOGIES, INC.
STATEMENT REGARDING NET LOSS PER SHARE
AUGUST 31, 1996
THREE MONTHS
ENDED
AUGUST 31, 1995
---------------
Net loss.......................................... $ (237,782)
===========
Shares used in calculation of loss per share:
Common shares outstanding (1)................. 2,343,333
Common equivalent shares (2).................. 1,754,000
---------
4,097,333
=========
Net loss per share................................ $ (.06)
=======
THREE MONTHS
ENDED
AUGUST 31, 1996
---------------
Net loss.......................................... $ (1,264,980)
=============
Shares used in calculation of loss per share:
Weighted average common shares outstanding 5,076,083
=========
Net loss per share................................ $ (.25)
=======
(1) Includes all common shares outstanding prior to the initial public offering
in accordance with the Staff Accounting Bulletin.
(2) Includes common equivalent shares outstanding as follows: (i) 500,000 shares
of Class A convertible preferred stock convertible into 500,000 shares of
common stock; (ii) 259,000 shares of common stock issued pursuant to
convertible debt at the closing of the initial public offering; (iii)
695,000 shares issuable pursuant to outstanding stock options and warrants;
and (iv) 300,000 shares of Class B convertible preferred stock convertible
into 300,000 shares of common stock. All of these shares were issued or have
exercise prices per share which are less than the initial public offering
price per share. The treasury stock method was not used in calculating
common equivalent shares.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR
UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAW OR (ii)
THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL TO
THE HOLDER OF SUCH NOTE, WHICH OTHER COUNSEL IS REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH NOTE MAY BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE
STATE SECURITIES LAWS.
GREENMAN TECHNOLOGIES, INC.
NOTE DUE THE EARLIER OF
(i) JANUARY 1, 1997 OR
(ii) THE TENTH BUSINESS DAY FOLLOWING THE
CLOSINGOF A MINIMUM OF A $3,000,000 REGULATION S OFFERING
OF SECURITIES OF GREENMAN TECHNOLOGIES, INC.
$ 200,000 June 10, 1996
----------------- ----------------------
FOR VALUE RECEIVED, GreenMan Technologies, Inc., a Delaware corporation
(the "Company"), with its principal office at 7 kimball Lane, Lynnfield,
Massachusetts 01940, promises to pay to the order of Palomar Medical
Technologies, Inc. , with its principal office at 66 Cherry Hill Drive, Beverly,
Massachusetts 01915 (the "Payee" or "the holder of this Note"), or registered
assigns, on the earlier of (i) January 1, 1997 or (ii) the tenth business day
following the consummation by the Company of a minimum of a $3,000,000
regulation S offering of its securities as described in Section 4 hereof (the
"Maturity Date") the principal amount of Two Hundred Thousand Dollars
($200,000), in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public or private
debts, together with interest at a rate equal to 10% per annum until the Note is
paid in full. The Payee will also be granted a warrant to purchase 100,000
shares of Common Stock of the Company (the "Warrant"). The Warrant shall be
exercisable at $3.875 per share and be issued in accordance with the terms as
specifically stated within the actual Warrant Agreement.
1. Events of Default.
(a) Upon the occurrence of any of the following events (herein
called "Events of Default") which shall have occurred and be continuing:
(i) The Company shall default in the payment of the principal
and interest of this Note after the Maturity Date; or
(ii) (1) The Company shall commence any proceeding or other
action relating to it in bankruptcy or seek reorganization,
arrangement, readjustment of its debts, receivership,
dissolution, liquidation, winding-up, composition or any other
relief under the Bankruptcy Act, as amended, or under any
other insolvency, reorganization, liquidation, dissolution,
arrangement, composition, readjustment of debt or any other
similar act or law; of any jurisdiction, domestic or foreign,
now or hereafter existing; or (2) the Company shall admit the
material allegations of any petition or pleading in connection
with any such proceeding; or (3) the Company applies for, or
consents or acquiesces to, the appointment of a receiver,
conservator, trustee or similar officer for it or for all or a
substantial part of its property; or (4) the Company makes a
general assignment for the benefit of creditors; or
(iii) (1) Commencement of any proceeding or in the taking of
any other action against the Company in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts,
liquidation, dissolution, arrangement, composition,
readjustment of debt or any other similar act or law of any
jurisdiction, domestic or foreign, now or hereafter existing
and the continuance of any of such events for sixty (60) days
undismissed, unbonded or undischarged; or (2) the appointment
of a receiver, conservator, trustee or similar officer of the
Company or for all or substantially all of its property and
the continuance of any such events for sixty (60) days
undismissed, unbonded or undischarged, or (3) the issuance of
a warrant or attachment, execution or similar process against
substantially all of the property of the Company and the
continuance of such event for thirty (30) undismissed,
unbonded and undischarged; or
(iv) The Company shall default in the payment of any materiel
amount of its indebtedness and such default shall not be cured
or waived within thirty (30) days after the Company's receipt
of written notice of same;
then, and in any such event the holder of this Note may, by
written notice to the Company, declare the entire unpaid
principal amount of this Note outstanding together with
accrued interest thereon due and payable, and the same shall,
unless such default shall be cured within ten (10) business
days after such notice, forthwith become due and payable upon
the expiration of such ten-day period, without presentment,
demand protest, or other notice of any kind, all of which are
expressly waived.
2. Non-Waiver and Other Remedies. No course of dealing or delay on the
part of the holder of this Note in exercising any right thereunder shall operate
as a waiver thereof or otherwise prejudice the right of the holder of this Note.
