WARRANT
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES
ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION
THEREOF. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION AND QUALIFICATION WITHOUT AN OPINION OF COUNSEL FOR THE
HOLDER, CONCURRED IN BY COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED.
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT ARE SUBJECT TO
RESTRICTIONS ON TRANSFER PURSUANT TO REGULATION S PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED EXCEPT PURSUANT TO THE PROVISIONS UNDER REGULATION S OR PURSUANT
TO REGISTRATION UNDER SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION.
THE WARRANTS AND WARRANT SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND (i) THE WARRANTS AND THE WARRANT SHARES
MAY NOT BE EXERCISED, OFFERED OR SOLD BY OR ON BEHALF OF U.S. PERSONS, (ii) THE
WARRANTS MAY NOT BE EXERCISED IN THE UNITED STATES AND (iii) THE WARRANT SHARES
MAY NOT BE DELIVERED IN THE UNITED STATES UNLESS, IN EACH CASE, THERE IS A
REGISTRATION STATEMENT IN EFFECT COVERING THE WARRANTS AND WARRANT SHARES OR
THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN THAT CERTAIN OCTOBER 25, 1996
SUBSCRIPTION AGREEMENT BETWEEN THE ORIGINAL HOLDER HEREOF AND THE COMPANY.
No. Series C-11
500,000 Shares
CASHLESS EXERCISE WARRANT TO PURCHASE COMMON STOCK
U.S. ELECTRICAR, INC., a California corporation (the "Corporation"),
hereby grants to FONTAL INTERNATIONAL LTD. (the "Holder"), the right to purchase
from the Corporation five hundred thousand (500,000) shares of the common stock
of the Corporation (the "Warrant Shares"), subject to the terms and conditions
set forth below. This Warrant is one of a duly authorized series of Warrants of
the Corporation (which Warrants are identical except for the variations
necessary to express the name of the Holder and number of "Warrant Shares"),
which Warrants together are designated "Series C Warrants" acquired pursuant to
the terms and conditions set forth in that certain October 25, 1996 Subscription
Agreement (the Subscription Agreement").
1. Term. This Warrant may be exercised at any time after the date
hereof through October 25, 1997 (the "Exercise Period").
2. Purchase Price. The purchase price for each share of the
Corporation's common stock purchasable hereunder shall be Thirty Cents ($0.30),
subject to adjustment as provided in Section 8 below (the "Warrant Exercise
Price").
3. Exercise of Warrant. This Warrant may be exercised in whole or in
part (except for a cashless exercise which shall require exercise in full) , but
not for less than one hundred thousand (100,000) Warrant Shares (or such lesser
number of Warrant Shares as may at the time of exercise constitute the maximum
number exercisable) and in excess of 100,000 Warrant Shares in increments of
10,000 Warrant Shares. It is exercisable, subject to the satisfaction of
applicable securities laws, at any time during the Exercise Period by the
surrender of the Warrant to the Corporation at its principal office together
with the Notice of Exercise annexed hereto duly completed and executed on behalf
of the Holder, accompanied by payment in full of the amount of the aggregate
purchase price of the Warrant Shares in immediately available funds, except if
exercised under the cashless exercise option as provided below. The Corporation
agrees that the Warrant Shares so purchased shall be issued as soon as
practicable thereafter, and that the Holder shall be deemed the record owner of
such Warrant Shares as of and from the close of business on the date on which
this Warrant shall be surrendered, together with payment in full as required
above. It shall be a condition to the exercise of this Warrant that the Holder
or any transferee hereof certify to the Corporation, at the time of exercise,
either that he or it is not a U.S. Person (as defined in Regulation S under the
Securities Act of 1933, as amended (the "Securities Act") and that this Warrant
is not being exercised on behalf of a U.S. Person, or to provide an opinion of
counsel that the Warrant and the Warrant Shares to be delivered upon exercise
thereof have been registered under the Securities Act or that an exemption from
the registration requirements of the Securities Act is available. It shall be a
further condition to the exercise of this Warrant that the Warrant may not be
exercised in the United States and the Warrant Shares may not be delivered to
the United States absent registration under the Securities Act or an available
exemption from registration.
