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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)*
AMERIGON INCORPORATED
(NAME OF ISSUER)
COMMON STOCK, NO PAR VALUE
(TITLE OF CLASS OF SECURITIES)
03070L 30 0
(CUSIP NUMBER)
GEORGE L. ARGYROS
ARNEL DEVELOPMENT COMPANY
949 SOUTH COAST DRIVE, SUITE 600
COSTA MESA, CA 92626
(714) 481-5000
WITH A COPY TO:
THOMAS M. WHEELER
TMW ENTERPRISES, INC.
801 WEST BIG BEAVER ROAD, SUITE 201
TROY, MI 48084
(248) 362-3620
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS)
SEPTEMBER 20, 2001
(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(b)(3) or (4) 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.
* 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
disclosures provided in a prior cover page.
The information required on 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).
Page 1 of 14
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1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON
George L. Argyros
---- --------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)(a) |X|
(b) |_|
---- ---------------------------------------------------------------------------
3. SEC USE ONLY
---- ---------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
---- ---------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
---- ---------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---- ---------------------------------------------------------------------------
7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
SOLE VOTING POWER
---- ---------------------------------------------------------------------------
8. SHARED VOTING POWER
8,397,177 Shares
---- ---------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
---- ---------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,397,177 Shares
---- ---------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,397,177 shares of Common Stock held as follows: (i) 40,000
shares owned by Mr. Argyros; (ii) 2,686,567 shares issuable
upon conversion of Series A Preferred Stock owned by Westar
Capital II, LLC; Mr. Argyros disclaims beneficial ownership of
these shares except to the extent of his interests in Westar
Capital II, LLC; (iii) 150,000 shares owned by Westar Capital
II, LLC; Mr. Argyros disclaims beneficial ownership of these
shares except to the extent of his interests in Westar Capital
II, LLC; (iv) 25,000 shares underlying bridge loan warrants
held by Westar Capital II, LLC; Mr. Argyros disclaims
beneficial ownership of these shares until the shares are
purchased upon exercise of the warrants, and he further
disclaims beneficial ownership of these shares except to the
extent of his interests in Westar Capital II, LLC; (v) 822,332
shares underlying contingent warrants held by Westar Capital
II, LLC; Mr. Argyros disclaims beneficial ownership of such
shares until the shares are purchased upon exercise of the
warrants, and he further disclaims beneficial ownership of
these shares except to the extent of his interests in Westar
Capital II, LLC; (vi) 2,686,567 shares issuable upon
conversion of Series A Preferred Stock owned by Big Beaver
Investments LLC; Mr. Argyros disclaims beneficial ownership of
these shares; (vii) 150,000 shares owned by Big Beaver
Investments LLC; Mr. Argyros disclaims beneficial ownership of
these shares; (viii) 822,332 shares underlying contingent
warrants held by Big Beaver Investments LLC; Mr. Argyros
disclaims beneficial ownership of these shares; (ix) 175,922
shares underlying bridge loan warrants held by Big Beaver
Investments LLC; Mr. Argyros disclaims beneficial ownership of
these shares; and (x) 838,457 shares issuable upon conversion
of a convertible promissory note held by Big Beaver
Investments LLC; Mr. Argyros disclaims beneficial ownership of
these shares.
---- ---------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) |_|
---- ---------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.67% (after giving effect to the exercise of the contingent
warrants, which includes the exercise of other warrants upon
which the exercisability of the contingent warrants depends)
---- ---------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
==== ===========================================================================
CUSIP No. 03070L 30 0 13D Page 2 of 14
==== ===========================================================================
1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON
Thomas M. Wheeler
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |X|
(b) |_|
---- ---------------------------------------------------------------------------
3. SEC USE ONLY
---- ---------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
---- ---------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
---- ---------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
---- ---------------------------------------------------------------------------
7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
SOLE VOTING POWER
---- ---------------------------------------------------------------------------
8. SHARED VOTING POWER
8,397,177 Shares
---- ---------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
---- ---------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,397,177 Shares
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,397,177 shares of Common Stock held as follows: (i) 40,000
shares owned by Mr. Argyros; Mr. Wheeler disclaims beneficial
ownership of these shares; (ii) 2,686,567 shares issuable upon
conversion of Series A Preferred Stock owned by Westar Capital
II, LLC; Mr. Wheeler disclaims beneficial ownership of these
shares; (iii) 150,000 shares owned by Westar Capital II, LLC;
Mr. Wheeler disclaims beneficial ownership of these shares;
(iv) 25,000 shares underlying bridge loan warrants held by
Westar Capital II, LLC; Mr. Wheeler disclaims beneficial
ownership of these shares; (v) 822,332 shares underlying
contingent warrants held by Westar Capital II, LLC; Mr.
Wheeler disclaims beneficial ownership of these shares; (vi)
2,686,567 shares issuable upon conversion of Series A
Preferred Stock owned by Big Beaver Investments LLC; Mr.
Wheeler disclaims beneficial ownership of these shares except
to the extent of his interests in Big Beaver Investments LLC;
(vii) 150,000 shares owned by Big Beaver Investments LLC; Mr.
Wheeler disclaims beneficial ownership of these shares except
to the extent of his interests in Big Beaver Investments LLC;
(viii) 822,332 shares underlying contingent warrants held by
Big Beaver Investments LLC; Mr. Wheeler disclaims beneficial
ownership of these shares until the shares are purchased upon
exercise of the warrants, and he further disclaims beneficial
ownership of these shares except to the extent of his
interests in Big Beaver Investments LLC; (ix) 175,922 shares
underlying bridge loan warrants held by Big Beaver Investments
LLC; Mr. Wheeler disclaims beneficial ownership of these
shares until the shares are purchased upon exercise of the
warrants, and he further disclaims beneficial ownership of
these shares except to the extent of his interests in Big
Beaver Investments LLC; and (x) 838,457 shares issuable upon
conversion of a convertible promissory note held by Big Beaver
Investments LLC; Mr. Wheeler disclaims beneficial ownership of
these shares until the shares are acquired upon exercise of
the conversion rights, and he further disclaims beneficial
ownership of these shares except to the extent of his
interests in Big Beaver Investments LLC.
---- ---------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) |_|
---- ---------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.67% (after giving effect to the exercise of the contingent
warrants, which includes the exercise of other warrants upon
which the exercisability of the contingent warrants depends).
---- ---------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
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CUSIP No. 03070L 30 0 13D Page 3 of 14
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1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON
Big Star Investments LLC
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |_|
(b) |_|
---- ---------------------------------------------------------------------------
3. SEC USE ONLY
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4. SOURCE OF FUNDS
00
---- ---------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
---- ---------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
SOLE VOTING POWER
-0-
---- ---------------------------------------------------------------------------
8. SHARED VOTING POWER
-0-
---- ---------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
---- ---------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
---- ---------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None.
---- ---------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) |_|
---- ---------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
---- ---------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
00
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CUSIP No. 03070L 30 0 13D Page 4 of 14
==== ===========================================================================
1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON
Big Beaver Investments LLC
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |X|
(b) |_|
---- ---------------------------------------------------------------------------
3. SEC USE ONLY
---- ---------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
---- ---------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
---- ---------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
---- ---------------------------------------------------------------------------
7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
SOLE VOTING POWER
---- ---------------------------------------------------------------------------
8. SHARED VOTING POWER
8,397,177
---- ---------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
---- ---------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,397,177
---- ---------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,397,177 shares of Common Stock held as follows: (i) 40,000
shares owned by Mr. Argyros; Big Beaver Investments LLC
disclaims beneficial ownership of these shares; (ii) 2,686,567
shares issuable upon conversion of Series A Preferred Stock
owned by Westar Capital II, LLC; Big Beaver Investments LLC
disclaims beneficial ownership of these shares; (iii) 150,000
shares owned by Westar Capital II, LLC; Big Beaver Investments
LLC disclaims beneficial ownership of these shares; (iv)
25,000 shares underlying bridge loan warrants held by Westar
Capital II, LLC; Big Beaver Investments LLC disclaims
beneficial ownership of these shares; (v) 822,332 shares
underlying contingent warrants held by Westar Capital II, LLC;
Big Beaver Investments LLC disclaims beneficial ownership of
these shares; (vi) 2,686,567 shares issuable upon conversion
of Series A Preferred Stock owned by Big Beaver Investments
LLC; (vii) 150,000 shares owned by Big Beaver Investments LLC;
(viii) 822,332 shares underlying contingent warrants held by
Big Beaver Investments LLC; Big Beaver Investments LLC
disclaims beneficial ownership of these shares until the
shares are purchased upon exercise of the warrants; (ix)
175,922 shares underlying bridge loan warrants held by Big
Beaver Investments LLC; Big Beaver Investments LLC disclaims
beneficial ownership of these shares until the shares are
purchased upon exercise of the warrants; and (x) 838,457
shares issuable upon conversion of a convertible promissory
note held by Big Beaver Investments LLC; Big Beaver
Investments LLC disclaims beneficial ownership of these shares
until the shares are acquired upon exercise of the conversion
rights.
---- ---------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) |_|
---- ---------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.67% (after giving effect to the exercise of the contingent
warrants, which includes the exercise of other warrants upon
which the exercisability of the contingent warrants depends).
---- ---------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
00
==== ===========================================================================
CUSIP No. 03070L 30 0 13D Page 5 of 14
==== ===========================================================================
1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON
Westar Capital Associates II, LLC
---- ---------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |_|
(b) |_|
---- ---------------------------------------------------------------------------
3. SEC USE ONLY
---- ---------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
---- ---------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
---- ---------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
---- ---------------------------------------------------------------------------
7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
SOLE VOTING POWER
-0-
---- ---------------------------------------------------------------------------
8. SHARED VOTING POWER
-0-
---- ---------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
-0-
---- ---------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
---- ---------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
---- ---------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) |_|
---- ---------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
---- ---------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
00
==== ===========================================================================
CUSIP No. 03070L 30 0 13D Page 6 of 14
==== ===========================================================================
1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON
Westar Capital II, LLC
---- ---------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) |X|
(b) |_|
---- ---------------------------------------------------------------------------
3. SEC USE ONLY
---- ---------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
---- ---------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
---- ---------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
---- ---------------------------------------------------------------------------
7. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
SOLE VOTING POWER
---- ---------------------------------------------------------------------------
8. SHARED VOTING POWER
8,397,177
---- ---------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
---- ---------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
8,397,177
---- ---------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,397,177 shares of Common Stock held as follows: (i) 40,000
shares owned by Mr. Argyros; Westar Capital II, LLC disclaims
beneficial ownership of these shares; (ii) 2,686,567 shares
issuable upon conversion of Series A Preferred Stock owned by
Westar Capital II, LLC; (iii) 150,000 shares owned by Westar
Capital II, LLC; (iv) 25,000 shares underlying bridge loan
warrants held by Westar Capital II, LLC; Westar Capital II,
LLC disclaims beneficial ownership of these shares until the
shares are purchased upon exercise of the warrants; (v)
822,332 shares underlying contingent warrants held by Westar
Capital II, LLC; Westar Capital II, LLC disclaims beneficial
ownership of these shares until such time as the shares are
purchased upon exercise of the warrants; (vi) 2,686,567 shares
issuable upon conversion of Series A Preferred Stock owned by
Big Beaver Investments LLC; Westar Capital II, LLC disclaims
beneficial ownership of these shares; (vii) 150,000 shares
owned by Big Beaver Investments LLC; Westar Capital II, LLC
disclaims beneficial ownership of these shares; (viii) 822,332
shares underlying contingent warrants held by Big Beaver
Investments LLC; Westar Capital II, LLC disclaims beneficial
ownership of these shares; (ix) 175,922 shares underlying
bridge loan warrants held by Big Beaver Investments LLC;
Westar Capital II, LLC disclaims beneficial ownership of these
shares; and (x) 838,457 shares issuable upon conversion of a
convertible promissory note held by Big Beaver Investments
LLC; Westar Capital II, LLC disclaims beneficial ownership of
these shares.
---- ---------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) |_|
---- ---------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.67% (after giving effect to the exercise of the contingent
warrants, which includes the exercise of other warrants upon
which the exercisability of the contingent warrants depends).
---- ---------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
00
==== ===========================================================================
CUSIP No. 03070L 30 0 13D Page 7 of 14
SCHEDULE 13D
George L. Argyros, Thomas M. Wheeler, Big Star Investments LLC ("Big
Star"), Big Beaver Investments LLC ("Big Beaver"), Westar Capital II, LLC
("Westar II") and Westar Capital Associates II, LLC ("Westar Associates") hereby
amend their report on Schedule 13D filed on April 8, 1999 (the "Original
Statement") (filed by George L. Argyros, Thomas M. Wheeler and Big Star), their
Amendment No. 1 to the Original Statement (the "First Amendment") filed on June
22, 1999 (filed by all of the foregoing), their Amendment No. 2 to the Original
Statement (the "Second Amendment") filed on April 26, 2000 (filed by all of the
foregoing), their Amendment No. 3 to the Original Statement (the "Third
Amendment") filed on June 7, 2000 (filed by all of the foregoing). Big Star no
longer owns any interest in the Issuer's securities and is no longer a reporting
person under Section 13 of the Securities and Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder. Westar Associates does not
have a beneficial ownership interest in the Issuer's securities and is no longer
a reporting person under Section 13 of the Securities and Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder. George L.
Argyros, Thomas M. Wheeler, Big Beaver and Westar II are collectively referred
to herein as the "Reporting Persons."
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D relates to the Common Stock, no par
value (the "Issuer Common Stock"), of the Issuer. The principal executive
offices of the Issuer are located at 5462 Irwindale Avenue, Irwindale,
California 91706.
ITEM 2. IDENTITY AND BACKGROUND.
Big Star is a Delaware limited liability company formed for the purpose
of entering into the prior credit transaction described in the Original
Statement (which was paid off in connection with the transactions described in
the First Amendment). Big Star entered into a subsequent credit transaction with
the Issuer on March 16, 2000, as supplemented on May 10, 2000, as described in
the Second Amendment and the Third Amendment, respectively. The subsequent
credit transaction was satisfied in part by payment in cash proceeds and in part
by exchange of the unpaid principal balance for Issuer Common Stock, which was
issued equally to Big Beaver and Westar II. Big Star's principal business
address is c/o Westar Capital, 949 South Coast Drive, Suite 650, Costa Mesa,
California 92626, and its managing members are Westar II and Big Beaver.
