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EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is made and entered into
as of April 23, 2001 by and among Southwall Technologies Inc., a Delaware
corporation (the "COMPANY") and GMX Associates PTE Ltd., a Singapore corporation
("GMX" or the "INVESTOR").
WHEREAS, the Company supplies GMX with certain film media for distribution
to GMX's customers and GMX distributes such media through sub-distributors,
pursuant to the Distribution Agreements between the Company and GMX, dated March
14, 1997, November 17, 1997 and March 1, 2000, and any written amendments
thereto executed by the parties to such agreements (all collectively, the
"DISTRIBUTION AGREEMENTS"); and
WHEREAS, the Company desires to obtain additional capital investments in
order to assist it in providing the Investor with additional supply of
distributable media and Investor desires to invest in shares of the Company's
common stock, par value $0.001 per share (the "SHARES") on the terms and
conditions set forth in this Agreement for such purpose;
NOW, THEREFORE, the parties hereby agree as follows:
1. AGREEMENT FOR PURCHASE AND SALE OF SHARES.
Subject to the terms and conditions set forth in this Agreement, the
Company hereby agrees to sell to the Investor at the Closing and the Investor
hereby agrees to purchase from the Company at the Closing the number of Shares
set forth in Exhibit A next to the Investor's name for the purchase price set
forth on Exhibit A.
2. CLOSING.
The purchase and sale of the Shares will take place at the offices of
Fenwick & West LLP, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx,
at 11:00 a.m. Pacific Time, on April 28, 2001 or at such other time and place as
the Company and Investor mutually agree (which time and place are referred to in
this Agreement as the "CLOSING"). At the Closing, the Company will deliver to
the Investor a certificate representing the number of Shares that the Investor
has agreed to purchase hereunder against delivery to the Company by the Investor
of the full purchase price of such Shares, paid by (i) a check payable to the
Company's order, (ii) wire transfer of funds to the Company (which transfer
shall be delivered to the Company pursuant to the wire transfer instructions
attached hereto as Exhibit B) or (iii) any combination of the foregoing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Investor that the
statements in the following paragraphs of this Section 3 are all true and
complete:
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3.1 ORGANIZATION, GOOD STANDING, CORPORATE POWER AND QUALIFICATION. The
Company has been duly incorporated and organized, and is validly existing in
good standing, under the laws of the State of Delaware. Each subsidiary of the
Company has been duly incorporated and organized, and is validly existing in
good standing, under the laws of the jurisdiction under which it is chartered.
The Company has the requisite corporate power and authority to enter into and
perform this Agreement, and the Company and its subsidiaries have the power to
own and operate their respective properties and assets and to carry on their
respective businesses as currently conducted and as presently proposed to be
conducted. The Company and each of its subsidiaries are duly qualified to do
business as a foreign corporation in good standing in all jurisdictions in which
such entity is required to be qualified to do business as the Company's or such
subsidiary's business is currently conducted and as presently proposed to be
conducted, as the case may be, except for jurisdictions in which failure to so
qualify could not reasonably be expected to have a material adverse effect on
the business and operations of the Company and its subsidiaries taken as a
whole.
3.2 CAPITALIZATION. The capitalization of the Company immediately prior to
the Closing consists of the following:
(a) Common Stock. A total of 20,000,000 authorized Shares, of which
approximately 7,889,000 shares will be issued and outstanding.
(b) Options, Warrants, Reserved Shares. Except for (i) 2,442,402
Shares reserved for issuance under the Company's 1997 Stock Incentive Plan and
the Company's 1998 Stock Option Plan for Employees and Consultants under which,
collectively, options to purchase 1,968,060 are issued and outstanding, and (ii)
250,000 Shares reserved for issuance under the Company's 1997 Employee Stock
Purchase Plan and the 1998 Employee Stock Purchase Plan, there are no
outstanding options, warrants, rights (including conversion or preemptive
rights) or agreement for the purchase or acquisition from the Company of any
shares of its capital stock or any securities convertible into or ultimately
exchangeable or exercisable for any shares of the Company's capital stock.
(c) The outstanding shares of the capital stock of the Company are
duly authorized and validly issued, fully paid and nonassessable, and have been
approved by all requisite stockholder action.