No remedy conferred hereby shall be exclusive of any other remedy referred to
herein or now or hereinafter available at law, in equity, by statute or
otherwise.
3. Principal Obligation; Covenants. Except as set forth in Section 1
hereof, no provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, at the rates, and
in the currency herein prescribed.
3.1. Affirmative Covenants. The Company covenants and agrees that,
while this Note is outstanding, it shall:
(a) Pay all material indebtedness and obligations of the
Company in accordance with their respective terms, as the same my be modified or
waived by the lenders or other obligees, and pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income and profits, or upon any properties belonging to it before the same shall
be in default; provided, however, that the Company shall not be required to pay
any such tax, assessment, charge or levy which is being contested in good faith
by proper proceedings;
(b) Do all things necessary to preserve its corporate
existence and continue to engage in business of the same general type as
conducted as of the date hereof;
(c) Promptly notify the holder of this Note of the occurrence
of any event of any default under this Note;
2
(d) Comply in all material respects with all statutes, laws,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations and requirements (collectively,
"Requirement(s)") of all governmental bodies, departments, commissions, boards,
companies or associations insuring the premises, courts, authorities, officials,
or officers, which are applicable to the company or its properties, except
wherein the failure to comply would not have a material effect on the Company or
its property; provided that nothing contained herein shall prevent the Company
from contesting the validity or the application of any Requirements; and
(e) Promptly provide the holder of this Note with such reports
as are provided to holders of Common Stock or Warrants as soon as such reports
become available.
3.2 Negative Covenants. The Company covenants and agrees that while
this Note is outstanding it will not directly or indirectly:
(a) Guaranty or otherwise in any way become or be responsible
for indebtedness or borrowed money or obligations of any other person (other
that a subsidiary of the Company), contingently or otherwise;
(b) Declare or pay cash dividends;
(c) Borrow money in an amount exceeding $5,000,000
outstanding at any time; or
(d) Make or incur an obligation for capital expenditures
outstanding at any one time exceeding $5,000,000, other than in the ordinary
course of business.
4. Prepayment.
4.1 Consolidation or Merger. The principal of and accrued
interest on this Note shall be prepaid in full without premium in the event the
Company consolidates or merges with another corporation unless the other
corporation controls, is under common control with or is controlled by the
Company immediately prior to the consolidation or merger, in which event this
Note shall remain outstanding as an obligation of the consolidated or surviving
corporation.
4.2 Voluntary Prepayment. This Note may be called by the
Company at any time in whole or in part from time to time, without penalty at
the principal amount plus accrued but unpaid interest.
5. Holder as Deemed Owner. The Company may deem and treat the
registered holder hereof as the absolute owner of this Note (whether or not this
Note shall be overdue and notwithstanding any notice of ownership or writing
hereon made by anyone other than the Company, for the purpose of receiving
payment hereof or thereof or on account hereof and for all other purposes) and
the Company shall not be affected by notice to the contrary.
6. Corporate Obligation. It is expressly understood that this Note is
solely a corporate obligation of the Company, and that any and all personal
liability, either at common law or in equity or by constitution or statute, of,
and any and all such rights and claims against, every promoter, subscriber,
incorporator, shareholder, officer or director, as such, are hereby expressly
waived and released by the holder hereof by the acceptance of this Note and as a
part of the consideration for the issue hereof.
7. Required Consent. The Company may not modify any of the
terms of the Note without the prior written consent of the holder hereof.
3
8. Lost Documents. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Note or any Note
exchanged for it, and (in the case of loss, theft or destruction) of indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such Note,
if mutilated, the Company will make and deliver in lieu of such Note a new Note
of like tenor and unpaid principal amount and dated as of the original date of
the Note.
9. Miscellaneous.
(a) Parties in Interest. All covenants, agreements, and
undertakings in this Note by and on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective permitted successors and assigns
of the parties hereto whether so expressed or not.
(b) Notices. All notices, requests, consents and demands shall
be made in writing and shall be mailed first class, certified mail, return
receipt requested, to the Company or to the holder of this Note at such
respective addresses as may be furnished in writing to the other party hereto.
(c) Construction. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this Note has been executed and delivered on the
date specified above by the duly authorized representative of the Company.
GREENMAN TECHNOLOGIES, INC.
By: /s/ James F. Barker
-----------------------------------------
James F. Barker, President
4
EXHIBIT 10.43
THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
ASSIGNED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITY UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS,
UNLESS THE COMPANY HAS RECEIVED THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH COUNSEL IS OF THE OPINION THAT SUCH SALE, ASSIGNMENT OR
TRANSFER DOES NOT INVOLVE A TRANSACTION REQUIRING REGISTRATION OF SUCH SECURITY
UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
WARRANT NO.: W96/3C RIGHT TO PURCHASE 100,000
SHARES OF COMMON STOCK OF
JUNE 10, 1996 GREENMAN TECHNOLOGIES, INC.
VOID UNLESS EXERCISED BEFORE 5:00 P.M., EASTERN STANDARD TIME ON JUNE 10, 2001.
GREENMAN TECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT
GREENMAN TECHNOLOGIES, INC., a Delaware corporation (the "Company"),
hereby certifies that, for value received, Palomar Medical Technologies, Inc.,
or assigns, is entitled, subject to the terms set forth below, to purchase from
the Company, commencing June 10, 1996, at any time or from time to time before
5:00 p.m., Eastern Daylight Savings Time, on or before June 10, 2001, 100,000
fully paid and nonassessable shares of Common Stock, $.01 par value, of the
Company, at an exercise price per share equal to $3.88. Such exercise price per
share as adjusted from time to time as herein provided is referred to herein as
the "Exercise Price." The number and character of such shares of Common Stock
and the Exercise Price are subject to adjustment as provided herein.