Westar II is a Delaware limited liability company engaged in the
business of investing in both private and public companies. Westar II's managing
member is Westar Associates, a Delaware limited liability company. George
Argyros has a controlling interest in Westar II and Westar Associates. Mr.
Argyros is the Chairman of the Board and Chief Executive Officer of Arnel and
Affiliates, a private investment company. John Clark is the managing member of
Westar Associates. Mr. Clark's principal occupation is as a partner of Westar
Capital, LLC, a Delaware limited liability company ("Westar Capital"). Westar
Capital is a private investment firm. Mr. Clark is a member of the board of
directors of the Issuer. Mr. Clark and Mr. Argyros are United States citizens.
The principal business address of Westar II, Westar Associates, Westar Capital,
and John Clark is 949 South Coast Drive, Suite 650, Costa Mesa, California
CUSIP No. 03070L 30 0 13D Page 8 of 14
92626. The principal business address of Mr. Argyros and Arnel and Affiliates is
949 South Coast Drive, Suite 600, Costa Mesa, California 92626.
Big Beaver is a Delaware limited liability company engaged in the
business of investing in both private and public companies. This Amendment No. 4
relates to the Credit Agreement dated September 20, 2001 (attached hereto as
Exhibit 2, the "Credit Agreement") between Big Beaver and the Issuer, and the
making of the loan by Big Beaver to the Issuer pursuant thereto. The managing
member of and holder of a controlling interest in Big Beaver is W III H Partners
LP ("W III H"). The general partner of W III H is TMW Enterprises, Inc., a
Delaware corporation ("TMW"). Thomas M. Wheeler owns a controlling interest in
TMW. Mr. Wheeler is a private investor. Oscar B. Marx, III is the President of
TMW and of Big Beaver, and is a member of Big Beaver. Paul Oster is the Chief
Financial Officer of TMW and of Big Beaver, and is a member of Big Beaver.
Messrs. Oster and Marx are members of the board of directors of the Issuer.
Messrs. Wheeler, Oster and Marx are United States citizens. The principal
business address of Big Beaver, TMW, and Messrs. Wheeler, Oster and Marx is 801
W. Big Beaver Road, Suite 201, Troy, Michigan 48084. The principal address of W
III H is 50 Rockefeller Plaza, 54th Floor, New York, New York.
During the past five years, neither the Reporting Persons nor, to the
Reporting Persons' knowledge, any person named herein pursuant to Instruction C
of Schedule 13D has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
During the past five years, neither the Reporting Persons nor, to the
Reporting Persons' knowledge, any person named herein pursuant to Instruction C
of Schedule 13D, was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of or prohibiting or mandating activity subject to federal or state
securities laws or finding any violation with respect to such laws.
ITEM 3: SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
In connection with the Credit Agreement, the Issuer granted to Big
Beaver the right to convert all or any portion of the outstanding principal
amount and accrued interest under the loan funded pursuant to the Credit
Agreement to shares of Issuer Common Stock (the "Conversion Right"). The Issuer
also issued to Big Beaver a warrant (the "Bridge Loan Warrant") to purchase all
or any portion of shares of Issuer Common Stock in an amount equal to eighteen
percent (18%) of the principal amount of the loan divided by the Exercise Price
(as defined in the Bridge Loan Warrant). Big Beaver, however, cannot exercise
the Conversion Right and the Bridge Loan Warrant to the extent that after giving
effect thereto Big Beaver shall have acquired, pursuant to such conversion and
exercise, twenty percent (20%) or more of the outstanding Issuer Common Stock
unless the Issuer complies with applicable NASDAQ rules.
ITEM 4: PURPOSE OF TRANSACTION.
Pursuant to the Credit Agreement and other related loan documents, Big
Beaver agreed to make a loan to the Issuer in the principal amount of up to
$1,500,000 (the "Loan"), of which $500,000 was funded upon the closing of the
Credit Agreement. The purpose of such transaction is to provide the Issuer with
CUSIP No. 03070L 30 0 13D Page 9 of 14
proceeds for its general corporate purposes. In connection with the Credit
Agreement, the Issuer executed a Convertible Promissory Note (the "Promissory
Note") in favor of Big Beaver. The Loan is secured by all of the assets of the
Issuer.
Pursuant to the Credit Agreement, the Issuer granted to Big Beaver the
Conversion Right, wherein Big Beaver is entitled to convert all or any portion
of the outstanding principal amount and accrued interest under the Promissory
Note to shares of Issuer Common Stock. Big Beaver may exercise the Conversion
Right at any time until repayment in full of the Loan under the Credit
Agreement. The Loan is due on the earlier of December 1, 2001, the occurrence of
a Triggering Event (as defined in the Credit Agreement), or acceleration of the
Loan under the Credit Agreement. The conversion price for such shares shall be
the lesser of (i) the Market Price (as defined in the Credit Agreement), or (ii)
the issuance price per share of any subsequent offering of equity in an
aggregate amount in excess of $1,500,000. As of the closing date and based on
the full principal amount of the Loan, Big Beaver would be entitled to 838,457
shares of Issuer Common Stock upon exercise of the Conversion Right.
Pursuant to the Credit Agreement, the Issuer also issued to Big Beaver
the Bridge Loan Warrant, wherein Big Beaver is entitled to purchase all or any
portion of shares of Issuer Common Stock in an amount equal to eighteen percent
(18%) of the principal amount of the Loan divided by the Exercise Price (as
defined in the Bridge Loan Warrant). Big Beaver may exercise the Bridge Loan
Warrant at any time on or before September 20, 2006. The Exercise Price for such
shares shall be the lesser of (i) the Market Price (as defined in the Bridge
Loan Warrant), or (ii) the issuance price per share of any subsequent offering
of equity in an aggregate amount in excess of $1,500,000. As of the closing
date, Big Beaver would be entitled to purchase 150,922 shares of Issuer Common
Stock pursuant to exercise of the Bridge Loan Warrant. Big Beaver, however,
cannot exercise the Conversion Right and the Bridge Loan Warrant to the extent
that after giving effect thereto, Big Beaver shall have acquired, pursuant to
such conversion and exercise, twenty percent (20%) or more of the outstanding
Issuer Common Stock, unless the Issuer complies with applicable NASDAQ rules.
Pursuant to the terms of the Second Amendment to Investors' Rights
Agreement executed in connection with the Credit Agreement and the Investors'
Rights Agreement dated as of June 8, 1999, as amended (collectively, the
"Amended Rights Agreement"), Big Beaver and Westar II each will have certain
rights to register for resale pursuant to the Securities Act of 1933, as
amended, any shares of Issuer Common Stock received as Registrable Securities
(as defined in the Amended Rights Agreement), including, without limitation,
such shares of Issuer Common Stock received by Big Beaver upon the exercise of
the Conversion Right and/or the Bridge Loan Warrant. The Amended Rights
Agreement also provides Big Beaver and Westar II with rights of first refusal to
participate in future sales of equity securities by the Issuer, subject to the
terms, conditions and limitations provided in the Amended Rights Agreement.
Other than as described above, no Reporting Person has any plans or
proposals which relate to, or may result in, any of the matters listed in Items
4(a)-(j) of Schedule 13D.
The foregoing summary of the Credit Agreement, the Promissory Note, the
Bridge Loan Warrant and the Amended Rights Agreement is qualified in its
entirety by reference to the copies of such documents included as exhibits to
CUSIP No. 03070L 30 0 13D Page 10 of 14
the Original Statement, the First Amendment, the Second Amendment, the Third
Amendment and/or this Amendment No. 4 to Schedule 13D, which are incorporated
herein by their entirety by this reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b) According to the Issuer's representation in connection with
the Credit Agreement, there were 4,717,259 shares of Issuer Common Stock
outstanding as of September 1, 2001. As of September 20, 2001, (i) the
Conversion Right provides Big Beaver the right to convert the Promissory Note
into 838,457 shares of Issuer Common Stock (based on the full principal amount
of the Loan), (ii) the Bridge Loan Warrant provides Big Beaver the right to
purchase 150,922 shares of Issuer Common Stock, (iii) Westar II and Big Beaver
each owns 150,000 shares of Issuer Common Stock as a result of the exercise by
Westar and Big Beaver of their conversion rights under the credit transactions
described in the Second Amendment and the Third Amendment (the "Prior Conversion
Rights"), (iv) Westar II and Big Beaver each has rights to purchase 25,000
shares of Issuer Common Stock pursuant to bridge loan warrants issued in
connection with the credit transaction described in the Second Amendment and the
Third Amendment (the "Prior Bridge Loan Warrants"), and (v) Westar II and Big
Beaver each owns 4,500 shares of Series A Preferred Stock which are currently
convertible into 2,686,567 shares of Issuer Common Stock. The shares of Issuer
Common Stock set forth in the immediately preceding clauses (i) through (v) of
this paragraph represent in the aggregate approximately 60.31% of the
outstanding shares of Issuer Common Stock (which together with the 40,000 shares
owned by George L. Argyros, as discussed below, represent in the aggregate
approximately 60.67% of the outstanding shares of Issues Common Stock).
Further, Westar II and Big Beaver each owns contingent warrants as
described in the Original Statement (the "Contingent Warrants"), which are
exercisable for up to 822,332 shares of Issuer Common Stock. The Contingent
Warrants, however, are exercisable only upon the exercise of certain other
outstanding warrants to purchase Issuer Common Stock, and Westar II and Big
Beaver each may exercise such Contingent Warrants only for that number of shares
equal to 36.9% of the shares purchased under such other warrants. The purpose of
the Contingent Warrants is to provide Westar II and Big Beaver with
anti-dilution protection in the event that other outstanding warrants to
purchase Issuer Common Stock are exercised. Consequently, the exercise of the
Contingent Warrants would not result in either such investor owning more than
30.34% of the outstanding Issuer Common Stock or in the investors together
owning more than 60.67% of the outstanding Issuer Common Stock. The Reporting
Persons disclaim beneficial ownership of the shares underlying the Contingent
Warrants until such time as such shares are purchased upon the exercise of such
Contingent Warrants.
Due to the controlling interest of George Argyros in Westar II and its
controlling entities, and the controlling interest of Thomas Wheeler in Big
Beaver and its controlling entities, Messrs. Argyros and Wheeler may be deemed
to share the power to vote and dispose of (and therefore be the beneficial
owners of) the shares issued to and shares issuable upon exercise or conversion,
as the case may be, of the Conversion Right, the Prior Conversion Rights, the
CUSIP No. 03070L 30 0 13D Page 11 of 14
Bridge Loan Warrant, the Prior Bridge Loan Warrants, the Contingent Warrants,
and the Series A Preferred Stock held by their respective affiliates. George
Argyros disclaims beneficial ownership of (i) all shares issued to or issuable
upon exercise or conversion, as the case may be, of the Conversion Right, the
Bridge Loan Warrant, the Prior Conversion Rights, the Prior Bridge Loan
Warrants, the Contingent Warrants, and the Series A Preferred Stock held by Big
Beaver, and (ii) all shares issued to or issuable upon exercise or conversion,
as the case may be, of the Prior Conversion Rights, the Prior Bridge Loan
Warrants, the Contingent Warrants and the Series A Preferred Stock held by
Westar II, except to the extent of his interests in Westar II. Westar II
disclaims beneficial ownership of all shares issued to or issuable upon exercise
or conversion, as the case may be, of the Conversion Right, the Bridge Loan
Warrant, the Prior Conversion Rights, the Prior Bridge Loan Warrants, the
Contingent Warrants, and the Series A Preferred Stock held by Big Beaver. Thomas
Wheeler disclaims beneficial ownership of (i) all shares issued to or issuable
upon exercise or conversion, as the case may be, of the Conversion Right, the
Bridge Loan Warrant, the Prior Conversion Rights, the Prior Bridge Loan
Warrants, the Contingent Warrants, and the Series A Preferred Stock held by Big
Beaver, except to the extent of his interests in Big Beaver, and (ii) all shares
issued to or issuable upon exercise or conversion, as the case may be, of the
Prior Conversion Rights, the Prior Bridge Loan Warrants, the Contingent
Warrants, and the Series A Preferred Stock held by Westar II. Big Beaver
disclaims beneficial ownership of all shares issued to or issuable upon exercise
or conversion, as the case may be, of the Prior Conversion Rights, the Prior
Bridge Loan Warrants, the Contingent Warrants and the Series A Preferred Stock
held by Westar II.
George Argyros owns 40,000 shares of Issuer Common Stock, which
represents less than 1% of the outstanding shares. As members of a group, Thomas
Wheeler, Big Beaver and Westar II may be deemed to be the beneficial owners of
Mr. Argyros' shares. Mr. Wheeler, Big Beaver and Westar II disclaim beneficial
ownership of such shares.
In addition, John Clark owns 2,400 shares of Issuer Common Stock and
has the right to acquire pursuant to currently exercisable options 12,000 shares
of Issuer Common Stock, which in the aggregate represents less than 1% of the
outstanding shares (after giving effect to the exercise of such option). Paul
Oster owns 2,000 shares of Issuer Common Stock, which represents less than 1% of
the outstanding shares. Oscar B. Marx, III does not beneficially own any shares
of Issuer Common Stock.
(c) Neither the Reporting Persons nor, to the knowledge of the
Reporting Persons, any person named in Item 2 pursuant to Instruction C of
Schedule 13D, has effected any transaction in the Issuer Common Stock during the
past 60 days, except as provided herein.
(d) None.
(e) Not applicable.
CUSIP No. 03070L 30 0 13D Page 12 of 14
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Other than the Credit Agreement, the Bridge Loan Warrant, the
Contingent Warrants, the Shareholders' Agreement (as described in the First
Amendment), the Amended Rights Agreement, to the knowledge of the Reporting
Persons, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 and between such persons
and any person with respect to any securities of the Issuer, including but not
limited to transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following documents are filed as exhibits:
1. Joint Filing Agreement.
2. Credit Agreement dated September 20, 2001, by and between Big
Beaver Investments LLC and Amerigon Incorporated.