3.3 DUE AUTHORIZATION. All corporate action on the part of the Company's
directors and stockholders necessary for the authorization, execution, delivery
of, and the performance of all obligations of the Company under this Agreement
has been taken. This Agreement, when executed and delivered, will constitute the
valid and legally binding obligation of the Company, enforceable in accordance
with its terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or others laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies.
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3.4 VALID ISSUANCE OF STOCK. The Shares, when paid for and then issued as
provided in this Agreement, will be duly authorized and validly issued, fully
paid and nonassessable. Based in part on the representations made by the
Investor in Section 4 hereof, the offer and sale of the Shares solely to the
Investor in accordance with this Agreement are exempt from the registration and
prospectus delivery requirements of the U.S. Securities Act of 1933, as amended
(the "1933 ACT"), and the securities registration and qualification requirements
of the State of California.
3.5 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or to loss of a benefit under (i) any
provision of the Certificate of Incorporation or Bylaws of the Company or the
charter documentation of any of its subsidiaries, or (ii) any indenture,
mortgage, lease, line of credit, contract or other agreement or instrument,
permit, concession, franchise, license to which the Company or any of its
subsidiaries is a party or by which any of its properties are bound; or (iii)
any judgment, order, decree to which the Company or any of its subsidiaries is a
party or to which any of its properties is bound, or (iv) any statute, law,
ordinance or rule applicable to the Company or any of its subsidiaries or on
which the Company's and its subsidiaries' business, financial condition,
operations or prospects is substantially dependent, in each case in clauses
(ii), (iii) or (iv), the breach, violation, default, termination or forfeiture
of which would result in a material adverse effect upon the ability of the
Company to consummate the transactions contemplated by this Agreement, or a
material adverse effect on the Company and its subsidiaries, taken as a whole.
3.6 COMPANY'S SEC FILINGS AND FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, and documents required
to be filed by it with the U. S. Securities and Exchange Commission ("SEC") and
has made available to the Investor such forms, reports, and documents in the
form filed with the SEC. All such required forms, reports and documents
(including those that the Company may file subsequent to the date hereof until
the Closing) are referred to herein as the "COMPANY SEC REPORTS." As of their
respective filing dates, the Company SEC Reports, as amended, complied in all
material respects with the requirements of the Act or the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Company SEC Reports.
The Company SEC Reports, this Agreement, the exhibits and schedules hereto, and
any certificates or documents to be delivered to the Company pursuant to this
Agreement, when considered together, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements of the Company
(including, in each case, the notes thereto), included in or incorporated by
reference into the Company SEC Reports after December 31, 2000 (the "COMPANY
FINANCIAL STATEMENTS"), and
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each Company SEC Report filed after the date hereof until the Closing, (i)
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto; (ii) was prepared in accordance
with United States Generally Accepted Accounting Principles applied on a
consistent basis throughout the periods indicated (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as may be permitted
by the SEC on Form 10-Q under the Exchange Act); and (iii) fairly presented the
consolidated financial position of Company and its subsidiaries at the
respective dates thereof and the consolidated results of Company's operations
and cash flows for the periods indicated (subject, in the case of unaudited
financial statements, to normal audit adjustments that will not be material in
amount or effect). There has been no change in Company's accounting policies
except as described in the notes to the Company Financial Statements.
4. REPRESENTATIONS OF THE INVESTOR.
The Investor hereby represents and warrants to the Company that the
following statements are true and complete:
4.1 REVIEW AND AGREEMENTS. The Investor has read carefully and
understands this Agreement and the Company's Certificate of Incorporation and
has consulted the Investor's own attorney, accountant or investment adviser with
respect thereto and to the investment contemplated hereby and its suitability
for the Investor.
4.2 ACCESS TO INFORMATION. The Company has made available to the
Investor prior to the purchase of any Shares, all documents and information that
the Investor has requested including, without limitation, the Company SEC
Reports and the books and records of the Company and the opportunity to ask
questions of and receive answers from representatives of the Company concerning
the investment in the Shares, the business, affairs, operations and finances of
the Company and any other matters relevant to this investment. The Investor has
reviewed the Company SEC Reports.