As used herein, the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include GreenMan Technologies, Inc., a
Delaware corporation, and any corporation which shall succeed or assume
the obligations of the Company hereunder.
(b) The term "Common Stock" includes (a) the Company's Common Stock,
$.01 par value per share, as authorized, (b) any other capital stock of
any class or classes (however designated) of the Company, authorized on
or after such date, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of
current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of
which shall ordinarily, in the absence of contingencies, be entitled to
vote for the election of a majority of directors of the Company (even
though the right so to vote has been suspended by the happening of such
a contingency), (c) any other securities into which or for which any of
the securities described in (a) or (b) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of
assets or otherwise, or the conversion of promissory notes or other
obligations of the Company.
(c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holder of this Warrant at any time
shall be entitled to receive, or shall have received, on the exercise
of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or
in replacement of Other Securities pursuant to Sections 3 or 4 or
otherwise.
1. EXERCISE OF WARRANT.
1.1. FULL EXERCISE. This Warrant may be exercised in full by
the holder hereof by surrender of this Warrant, with the form of subscription at
the end hereof duly executed by such holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or official bank check
payable to the order of the Company, in the amount obtained by multiplying the
number of shares of Common Stock for which this Warrant is then exercisable by
the Exercise Price then in effect.
1.2 PARTIAL EXERCISE. This Warrant may be exercised in part by
surrender of this Warrant in the manner and at the place provided in Section 1.1
except that the amount payable by the holder on such partial exercise shall be
the amount obtained by multiplying (a) the number of shares of Common Stock
designated by the holder in the subscription at the end hereof by (b) the
Exercise Price then in effect. On any such partial exercise, the Company at its
expense will forthwith issue and deliver to or upon the order of the holder
hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may request, calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock for which such Warrant or Warrants may still be
exercised.
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant in full or in part, and in any event within
sixty (60) days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof, or as such holder (upon payment by such holder
of any applicable transfer taxes) may direct, a certificate or certificates for
the number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the then current market value of one
full share,
2
together with any other stock or other securities and property (including cash,
where applicable) to which such holder is entitled upon such exercise pursuant
to Section 1 or otherwise.
3. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER.
3.1 REORGANIZATION, CONSOLIDATION OR MERGER. In case at any
time or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person or entity, or (c) transfer all
or substantially all of its properties or assets to any other person under any
plan or arrangement contemplating the dissolution of the Company, then, in each
such case, the holder of the Warrant, on the exercise hereof as provided in
Section 1 at any time after the consummation of such reorganization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or such effective date, the
stock and other securities and property (including cash) to which such holder
would have been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment thereafter as
provided in Sections 4 and 5.
3.2 CONTINUATION OF TERMS. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and Other
Securities and property receivable on the exercise of the Warrant after the
consummation of such reorganization, consolidation or merger or the effective
date of dissolution following any such transfer, as the case may be, and shall
be binding upon the issuer of any such stock or other securities, including, in
the case of any such transfer, the person acquiring all or substantially all of
the properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant.
4. ADJUSTMENTS FOR STOCK DIVIDENDS AND STOCK SPLITS. In the event that
the Company shall (i) issue additional shares of Common Stock as a dividend or
other distribution on outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock, or (iii) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Exercise Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then prevailing Exercise Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such event (calculated assuming the conversion
or exchange of all outstanding shares of convertible or exchangeable securities
of the Company which are convertible or exchangeable into, or exercisable for,
shares of Common Stock) and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such event (calculated
assuming the conversion or exchange of all outstanding shares of convertible or
exchangeable securities of the Company which are convertible or exchangeable
into, or exercisable for, shares of Common Stock), and the product so obtained
shall thereafter be the Exercise Price then in effect. The Exercise Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events
3
described herein in this Section 4. The holder of this Warrant shall thereafter,
on the exercise hereof as provided in Section 1, be entitled to receive that
number of shares of Common Stock determined by multiplying the number of shares
of Common Stock which would otherwise (but for the provisions of this Section 4)
be issuable on such exercise, by a fraction of which (i) the numerator is the
Exercise Price which would otherwise (but for the provisions of this Section 4)
be in effect, and (ii) the denominator is the Exercise Price in effect on the
date of such exercise.
5. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY AND
RECLASSIFICATIONS. In case at any time or from time to time, the holders of
Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of stockholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or property (other
than cash) by way of dividend, or
(b) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock-split (adjustments in respect of which, in the case
of Common Stock, are provided for in Section 4), then and in each such case the
holder of this Warrant, on the exercise hereof as provided in Section 1, shall
be entitled to receive the amount of other or additional stock and other
securities and property (including cash in the cases referred to in subdivision
(b) of this Section 5) which such holder would hold on the date of such exercise
if on the date of distribution of such other or additional stock or other
securities and property, or on the record date fixed for determining the
shareholders entitled to receive such other or additional stock or other
securities and property, such holder had been the holder of record of the number
of shares of Common Stock called for on the face of this Warrant and had
thereafter, during the period from the date thereof to and including the date of
such exercise, retained such shares and all such other or additional stock and
other securities and property (including cash in the cases referred to in
subdivision (b) of this Section 5) receivable by such holder as aforesaid during
such period, giving effect to all adjustments called for during such period by
Sections 3 and 4.