3. Bridge Loan Warrant dated September 20, 2001.
4. Convertible Promissory Note dated September 20, 2001.
5. Form of Contingent Warrants (incorporated by reference to
Exhibit 4 of the Original Statement).
6. Form of Investors' Rights Agreement (incorporated by reference
to Exhibit 7 of the Original Statement).
7. Second Amendment to Investors' Rights Agreement dated
September 20, 2001.
8. Shareholders Agreement (incorporated by reference to Exhibit 6
of the First Amendment).
CUSIP No. 03070L 30 0 13D Page 13 of 14
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: As of October 3, 2001 BIG BEAVER INVESTMENTS LLC
By: /s/ O.B. MARX III
-------------------------------------
O.B. Marx III
WESTAR CAPITAL II, LLC
By: Westar Capital Associates II, LLC,
Manager
By: /s/ JOHN W. CLARK
-------------------------------------
John W. Clark
WESTAR CAPITAL ASSOCIATES II, LLC
By: /s/ JOHN W. CLARK
------------------------------------
John W. Clark
BIG STAR INVESTMENTS LLC
By: Westar Capital II, LLC, Member
By: Westar Capital Associates II, LLC,
Manager
By: /s/ JOHN W. CLARK
--------------------------
John W. Clark
By: Big Beaver Investments LLC,
Member
By: /s/ O.B. MARX III
-------------------------------
O.B. Marx III
/s/ GEORGE ARGYROS
-----------------------------------------
GEORGE ARGYROS
/s/ THOMAS M. WHEELER
-----------------------------------------
THOMAS M. WHEELER
CUSIP No. 03070L 30 0 13D Page 14 of 14
EXHIBIT 1
---------
JOINT FILING AGREEMENT
The undersigned agree to file jointly with the Securities and Exchange
Commission ("SEC") any and all statements on Schedule 13D (and any amendments or
supplements thereto) required under Section 13(d) of the Securities Exchange Act
of 1934, as amended, in connection with transactions by the undersigned in the
Common Stock of Amerigon Incorporated. Each of the undersigned will be
responsible for the timely filing of the Schedule 13D and all amendments
thereto, and for the completeness and accuracy of the information concerning
such party contained therein. None of the undersigned shall be responsible for
the completeness or accuracy of the information concerning any other party
contained in the Schedule 13D or any amendment thereto, except to the extent
such person knows or has reason to believe that such information is inaccurate.
Dated: As of October 3, 2001 BIG BEAVER INVESTMENTS LLC
By: /s/ O.B. MARX III
---------------------------------------
O.B. Marx III
WESTAR CAPITAL II, LLC
By: Westar Capital Associates II, LLC,
Manager
By: /s/ JOHN W. CLARK
----------------------------------
John W. Clark
WESTAR CAPITAL ASSOCIATES II, LLC
By: /s/ JOHN W. CLARK
---------------------------------------
John W. Clark
/s/ GEORGE ARGYROS
---------------------------------------
GEORGE ARGYROS
/s/ THOMAS M. WHEELER
---------------------------------------
THOMAS M. WHEELER
[Signatures continued next page]
BIG STAR INVESTMENTS LLC
By: Westar Capital II, LLC, Member
By: Westar Capital Associates II, LLC,
Manager
By: /s/ JOHN W. CLARK
-----------------------------
John W. Clark
By: Big Beaver Investments LLC,
Member
By: /s/ O.B. MARX III
----------------------------------
O.B. Marx III
EXHIBIT 2
---------
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement"), dated as of September 20,
2001, is made between Amerigon Incorporated, a California corporation (the
"Company"), and Big Beaver Investments LLC, a Delaware limited liability company
(the "Lender").
The Company has requested the Lender to make a term loan to the Company
in an aggregate principal amount of up to One Million Five Hundred Thousand
Dollars ($1,500,000) as provided herein. The Lender is willing to make such loan
upon the terms and subject to the conditions set forth in this Agreement.
The Lender may elect to convert some or all of such loan into Common
Stock of the Company as provided herein.
In order to induce the Lender to enter into this Agreement, the Company
has agreed to issue a warrant to purchase shares of Common Stock of the Company
to the Lender or its members as provided herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" means any Person which, directly or indirectly, controls,
is controlled by or is under common control with another Person. For purposes of
the foregoing, "control," "controlled by" and "under common control with" with
respect to any Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
"BRIDGE LOAN WARRANT" has the meaning set forth in Section 2.12.
"BUSINESS DAY" means a day of the year on which commercial banks are
not required or authorized by law to close in Los Angeles, California.
"CHARTER DOCUMENTS" means the Company's articles of incorporation,
bylaws and other organizational documents, each as may be amended, modified or
restated from time to time.
"COMMON STOCK" means the Common Stock, no par value per share, of the
Company, and any securities or other property into or for which such Common
Stock may hereafter be converted or exchanged.
"CLOSING DATE" means the date upon which the conditions set forth in
Sections 3.01 and 3.02 are satisfied and the Lender makes the First Loan Advance
to the Company.
"COLLATERAL" means the property described in one or more of the
Collateral Documents, and all other property now existing or hereafter acquired
which may at any time be or become subject to a Lien in favor of the Lender
pursuant to one or more of the Collateral Documents or otherwise, securing the
payment and performance of the Obligations.
"COLLATERAL DOCUMENTS" means the Security Agreement, the Patent and
Trademark Security Agreement, the Membership Pledge Agreement, any other
agreement pursuant to which the Company provides a Lien on its assets in favor
of the Lender, and all filings (including, but not limited to, all U.C.C.
financing statements filed to perfect the security interests granted in the
Security Agreement), documents and agreements made or delivered pursuant
thereto.
"COMMITMENT" means the Lender's obligation to make the Loan on the
terms and conditions set forth in this Agreement.
"DEFAULT" means an Event of Default or an event or condition which with
notice or lapse of time or both would constitute an Event of Default.
"ENVIRONMENTAL LAWS" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances, judgments and codes, together
with all administrative orders, directives, requests, licenses, authorizations
and permits of, and agreements with (including consent decrees), any
governmental agencies or authorities, in each case relating to or imposing
liability or standards of conduct concerning public health, safety and/or
environmental protection matters, including Hazardous Substances.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"FINAL MATURITY DATE" means the earlier to occur of (i) December 1,
2001, (ii) the occurrence of a Trigger Event, or (iii) acceleration of the Loan
pursuant to Section 6.02.
"GAAP" means generally accepted accounting principles in the United
States, consistently applied.
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or other
hazardous substances, materials, wastes, contaminants or pollutants, including
asbestos, PCBs, petroleum products and byproducts, and any substances defined or
listed as "hazardous substances," "hazardous materials," "hazardous wastes" or
"toxic substances" (or similarly identified or having any constituent substances
displaying any of the foregoing characteristics), regulated under or forming the
basis for liability under any applicable Environmental Law.
"INDEBTEDNESS" means, for any Person: (i) all indebtedness or other
obligations of such Person for borrowed money or for the deferred purchase price
of property or services which purchase price is (a) due more than six (6) months
from the date of incurrence of the obligation in respect thereof, or (b)
evidenced by a note or similar written instrument, but excluding trade payables
incurred in the ordinary course of business; (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses described in clause (i) above; (iii) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person; (iv) all reimbursement and other
obligations of such Person in respect of letters of credit and bankers
acceptances and all net obligations in respect of interest rate swaps, caps,
floors and collars, currency swaps, and other similar financial products; (v)
all obligations under leases which shall have been or should be, in accordance
with GAAP, recorded as capital leases; and/or (vi) all indebtedness of another
Person of the types referred to in clauses (i) through (v) guaranteed directly
or indirectly in any manner by the Person for whom indebtedness is being
determined, or in effect guaranteed directly or indirectly by such Person
through an agreement to purchase or acquire such indebtedness, to advance or
supply funds for the payment or purchase of such indebtedness or otherwise
assure a creditor against loss, or secured by any Lien upon or in property owned
by the Person for whom indebtedness is being determined, whether or not such
Person has assumed or become liable for the payment of such indebtedness of such
other Person.
"INVESTORS RIGHTS AGREEMENT" means the Investors' Rights Agreement
dated as of June 8, 1999 among the Company, the Lender and Westar Capital II
LLC, a Delaware limited liability company ("Westar").
"LIEN" means any mortgage, pledge, security interest, assignment,
deposit arrangement, charge or encumbrance, lien or other type of preferential
arrangement (other than a financing statement filed by a lessor in respect of an
operating lease in the ordinary course of business not intended as security).
"LOAN ADVANCE" has the meaning set forth in Section 2.01.
"LOAN DOCUMENTS" means this Agreement, the Note, the Collateral
Documents and all other certificates, documents, agreements and instruments
delivered to the Lender under or in connection with this Agreement or the Loan.
"LOAN" has the meaning set forth in Section 2.01.
"MARKET PRICE" shall mean (i) the average closing bid price of the
Common Stock, for ten (10) consecutive Business Days ending on the Closing Date,
as reported by Nasdaq, if the Common Stock is traded on the Nasdaq SmallCap
Market, or (ii) the average last reported sale price of the Common Stock, for
ten (10) consecutive Business Days ending on the Closing Date, as reported by
the primary exchange on which the Common Stock is traded, if the Common Stock is
traded on a national securities exchange, or by Nasdaq, if the Common Stock is
traded on the Nasdaq National Market; provided, however, that such price shall
not be greater than the average closing bid price or the last reported sale
price, as the case may be, for the ninety (90) calendar days ending on the
Closing Date.
"MATERIAL ADVERSE EFFECT" means any event, circumstance or condition
that, individually or in the aggregate: (i) has or could reasonably be expected
to have a material adverse effect on the business, operations, assets,
liabilities (including without limitation contingent liabilities), prospects,
employee relationships, customer or supplier relationships, or the condition
(financial or otherwise) of the Company; (ii) would materially impair the
ability of the Company to perform or observe its obligations under or in respect
of any of the Loan Documents; or (iii) adversely affects the legality, validity,
binding effect or enforceability of any of the Loan Documents or the perfection
or priority of any Lien granted to the Lender under any of the Collateral
Documents.
"MEMBERSHIP PLEDGE AGREEMENT" means the Membership Interest Pledge
Agreement between the Company and the Lender, in form and substance satisfactory
to the Lender.
"NOTE" has the meaning set forth in Section 2.03.
"OBLIGATIONS" means the indebtedness, liabilities and other obligations
of the Company to the Lender under or in connection with the Loan Documents,
including the Loan, all interest accrued thereon, all fees due under this
Agreement and all other amounts payable by the Company to the Lender thereunder
or in connection therewith.
"PATENT AND TRADEMARK SECURITY AGREEMENT" means the Patent and
Trademark Security Agreement between the Company and the Lender, in form and
substance satisfactory to the Lender.
"PERMITTED LIENS" means: (i) Liens in favor of the Lender; (ii) the
existing Liens (including leases and subleases) listed in Schedule 1 or incurred
in connection with the extension, renewal or refinancing of the Indebtedness
secured by such existing Liens, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the Indebtedness being extended, renewed or
refinanced does not increase; (iii) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings and which are adequately reserved for in
accordance with GAAP, provided the same does not have priority over any of the
Lender's Liens and no notice of tax lien has been filed of record; (iv) Liens of
materialmen, mechanics, warehousemen, carriers or employees or other similar
Liens provided for by mandatory provisions of law and securing obligations
either not delinquent or being contested in good faith by appropriate
proceedings and which do not in the aggregate materially impair the use or value
of the property or risk the loss or forfeiture thereof; (v) Liens consisting of
deposits or pledges to secure the performance of bids, trade contracts, leases,
public or statutory obligations, or other obligations of a like nature incurred
in the ordinary course of business (other than for Indebtedness); (vi) Liens
upon or in any equipment acquired or held by the Company to secure the purchase
price of such equipment, or Indebtedness incurred solely for the purpose of
financing the acquisition of such equipment; and (vii) restrictions and other
minor encumbrances on real property which do not in the aggregate materially
impair the use or value of such real property or risk the loss or forfeiture
thereof.
"PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or any
other entity of whatever nature, or any governmental agency or authority.
"RESPONSIBLE OFFICER" means, with respect to any Person, the chief
executive officer, the president, the chief financial officer or the treasurer
of such Person, or any other senior officer of such Person having substantially
the same authority and responsibility.
"SECURITY AGREEMENT" means the Security Agreement between the Company
and the Lender, in form and substance satisfactory to the Lender.
"TRIGGER EVENT" means that the Company (or its Board of Directors)
shall have authorized, recommended, proposed or publicly announced its intention
to enter into (or has failed to recommend rejection of) any tender or exchange
offer, merger, consolidation, liquidation, dissolution, business combination,
recapitalization, acquisition, or disposition of a material amount of assets or
securities or any comparable transaction which has not been consented to in
writing by the Lender.
SECTION 1.02 ACCOUNTING TERMS. Unless otherwise defined or the context
otherwise requires, all accounting terms not expressly defined herein shall be
construed, and all accounting determinations and computations required under
this Agreement or any other Loan Document shall be made, in accordance with
GAAP.
SECTION 1.03 INTERPRETATION. In the Loan Documents, except to the
extent the context otherwise requires: (i) any reference to an Article, a
Section, a Schedule or an Exhibit is a reference to an article or section
thereof, or a schedule or an exhibit thereto, respectively, and to a subsection
or a clause is, unless otherwise stated, a reference to a subsection or a clause
of the Section or subsection in which the reference appears; (ii) the words
"hereof," "herein," "hereto," "hereunder" and the like mean and refer to this
Agreement or any other Loan Document as a whole and not merely to the specific
Article, Section, subsection, paragraph or clause in which the respective word
appears; (iii) the meaning of defined terms shall be equally applicable to both
the singular and plural forms of the terms defined; (iv) the words "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; (v) references to agreements and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications are not
prohibited by the terms of the Loan Documents; (vi) references to statutes or
regulations are to be construed as including all statutory and regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; (vii) any table of contents, captions and headings are for
convenience of reference only and shall not affect the construction of this
Agreement or any other Loan Document; and (viii) in the computation of periods
of time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding";
and the word "through" means "to and including."