4.3 LONG-TERM INVESTMENT. The Investor understands that it must bear
the economic risk of its investment for an indefinite period of time; that the
Shares have not been registered under the 1933 Act and, therefore, cannot be
resold unless they are subsequently registered under the Act or unless an
exemption from such registration is available; that the Investor is purchasing
the Shares for investment for the account of the Investor and not with a view
toward resale or other distribution thereof; that the Investor agrees not to
resell or otherwise dispose of all or any part of the Shares purchased by the
Investor, except as permitted by law, including, without limitation, any
regulations under the Act; that the Company does not have any intention of
registering the Shares under the Act (other than as provided in Section 5); and
that Rule 144 under the Act will not be available as a basis for exemption from
registration of any Shares until at least one year from the Closing.
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4.4 SUITABILITY. The Investor has adequate means of providing for the
Investor's current needs and personal contingencies and has no need for
liquidity in connection with the Investor's purchase of the Shares. The
Investor's overall commitment to investments which are not readily marketable is
not disproportionate to the net worth of the Investor, and its investment in the
Shares will not cause such overall commitment to become excessive. The Investor
can afford a complete loss of its investment in the Shares. The Investor has
evaluated the risks of purchasing the Shares and has determined that the Shares
are a suitable investment for the Investor. The Investor has such knowledge and
experience in financial, securities, investments and business matters that the
Investor is capable of evaluating the merits and risks of the Investor's
purchase of the Shares.
4.5 RESIDENCE. For purposes of the application of state securities
laws, the Investor is a resident of the jurisdiction listed as such Investor's
address on Exhibit A.
4.6 LEGENDS. It is understood that the certificates evidencing the
Shares will bear the legends substantially as set forth below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
The legend above shall be removed by the Company (or its transfer agent) from
any certificate evidencing the Shares upon the first to occur of (i)
registration of the Shares for resale under the 1933 Act, (ii) resale of the
Shares in the reasonable opinion of counsel to the Company in compliance with
the requirements for Rule 144 or (iii) upon delivery to the Company of an
opinion by counsel, reasonably satisfactory to the Company, that the Shares may
be resold pursuant to exemptions from the registration and prospectus delivery
requirements of the 1933 Act and the qualification requirements of any
applicable state Blue Sky laws.
5. REGISTRATION RIGHTS.
5.1 DEFINITIONS. For purposes of this Section 5:
(a) Registration. The terms "REGISTER," "REGISTRATION" and
"REGISTERED" refer to a registration effected by preparing and filing a
registration statement in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement.
(b) Registrable Securities. The term "REGISTRABLE SECURITIES"
means: (i) all the shares of Common Stock of the Company that are now owned or
may hereafter be acquired by any Investor or any holder of Shares who is its
permitted successor and assign; and (ii) any shares of Common Stock of the
Company issued (or issuable upon the conversion or
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exercise of any warrant, right or other security which is issued) as a dividend
or other distribution with respect to, or in exchange for or in replacement of,
all such shares of Common Stock described in clause (i) of this subsection (b);
excluding in all cases, however, any such securities of the Company sold by a
person in a transaction in which rights under this Section 5 are not assigned in
accordance with this Agreement or any such securities of the Company sold to the
public or sold pursuant to Rule 144 promulgated under the 1933 Act.
(c) Registrable Securities Then Outstanding. The number of
shares of "REGISTRABLE SECURITIES THEN OUTSTANDING" shall mean the number of
shares of Common Stock which are Registrable Securities that are then (i) issued
and outstanding or (ii) issuable pursuant to the exercise or conversion of then
outstanding and then exercisable and qualifying options, warrants or convertible
securities.
(d) Holder. The term "HOLDER" means any person owning of record
Registrable Securities or any assignee of record of such Registrable Securities
to whom rights set forth herein have been duly assigned in accordance with this
Agreement.
(e) Form S-3. The term "FORM S-3" means such form under the 1933
Act as is in effect on the date hereof or any successor registration form under
the 1933 Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
5.2 DEMAND REGISTRATION.
(a) Request by Holders. If at any time following the expiration
of ten months after the Closing and at such time the Company is not eligible to
register shares on Form S-3, the Company shall receive a written request from
the Holders of all of the Registrable Securities then outstanding that the
Company file a registration statement under the 1933 Act covering the
registration of Registrable Securities pursuant to this Section 5.2, then the
Company shall, within 20 days after the receipt of such written request, give
written notice of such request (the "REQUEST NOTICE") to all Holders, and
effect, as soon as practicable, the registration under the 1933 Act of all
Registrable Securities which Holders request to be registered and included in
such registration by written notice given by such Holders to the Company within
30 days after receipt of the Request Notice, subject only to the limitations of
this Section 5.