4
6. NOTICES OF RECORD DATE. In the event of
(a) any taking by the Company of a record of the holders of any class
or securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive
any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of
all or substantially all the assets of the Company to or consolidation
or merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Company,
then and in each such event the Company will mail or cause to be mailed to the
holder of this Warrant a notice specifying (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, and
(ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for securities or
other property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice shall be mailed at least twenty (20) days prior to the
date specified in such notice on which any such action is to be taken.
7. RESERVATION OF STOCK ISSUABLE ON EXERCISE ON WARRANT. The Company
will at all times reserve and keep available, solely for issuance and delivery
on the exercise of the Warrant, all shares of Common Stock (or Other Securities)
from time to time issuable on the exercise of the Warrant; the shares of Common
Stock which the holder of this Warrant shall receive upon exercise of the
Warrant will be duly authorized, validly issued, fully paid and non-assessable.
8. EXCHANGE OF WARRANT. On surrender for exchange of this Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder or as such holder (on payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face or faces of the Warrant or Warrants so surrendered.
9. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
5
10. WARRANTHOLDER NOT DEEMED STOCKHOLDER; RESTRICTIONS ON TRANSFER.
This Warrant is issued upon the following terms, to all of which each holder or
owner hereof by the taking hereof consents and agrees:
(a) No holder of this Warrant shall, as such, be deemed the holder of
Common Stock that may at any time be issuable upon exercise of this
Warrant for any purpose whatsoever, nor shall anything contained herein
be construed to confer upon such holder, as such, any of the rights of
a stockholder of the Company until such holder shall have exercised the
Warrant and been issued shares of Common Stock in accordance with the
provisions hereof.
(b) Neither this Warrant nor any shares of Common Stock purchased
pursuant to this Warrant shall be registered under the Securities Act
of 1933 (the "Securities Act") and applicable state securities laws.
Therefore, the Company may require, as a condition of allowing the
transfer or exchange of this Warrant or such shares, that the holder or
transferee of this Warrant or such shares, as the case may be, furnish
to the Company an opinion of counsel acceptable to the Company to the
effect that such transfer or exchange may be made without registration
under the Securities Act and applicable state securities laws. The
certificates evidencing the shares of Common Stock issued on the
exercise of the Warrant shall bear a legend to the effect that the
shares evidenced by such certificates have not been registered under
the Securities Act and applicable state securities laws.
(c) This Warrant is not transferable or assignable to any party without
the prior written consent of the Company and an opinion of counsel
satisfactory to the Company that such transfer is permissible under
applicable law.
11. NOTICES. All notices and other communications from the Company to
the holder of this Warrant shall be mailed by (i) first class mail, postage
prepaid, (ii) electronic facsimile transmission, or (iii) express overnight
courier service, at such address as may have been furnished to the Company in
writing by such holder or, until any such holder furnishes to the Company an
address, then to, and at the address of, the last holder of this Warrant who has
so furnished an address to the Company.
12. REGISTRATION RIGHTS. The Company hereby grants the following
registration rights with respect to the shares of Common Stock issued or
issuable upon exercise of this Warrant (the "Warrant Shares").
12.1 "PIGGY-BACK REGISTRATIONS": Until June 10, 2001, if at
any time the Company shall determine to register in a public offering for its
own account (and not the account of selling stockholders) under the Securities
Act any of its Common Stock, it shall send to the Warrantholder written notice
of such determination and, if within 15 days after receipt of such notice, the
Warrantholder shall so request in writing, the Company shall use its best
efforts to include in such registration statement all or any part of the Warrant
Shares such holder requests to be registered. This right shall not apply to a
registration of shares of Common Stock on Form S-4 or Form S-8 (or
6
their then equivalents) relating to shares of Common Stock to be issued by the
Company in connection with any acquisition of any entity or business, or shares
of Common Stock issuable in connection with any stock option or other employee
benefits plan, respectively.
If, in connection with any offering involving an underwriting of Common
Stock to be issued by the Company for the account of the Company, the managing
underwriter shall impose a limitation on the number of shares of such Common
Stock which may be included in any such registration statement because, in its
judgment, such limitation is necessary to effect an orderly public distribution
of the Common Stock and to maintain a stable market for the securities of the
Company, then the Company shall be obligated to include in such registration
statement only such limited portion (which may be none) of the Warrant Shares
with respect to which the Warrantholder and all other selling stockholders have
requested inclusion thereunder.
12.2 EXPENSES. In the case of a registration under Section
12.1, the Company shall bear all costs and expenses of such registration,
including, but not limited to, printing, legal and accounting expenses,
Securities and Exchange Commission (the "SEC") and NASD filing fees and all
related "Blue Sky" fees and expenses; provided, however, that the Company shall
have no obligation to pay or otherwise bear any portion of the underwriters'
commissions or discounts attributable to the Warrant Shares being offered and
sold by the Warrantholder or the fees and expenses of any counsel for the
Warrantholder in connection with any registration of the Warrant Shares.
12.3 LOCK-UP AGREEMENT FOR PUBLIC OFFERING. In connection with
any public offering of equity securities of the Company, the Warrantholder
agrees not to sell, pledge, transfer or otherwise dispose of, or grant any
option or purchase right with respect to, any shares of capital stock then owned
by him and not otherwise offered in the public offering, or engage in any short
sale, hedging transaction or other derivative security transaction involving the
Common Stock, or other shares of Common Stock of the Company held by him, for
such period of time commencing 30 days prior to the proposed effective date of
such public offering until such period of time following the offering as the
Company and the managing underwriter of such public offering deem necessary in
order to ensure a stable and orderly trading market.