ARTICLE II
THE LOAN
SECTION 2.01 LOAN. Subject to the terms and conditions of this
Agreement, including satisfaction of the conditions set forth under Article III,
the Lender agrees to make a term loan to the Company in an aggregate principal
amount of One Million Five Hundred Thousand Dollars ($1,500,000) (the "Loan"),
to be advanced to the Company in four (4) installments as follows (each a "Loan
Advance"): (i) the first distribution of Five Hundred Thousand Dollars
($500,000) is to be advanced on the Closing Date (the "First Loan Advance");
(ii) the second distribution of Two Hundred Fifty-Thousand Dollars ($250,000) is
to be advanced on October 1, 2001 (the "Second Loan Advance"); (iii) the third
distribution of Two Hundred Fifty-Thousand Dollars ($250,000) is to be advanced
within two (2) Business Days after the Company satisfies the conditions set
forth in Section 3.04, but in no event earlier than October 1, 2001 (the "Third
Loan Advance"); and (iv) the fourth distribution of Five Hundred Thousand
Dollars ($500,000) is to be advanced on November 1, 2001 (the "Fourth Loan
Advance"). Whenever any Loan Advance hereunder shall be stated to be made on a
day other than a Business Day, then such Loan Advance shall be made on the next
succeeding Business Day.
SECTION 2.02 [INTENTIONALLY OMITTED]
SECTION 2.03 EVIDENCE OF INDEBTEDNESS. The Company shall execute and
deliver for account of the Lender a promissory note (the "Note"), in a form
reasonably acceptable to the Lender, as additional evidence of the Indebtedness
of the Company to the Lender resulting from the Loan.
SECTION 2.04 INTEREST. The Company hereby promises to pay interest on
the unpaid principal amount of the Loan from the date of each Loan Advance until
maturity thereof, at a rate equal to ten percent (10%) per annum, on the date of
any prepayment of the Loan and at the Final Maturity Date.
Any principal payments on the Loan not paid when due and, to the extent
permitted by applicable law, any interest payments on the Loan not paid when
due, in each case whether at stated maturity, by notice of prepayment, by
acceleration or otherwise, shall thereafter bear interest (including
post-petition interest in any proceeding under applicable bankruptcy laws)
payable on demand at a rate which is five percent (5%) per annum in excess of
the interest rate otherwise payable under this Agreement for the Loan. Payment
or acceptance of the increased rates of interest provided for in this paragraph
is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of the Lender.
SECTION 2.05 COMPUTATIONS. All computations of fees and interest
hereunder shall be made on the basis of a year of three hundred sixty (360) days
for the actual number of days occurring in the period for which any such
interest or fee is payable.
SECTION 2.06 HIGHEST LAWFUL RATE. Anything herein to the contrary
notwithstanding, if during any period for which interest is computed hereunder,
the applicable interest rate, together with all fees, charges and other payments
which are treated as interest under applicable law, as provided for herein or in
any other Loan Document, would exceed the maximum rate of interest which may be
charged, contracted for, reserved, received or collected by the Lender in
connection with this Agreement under applicable law (the "Maximum Rate"), the
Company shall not be obligated to pay, and the Lender shall not be entitled to
charge, collect, receive, reserve or take, interest in excess of the Maximum
Rate, and during any such period the interest payable hereunder shall be limited
to the Maximum Rate.
SECTION 2.07 [INTENTIONALLY OMITTED]
SECTION 2.08 REPAYMENT OF THE LOAN. The Company hereby promises to pay
to the Lender the outstanding principal amount of the Loan and any accrued
interest thereon in full on the Final Maturity Date.
SECTION 2.09 PREPAYMENTS OF THE LOANS.
(a) OPTIONAL PREPAYMENTS. The Company may, upon prior notice to the
Lender, prepay the outstanding amount of the Loan in whole or in part, without
premium or penalty.
(b) NOTICE; APPLICATION. The notice given of any prepayment shall
specify the date and amount of the prepayment. If the notice of prepayment is
given, the Company shall make such prepayment and the prepayment amount
specified in such notice shall be due and payable on the date specified therein,
with accrued interest to such date. Each prepayment by or on behalf of the
Company hereunder shall, unless a specific determination is made by the Lender
with respect thereto, be applied (i) first, to accrued and unpaid interest due
the Lender, and (ii) second, to principal due the Lender.
SECTION 2.10 PAYMENTS.
(a) PAYMENTS. The Company shall make each payment under the Loan
Documents, unconditionally in full without deduction, set-off, counterclaim or,
to the extent permitted by applicable law, other defense, and free and clear of,
and without reduction for or on account of, any present or future taxes or
withholdings (other than a tax on the overall net income of the Lender), and all
liabilities with respect thereto. Each payment shall be made not later than
11:00 A.M. (California time) on the day when due to the Lender in U.S. dollars
and in immediately available funds, or such other funds as shall be separately
agreed upon in writing by the Company and the Lender, in accordance with the
Lender's payment instructions.
(b) EXTENSION. Whenever any payment hereunder shall be stated to be
due, or whenever any interest payment date or any other date specified hereunder
would otherwise occur, on a day other than a Business Day, then, except as
otherwise provided herein, such payment shall be made, and such interest payment
date or other date shall occur, on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of accrued interest.
(c) APPLICATION. Each payment by or on behalf of the Company hereunder
shall, unless a specific determination is made by the Lender with respect
thereto, be applied (i) first, to accrued and unpaid interest due the Lender,
and (ii) second, to principal due the Lender.
SECTION 2.11 CONVERSION OF LOANS INTO COMMON STOCK. The Lender shall
have conversion rights as follows (the "Conversion Rights"):
(a) CONVERSION RIGHTS. The Lender may elect in its sole discretion to
convert the principal of and/or interest accrued under all or a portion of the
Note into Common Stock at a conversion price equal to the Market Price of the
Common Stock; provided, however, that if the Company, while any of the
Obligations shall remain unpaid or the Lender shall have any Commitment, issues
equity securities in excess of One Million Five Hundred Thousand Dollars
($1,500,000) in an offering at an issuance price that is less than the Market
Price, the conversion price shall be reduced to such issuance price (the
"Conversion Price"). The Conversion Price shall be subject to adjustment as set
forth in Section 2.11(c).
(b) MECHANICS OF CONVERSION. Before the Lender shall be entitled to
convert the Note into shares of Common Stock, the Lender shall, in the case of a
partial conversion of the Note, indicate on the face of the Note the amount so
converted and provide a copy of the Note to the Company or, in the case of the
conversion of all of the remaining outstanding principal and interest due under
the Note, surrender the Note, duly endorsed, at the office of the Company and
shall give written notice to the Company at its principal corporate office, of
the election to convert the same or a portion thereof and shall state therein
the name or names in which the certificate or certificates for shares of Common
Stock are to be issued. The Company shall, as soon as practicable thereafter,
issue and deliver at such office to the Lender, or to the nominee or nominees of
the Lender, a certificate or certificates for the number of shares of Common
Stock to which such persons shall be entitled as aforesaid. Such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the Note (or a copy thereof as provided herein)
and the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), the conversion may, at the option of the Lender, be conditioned upon the
closing with the underwriters of the sale of securities pursuant to such
offering, in which event the person or persons entitled to receive the Common
Stock upon conversion of the Note shall not be deemed to have converted such
Note until immediately prior to the closing of such sale of securities.
(c) CONVERSION PRICE ADJUSTMENTS OF NOTE FOR CERTAIN DILUTIVE
ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price of the Note shall be
subject to adjustment from time to time as follows:
(i) In the event the Company should at any time or from time
to time after the Closing Date fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or
the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common
Stock without payment of any consideration by such holder for the
additional shares of Common Stock, then, as of such record date (or the
date of such dividend distribution, split or subdivision if no record
date is fixed), the Conversion Price of the Note shall be appropriately
decreased so that the number of shares of Common Stock issuable on
conversion of the Note shall be increased in proportion to such
increase of the aggregate of shares of Common Stock outstanding. In the
event the Company shall declare or pay, without consideration, any
dividend on the Common Stock payable in any right to acquire Common
Stock for no consideration, then the Company shall be deemed to have
made a dividend payable in Common Stock in an amount of shares equal to
the maximum number of shares issuable upon exercise of such rights to
acquire Common Stock.
(ii) If the number of shares of Common Stock outstanding at
any time after the Closing Date is decreased by a combination of the
outstanding shares of common stock, then, following the record date of
such combination, the Conversion Price for the Note shall be
appropriately increased so that the number of shares of Common Stock
issuable on conversion of the Note or a portion thereof shall be
decreased in proportion to such decrease in outstanding shares.
(iii) All adjustments to the Conversion Price will be
calculated to the nearest cent of a dollar. No adjustment in the
Conversion Price will be required unless such adjustment would require
an increase or decrease of at least one cent per dollar; provided,
however, that any adjustments which by reason of this Section
2.11(c)(iii) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All adjustments to the
Conversion Price shall be made successively.
(d) RECAPITALIZATIONS AND REORGANIZATIONS. If the Common Stock issuable
upon conversion of the Note shall be changed into or exchanged for a different
class or classes of capital stock, or other securities or property whether by
reorganization, recapitalization or otherwise (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 2.11), provision shall be made so that the Lender shall thereafter
be entitled to receive upon conversion of the Note the number of shares of stock
or other securities or property to which a holder of Common Stock deliverable
upon conversion would have been entitled on such recapitalization or
reorganization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 2.11 with respect to the rights of
the Lender after the recapitalization or reorganization to the end that the
provisions of this Section 2.11 (including adjustment of the Conversion Price
then in effect and the number of shares purchasable upon conversion of the Note)
shall be applicable after the event as nearly equivalent as may be practicable.
(e) NO IMPAIRMENT. The Company will not, by amendment of any of its
Charter Documents or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performances of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out all of the provisions of
this Section 2.11 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the Lender against
impairment.
(f) NO FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
(i) No fractional shares shall be issued upon the conversion
of the Note and the number of shares of Common Stock to be issued shall
be rounded to the nearest whole share. Whether or not fractional shares
are issuable upon such conversion shall be determined on the basis of
the amount of the Note the Lender is at the time converting into Common
Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of the Note pursuant to this Section 2.11, the
Company, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and
furnish to the Lender a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment
or readjustment is based. The Company shall, upon the written request
at any time of the Lender, furnish or cause to be furnished to the
Lender a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price for the Note at the time in
effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the
conversion of the Note.
(g) NOTICES OF RECORD DATE. In the event of any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, 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 (except the right to
vote), the Company shall mail to the Lender at least twenty (20) days prior to
the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
(h) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting conversion of the Note,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of the Note; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the Note, in addition to such other remedies as shall
be available to the Lender, the Company will take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes, including, without limitation, engaging in best efforts to
obtain the requisite shareholder approval of any necessary amendment to its
Charter Documents.
(i) NO SHAREHOLDER RIGHTS. Nothing contained in this Agreement shall be
construed as conferring upon the Lender or any other person the right to vote or
to consent to receive notice as a shareholder in respect of meeting of
shareholders for the election of directors of the Company or any or any other
matters or any other rights whatsoever as a shareholder of the Company and no
dividends or interest shall be payable or accrued in respect of the Note or the
Common Stock obtainable under this Section 2.11 until, and only to the extent
that, the Note shall have been converted.
(j) SATISFACTION OF THE LOAN UPON CONVERSION. If the Note is converted
in full into Common Stock as provided herein, it will be deemed to be payment in
full for all purposes of this Agreement and the other Loan Documents (except the
Bridge Loan Warrant), or if the Note is converted in part into Common Stock as
provided herein, it will be deemed to be payment under this Agreement and the
other Loan Documents (except the Bridge Loan Warrant) up to the amount of the
Note so converted.
SECTION 2.12 WARRANT.
(a) Concurrently with the execution of this Agreement, and in
consideration of the Lender's agreement to make the Loan to the Company, the
Company will issue to the Lender a warrant to purchase an amount of the Common
Stock of the Company equal to eighteen (18%) of the principal amount of the Loan
(i.e. 270,000) divided by the Exercise Price (as defined below) and on the terms
and conditions set forth in Exhibit A hereto (the "Bridge Loan Warrant").
(b) The Exercise Price of the Warrant shall be equal to the Conversion
Price, as further provided in the Bridge Loan Warrant.
SECTION 2.13 LIMITATION ON CONVERSION RIGHTS AND EXERCISE OF WARRANT.
To the extent that, after giving effect to the Lender's conversion under the
Note and exercise under the Bridge Loan Warrant, the Lender will have the right
to acquire twenty percent (20%) or more of the outstanding Common Stock of the
Company such that a shareholder vote is required under applicable NASDAQ rules,
the Lender will have (i) the right to acquire up to nineteen and ninety-nine one
hundredths percent (19.99%) of the outstanding Common Stock of the Company and
(ii) the conditional right to acquire a greater percentage of the outstanding
Common Stock, as contemplated by Sections 2.11 and 2.12, at such time that the
Company complies with applicable NASDAQ rules. Notwithstanding anything to the
contrary, the Company will use its best efforts to comply with such NASDAQ
rules, including obtaining the necessary shareholder approval.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01 CONDITIONS PRECEDENT TO THE LOAN AND THE FIRST LOAN
ADVANCE. The obligation of the Lender to make the Loan and the First Loan
Advance shall be subject to the satisfaction of each of the following conditions
precedent before or concurrently on the Closing Date:
(a) FEES AND EXPENSES. The Company shall have paid all fees and
invoiced costs and expenses then due hereunder, including fees, costs and
expenses set forth in Section 7.04(a).
(b) LOAN DOCUMENTS. The Lender shall have received the following Loan
Documents: (i) this Agreement executed by the Company; (ii) the Note executed by
the Company; and (iii) the Collateral Documents executed by each of the
respective parties thereto.
(c) DOCUMENTS AND ACTIONS RELATING TO COLLATERAL. The Lender shall have
received, in form and substance satisfactory to it, results of such Lien
searches as it shall reasonably request, and evidence that all filings,
registrations and recordings have been made in the appropriate governmental
offices, and all other action has been taken, which shall be necessary to
create, in favor of the Lender, a perfected first priority Lien on the
Collateral, subject only to Permitted Liens.