(b) Underwriting. If the Holders initiating the registration
request under this Section 5.2 (the "INITIATING HOLDERS") intend to distribute
the Registrable Securities covered by their request by means of an underwriting,
then they shall so advise the Company as a part of their request made pursuant
to this Section 5.2 and the Company shall include such information in the
Request Notice. In such event, the right of any Holder to include his, her, or
its Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. The Company shall not be required to include any securities of
any Holder in such underwriting unless such Holder accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
the
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Company and enters into an underwriting agreement in customary form with the
underwriter or underwriters selected by the Company. Notwithstanding any other
provision of this Section 5.2, if the underwriter(s) advise(s) the Company in
writing that marketing factors require a limitation of the number of securities
to be underwritten then the Company shall so advise all Holders of Registrable
Securities that would otherwise be registered and underwritten pursuant hereto,
and the number of Registrable Securities that may be included in the
underwriting shall be reduced as required by the underwriter(s) and allocated
among the Holders of Registrable Securities on a pro rata basis according to the
number of Registrable Securities then outstanding held by each Holder requesting
registration (including the Initiating Holders); provided, however, that the
number of shares of Registrable Securities to be included in such underwriting
and registration shall not be reduced unless all other securities to be sold for
the account of the Company are first entirely excluded from the underwriting and
registration. Any Registrable Securities excluded and withdrawn from such
underwriting shall be withdrawn from the registration.
(c) Maximum Number of Demand Registrations. The Company is
obligated to effect only one such registration pursuant to this Section 5.2. An
offering shall not be deemed a registration pursuant to this Section 5.2 if less
than 75% of the Registrable Securities requested to be included therein were not
so included.
(d) Deferral. Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting the filing of a registration statement
pursuant to this Section 5.2, a certificate signed by the President or Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such registration statement to be filed and it
is therefore essential to defer the filing of such registration statement, then
the Company shall have the right to defer such filing or the effectiveness of
the registration statement for a period of not more than 90 days after receipt
of the request of the Initiating Holders; provided, however, that the Company
may not utilize this right more than once in any twelve month period.
(e) Expenses. All expenses incurred in connection with a
registration pursuant to this Section 5.2, including without limitation all
registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling Holders (but excluding
underwriters' or brokers' discounts and commissions) shall be borne by the
Company. Each Holder participating in a registration pursuant to this Section
5.2 shall bear such Holder's proportionate share (based on the number of shares
sold by such Holder over the total number of shares included in such
registration at the time it is declared effective) of all discounts, commissions
or other amounts payable to underwriters or brokers in connection with such
offering. Notwithstanding the foregoing, the Company shall not be required to
pay for any expenses of any registration proceeding begun pursuant to this
Section 5.2 if the registration request is subsequently withdrawn at the request
of the Holders of a majority of the Registrable Securities to be registered,
unless the Holders of a majority of the Registrable Securities then outstanding
agree to forfeit their right to one demand registration pursuant to this Section
5.2 (in which case such right shall be forfeited by all Holders of Registrable
Securities); provided, further, however, that if at the time of such withdrawal,
the Holders have learned of a material
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adverse change in the condition, business, or prospects of the Company not known
to the Holders at the time of their request for such registration and have
withdrawn their request for registration with reasonable promptness after
learning of such material adverse change, then the Holders shall not be required
to pay any of such expenses and shall retain their demand registration rights
pursuant to this Section 5.2.
5.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least 30 days prior to filing any
registration statement under the 1933 Act for purposes of effecting a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements (i) relating to any registration
under Section 5.2 or Section 5.4 of this Agreement or (ii) relating to any
employee benefit plan or a corporate reorganization or other transaction covered
by Rule 145 promulgated under the 1933 Act, or (iii) on any registration form
which does not permit secondary sales or does not include substantially the same
information as would be required to be included in a registration statement
covering the resale of Registrable Securities, and will afford each such Holder
an opportunity to include in such registration statement all or any part of the
Registrable Securities then held by such Holder. Each Holder desiring to include
in any such registration statement all or any part of the Registrable Securities
held by such Holder shall, within twenty days after receipt of the
above-described notice from the Company, so notify the Company in writing, and
in such notice shall inform the Company of the number of Registrable Securities
such Holder wishes to include in such registration statement. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein.