12.4 EXPIRATION OF REGISTRATION RIGHTS. The obligations of the
Company under this Section 12 to register the Warrant Shares shall expire and
terminate at such time as the Warrantholder shall be entitled to sell such
securities without restriction and without a need for the filing of a
registration statement under the Securities Act, including, without limitation,
for any resales of "Restricted Securities" made pursuant to Rule 144 as
promulgated by the SEC, or a sale made pursuant to Sections 4(1) and/or 4(2)
under the Securities Act. If the Warrantholder desires to exercise the
registration rights provided in this Section 12, the Warrantholder must exercise
this Warrant for cash consideration prior to the effectiveness of any
registration.
13. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which
7
enforcement of such change, waiver, discharge or termination is sought. This
Warrant and the shares of Common Stock underlying this Warrant shall be
construed and enforced in accordance with and governed by the laws of the State
of Delaware. The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof. The invalidity
or unenforceability of any provision hereof shall in no way affect the validity
or enforceability of any other provision.
14. EXPIRATION. The right to exercise this Warrant shall expire at
5:00 p.m., Eastern Daylight Saving Time, on June 10, 2001.
Dated: June 10, 1996
ATTEST: GREENMAN TECHNOLOGIES, INC.
By: /s/ Joseph E. Levangie By: /s/ Maurice E. Needham
---------------------- --------------------------
Title: Secretary Title: Chief Executive Officer
---------------------- --------------------------
8
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY ON EXERCISE OF WARRANT)
TO GreenMan Technologies, Inc.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, ____________
shares of Common Stock of GreenMan Technologies, Inc., a Delaware corporation,
and herewith makes payment of $____________ therefor, and requests that the
certificates for such shares be issued in the name of, and delivered to
_________________________, whose address is
- -------------------------.
Dated: __________________________________________________
(Signature must conform to name of holder as specified
on the face of the Warrant)
------------------------------------------------------
------------------------------------------------------
(Address)
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY ON TRANSFER OF WARRANT)
For value received, the undersigned hereby sells, assigns, and
transfers unto _________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of GreenMan
Technologies, Inc., a Delaware corporation, to which the within Warrant relates,
and appoints _________________________ Attorney to transfer such right on the
books of GreenMan Technologies, Inc., a Delaware corporation, with full power of
substitution in the premises.
Dated: __________________________________________________
(Signature must conform to name of holder as specified
on the face of the Warrant)
------------------------------------------------------
------------------------------------------------------
(Address)
Signed in the presence of:
- ------------------------------------------
10
OFFSHORE STOCK SUBSCRIPTION AGREEMENT
This Stock Subscription Agreement (the "Agreement"), dated September
16, 1996, is entered into by and between GreenMan Technologies, Inc., a Delaware
corporation (the "Issuer"), and ______________ acting in its capacity as agent
for certain non-U.S. persons (such non-U.S. persons, collectively, the
"Purchaser").
The Issuer has offered for sale outside the United States (as that term
is defined in regulation S ("Regulation S" under the United States Securities
Act of 1933, as amended (the "Act")) to the purchaser _______ shares of its
common stock, $0.01 par value. Capitalized terms used herein and not defined
herein shall have the meanings given to them in Regulation S.
The parties hereto agree as follows:
1. Purchase and Sale of Shares: Upon the basis of the representations
and warranties, and subject to the terms and conditions, set forth in this
Agreement, the Issuer covenants and agrees to sell the Purchaser on the Closing
Date (as herein defined), _______ shares of its common stock, $0.01 par value
(the "Shares"), at a price equal to $1.51 per share (the "Purchase Price"), and
upon the basis of representations and warranties and subject to the terms and
conditions, set forth in this Agreement, the Purchaser covenants and agrees to
purchase from the Issuer on the Closing Date the Shares at the Purchase Price.
2. Closing The closing of the purchase and sale of the Shares pursuant
to Section 1 hereof shall take place on September 21, 1996, at the office of
Morse, Zelnick, Rose & Lander LLP (the "Escrow Agent"), located at 450 Park
Avenue, New York, New York, or at such other date, time and place as the
Purchaser the Issuer may agree upon in writing (such time and date for the
closing, the "Closing Date"). The legended (see Annex A) certificates
representing the shares to be purchased by the Purchaser shall be delivered by,
or on behalf of, the Issuer at the above-mentioned office of the Escrow Agent.
The Purchase Price shall be delivered in immediately available funds by, or on
behalf of the Purchaser to the Escrow Agent's account (No: 967 086 639 -Attorney
Trust Account) at CHEMICAL BANK, NY. The Escrow Agent shall be instructed by the
Purchaser and the Issuer to deliver the such Shares against payment therefor in
accordance with the instructions of the purchaser, subject to customary
settlement procedures.
3. Representations and Warranties of the Purchaser. The Purchaser
understands, and represents and warrants to, and agrees with, the Issuer, that:
(a) The Purchaser understands that no federal or state agency
has passed on or made any recommendation or endorsement of the Shares.
(b) The Purchaser acknowledges that, in making to decision to
purchase the Shares, it has relied solely upon independent investigators made by
it and not upon any representations made by the Issuer with respect to the
Issuer of r the Shares.
(c) The Purchaser understands that the Shares are being
offered and sold to it in reliance on specific exemptions or non-application
from the registration requirements of federal and state securities laws and that
the Issuer is relying upon the truth and accuracy of the representation,
warranties, agreements acknowledgments and understandings of the Purchaser set
forth herein in order to determine the applicability of such exemptions and the
suitability of the Purchaser to acquire the Shares.