(d) ADDITIONAL CLOSING DOCUMENTS. The Lender shall have received the
following, in form and substance satisfactory to it: (i) evidence that all (A)
authorizations or approvals of any governmental agency or authority, and (B)
approvals or consents of any other Person, required in connection with the
execution, delivery and performance of the Loan Documents shall have been
obtained; and (ii) a certificate of the Secretary or other appropriate officer
of the Company, dated the Closing Date, certifying (A) copies of its Charter
Documents and the resolutions and other actions taken or adopted by the Company
authorizing the execution, delivery and performance of the Loan Documents, and
(B) the incumbency, authority and signatures of each officer of the Company
authorized to execute and deliver the Loan Documents and act with respect
thereto.
(e) LEGAL OPINION. The Lender shall have received an opinion of legal
counsel to the Company dated the Closing Date, in the form attached hereto as
Exhibit B.
(f) BRIDGE LOAN WARRANT. The Lender shall have received a duly executed
Bridge Loan Warrant, in the form attached hereto as Exhibit A.
(g) AMENDMENT TO INVESTORS RIGHTS AGREEMENT. The Company, the Lender
and Westar shall have entered into the Second Amendment to the Investors Rights'
Agreement, in substantially the form attached hereto as Exhibit C. ---------
(h) AMENDMENT TO OPTION AGREEMENT. The Lender shall have received a
duly executed Third Amendment to Option Agreement, in the form attached hereto
as Exhibit D.
(i) ESTOPPEL CERTIFICATE. The Lender shall have received a certificate,
in the form attached hereto as Exhibit E, executed by Westar and each of the
Company's directors and officers who hold capital stock or other securities of
the Company.
(j) LANDLORD'S WAIVER. The Lender shall have received an agreement and
waiver, in the form attached hereto as Exhibit F, executed by the Company's
landlord for the premises located in Irwindale, California.
SECTION 3.02 CONDITIONS PRECEDENT TO THE LOAN AND ALL LOAN ADVANCES.
The obligation of the Lender to make the Loan and each Loan Advance shall be
subject to the satisfaction of each of the following conditions precedent before
or concurrently on the date of the Loan and each Loan Advance:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement and the other Loan Documents, or in
any certificate or document delivered pursuant to the provisions hereof or in
connection with the transactions contemplated hereby, shall be true on and as of
the date of the Loan and each Loan Advance as though such representations and
warranties were made at and as of such date(s).
(b) COMPLIANCE. The Company shall have performed and complied with all
agreements and conditions required by this Agreement and the other Loan
Documents to be performed or complied with by it.
(c) OFFICER'S CERTIFICATE. The Lender shall have received certificates
duly executed by the President of the Company dated the date of the Loan and
each Loan Advance certifying in such detail as the Lender may reasonably request
to the fulfillment of the conditions specified in Sections 3.02(a) and 3.02(b).
(d) MATERIAL ADVERSE EFFECT. On and as of the date of each Loan
Advance, there shall have occurred no change or event since the date of this
Agreement that has or could reasonably be expected to have a Material Adverse
Effect.
(e) NO DEFAULT. On the date of each Loan Advance, both before and after
giving effect thereto and to the application of proceeds therefrom, no Default
shall have occurred and be continuing or shall result from the making of such
Loan Advance. The acceptance by the Company of the proceeds of each Loan Advance
shall be deemed a certification to the Lender that on and as of the date of such
Loan Advance no material Default shall have occurred or shall result from the
making of such Loan Advance.
(f) ADDITIONAL DOCUMENTS. The Lender shall have received, in form and
substance satisfactory to it, such additional approvals, opinions, documents and
other information as the Lender may reasonably request.
SECTION 3.03 CONDITIONS PRECEDENT TO THE SECOND LOAN ADVANCE. The
obligation of the Lender to make the Second Loan Advance shall be subject to the
satisfaction by the Company of all conditions set forth in Sections 3.01 and
3.02 before or concurrently on the date of the Second Loan Advance.
SECTION 3.04 CONDITIONS PRECEDENT TO THE THIRD LOAN ADVANCE. The
obligation of the Lender to make the Third Loan Advance shall be subject to the
satisfaction of each of the following conditions precedent before or
concurrently on the date of the Third Loan Advance:
(a) COMPLIANCE. The Company shall have performed and complied with all
conditions precedent set forth in Sections 3.01 and 3.02.
(b) INVESTMENT BANKER LETTER. The Lender shall have received on or
before October 17, 2001, in form and substance satisfactory to it, an engagement
letter executed by the Company and a third-party investment banker of
recognizable reputation regarding future Company financing(s).
SECTION 3.05 CONDITIONS PRECEDENT TO THE FOURTH LOAN ADVANCE. The
obligation of the Lender to make the Fourth Loan Advance shall be subject to the
satisfaction of each of the following conditions precedent before or
concurrently on the date of the Fourth Loan Advance:
(a) COMPLIANCE. The Company shall have performed and complied with all
conditions precedent set forth in Sections 3.01 and 3.02.
(b) MAKING OF THIRD LOAN ADVANCE. The Lender shall have made the Third
Loan Advance pursuant to the terms and conditions herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
specifically set forth in the Disclosure Letter, with each disclosure to
reference the Section or Sections hereof to which it relates, the Company
represents and warrants to the Lender that the following statements are true and
correct on and as of the date of this Agreement and will be true and correct on
and as of the date of each Loan Advance as if made on such date(s):
(a) ORGANIZATION AND POWERS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and has all requisite power and authority to execute, deliver and
perform its Obligations under the Loan Documents. The Company is qualified to do
business and is in good standing in each jurisdiction in which the failure so to
qualify or be in good standing would result in a Material Adverse Effect and has
all requisite power and authority to own its assets and carry on its business.
(b) AUTHORIZATION; NO CONFLICT. The execution, delivery and performance
by the Company of the Loan Documents have been duly authorized by all necessary
corporate action of the Company and do not and will not (i) result in a
violation of any of its Charter Documents, (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which the Company or any of its properties is subject, or result in a
violation of any material law, rule, regulation, order, judgment or decree
(including U.S. federal and state securities laws and regulations, including
NASDAQ rules or other rules of any exchange) applicable to the Company or by
which any property or asset of the Company is bound or affected, and (iii)
except as contemplated by this Agreement, result in, or require, the creation or
imposition of any Lien upon or with respect to any of the properties, assets or
revenues of the Company. The Company is not in violation of any of its Charter
Documents, or of any judgment, order, writ, decree, law, rule or regulation to
which the Company or its properties is subject in any material respect. The
Company is not in default (and no event has occurred which, with notice or lapse
of time or both, would put the Company in default) under, nor has there occurred
any event giving others (with notice or lapse of time or both) any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which the Company is a party or any of its properties
is subject in any material respect.
(c) BINDING OBLIGATION. The Loan Documents constitute, or when
delivered under this Agreement, will constitute, legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or
other equitable remedies.
(d) CONSENTS. No authorization, consent, approval, license, exemption
of, or filing or registration with, any governmental agency or authority, or
approval or consent of any other Person, is required for the due execution,
delivery or performance by the Company of any of the Loan Documents, except for
such approvals as have been obtained or as set forth in Schedule 2 hereto.
(e) LITIGATION. There is no action, suit, proceeding or investigation
pending, or to the Company's knowledge, currently threatened against the
Company, except as which individually or in the aggregate would not have a
Material Adverse Effect. The Company is not a party or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. Except as set forth on the Disclosure Letter, there
is no material action, suit, proceeding or investigation by the Company
currently pending or that the Company intends to initiate.
(f) PATENTS AND TRADEMARKS. The Company owns or licenses from another
person all inventions, patents, patent rights, computer software, trademarks,
trademark rights, service marks, service mark rights, trade names, trade name
rights and copyrights (collectively, the "Intellectual Property") necessary for
its business without any conflict with or infringement of the valid rights of
others and the lack of which could materially and adversely affect the
operations or condition, financial or otherwise, of the Company, and the Company
has not received any notice of infringement upon or conflict with the asserted
rights of others. The Disclosure Letter contains a complete list of all such
patents, patent rights, trademarks, service marks, copyrights, all agreements
related to the foregoing, and all agreements pursuant to which the Company
licenses Intellectual Property from or to a third party (excluding "shrink wrap"
license agreements relating solely to off the shelf software which is not
material to the Company's business). All such Intellectual Property owned by the
Company is owned free and clear of all Liens, adverse claims, encumbrances, or
restrictions, except for restrictions contained in the terms of the licenses
listed in the Disclosure Letter. All such Intellectual Property licensed by the
Company is the subject of a license agreement which is legal, valid, binding and
enforceable and in full force and effect. The consummation of the transactions
contemplated hereby will not result in the termination or impairment of the
Company's ownership of, or right to use, any Intellectual Property. The Company
has a valuable body of trade secrets, including know-how, concepts, business
plans, and other technical data (the "Proprietary Information") for the
development, manufacture and sale of its products. The Company has the right to
use the Proprietary Information free and clear of any material rights, Liens,
encumbrances or claims of others. The Company is not aware, after reasonable
investigation, that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of his or her best efforts to promote
the interests of the Company or that would conflict with the Company's business
in any material respect.
(g) TITLE TO PROPERTIES; LIENS. The Company has good and marketable
title to, or valid and subsisting leasehold interests in, its properties and
assets, including all property forming a part of the Collateral, in all material
respects, and there is no Lien upon or with respect to any of such properties or
assets, including any of the Collateral, except for Permitted Liens.
(h) SEC DOCUMENTS AND FINANCIAL STATEMENTS. Since January 1, 1997, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange Commission
("SEC") pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (all of the foregoing and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, with amendments read together with underlying
documents, are referred to herein as the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
GAAP during the periods involved and fairly and accurately present in all
material respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as
set forth in the most recent balance sheet provided to the Lender or the
Disclosure Letter, the Company has no liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to the date of such financial statements and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under GAAP to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company. Except as disclosed in such financial
statements or in the Disclosure Letter, the Company is not a guarantor or
indemnitor of any Indebtedness of any other Person.
(i) WARRANT AND CONVERSION RIGHTS. The Bridge Loan Warrant is duly
authorized and, upon issuance in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable, and will be free of Liens,
claims, encumbrances and restrictions on transfer, other than restrictions on
transfer under applicable state and federal securities laws or as set forth
therein. The shares of Common Stock issuable upon exercise of the Bridge Loan
Warrant and upon exercise of the Conversion Rights are duly authorized and
reserved for issuance, and, upon exercise of the Bridge Loan Warrant and the
Conversion Rights, as the case may be, in accordance with the terms thereof,
will be validly issued, fully paid and nonassessable, and will be free of Liens,
claims, encumbrances and restrictions on transfer, other than restrictions on
transfer under applicable state and federal securities laws or as set forth
therein. The Disclosure Letter sets forth (A) the number of authorized shares of
Common Stock, and (B) the number of issued and outstanding shares of Common
Stock.
(j) TAX RETURNS. The Company has timely filed all tax returns (federal,
state and local) required to be filed by it and such tax returns are true and
correct in all material respects. In addition, (i) the Company has not requested
any extension of time within which to file any tax returns in respect of any
fiscal year which have not since been filed and no request for waivers of the
time to assess any taxes are pending or outstanding, (ii) no claim for taxes has
become a Lien against the property of the Company or is being asserted against
the Company other than liens for taxes not yet due and payable, (iii) no audit
of any tax return of the Company is being conducted by a tax authority, (iv) no
extension of the statute of limitations on the assessment of any taxes has been
granted to, by or applied for by, the Company and is currently in effect, and
(v) there is no agreement, contract or arrangement to which the Company is a
party that may result in the payment of any amount that would not be deductible
by reason of Sections 280G, 162 or 404 of the Internal Revenue Code.
(k) PERMITS. The Company has all material franchises, permits, licenses
and any similar authority necessary for the conduct of its business ("Permits").
The Company is not in default in any material respect under any of such Permits.
(l) ENVIRONMENTAL AND SAFETY LAWS. The Company is not in violation of
any applicable material statute, law or regulation relating to the environment
or occupational health and safety or Hazardous Substances, and no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.
(m) ORGANIZATION AND POWERS OF BSST. BSST LLC is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. BSST is qualified to do business and is in good standing
in each jurisdiction in which the failure so to qualify or be in good standing
would result in a material adverse effect on BSST or its business or operations,
and has all requisite limited liability power and authority to own its assets
and carry on its business.
(n) VALID SENIOR LOAN. The Loan and the Obligations under the Loan
Documents constitute a valid senior secured debt of the Company owed to the
Lender, negotiated and consummated at arm's length, and in no respects
constitutes equity or an equity contribution to the Company or its Affiliates on
the part of the Lender or its Affiliates. The Company hereby forever waives any
and all rights and claims to characterize the Loan or any Obligation as equity
or equity contribution by the Lender or its Affiliates.
(o) NO USURY. The Loan Documents and the Obligations are in compliance
with California Corporations Code Section 25118, and do not violate any usury
laws of the State of California or the United States.
SECTION 4.02 REPRESENTATIONS AND WARRANTIES OF THE LENDER. The Lender
represents and warrants to the Company that:
(a) INVESTMENT REPRESENTATIONS. The Lender: (i) will acquire the Note,
the Bridge Loan Warrant and shares underlying the Bridge Loan Warrant for its
own account for investment and not with a view to any resale or other
distribution (other than to Affiliates) of the Note in a transaction
constituting a public offering or otherwise requiring registration under the
Securities Act, or in a transaction that would result in noncompliance with
applicable state securities laws; (ii) has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and the
risks of its acquisition of the Note, the Bridge Loan Warrant (and shares
underlying the Bridge Loan Warrant) and credit extensions to the Company; (iii)
is an accredited investor as such term is defined in Rule 501 of Regulation D
under the Securities Act; and (iv) understands that the Note, the Bridge Loan
Warrant and the shares underlying the Bridge Loan Warrant have not been
registered under the Securities Act or any state securities laws.
(b) ORGANIZATION AND POWERS. The Lender is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement.
(c) AUTHORIZATION; BINDING OBLIGATION. The execution, delivery and
performance by the Lender of this Agreement has been duly authorized by all
necessary organizational action of the Lender. This Agreement constitutes a
legal, valid and binding obligation of the Lender, enforceable against the
Lender in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
(d) FINANCIAL CAPACITY. The Lender has access to adequate capital to
enable it to satisfy its obligations to make the Loan contemplated hereby.