(b) Underwriting. If a registration statement under which the
Company gives notice under this Section 5.3 is for an underwritten offering,
then the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder's Registrable Securities to be included in a
registration pursuant to this Section 5.3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the managing
underwriter(s) may exclude shares (including Registrable Securities) from the
registration and the underwriting, and the number of shares that may be included
in the registration and the underwriting shall be allocated, first, to the
Company, second to Holders requesting inclusion of their Registrable Securities
in such registration statement on a pro rata basis based on the number of
Registrable Securities each such Holder has requested to be included in the
registration, and third to other holders of the Company's securities, provided
however, that the right of the underwriters to exclude shares (including
Registrable Securities) from the registration and underwriting as described
above shall
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be restricted so that: (i) the number of Registrable Securities included in any
such registration is not reduced below 50% percent of the Registrable Securities
requested to be included in the registration; and (ii) all shares (other than
those to be sold by the Company for its account) that are not Registrable
Securities and are held by persons other than the Holders shall first be
excluded from such registration and underwriting before any Registrable
Securities are so excluded. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice,
given in accordance with Section 10.5 hereof, to the Company and the
underwriter, delivered at least 20 days prior to the effective date of the
registration statement. Any Registrable Securities excluded or withdrawn from
such underwriting shall be excluded and withdrawn from the registration.
(c) Expenses. All expenses incurred in connection with a
registration pursuant to this Section 5.3, including, without limitation, all
registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling Holders (but excluding
underwriters' or brokers' discounts and commissions) shall be borne by the
Company. Each Holder participating in a registration pursuant to this Section
5.3 shall bear such Holder's proportionate share (based on the number of shares
sold by such Holder over the total number of shares included in such
registration at the time it goes effective) of all discounts, commissions or
other amounts payable to underwriters or brokers in connection with such
offering.
5.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of at least 50% of Registrable Securities then outstanding a
written request or requests that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, then the Company will do
the following:
(a) Notice. Promptly give written notice of the proposed
registration and the Holder's or Holders' request therefor, and any related
qualification or compliance, to all other Holders of Registrable Securities.
(b) Registration. Use commercially reasonable efforts to effect
as soon as practicable such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder's or Holders' Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given within 20 days after receipt
of such written notice from the Company; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance pursuant to this Section 5.4:
(i) if Form S-3 is not available for such offering;
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $300,000;
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(iv) if the Company shall furnish to the Holders a
certificate signed by the President or Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such Form S-3 Registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement no more than once during any twelve-month period for a period of not
more than 60 days after receipt of the request of the Holder or Holders under
this Section 5.4;
(v) if the Company has, within the six-month period
preceding the date of such request, already effected one registration on Form
S-3 for the Holders pursuant to this Section 5.4; or
(vi) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
(c) Expenses. Subject to the foregoing, the Company shall file a
Form S-3 registration statement covering the Registrable Securities and other
securities so requested to be registered pursuant to this Section 5.4 as soon as
practicable after receipt of the request or requests of the Holders for such
registration. The Company shall pay all expenses incurred in connection with
each registration requested pursuant to this Section 5.4, (excluding
underwriters' or brokers' discounts and commissions), including without
limitation all filing, registration and qualification, printers' and accounting
fees and the reasonable fees and disbursements of one counsel for the selling
Holder or Holders and counsel for the Company. Each Holder participating in a
registration pursuant to this Section 5.4 shall bear such Holder's proportionate
share (based on the number of shares sold by such Holder over the total number
of shares included in such registration at the time it goes effective) of all
discounts, commissions or other amounts payable to underwriters or brokers in
connection with such offering.
(d) Not Demand Registration. Form S-3 registrations shall not be
deemed to be demand registrations as described in Section 5.2 above.
5.5 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use reasonable efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 90 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all securities
covered by such registration statement.
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(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as they may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by them that are included in such registration.
(d) Use reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting hereby agrees also to enter into and perform
its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective: (1) an opinion, dated as of such date, of
the counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (2) a
"comfort" letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities.
5.6 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 5.2, 5.3 or
5.4 that the selling Holders shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them and the intended
method of disposition of such securities as shall be required to timely effect
the registration of their Registrable Securities.
5.7 DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any
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controversy that might arise with respect to the interpretation or
implementation of this Section 5.