(d) The Purchaser is not a U.S. Person (as defined in
Regulation S) and is not an affiliate of the Issuer.
(e) No offer of the Shares was made to the Purchaser in the
United States
(f) At the time the buy order for the Shares was originated
the Purchaser was located outside the United States.
(g) None of the Purchasers, its affiliates or any person
acting on behalf of the Purchaser or any such affiliate has engaged, or will
engage, in any Directed Selling Efforts with respect to the Shares; and the
Purchaser and its affiliates have complied, and will comply, with the Offering
Restrictions, and any other requirements, of Regulation S.
(h) The Purchaser is aware that the Shares have not been and
will not be registered under the Act and may only be offered or sold pursuant to
registration under the Act or an available exemption therefrom.
(i) The Purchaser:
(i) will not, during the period commencing on the
Closing Date and ending on the day 40 days after the Closing Date (the
"Restricted Period"), offer or sell the Shares in the United States, to a U.S.
Person or for the account or benefit of a U.S. Person or other than in
accordance with Rule 903 or Rule 904 of Regulation S; and
(ii) will, after the expiration of the Restricted
Period, offer, sell, pledge or otherwise transfer the Shares only pursuant to
registration under the Act or an available exemption therefrom and, in any case,
in accordance with applicable state securities laws.
(j) If the Purchaser offers and sells the Shares during the
Restricted Period, then it will do so only: in accordance with the provisions of
Regulation S; pursuant to registration of the Shares under the Act; or pursuant
to an available exemption from the registration requirements of the Act.
(k) The transactions contemplated by this Agreement:
(i) have not been pre-arranged with a purchaser
located in the United States or who is a U.S. Person; and
(ii) are not part of a plan or scheme to evade the
registration provisions of the Act.
(l) The Purchaser is purchasing the Shares for its own account
for the purpose of investment and not (i) with a view to , or for sale in
connection with, any distribution thereof or (ii) for the account or on behalf
of any U.S. Person.
(m) The Purchaser has consulted with the Issuer with respect
to the transactions pursuant to this Agreement, and no objection has been raised
by the Issuer.
4. Representations and Warranties of the Issuer. The Issuer represents
and warrants to, and agrees with, the Purchaser that:
(a) The Issuer has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware.
(b) This Agreement has been duly authorized, executed and
delivered by the Issuer and is a valid and binding agreement enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
livability relating to or affecting creditors' rights generally and to general
principles of equity; and the Issuer has full corporate power and authority
necessary to enter into this Agreement and to perform its obligations hereunder.
(c) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Issuer or
any of its affiliates is required for execution of this Agreement, including,
without limitations the issuance and sale of the Shares, or the performance of
its obligations hereunder.
(d) Neither the sale of the Shares pursuant to, nor the
performance of its obligations under, this Agreement by the Issuer will:
(i) violate, conflict with, result in a breach of, or
Constitute a default (or an event which with the giving of notice or the lapse
of time or both would be reasonably likely to constitute default) under (A) the
articles of incorporation, charter or by-laws of the Issuer or any of its
affiliates, (B) any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Issuer or any of its affiliates of any Court,
governmental agency or body, or arbitrator having jurisdiction over the Issuer
or any of its affiliates or over the properties or assets of the Issuer or any
of its affiliates, (C) the terms of any bond, debenture, lease, mortgage, deed
of trust or other instrument to which the Issuer or any of its affiliates is a
party, by which the Issuer or any of its affiliates subject, or (D) the terms of
any "lock-up" or similar provision of an underwriting or similar agreement to
which the Issuer or any of its affiliates a party; or
(ii) result in the creation or imposition of any
lien, charge or encumbrance upon the Shares or any of the assets of the Issuer
or any of its affiliates.
(e) The Shares:
(i) are free and clear of any security interests,
liens, claims or other encumbrances;
(ii) have been duly and validly authorized and on the
Closing Date will be duly and validly issued, fully paid and nonassessable;
(iii) will not have been, individually collectively,
issued or sold in violation of any preemptive or other similar rights of the
holders of the securities of the Issuer;
(iv) will not subject the holders thereof to personal
liability by reason of being such holders; and
(v) are [quoted/listed] on, and will be, following
the completion of the Restricted Period (if sold in accordance with the
provisions of this Agreement) eligible for trading on, [the National Association
of Securities Dealers Automated Quotations system ("NASDAQ") / other exchange].
(f) The Issuer is a Reporting Issuer and has filed all reports
required to be filed by Section 13(a) or 15(d) of the Securities and Exchange
Act of 1934 (the "Exchange Act") during the preceding 12 months and has been
subject to such filing requirements for the past 90 days.
(g) Where is no pending or, to the best knowledge of the
Issuer, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Issuer
or any of its affiliates that would materially affect the execution by the
Issuer of, or the performance by the Issuer of its obligations under, this
Agreement.
(h) The Issuer, any person representing the Issuer, and, the
best knowledge of the Issuer, any other person selling or offering to sell the
Shares in connection with the transaction contemplated by this Agreement, have
not made, any oral communication in connection with the offer or sale of the
Shares which contained any untrue statement of a material fact or omitted to the
state any material fact necessary in order to make statements, in the light of
the circumstances under which they were made, not misleading.
(i) The Issuer is not in possession of any material non-public
information that, if disclosed, would, or could reasonably be expected to have,
a material adverse effect on the price of the Shares.
(j) The sale of the Shares pursuant to this Agreement will be
made in accordance with the provisions and requirements of Regulation S and any
applicable state law.
(k) No offer to buy the Shares was made to the Issuer by any
person in the Unites States.