ARTICLE V
COVENANTS
SECTION 5.01 REPORTING COVENANTS. So long as any of the Obligations
shall remain unpaid or the Lender shall have any Commitment, the Company agrees
that:
(a) FINANCIAL STATEMENTS AND OTHER REPORTS. The Company will furnish to
the Lender: (i) on Monday of each week, a statement of cash flow for the prior
week and projected cash flow for the following two (2) weeks; (ii) as soon as
available and in any event within ten (10) days after the end of a month,
monthly agings (aged from invoice date) of accounts receivable, payables
reports, and unaudited financial statements (including a balance sheet, income
statement and statement of cash flows) with respect to that month prepared on a
basis consistent with such statements prepared in prior months and otherwise in
accordance with GAAP and certified by a Responsible Officer as being prepared in
accordance with GAAP; and (iii) as soon as available and in any event within
forty-five (45) days after the end of each fiscal quarter, its quarterly
consolidated and, if requested by the Lender, consolidating financial statements
(including a balance sheet, income statement and statement of cash flows),
prepared in accordance with GAAP, together with a certificate of a Responsible
Officer of the Company stating that such financial statements fairly present in
all material respects the financial condition of the Company as at such date and
the results of operations of the Company for the period ended on such date and
have been prepared in accordance with GAAP, subject to changes resulting from
normal, year-end audit adjustments and except for the absence of notes.
(b) ADDITIONAL INFORMATION. The Company will furnish to the Lender: (i)
promptly after the Company has knowledge or becomes aware thereof, notice of the
occurrence of any Default; (ii) prompt written notice of all actions, suits and
proceedings before any governmental agency or authority or arbitrator pending,
or to the best of the Company's knowledge, threatened against or affecting the
Company; (iii) prompt written notice of any other condition or event which has
resulted, or that could reasonably be expected to result, in a Material Adverse
Effect; (iv) promptly after the same are released, copies of all press releases;
(v) promptly after the giving, sending or filing thereof, copies of all reports
and financial information, if any, which the Company sends to the holders of its
capital stock or other securities, and the holders, if any, of any other
Indebtedness, and of all reports or filings, if any, by the Company with the SEC
or any national securities exchange; and (vi) such other information respecting
the operations, properties, business or condition (financial or otherwise) of
the Company (including with respect to the Collateral) as the Lender may from
time to time reasonably request. Each notice pursuant to clauses (i) through
(iii) of this subsection (b) shall be accompanied by a written statement by a
Responsible Officer of the Company setting forth details of the occurrence
referred to therein.
(c) CERTAIN CONTRACTS. Upon the Lender's reasonable request, and at
least twice monthly after the date of this Agreement, the Company shall provide
reports to the Lender concerning the status of all programs with major
customers, in such detail as Lender may reasonably request.
SECTION 5.02 AFFIRMATIVE COVENANTS. So long as any of the Obligations
shall remain unpaid or the Lender shall have any Commitment, the Company agrees
that:
(a) PRESERVATION OF EXISTENCE, ETC. The Company will maintain and
preserve its corporate existence, its rights to transact business and all other
material rights, franchises and privileges necessary or desirable in the normal
course of its business and operations and the ownership of its properties,
except in connection with any transactions expressly permitted by Section 5.03.
(b) PAYMENT OF TAXES, ETC. The Company will pay and discharge all
taxes, fees, assessments and governmental charges or levies imposed upon it or
upon its properties or assets prior to the date on which penalties attach
thereto, and all lawful claims for labor, materials and supplies which, if
unpaid, might become a Lien upon any properties or assets of the Company prior
to the date on which penalties attach thereto except to the extent such taxes,
fees, assessments or governmental charges or levies, or such claims, are being
contested in good faith by appropriate proceedings and are adequately reserved
against in accordance with GAAP.
(c) MAINTENANCE OF INSURANCE. The Company will carry and maintain in
full force and effect, at its own expense and with financially sound and
reputable insurance companies, insurance in such amounts, with such deductibles
and covering such risks as is consistent with the Company's past practices.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company will keep
adequate records and books of account to permit preparation of financial
statements in accordance with GAAP.
(e) INSPECTION RIGHTS. The Company will at any reasonable time during
regular business hours and from time to time permit the Lender or any of its
agents or representatives to visit and inspect any of the properties of the
Company and to examine the records and books of account of the Company, and to
discuss the business affairs, finances and accounts of the Company with any of
the officers, employees or accountants of the Company, provided that the Company
may designate one or more individuals who will be present during such
discussions.
(f) COMPLIANCE WITH LAWS. The Company will comply in all material
respects with the requirements of all applicable laws, rules, regulations and
orders of any governmental agency or authority, including all Environmental
Laws.
(g) MAINTENANCE OF PROPERTIES, ETC. The Company will maintain and
preserve all of its material properties necessary or useful in the proper
conduct of its business in good working order and condition in accordance with
the general practice of other corporations of similar character and size,
ordinary wear and tear excepted.
(h) LICENSES. The Company will obtain and maintain all licenses,
authorizations, consents, filings, exemptions, registrations and other
governmental approvals of any governmental agency or authority necessary in
connection with the execution, delivery and performance of the Loan Documents,
the consummation of the transactions therein contemplated or the operation and
conduct of its business and ownership of its properties, except where the
failure to do so would not have a Material Adverse Effect.
(i) USE OF PROCEEDS. The Company will use the proceeds of the Loan for
its general corporate purposes.
(j) FURTHER ASSURANCES AND ADDITIONAL ACTS. The Company will execute,
acknowledge, deliver, file, notarize and register at its own expense all such
further agreements, instruments, certificates, documents and assurances and
perform such acts as the Lender shall deem necessary or appropriate to
effectuate the purposes of the Loan Documents, and promptly provide the Lender
with evidence of the foregoing satisfactory in form and substance to the Lender.
SECTION 5.03 NEGATIVE COVENANTS. So long as any of the Obligations
shall remain unpaid or the Lender shall have any Commitment, the Company agrees
that without the consent of Lender, which consent will not be unreasonably
withheld:
(a) LIENS; NEGATIVE PLEDGES. (i) The Company will not create, incur,
assume or suffer to exist any Lien upon or with respect to any of its
properties, revenues or assets, whether now owned or hereafter acquired, other
than Permitted Liens. (ii) The Company will not enter into any agreement (other
than this Agreement or any other Loan Document) prohibiting the creation or
assumption of any Lien upon any of its properties, revenues or assets, whether
now owned or hereafter acquired.
(b) CHANGE IN NATURE OF BUSINESS. The Company will not engage in any
material line of business substantially different from those lines of business
carried on by it at the date hereof.
(c) RESTRICTIONS ON FUNDAMENTAL CHANGES. The Company will not merge
with or consolidate into, or acquire all or substantially all of the assets of,
any Person, or sell, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets.
(d) SALES OF ASSETS. The Company will not sell, lease, transfer, or
otherwise dispose of, or part with control of (whether in one transaction or a
series of transactions) any assets (including any shares of stock in any other
Person), except: (i) sales or other dispositions of inventory, and the license,
sublicense and grant of distribution and similar rights, in the ordinary course
of business; (ii) sales or other dispositions of assets in the ordinary course
of business which have become worn out or obsolete or which are promptly being
replaced; or (iii) sales or other dispositions of assets (other than accounts
receivable) outside the ordinary course of business not exceeding in the
aggregate Twenty-Five Thousand Dollars ($25,000) in any fiscal year.
(e) DISTRIBUTIONS. The Company will not declare or pay any dividends in
respect of the Company's capital stock, or purchase, redeem, retire or otherwise
acquire for value any of its capital stock now or hereafter outstanding, return
any capital to its shareholders as such, except that the Company may: (A)
declare and deliver dividends and distributions payable only in common stock of
the Company; and (B) purchase, redeem, retire, or otherwise acquire shares of
its capital stock with the proceeds received from a substantially concurrent
issue of new shares of its capital stock.
(f) LOANS AND INVESTMENTS. The Company will not purchase or otherwise
acquire the capital stock, assets (constituting a business unit), obligations or
other securities of or any interest in any Person, or otherwise extend any
credit to or make any additional investments in any Person, other than in
connection with: (i) extensions of credit in the nature of accounts receivable
or notes receivable arising from the sales of goods or services in the ordinary
course of business; and (ii) short term, investment grade money market
instruments, in accordance with the Company's usual and customary treasury
management policies.
(g) TRANSACTIONS WITH RELATED PARTIES. The Company will not enter into
any transaction, including the purchase, sale or exchange of property or the
rendering of any services, with any Affiliate, any officer or director thereof
or any Person which beneficially owns or holds five percent (5%) or more of the
equity securities, or five percent (5%) or more of the equity interest, thereof
(a "Related Party"), or enter into, assume or suffer to exist, any employment or
consulting contract with any Related Party, except a transaction or contract
which is in the ordinary course of the Company's business and which is upon fair
and reasonable terms not less favorable to the Company than it would obtain in a
comparable arm's length transaction with a Person not a Related Party.
SECTION 5.04 CONFIDENTIALITY. The Lender will hold in confidence all,
and not disclose to others for any reason whatsoever any, material non-public
information received by it from the Company in connection with this Agreement,
except that the Lender may provide such confidential information in response to
legal process or applicable governmental regulations provided that the Lender
forthwith notifies the Company of its obligation to provide such confidential
information and fully cooperates (to the extent permitted by law) with the
Company to protect the confidentiality of such information.
EXHIBIT VI
EVENTS OF DEFAULT
SECTION 6.01 EVENTS OF DEFAULT. Any of the following events which shall
occur shall constitute an "Event of Default":
(a) PAYMENTS. The Company shall fail to pay when due any amount of
principal of, or interest on, the Loan or the Note, or any fee or other amount
payable under any of the Loan Documents.
(b) REPRESENTATIONS AND WARRANTIES. Any representation or warranty by
the Company under or in connection with the Loan Documents shall prove to have
been incorrect in any material respect when made or deemed made.
(c) FAILURE BY COMPANY TO PERFORM CERTAIN COVENANTS. The Company shall
fail to perform or observe any term, covenant or agreement contained in Section
5.03 or Subsections (a), (i) or (j) of Section 5.02.
(d) FAILURE BY COMPANY TO PERFORM OTHER COVENANTS. The Company shall
fail to perform or observe any term, covenant or agreement, other than those
specified in Section 6.01(c), contained in any Loan Document on its part to be
performed or observed, and any such failure shall continue for a period of ten
(10) days from the occurrence thereof (unless the Lender determines that such
failure is not capable of remedy).
(e) INSOLVENCY. (i) The Company shall (A) make a general assignment for
the benefit of creditors or (B) be dissolved, liquidated, wound up or cease its
corporate existence; or (ii) the Company (A) shall file a voluntary petition in
bankruptcy or a petition or answer seeking reorganization, to effect a plan or
other arrangement with creditors or any other relief under the Bankruptcy Reform
Act of 1978 (the "Bankruptcy Code") or under any other state or federal law
relating to bankruptcy or reorganization granting relief to debtors, whether now
or hereafter in effect, or (B) shall file an answer admitting the jurisdiction
of the court and the material allegations of any involuntary petition filed
against the Company pursuant to the Bankruptcy Code or any such other state or
federal law; or (iii) the Company shall be adjudicated a bankrupt, or shall make
an assignment for the benefit of creditors, or shall apply for or consent to the
appointment of any custodian, receiver or trustee for all or any substantial
part of the Company's property, or shall take any action to authorize any of the
actions or events set forth above in this subsection; or (iv) an involuntary
petition seeking any of the relief specified in this subsection shall be filed
against the Company and not dismissed within sixty (60) days; or (v) any order
for relief shall be entered against the Company, in any involuntary proceeding
under the Bankruptcy Code or any such other state or federal law referred to in
this subsection (e).
(f) DISSOLUTION, ETC. The Company shall (i) liquidate, wind up or
dissolve (or suffer any liquidation, wind-up or dissolution), (ii) discontinue
its operations, or (iii) take any corporate action to authorize any of the
actions or events set forth above in this subsection (f).
(g) JUDGMENTS. (i) A final judgment or order for the payment of money
in excess of Fifty Thousand Dollars ($50,000) (or its equivalent in another
currency) which is not fully covered by third-party insurance shall be rendered
against the Company (or its equivalent in another currency); or (ii) any
non-monetary judgment or order shall be rendered against the Company which has
or would reasonably be expected to have a Material Adverse Effect; and in each
case there shall be any period of fifteen (15) consecutive days during which
such judgment continues unsatisfied or during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect.
(h) MATERIAL ADVERSE EFFECT. Any circumstance, condition, or event
shall have occurred which has or could reasonably be expected to have a Material
Adverse Effect.
(i) COLLATERAL DOCUMENTS. Any "Event of Default" as defined in the
Collateral Documents shall have occurred; or any of the Collateral Documents
after delivery thereof shall for any reason be revoked or invalidated, or
otherwise cease to be in full force and effect, or the Company or any other
Person shall contest in any manner the validity or enforceability thereof, or
the Company or any other Person shall deny that it has any further liability or
obligation thereunder; or any of the Collateral Documents for any reason, except
to the extent permitted by the terms thereof, shall cease to create a valid and
perfected first priority Lien subject only to Permitted Liens in any of the
Collateral purported to be covered thereby.
SECTION 6.02 EFFECT OF EVENT OF DEFAULT. If any Event of Default shall
occur, the Lender may, by notice to the Company, declare the Commitment to be
terminated, whereupon the same shall forthwith terminate, and cease to make the
Loan and all or any Loan Advances. If any Event of Default under Section 6.01(e)
shall occur, the Lender may declare the entire unpaid principal amount of the
Loan and the Note, all interest accrued and unpaid thereon and all other
Obligations to be forthwith due and payable, whereupon the Loan and the Note,
all such accrued interest and all such other Obligations shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Company. In
addition, if any Event of Default under Section 6.01(a) or Section 6.01(e) shall
occur, the Lender may exercise any or all of the Lender's rights and remedies
under the Collateral Documents and proceed to enforce all other rights and
remedies available to the Lender under the Loan Documents and applicable law.