5.8 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 5.2, 5.3 or 5.4:
(a) By the Company. To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, the partners, officers
and directors of each Holder, any underwriter (as defined in the 0000 Xxx) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the 1933 Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the 1933 Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively, the "VIOLATIONS" and, individually, a
"VIOLATION"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto; or
(ii) the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to make the
statements therein not misleading; or
(iii) any violation or alleged violation by the Company
of the 1933 Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the 1933 Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by such
registration statement.
The Company will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, within three months after a request for reimbursement has been
received by the Company, in connection with investigating or defending any such
loss, claim, damage, liability or action; provided however, that the indemnity
agreement contained in this subsection 5.8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
(b) By Selling Holders. To the extent permitted by law,
each selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, each
person, if any, who controls the Company within the meaning of the 1933 Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or
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any person who controls such Holder within the meaning of the 1933 Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director, officer or controlling
person of such other Holder may become subject under the 1933 Act, the Exchange
Act or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration.
Each such Holder will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling person, underwriter or
other Holder, partner, officer, director or controlling person of such other
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action; within three months after a request for
reimbursement has been received by the indemnifying Holder, provided, however,
that the indemnity agreement contained in this subsection 5.8(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder (which
consent shall not be unreasonably withheld); and provided further, that the
total amounts payable in indemnity by a Holder under this subsection 5.8(b) in
respect of all Violation shall not exceed the net proceeds received by such
Holder in the registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party
under this Section 5.8 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 5.8,
deliver to the indemnifying party a written notice of the commencement thereof.
The indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 5.8, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 5.8.
(d) Defect Eliminated in Final Prospectus. The foregoing
indemnity agreements of the Company and Holders are subject to the condition
that, insofar as they relate to any Violation made in a preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "FINAL
PROSPECTUS"), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person
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asserting the loss, liability, claim or damage at or prior to the time such
action is required by the 1933 Act.
(e) Contribution. If the indemnification provided for in
this Section 5.8 is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, liability, claim, damage or
expense referred to herein, then the indemnifying party, in lieu of indemnifying
the indemnified party, shall contribute to the amount paid or payable by such
indemnified party with respect to such loss, liability, claim, damage or expense
in the proportion that is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the statements
or omissions that resulted in such loss, liability, claim, damage or expense, as
well as any other relevant equitable considerations. The relative fault of the
indemnifying party and the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. In any such case, (i) no such Holder will be
required to contribute any amount in excess of the public offering price of all
such Registrable Securities offered and sold by such Holder pursuant to such
registration statement; and (ii) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
(f) Conflict with Underwriting Agreement. Notwithstanding the
foregoing, to the extent that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in connection with the
underwritten public offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement will control.
(g) Survival. The obligations of the Company and Holders under
this Section 5.8 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
5.9 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the SEC which may at any time permit the
sale of the Registrable Securities to the public without registration, so long
as the Company is subject to the reporting requirements of the Exchange Act, the
Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the 1933 Act;
(b) Use reasonable, diligent efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
1933 Act and the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities, to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, and of the
1933 Act and the Exchange Act, a copy of the
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most recent annual or quarterly report of the Company, and such other reports
and documents of the Company as a Holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing a Holder to sell any such
securities without registration.
5.10 TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall have
no obligations pursuant to Sections 5.2 through 5.4 with respect to: (a) any
request or requests for registration made by any Holder on a date more than five
years after the Closing; or (b) any Registrable Securities proposed to be sold
by a Holder in a registration pursuant to Section 5.2, 5.3 or 5.4 if all such
Registrable Securities proposed to be sold by a Holder may be sold in a
three-month period without registration under the 1933 Act pursuant to Rule 144.
5.11 ASSIGNMENT OF REGISTRATION RIGHTS. The registration rights of a
Holder under this Section 5 may be assigned only to a party who acquires at
least 50,000 shares (as adjusted for stock splits, stock dividends, stock
combinations, recapitalizations and the like) of Registrable Securities;
provided, however that no party may be assigned any of the foregoing rights
unless the Company is given written notice by the assigning party at the time of
such assignment stating the name and address of the assignee and identifying the
securities of the Company as to which the rights are being assigned and provided
further that any such assignee shall receive such assigned rights subject to all
the terms and conditions of Sections 5 and 10 of this Agreement. Assignments may
be made without the Company's consent and without the assignee's obtaining the
minimum number of shares of Registrable Securities set forth above if the
assignment is to a partner, affiliate, stockholder, parent, child or spouse of
the Holder or to the Holder's estate.