(l) None of the Issuer, any affiliate of the Issuer, or any
person acting on behalf of the Issuer or any such affiliate has engaged, or will
engage, in any Direct Selling Efforts with respect to the Shares.
(m) The transaction contemplated by this Agreement:
(i) have not been pre-arranged with a purchaser who
is in the United States or is a U.S. person; and
(ii) are not part of a plan or scheme to evade the
registration provisions of the Act.
(n) The Issuer has not issued, and after the Closing Date will
not issue, any stop transfer order or other order impeding the sale and delivery
of the Shares except for a stop order restricting the sale of the Shares into
the United States or to, or for the account or benefit of, U.S.
persons during the Restricted Period, which expires on __________, 1996.
(o) The Issuer has not offered to sell or sold any warrants
convertible into its common stock in a transaction involving Regulation S in the
past year; and there are no outstanding warrants convertible into its common
stock which have been sold in a transaction involving Regulation S.
5. Covenants of the Issuer. The Issuer covenants and agrees with the
Purchaser to:
(a) continue to comply with all applicable reporting
requirements of the Exchange Act;
(b) refrain from publishing or disseminating any material in
connection with the offering of the Shares;
(c) ensure that all Offering Restrictions applicable to the
sale of the Shares pursuant to this Agreement are thoroughly complied with and
satisfied;
(d) refrain from engaging, and insure that none of its
affiliates will engage, in any Direct Selling Efforts with respect to the
Shares; and
(e) notify the Purchaser promptly if at any time during the
period beginning on the date of this Agreement and ending on the Closing Date
(i) any even shall have occurred as a result of which any oral communication
made by the Issuer, any person representing the Issuer, or, to the best
knowledge of the Issuer, by any other person in connection with the transactions
contemplated by this Agreement would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (ii) there is any public disclosure of material
information regarding the Issuer or its financial condition or results of
operation;
(f) refrain from offering to sell or selling any shares of
common stock, or warrants or other securities convertible into its common stock,
in a transaction involving Regulation S for a period of 180 days following the
date hereof:
6. Conditions Precedent to the Purchaser's Obligations. The obligations
of the Purchaser hereunder are subject to the performance by the Issuer of its
obligations hereunder and to the satisfaction of the following additional
conditions precedent:
(a) The representations and warranties made by the Issue in
this Agreement shall, unless waived by the Purchaser, be true and corrects as of
the dates hereof and at the Closing Date, with the same force and effect as if
they had been made on and as of the Closing Date.
(b) The Company will provide an opinion of counsel confirming
in substance the representations and warranties set out in paragraphs(a), (b),
(c), (d), (e) and (f) of Section 4. Such counsel will not opine as to the laws
of foreign countries.
7. Conditions Precedent to the Issuer's Obligations. The obligations to
the Issuer hereunder are subject to the performance by the Purchaser of its
obligations and to the satisfaction of the following additional precedent:
(a) The representations and warranties made by the Purchaser
in this Agreement shall, unless waived by the Issuer, be true and correct as of
the date hereof and at the Closing Date, with the same force and effect as if
they had been made on the Closing Date.
(b) The delivery into escrow of the immediately available
funds in the amount of purchase price for the Shares.
8. Fees and Expenses. Each of the Purchaser and the Issuer agrees to
pay its own expenses incident to the performance of its obligations hereunder,
including but not limited to, the fees, expenses and disbursements of such
party's counsel.
9. Non-Delivery of the Shares. If, on the Closing Date, the Issuer
shall fail to deliver the Shares to the Purchaser pursuant to this Agreement for
any reason other than the failure by the purchaser to comply with its
obligations hereunder, the Issuer shall:
(I) hold the purchaser harmless against any loss, claim or
damage arising from or as a result of such failure by the Issuer (including,
without limitation, any such loss, claim or damage resulting from an obligation
to resell the shares); and
(ii) reimburse the Purchaser for all of its out-of-pocket
expenses, including fees and disbursements of its counsel, incurred by the
Purchaser in connection with this Agreement and the
transactions contemplated herein provided, however that the Issuer shall then be
under no further liability to the Purchaser except as provided in this Section 3
and Section 10 hereof.
10. Indemnification
(a) In the event the purchaser becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter referred to in or relating to this Agreement (except as expressly
provided for in paragraph (c) of this Section 10), the Issuer will reimburse the
Purchaser for its reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith, as such
expenses are incurred, and will indemnify and hold the Purchaser harmless from
and against any losses, claims, damages or liabilities to which it may become
subject in connection with any such action, proceeding, investigation or matter,
unless such loss, claim, damage or liability results primarily from the
Purchaser's gross negligence, recklessness or bad faith in performing the
services which are the subject of this Agreement.
(b) In the event that the Issuer becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter referred to in or relating to this Agreement (except as expressly
provided for in paragraph (c) of this Section 10), the Purchaser will reimburse
the Purchaser for its reasonable legal and other expenses (including the cost of
any investigation and preparation) incurred in connection therewith, as such
expenses are incurred, and will indemnify and hold the Purchaser harmless from
and against any losses, claims, damages or liabilities to which it may become
subject in connection with any such action, proceeding, investigation or matter,
unless such loss, claim, damage or liability results primarily from the
Purchaser's gross negligence, recklessness or bad faith in performing the
services which are the subject of this Agreement.