EXHIBIT VII
MISCELLANEOUS
SECTION 7.01 AMENDMENTS AND WAIVERS. No amendment to any provision of
the Loan Documents shall be effective unless it is in writing and has been
signed by the Lender and the Company, and no waiver of any provision of any Loan
Document, or consent to any departure by the Company therefrom, shall be
effective unless it is in writing and has been signed by the Lender. Any such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 7.02 NOTICES. All notices and other communications provided for
hereunder and under the other Loan Documents shall, unless otherwise stated
herein, be in writing (including by facsimile transmission) and mailed, sent or
delivered to the respective parties hereto at or to their respective addresses
or facsimile numbers set forth below their names on the signature pages hereof,
or at or to such other address or facsimile number as shall be designated by any
party in a written notice to the other party hereto. All such notices and
communications shall be effective: (i) if delivered by hand, when delivered;
(ii) if sent by mail, upon the earlier of the date of receipt or five (5)
Business Days after deposit in the mail, first class, postage prepaid; or (iii)
if sent by facsimile transmission, when sent; provided, however, that notices
and communications to the Lender pursuant to Article II shall not be effective
until received.
SECTION 7.03 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
the Lender to exercise, no delay in exercising, and no course of dealing with
respect to, any right, remedy, power or privilege under any Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, remedy, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights and remedies under the Loan Documents are cumulative and not exclusive of
any rights, remedies, powers and privileges that may otherwise be available to
the Lender.
SECTION 7.04 COSTS AND EXPENSES; INDEMNITY.
(a) COSTS AND EXPENSES. The Company agrees to pay on demand: (i) the
reasonable out-of-pocket costs and expenses of the Lender and any of its
Affiliates, and the reasonable fees and disbursements of counsel to the Lender
and its Affiliates, in connection with the Loan, including the negotiation,
preparation, execution, delivery and administration of the Loan Documents and
any amendments, modifications or waivers of the terms thereof, and (ii) all
reasonable costs and expenses of the Lender and its Affiliates, and fees and
disbursements of counsel, in connection with (A) any Default, (B) the
enforcement or attempted enforcement of, and preservation of any rights or
interests under, the Loan Documents, (C) any out-of-court workout or other
refinancing or restructuring or any bankruptcy or insolvency case or proceeding,
and (D) the preservation of and realization upon any of the Collateral. Without
limiting the foregoing, the costs and reasonable fees of counsel to the Lender
and its Affiliates incurred or reasonably expected to be incurred in connection
with the Loan will be automatically deducted from the disbursement of the Second
Loan Advance and, accordingly, the amount of the Second Loan Advance actually
disbursed to the Company will be less of such fees and costs.
(b) INDEMNIFICATION. Whether or not the transactions contemplated
hereby shall be consummated, the Company hereby agrees to indemnify the Lender,
any Affiliate thereof and their respective directors, officers, employees,
agents, counsel and other advisors (each an "Indemnified Person") against, and
hold each of them harmless from, any and all liabilities, obligations, losses,
claims, damages, demands, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever, including the reasonable fees
and disbursements of counsel to an Indemnified Person, which may be imposed on,
incurred by, or asserted against any Indemnified Person, (i) in any way relating
to or arising out of any of the Loan Documents, the use or intended use of the
proceeds of the Loan or the transactions contemplated hereby or thereby, (ii)
with respect to any investigation, litigation or other proceeding relating to
any of the foregoing, irrespective of whether the Indemnified Person shall be
designated a party thereto, and/or (iii) in any way relating to or arising out
of the use, generation, manufacture, installation, treatment, storage or
presence, or the spillage, leakage, leaching, migration, dumping, deposit,
discharge, disposal or release, at any time, of any Hazardous Substances on,
under, at or from any properties of the Company, including any personal injury
or property damage suffered by any Person, and any investigation, site
assessment, environmental audit, feasibility study, monitoring, clean-up,
removal, containment, restoration, remedial response or remedial work undertaken
by or on behalf of any Indemnified Person at any time, voluntarily or
involuntarily, with respect to the Premises (the "Indemnified Liabilities");
provided that the Company shall not be liable to any Indemnified Person for any
portion of such Indemnified Liabilities to the extent they are found by a final
decision of a court of competent jurisdiction to have resulted from such
Indemnified Person's gross negligence or willful misconduct. If and to the
extent that the foregoing indemnification is for any reason held unenforceable,
the Company agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
SECTION 7.05 SURVIVAL. All covenants, agreements, representations and
warranties made in any Loan Document shall, except to the extent otherwise
provided therein, survive the execution and delivery of this Agreement, the
making of the Loan, the making of all Loan Advances, and the execution and
delivery of the Note, and shall continue in full force and effect so long as the
Lender has any Commitment, the Loan remains outstanding or any other Obligations
remain unpaid or any obligation to perform any other act hereunder or under any
other Loan Document remains unsatisfied. Without limiting the generality of the
foregoing, the obligations of the Company under Section 7.04, and all similar
obligations under the other Loan Documents (including all obligations to pay
costs and expenses and all indemnity obligations), shall survive the repayment
of the Loans and the termination of the Commitment.
SECTION 7.06 BENEFITS OF AGREEMENT. The Loan Documents are entered into
for the sole protection and benefit of the parties hereto and their permitted
successors and permitted assigns, and no other Person shall be a direct or
indirect beneficiary of, or shall have any direct or indirect cause of action or
claim in connection with, any Loan Document.
SECTION 7.07 BINDING EFFECT; ASSIGNMENT. This Agreement shall become
effective when it shall have been executed by the Company and the Lender and
thereafter shall be binding upon, inure to the benefit of and be enforceable by
the Company, the Lender and their respective permitted successors and permitted
assigns. The Company shall not have the right to assign its rights or
Obligations or any interest herein or therein without the prior written consent
of the Lender. The Lender reserves the right freely to sell, assign, transfer or
grant participations in all or any portion of the Lender's rights and
obligations hereunder and under the other Loan Documents (i) to one or more
Affiliates of the Lender and/or (ii) with the prior consent of the Company
(which consent shall not be unreasonably withheld) to any other Person. In the
event of any such assignment, the assignee shall be deemed a "Lender" for all
purposes of the Loan Documents with respect to the rights and obligations
assigned to it, and the obligations of the Lender so assigned shall thereupon
terminate. The Company shall, from time to time upon request of the Lender,
enter into such amendments to the Loan Documents and execute and deliver such
other documents as shall be necessary to effect any such grant or assignment.
The Company agrees that in connection with any such grant or assignment, the
Lender may deliver to the prospective participant or assignee financial
statements and other relevant information relating to the Company (subject to
such Person entering into a confidentiality agreement with the Company on terms
reasonably satisfactory to the Company).
SECTION 7.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
SECTION 7.09 WAIVER OF JURY TRIAL. THE COMPANY AND THE LENDER EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE COMPANY AND THE LENDER EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
SECTION 7.10 ENTIRE AGREEMENT. The Loan Documents reflect the entire
agreement between the Company and the Lender with respect to the matters set
forth herein and therein and supersede any prior agreements, commitments,
drafts, communication, discussions and understandings, oral or written, with
respect thereto.
SECTION 7.11 SEVERABILITY. Whenever possible, each provision of the
Loan Documents shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. If, however, any provision of any of
the Loan Documents shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation, or,
if for any reason it is not deemed so modified, it shall be ineffective and
invalid only to the extent of such prohibition or invalidity without affecting
the remaining provisions of such Loan Document, or the validity or effectiveness
of such provision in any other jurisdiction.
SECTION 7.12 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Credit
Agreement, as of the date first above written.
THE COMPANY:
AMERIGON INCORPORATED, a California corporation
By: /s/ RICHARD A. WEISBART
-----------------------
Richard A. Weisbart,
President & CEO
Address:
5462 Irwindale Avenue
Irwindale, California 91706
Attn:
Fax: (626) 815-7441
THE LENDER:
BIG BEAVER INVESTMENTS LLC, a Delaware limited
liability company
By:/s/ O. B. MARX III
------------------
Name: O. B. Marx III
Title: President
Address:
801 W. Big Beaver Road, Suite 201
Troy, Michigan 48084
Attn: President
Fax: (248) 362-3033
EXHIBIT 3
---------
BRIDGE LOAN WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
AMERIGON INCORPORATED
WARRANT TO PURCHASE COMMON STOCK
This Warrant (this "Warrant") represents and certifies that,
for value received, Big Beaver Investments LLC, a Delaware limited liability
company (the "Holder"), is entitled to subscribe for and purchase shares
(subject to adjustment from time to time pursuant to the provisions of Section 5
hereof) of fully paid and nonassessable Common Stock of Amerigon Incorporated, a
California corporation (the "Company"), of an amount equal to eighteen percent
(18%) of the principal amount of the Loan (as defined below) divided by the
relevant Exercise Price specified in Section 2 hereof, as such Exercise Price
may be adjusted from time to time pursuant to Section 5 hereof, at a purchase
price per share equal to such Exercise Price, subject to the provisions and upon
the terms and conditions hereinafter set forth.
As used herein, the term "Loan" shall mean the One Million
Five Hundred Thousand Dollars ($1,500,000) bridge facility to be advanced
pursuant to the terms and conditions of the Credit Agreement dated as of
September 20, 2001 (as amended, modified, renewed or extended from time to time,
the "Credit Agreement") between the Company and the Holder. The date (if any) on
which the Holder makes the first advance of proceeds under the Loan is referred
to herein as the "Closing Date."
As used herein, the term "Common Stock" shall mean the
Company's presently authorized Common Stock, no par value, and any securities or
other property into or for which such Common Stock may hereafter be converted or
exchanged.
As used herein, the term "Market Price of the Common Stock"
shall mean (i) the average closing bid price of the Common Stock, for ten (10)
consecutive business days ending on the Closing Date, as reported by Nasdaq, if
the Common Stock is traded on the Nasdaq SmallCap Market, or (ii) the average
last reported sale price of the Common Stock, for ten (10) consecutive business
days ending on the Closing Date, as reported by the primary exchange on which
the Common Stock is traded, if the Common Stock is traded on a national
securities exchange, or by Nasdaq, if the Common Stock is traded on the Nasdaq
National Market; provided, however, that such price shall not be greater than
the average closing bid price or the last reported sale price, as the case may
be, for the ninety (90) calendar days ending on the Closing Date.
1. TERM OF WARRANT.
The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time during a period beginning on the date hereof
and ending five (5) years after such date (the "Warrant Term").
2. EXERCISE PRICE.
The "Exercise Price" shall be the Market Price of the Common
Stock, provided that the Exercise Price shall be subject to adjustment from time
to time pursuant to the provisions of Section 5 hereof.
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW
WARRANT.
a. EXERCISE. Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder, in whole or in part,
by the surrender of this Warrant (with the notice of exercise form attached
hereto as Exhibit 1 duly executed) at the principal office of the Company and by
the payment to the Company, by cashier's check or wire transfer, of an amount
equal to the then applicable Exercise Price per share multiplied by the number
of shares then being purchased. The Company agrees that the shares so purchased
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. In the event of any
exercise of this Warrant, a certificate or certificates for the shares of stock
so purchased shall be delivered to the Holder within fifteen (15) business days
thereafter and, unless this Warrant has been fully exercised or expired, a new
Warrant representing the portion of the shares, if any, with respect to which
this Warrant shall not then have been exercised, shall also be issued to the
Holder within such fifteen (15) business day period.
b. CONVERSION. Subject to Section 1 hereof, the Holder may
convert this Warrant (the "Conversion Right"), in whole or in part, into the
number of shares (less the number of shares which have been previously exercised
or as to which the Conversion Right has been previously exercised) calculated
pursuant to the following formula by surrendering this Warrant (with the notice
of exercise form attached hereto as Exhibit 1 duly executed) at the principal
office of the Company specifying the number of shares the rights to purchase
which the Holder desires to convert:
X = Y
-------
B
where: X = the number of shares of Common Stock to be issued
to the Holder;
Y = 18% of the principal amount of the Loan
(i.e., 270,000); and
B = the Exercise Price, as such price may be adjusted
from time to time pursuant to Section 5 hereof.
The Company agrees that the shares so converted shall be
deemed issued to the Holder as the record owner of such shares
as of the close of business on the date on which this Warrant
shall have been surrendered as aforesaid. In the event of any
conversion of this Warrant, a certificate or certificates for
the shares of stock so converted shall be delivered to the
holder hereof within fifteen (15) business days thereafter
and, unless this Warrant has been fully converted or expired,
a new Warrant representing the portion of the shares, if any,
with respect to which this Warrant shall not then have been
converted, shall also be issued to the holder hereof within
such fifteen (15)-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Common Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all liens, charges and United States taxes with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by this
Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
a. ADDITIONAL SHARES. In the event that the Company, during
the Warrant Term, issues additional shares of Common Stock, or other securities
exchangeable for, exercisable for, or convertible into additional shares of
Common Stock, in each case in an equity offering in excess of One Million Five
Hundred Thousand Dollars ($1,500,000), for consideration per share less than the
Exercise Price, then and in such event, the per share Exercise Price shall be
reduced concurrently with such issuance or sale to a price equal to the
consideration per share of such issuance; provided that such Exercise Price
shall not be so reduced at such time if the amount of such reduction would be an
amount less than $0.01, but any such amount shall be carried forward and
reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $0.01 or more. No adjustment in the
Exercise Price shall be made on account of (i) the grant of options exercisable
for, or sales of, Common Stock pursuant to employee benefit plans previously
approved by the Company's shareholders, (ii) the issuance of stock, warrants or
other securities or rights to persons or entities with which the Company has
business relationships provided such issuances are for other than primarily
equity financing purposes and provided that (x) any such issuance does not
exceed two percent (2%) of the then outstanding Common Stock of the Company
(assuming full conversion and exercise of all convertible and exercisable
securities) and (y) the aggregate of all such issuances since the date of this
Warrant do not exceed five percent (5%) of the then outstanding Common Stock of
the Company (assuming full conversion and exercise of all convertible and
exercisable securities).
b. STOCK SPLITS AND COMBINATIONS. If the Company at any time
or from time to time after the date this Warrant is issued effects a subdivision
of the outstanding Common Stock pursuant to a stock split or similar event, the
Exercise Price shall be proportionately decreased, and conversely, if the
Company at any time or from time to time after the date this Warrant is issued
combines the outstanding shares of Common Stock into a smaller number of shares
in a reverse stock split or similar event, the Exercise Price shall be
proportionately increased. Upon the adjustment of the Exercise Price pursuant to
the foregoing provisions, the number of shares of Common Stock subject to the
exercise of the Warrant shall be adjusted to the nearest full share by
multiplying the shares subject to the Warrant by a fraction, the numerator of
which is the Exercise Price immediately prior to such adjustment and the
denominator of which is the Exercise Price immediately after such adjustment.