6. USE OF PROCEEDS.
The parties acknowledge that the Company's undertaking to use and actual
use of the proceeds of the Shares sold at the Closing as provided in this
Section 6 is essential to the Investor's willingness to enter into and perform
its obligations under this Agreement to acquire the Shares. The Company hereby
agrees to use the proceeds from the sale of the shares pursuant to this
Agreement to fulfill purchase orders placed under the Distribution Agreements
under the terms of such purchase orders accepted by the Company, and the Company
shall continue to accept reasonable orders as required under the Distribution
Agreements, including without limitation, with terms as to the quantities, the
quality, and the time for delivery specified under such purchase orders, and for
general corporate and working capital purposes as well as for the repayment of
indebtedness. The Company also agrees that, in consideration of Investor's
purchase of the Shares hereunder, the time for payment of sums due under
outstanding invoices and invoices hereafter issued under the Distribution
Agreement shall be 60 days from the date of such invoice or such other period as
the parties may hereafter agree in writing.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the sale and purchase of the Shares
for a period of one year after the Closing. If in any material respect such
representations, warranties or information shall not
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be true and accurate at any time through the Closing, the person making the
representation will promptly give written notice of such fact to the other
parties to the Agreement, specifying which of the representations, warranties or
information is not true and accurate and the reasons thereof (it being
understood that any representation or warranty that speaks as of a particular
date shall not be deemed untrue or inaccurate as a result of changes thereto
that occur after the date as of such representation or warranty speaks).
8. CONDITIONS TO INVESTOR'S OBLIGATIONS AT CLOSING.
The obligations of the Investor under Section 2 of this Agreement are
subject to the fulfillment or waiver, on or before the Closing, of each of the
following conditions, which may be given by written, oral or telephone
communication to the Company, its counsel or to counsel to the Investor:
8.1 REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties of the Company contained in Section 3 shall be true and complete
on and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
8.2 PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
8.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Investor at the Closing a certificate signed on its behalf by its President,
Chief Executive Officer, or Chief Financial Officer certifying that the
conditions specified in Sections 8.1 and 8.2 have been fulfilled and stating
that there shall have been no material adverse change in the business, financial
condition, or assets of the Company not previously disclosed to the Investor in
writing.
8.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investor and to the Investor's counsel, the Investor shall have received all
such counterpart originals and certified or other copies of such documents as it
may reasonably request. Such documents shall include (but not be limited to) the
following:
(a) Certified Charter Documents. A copy of the Certificate of
Incorporation and the Bylaws of the Company (as amended through the date of the
Closing), certified by the Secretary of the Company as true and correct copies
thereof as of the Closing.
(b) Corporate Actions. A copy of the resolutions of the Board of
Directors authorizing the transactions contemplated by this Agreement, including
the issuance of the Shares and the grant of registration rights therefor as
provided in Section 5.
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8.5 NO MATERIAL CHANGE. There shall have been no material adverse
change in the business, financial condition, or assets of the Company and its
subsidiaries taken as a whole, since the date of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, filed with the SEC on or
about April 9, 2001.
9. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to the Investor under this Agreement are
subject to the fulfillment or waiver on or before the Closing of each of the
following conditions by such Investor which may be given by written, oral or
telephone communication to the Company or its counsel:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 4 shall be true and complete on
the date of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
9.2 PAYMENT OF PURCHASE PRICE. The Investor shall have delivered to
the Company in accordance with the provisions of Section 2 the purchase price
for the Investor's Shares referred to in Section 1.
9.3 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Company and to the Company's legal counsel, and the Company shall have received
all such counterpart originals and certified or other copies of such documents
as it may reasonably request.
10. GENERAL.
10.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective
successors, assigns, heirs, executors, administrators and legal representatives.
10.2 GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of California, without giving effect to
that body of laws pertaining to conflict of laws.
10.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same agreement.
10.4 TITLES AND HEADINGS. The titles, captions and headings of this
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically stated,
all references herein to "sections" and "exhibits" will mean "sections" and
"exhibits" to this Agreement.