(c) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such indemnified party
shall notify the indemnifying party in writing of the commencement thereof, but
the omission so to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have pursuant to this Section
10 unless, due to the failure to be so notified, the indemnifying party is
unable to contest the losses or claims indemnified against, and such omission
shall in no event relieve the indemnifying party from any liability which it may
have to any indemnified party otherwise than under this Section 10. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it may elect by
written notice delivered to such indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party, (who shall not,
except with the consent of the indemnified party, which consent shall not be
unreasonably withheld, be counsel to the indemnifying party)' provided, however
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available too it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and otherwise to
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party of its election so
to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 10 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying shall not be
liable for the expenses of more than one separate counsel for each indemnified
party). (Ii) the indemnifying party shall not have employer counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; provided
further, however, that if clause (i) or (iii) is applicable, such liability
shall be only in respect of the counsel referred to its such clauses clause (i)
or (iii). No indemnifying party shall consent to entry of any judgment or enter
into any settlement without the consent of the indemnified party which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release
from all liability in respect to such claim or litigation. No indemnifying party
shall be subject to any liability for any settlement made without its consent,
which consent shall not be unreasonably withheld.
11. Survival of the Representations, Warranties Etc. The respective
agreements, representations, warranties, indemnities and other statements made
by or on behalf of the Issuer and the Purchaser, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or person controlling or under common control
with, such party and will survive delivery of any payment for the Shares.
12. Notices. All communications hereunder shall be in writing, and, if
sent to the Purchaser shall be sufficient in all respects if delivered, sent by
registered mail, or by telecopy and confirmed to the Purchaser at:
Name:
Address:
Attention:
or if sent to the Issuer, shall be delivered, sent by registered mail or by
telecopy and confirmed to the Issuer at:
Name: GreenMan Technologies, Inc.
Address: 7 Kimball Lane, Building A
Lynnfield, MA 01940
Attention: Maurice E. Needham - CEO
Telephone: (617) 224-2411
Telecopy: (617) 224-0114
13. Miscellaneous.
(a) This Agreement may be executed in one or more counterparts
and it is not necessary that signatures of all parties appear on the same
counterpart but such counterparts together shall constitute but one and the same
agreement.
(b) This Agreement shall inure to the benefit of and be
binding upon the parties hereto, their respective successors and, with respect
to Section 10 hereof, the officers, directors and controlling persons thereof
and each person under common control therewith, and no other person shall have
any right or obligation hereunder.
(c) This agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (without giving effect to
conflicts of laws principles).
(d) Facsimile signatures of this Agreement shall be binding on
all parties hereto.
(e) The headings of the section of this document have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
14. Time of Essence. Time shall be of the essence in this Agreement
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, al as of the day and year first above written.
GREENMAN TECHNOLOGIES, INC.
/s/ Joseph E. Levangie
----------------------
BY:
NAME: JOSEPH E. LEVANGIE
TITLE: CHIEF FINANCIAL OFFICER
ACTING IN ITS CAPACITY AS AGENT FOR CERTAIN
NON-U.S. PERSONS
/s/
--------------------
BY:
NAME:
TITLE:
ANNEX A
(a) The Purchasers acknowledges that the certificates evidencing the
Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT",
AND HAVE BEEN SOLD IN RELIANCE ON THE EXEMPTION FROM REGISTRATION PROVIDED BY
REGULATION S UNDER THE SECURITIES ACT "("REGULATION S"), DURING THE PERIOD PRIOR
TO THE FORTY-FIRST DAY AFTER THE DATE OF THIS CERTIFICATE, (THE "RESTRICTED
PERIOD"), THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
SOLD DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES (AS DEFINED IN REGULATION
S), TO A U.S. PERSON (AS DEFINED IN REGULATION S) OR FOR THE ACCOUNT OR BENEFIT
OF A U.S. PERSON. THE PRECEDING SENTENCE SHALL HAVE NO FURTHER EFFECT SUBSEQUENT
TO THE EXPIRATION OF THE RESTRICTED PERIOD AND THEREAFTER THIS LEGEND MAY BE
REMOVED UPON PRESENTATION OF THIS CERTIFICATE TO THE TRANSFER AGENT FOR GREENMAN
TECHNOLOGIES, INC."
The Issuer covenants and agrees that following the expiration of the
restricted Period it will advise the transfer agent for the Common Stock, upon
the request of a record holder of the Shares, that the foregoing can be removed
from the certificate of Shares.
(b) The Purchaser represents and warrants to the Issuer that, as of
date hereof and as of the Closing Date, neither it nor any of its affiliates,
and covenants the during the Restricted Period neither it nor any of its
affiliates will establish or maintain, any short position (including any short
call position or any long put position) with respect to the Common Stock of the
Issuer, and that no such person or entity is a party to, nor shall it enter into
during the Restricted Period, any contract or arrangement having the effect of
eliminating or substantially diminishing the risk of ownership of the Shares.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> AUG-31-1996
<CASH> 106,664
<SECURITIES> 0
<RECEIVABLES> 633,128
<ALLOWANCES> 23,772
<INVENTORY> 430,442
<CURRENT-ASSETS> 1,268,771
<PP&E> 4,396,538
<DEPRECIATION> 597,861
<TOTAL-ASSETS> 7,961,497
<CURRENT-LIABILITIES> 3,991,491
<BONDS> 2,149,328
0
0
<COMMON> 50,761
<OTHER-SE> 7,468,722
<TOTAL-LIABILITY-AND-EQUITY> 7,961,497
<SALES> 886,866
<TOTAL-REVENUES> 886,866
<CGS> 726,039
<TOTAL-COSTS> 726,039
<OTHER-EXPENSES> 1,297,231
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 95,298
<INCOME-PRETAX> (1,264,980)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,264,980)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,264,980)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
</TABLE>