Any adjustment under this subsection (b) shall be effective at the close of
business on the date the subdivision or combination becomes effective.
c. CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the Company at any
time or from time to time after the date this Warrant is issued makes or fixes a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in additional shares of Common Stock,
then and in each such event the number of shares of Common Stock subject to this
Warrant shall be increased and the Exercise Price then in effect shall be
decreased as of the date of such issuance or, in the event such record date is
fixed, as of the close of business on such record date, by:
(i) multiplying the Exercise Price then in effect by
a fraction (A) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and (B) the
denominator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number
of shares of Common Stock issuable in payment of such dividend or
distribution; and
(ii) multiplying the number of shares of Common Stock
subject to the Warrant by a fraction (A) the numerator of which is the
total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business
on such record date plus the number of shares of Common Stock issuable
in payment of such dividend or distribution, and (B) the denominator of
which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close
of business on such record date.
If, however, such record date is fixed and such dividend is
not fully paid or if such distribution is not fully made on the date fixed
therefor, the number of shares of Common Stock subject to the Warrant and the
Exercise Price thereof shall be recomputed accordingly as of the close of
business on such record date and thereafter shall be adjusted pursuant to this
subsection (c) as of the time of actual payment of such dividends or
distributions.
d. OTHER ADJUSTMENTS. In the event the Company at any time or
from time to time after the date this Warrant is issued:
(i) makes a dividend or other distribution payable in
securities of the Company other than shares of Common Stock, or
(ii) changes any Common Stock into the same or a
different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section 5), or
(iii) effects a capital reorganization of the Common
Stock (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this
Section 5) or merger or consolidation of the Company with or into
another corporation or entity, or the sale of all or substantially all
of the Company's properties and assets to any other person,
then, in each such event, any and all new, substituted or
additional securities to which the Holder is or would be entitled by reason of
its ownership of the shares underlying this Warrant shall be immediately subject
to this Warrant and be included in the shares underlying this Warrant for all
purposes hereunder. After each such event, the Exercise Price per share shall be
proportionately adjusted so that the aggregate Exercise Price upon exercise of
this Warrant shall remain the same as before such event.
6. NOTICE OF ADJUSTMENTS.
Whenever any Exercise Price shall be adjusted pursuant to
Section 5 hereof, the Company shall prepare a certificate signed by its chief
financial officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, the Exercise Price after giving effect to such adjustment and
the number of shares then purchasable upon exercise of this Warrant, and shall
cause copies of such certificate to be mailed (by first class mail, postage
prepaid) to the Holder of this Warrant at the address specified in Section 9(c)
hereof, or at such other address as may be provided to the Company in writing by
the Holder of this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Common Stock will be issued in
conjunction with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefore on the basis of the Exercise
Price then in effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that
this Warrant and the shares of Common Stock to be issued on exercise hereof are
being acquired for investment and that it will not offer, sell or otherwise
dispose of this Warrant or any shares of Common Stock to be issued upon exercise
hereof except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act"). This Warrant and all shares of
Common Stock issued upon exercise of this Warrant (unless registered under the
Act) shall be stamped and imprinted with a legend substantially in the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS IT HAS BEEN REGISTERED UNDER THE ACT AND SUCH LAWS OR (1)
REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE
EFFECT THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED."
9. MISCELLANEOUS.
a. NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall
not be entitled to vote or receive dividends or be deemed the Holder of Common
Stock or any other securities of the Company that may at any time be issuable on
the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise, until the Warrant shall have been exercised
and the shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
b. REPLACEMENT. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction, or mutilation of this Warrant
and, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company, at the Holder's expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
c. NOTICE. Any notice given to either party under this Warrant
shall be in writing, and any notice hereunder shall be deemed to have been given
upon the earlier of delivery thereof by hand delivery, by courier, or by
standard form of telecommunication or three (3) business days after the mailing
thereof in the U.S. mail if sent registered mail with postage prepaid, addressed
to the Company at its principal executive offices and to the Holder at its
address set forth in the Company's books and records or at such other address as
the Holder may have provided to the Company in writing.
d. GOVERNING LAW. This Warrant shall be governed and construed
under the laws of the State of California.
This Warrant is executed as of this 20th day of September, 2001.
AMERIGON INCORPORATED, a California
corporation
By: /s/ RICHARD A. WEISBART
-----------------------
Richard A. Weisbart,
President & CEO
EXHIBIT 1
---------
NOTICE OF EXERCISE
------------------
TO: AMERIGON INCORPORATED
1. Check Box that Applies:
|_| The undersigned hereby elects to purchase __________
shares of Common Stock of AMERIGON INCORPORATED pursuant
to the terms of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full.
|_| The undersigned hereby elects to convert the attached
warrant into ________ shares of Common Stock of AMERIGON
INCORPORATED pursuant to the terms of the attached
Warrant.
2. Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
----------------------------------
(Name)
----------------------------------
----------------------------------
(Address)
3. The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares.
--------------------------------------------
Signature
EXHIBIT 4
---------
CONVERTIBLE PROMISSORY NOTE
$1,500,000 September 20, 2001
Irwindale, California
FOR VALUE RECEIVED, Amerigon Incorporated, a California
corporation (the "Borrower"), promises to pay to the order of Big Beaver
Investments LLC, a Delaware limited liability company (the "Lender"), the
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000), or,
if less, the aggregate principal amount of the Loan Advances (as defined in the
Credit Agreement referred to below) made by the Lender to the Borrower pursuant
to the Credit Agreement.
The Borrower also promises to pay interest on the unpaid
principal amount hereof from the date hereof until paid at the rates and at the
times which shall be determined in accordance with the provisions of the Credit
Agreement. Any interest not paid when due shall be compounded and shall
thereafter accrue interest at the rates and at the times which shall be
determined in accordance with the provisions of the Credit Agreement. All unpaid
amounts of principal and interest shall be due and payable in full on the Final
Maturity Date (as defined in the Credit Agreement).
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the office of the Lender located at 801 W. Big Beaver Road, Suite 201, Troy,
Michigan 48084, or at such other place as shall be designated in writing for
such purpose in accordance with the terms of the Credit Agreement. Until
notified of the transfer of this Note, the Borrower shall be entitled to deem
the Lender or such person who has been so identified by the transferor in
writing to the Borrower as the holder of this Note, as the owner and holder of
this Note. Each of the Lender and any subsequent holder of this Note agrees that
before disposing of this Note or any part hereof, it will make a notation hereon
of all principal payments previously made hereunder and of the date to which
interest hereon has been paid on the schedule attached hereto, if any; provided,
however, that the failure to make notation of any payment made on this Note
shall not limit or otherwise affect the obligation of the Borrower hereunder
with respect to payments of principal or interest on this Note.
This Note is referred to in, and is entitled to the benefits
and subject to the terms and conditions of, that certain Credit Agreement dated
as of September 20, 2001 (as amended, modified, renewed or extended from time to
time, the "Credit Agreement") between the Borrower and the Lender. The Credit
Agreement, among other things, (i) provides for the making of a term loan by the
Lender to the Borrower in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above mentioned (the "Loan"), the
indebtedness of the Borrower resulting from the Loan being evidenced by this
Note, (ii) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and (iii) permits the prepayment of the Loan
by the Borrower prior to maturity.
The Borrower's obligations under this Note are also secured by
all assets of the Borrower pursuant to the terms of the Credit Agreement and the
Collateral Documents (as defined in the Credit Agreement). The terms and
conditions of the Credit Agreement and the Collateral Documents are incorporated
herein by this reference.
This Note is subject to conversion into the Common Stock of
the Borrower as further provided in the Credit Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
No reference herein to the Credit Agreement or the Collateral
Documents, and no provision of this Note or such agreements shall alter or
impair the obligation of the Borrower, which is absolute and unconditional, to
pay the principal of and interest on this Note at the place, at the respective
times, and in the currency herein prescribed.
The Borrower promises to pay all reasonable costs and
expenses, including reasonable attorneys' fees, incurred in the collection and
enforcement of this Note. The Borrower hereby consents to renewals and
extensions of time at or after the maturity hereof, without notice, and, subject
to the Credit Agreement, hereby waives diligence, presentment, protest, demand
and notice of every kind and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed and delivered by its duly authorized officer, as of the date and the
place first above-written.
AMERIGON INCORPORATED,
a California corporation
By: /s/ RICHARD A. WEISBART
---------------------------------
Richard A. Weisbart,
President & CEO
SCHEDULE OF
TRANSACTIONS ON
NOTE
Amount of Amount of Interest Paid Principal Notation
Loan Made Principal Paid Interest Paid Through Balance Made by
--------- -------------- ------------- ------- ------- -------
EXHIBIT 7
---------
SECOND AMENDMENT TO THE INVESTORS' RIGHTS AGREEMENT
This Second Amendment to the Investors' Rights Agreement (this
"Amendment") dated as of September 20, 2001, is by and between Amerigon
Incorporated, a California corporation (the "Company"), Big Beaver Investments
LLC, a Delaware limited liability company (the "Lender") and Westar Capital II
LLC, a Delaware limited liability company ("Westar") and amends the Investors'
Rights Agreement dated as of June 8, 1999 among the Company, the Lender and
Westar Capital II LLC, a Delaware limited liability company (the "Investors'
Rights Agreement"). All terms not otherwise defined herein shall have the
meanings set forth in the Investors' Rights Agreement.
RECITALS
WHEREAS, the Company and the Lender, have entered into a Credit
Agreement (the "2001 Credit Agreement"), dated as of September 20, 2001;
WHEREAS, the Note issued by Company pursuant to the 2001 Credit
Agreement is convertible into Common Stock of the Company as provided therein;
WHEREAS, in order to induce the Lender to enter into the Credit
Agreement, the Company and the Lender have entered into a certain Bridge Warrant
Agreement, dated as of September 20, 2001 (the "Warrant Agreement"), pursuant to
which the Company has agreed to issue to the Lender certain warrants ("Bridge
Warrants") to purchase shares of Common Stock of the Company as provided
therein;
WHEREAS, the Company desires to amend and restate the definitions of
"Registrable Securities," "Bridge Loan," "Bridge Note," and "Bridge Warrants" in
the Investors' Rights Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree to amend the Investors' Rights Agreement as
provided herein:
1. Section 1.1(g) of the Investors' Rights Agreement is amended and
restated as follows:
"The term `Registrable Securities' means (i) the Common Stock issuable
or issued upon conversion of the Series A Preferred Stock, (ii) the
Common Stock issued or issuable upon the exercise of the Bridge Note
and the Bridge Warrants, and (iii) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued) a dividend or other
distribution with respect to, or in exchange for or in replacement of
the shares referenced in (i) and (ii) above, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction
in which his rights under this Section 1 are not assigned."
The following definitions are added after Section 1.1(i) of the
Investors' Rights Agreement.
"(j) The term `Bridge Note' means the promissory note executed and
delivered by Company to Big Star Investments LLC ("Big Star") pursuant
to a Credit Agreement dated as of March 16, 2000 (the "2000 Bridge
Credit Agreement") and the promissory note executed and delivered by
the Company to the Lender pursuant to a Credit Agreement dated as of
September 20, 2001 between Company and the Lender (the "2001 Bridge
Credit Agreement"), as such agreements may be amended, restated,
modified or supplemented from time to time.
(k) The term `Bridge Warrants' means a Bridge Warrant dated March 16,
2000 issued by the Company to Big Star and any additional Bridge
Warrants issued to Big Star pursuant to the 2000 Bridge Credit
Agreement and a Bridge Warrant dated September 20, 2001 issued by the
Company to the Lender and any additional Bridge Warrants issued to the
Lender pursuant to the 2001 Bridge Credit Agreement."
2. Right of First Offer. The Lender and Westar acknowledge that the
Company has satisfied its obligations to the Major Investors pursuant
to Section 2 of the Investors' Rights Agreement in connection with the
issuance of the Bridge Note and the Bridge Warrants.
3. Miscellaneous.
3.1 Successors and Assigns. This Amendment and the rights and
obligations of the parties hereunder shall inure to the benefit of, and
be binding upon, their respective successors, assigns and legal
representatives.
3.2 Governing Law. This Amendment shall be governed by and construed
under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely
within California.
3.3 Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which, when taken together, shall constitute one and the same
instrument.
3.4 Titles and Subtitles. The titles and subtitles used in this
Amendment are used for convenience only and are not to be considered in
construing or interpreting this Amendment.
3.5 Expenses. If any action at law or in equity is necessary to enforce
or interpret the terms of this Amendment, the prevailing party shall be
entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief
to which such party may be entitled.
3.6 Amendments and Waivers. Any term of this Amendment may be amended
and the observance of any term of this Amendment may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the
holders of a majority of the Registrable Securities then outstanding.
Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities, and
the Company.
3.7 Severability. If one or more provisions of this Amendment are held
to be unenforceable under applicable law, such provision shall be
excluded from this Amendment and the balance of the Amendment shall be
interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
3.8 Entire Agreement; Amendment; Waiver. This Amendment constitutes the
entire agreement between the parties hereto with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first written above.
AMERIGON INCORPORATED,
a California corporation
By: /s/ RICHARD A. WEISBART
------------------------------------
Name: Richard A. Weisbart
Title: President & CEO
BIG BEAVER INVESTMENTS LLC,
a Delaware limited liability company
By: /s/ PAUL OSTER
------------------------------------
Name: Paul Oster
Title: Chief Financial Officer
WESTAR CAPITAL II LLC,
a Delaware limited liability company
By: Westar Capital Associates II, LLC,
Managing Member
By: /s/ JOHN CLARK
------------------------------
Name: John W. Clark,
Title: Managing Member