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10.5 NOTICES. Any and all notices required or permitted to be given to
a party pursuant to the provisions of this Agreement will be in writing and will
be effective and deemed to provide such party sufficient notice under this
Agreement on the earliest of the following: (i) at the time of personal
delivery, if delivery is in person; (ii) one business day after transmission by
facsimile, addressed to the other party at its facsimile number specified
herein, with confirmation of receipt made by both telephone and printed
confirmation sheet verifying successful transmission of the facsimile; (iii) one
business day after deposit with an express overnight courier for United States
deliveries and three business days after deposit with an express courier for
deliveries outside the United States, with proof of delivery from the courier
requested in either case; or (iv) three business days after deposit in the
United States mail by certified mail (return receipt requested) for United
States deliveries. All notices for delivery outside the United States will be
sent only by facsimile or by express courier. Notices by facsimile shall be
machine verified as received. All notices not delivered personally or by
facsimile will be sent with postage and/or other charges prepaid and properly
addressed to the party to be notified at the address or facsimile number as
follows, or at such other address or facsimile number as such other party may
designate by one of the indicated means of notice herein to the other parties
hereto as follows:
(a) if to the Investor, at the Investor's address as set forth
next to the Investor's name on Exhibit A, with a copy to:
Fenwick & West LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 415-281-1350
Attn: Xxxx Xxxxxx
(b) if to the Company at:
Southwall Technologies Inc.
0000 Xxxxxxxxxxx Xxx
Xxxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attn: President
with a copy to:
Xxxxxx, Hall & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attn: Xxxxx X. Xxxxxxx, Xx.
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10.6 AMENDMENTS AND WAIVERS. Before the Closing, any term of this
Agreement may be amended and the observance of any term of this Agreement 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 Investor.
After the Closing, any term of this Agreement may be amended and the observance
of any term of this Agreement 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 at least 75% of the aggregate number
of Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this Section shall be binding upon each Holder of any Shares,
each future Holder of such securities, and the Company. No delay or failure to
require performance of any provision of this Agreement shall constitute a waiver
of that provision as to that or any other instance. No waiver granted under this
Agreement as to any one provision herein shall constitute a subsequent waiver of
such provision or of any other provision herein, nor shall it constitute the
waiver of any performance other than the actual performance specifically waived.
10.7 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein, together with all the Exhibits hereto, constitute the entire agreement
and understanding of the parties with respect to the subject matter of this
Agreement, and supersede any and all prior understandings and agreements,
whether oral or written, between or among the parties hereto with respect to the
specific subject matter hereof.
10.8 THIRD PARTIES. With the exception of the provisions of Section 5
hereof with regard to permitted successors or assigns of the registration rights
of Registrable Securities (which permitted successors and assigns are intended
beneficiaries of the provisions of Section 5 hereof) nothing in this Agreement,
express or implied, is intended to confer upon any person, other than the
parties hereto and their successors and assigns, any rights or remedies under or
by reason of this Agreement.
10.9 COSTS AND ATTORNEYS' FEES. In the event that any action, suit or
other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party shall recover all
of such party's costs and attorneys' fees incurred in each such action, suit or
other proceeding.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned has executed this Stock Purchase
Agreement as of the day and year first set forth above.
THE COMPANY: SOUTHWALL TECHNOLOGIES INC.
By /s/ Xxxxxx Xxxx
---------------------------------
Its: President and Chief Executive
---------------------------------
Officer
---------------------------------
THE INVESTOR:
GMX: GMX ASSOCIATES PTE LTD.
---
By /s/ Xxxxxx Xxxx
---------------------------------
Xxxxxx Xxxx, Director
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EXHIBIT A
PURCHASE PRICE AND INVESTOR ADDRESSES
Investor Purchase Price Shares of Common Stock
-------- -------------- ----------------------
GMX ASSOCIATES PTE LTD. US $1,000,000.00 422,119
XXX Xxxxx
0 Xxxxxxx Xxxx Xxxxx
#00-00 Xxxxxxxxx 000000
Telephone: 00-000-0000
Facsimile: 00-000-0000
22
EXHIBIT B
COMPANY WIRE TRANSFER INSTRUCTIONS\
Sanwa Bank California
ABA No.: 000000000
For Credit to:
Southwall Technologies Inc.
Account No.: 515311059
Attention: Xxxxx Xxxxxxx (000-000-0000)