4. Cashless Exercise Option. Notwithstanding the foregoing, if on the
date of exercise the "Fair Market Value" of one Warrant Share is equal to or
greater than twice the Warrant Exercise Price and during the preceding 20
trading days prior to the date of exercise under this Warrant the average
trading volume was in excess of 100,000 shares per day, then in lieu of
exercising this Warrant for cash, the Holder may elect to receive Warrant Shares
equal to the value of this Warrant (or equal to the value of the portion of the
Warrant Shares thereof being cancelled) which shall be that number of Warrant
Shares equal to the quotient obtained by dividing (Z) the product obtained when
(i) the number of Warrant Shares being exercised/cancelled under this Warrant is
multiplied by (ii) the value of one Warrant Share for which this Warrant is
being cancelled on the exercise date (determined by subtracting the Warrant
Exercise Price for one Warrant Share on the exercise date from the "Fair Market
Value" (as hereinafter defined) of one Warrant Share on the exercise date) by
(ZZ) the Warrant Exercise Price for one Warrant Share on the exercise date
illustrated as follows:
X = Y(A-B)
------
B
Where X = the number of Warrant Shares to be issued to Holder
Y = the number of Warrant Shares being exercised/cancelled under this
Warrant
A = the "Fair Market Value" of one Warrant Share on the date of
exercise
B = Exercise Price on the date of exercise
Fair Market Value of one share of a Warrant Share shall mean:
-2-
a. If the Corporation's Common Stock is listed on a national securities
exchange or is quoted on the National Association of Securities Dealers, Inc.
Automated Quotation/ National Market System (NASDAQ/NMS), then the average price
of all of the closing or last sales prices, respectively, reported for the
twenty (20) trading days immediately preceding the exercise date.
b. If the Corporation's Common Stock is not listed on a national
securities exchange or quoted on NASDAQ/NMS, but is traded in the
over-the-counter market, then the average price of all of the mean prices
between the closing bid and asked prices of the Corporation's publicly traded
stock as listed and traded on the NASDAQ electronic bulletin board during the
twenty (20) trading days immediately preceding the exercise date.
In the event of a cashless exercise, the entire Warrant must be
surrendered, and no new Warrant shall be issued. In no event shall a cashless
exercise entitle the Holder to exercise more than the Warrant Shares set forth
on page 1 of this Warrant, less any number previously exercised.
5. Warrant Confers No Rights of Shareholder. The Holder shall not have
any rights as a shareholder of the Corporation with regard to the Warrant Shares
prior to actual exercise resulting in the purchase of the Warrant Shares.
6. Holder Representations and Warranties. The Holder represents and
warrants to the Corporation that:
a. Purchase For Own Account/Regulation S. The Holder
understands that neither this Warrant nor the Warrant Shares issuable upon the
exercise of this Warrant have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), or any state securities laws, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment as
expressed herein. The Holder is acquiring this Warrant for investment for its
own account, and not with a view to, or for resale in connection with, any
distribution thereof, and it has no present intention of selling or distributing
this Warrant. The Holder agrees that any Warrant Shares issuable upon exercise
of this Warrant will be acquired for investment for its own account, and not
with a view to, or for resale in connection with, any distribution thereof, and
such Warrant Shares will not be registered under the Securities Act and
applicable state securities laws and that such Warrant Shares may have to be
held indefinitely unless they are subsequently registered or qualified under the
Securities Act and applicable state securities laws or, based on an opinion of
counsel reasonably satisfactory to the Corporation, an exemption from such
registration and qualification is available. The Holder further understands that
the Corporation is relying on the rules and regulations governing offers and
sales made outside the United States to non-"U.S. Persons" pursuant to
Regulation S under the Securities Act. The Holder, by acceptance hereof,
consents to the placement of the following restrictive legends, or similar
legends, on each certificate to be issued to the Holder by the Corporation in
connection with the issuance of such Warrant Shares:
-3-
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY
STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR LAWS COVERING SUCH SECURITIES, OR (B) THE HOLDER
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITIES
SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION
REQUIREMENTS UNDER APPLICABLE STATE LAW.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER PURSUANT TO REGULATION S PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO THE PROVISIONS UNDER
REGULATION S OR PURSUANT TO REGISTRATION UNDER SUCH ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER SET FORTH IN THAT CERTAIN MAY 1, 1996 [Don, review]
INVESTMENT BANKING AGREEMENT BETWEEN THE ORIGINAL HOLDER HEREOF AND THE
COMPANY.
b. Access to Data. The Holder has had an opportunity to
discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information which the Holder has deemed
necessary or appropriate for deciding whether or not to purchase this Warrant
and the Warrant Shares, including the information provided or otherwise
disclosed under the Subscription Agreement. The Holder acknowledges that no
other representations or warranties, oral or written, have been made by the
Corporation or any agent thereof except as set forth in this Agreement.
c. No Fairness Determination. The Holder is aware that no
federal, state or other agency has made any finding or determination as to the
fairness of the investment, nor made any recommendation or endorsement of this
Warrant or the Warrant Shares.
d. Knowledge And Experience. The Holder has such knowledge and
experience in financial and business matters, including investments in other
start-up companies, that it is capable of evaluating the merits and risks of the
investment in this Warrant and the Warrant Shares, and it is able to bear the
economic risk of such investment. Further, the Holder has such knowledge and
experience in financial and business matters that he is capable of utilizing the
information made available to him in connection with the offering of this
Warrant and the Warrant Shares, of evaluating the merits and risks of an
investment in this Warrant and the Warrant Shares and of making an informed
investment decision with respect to this Warrant and the Warrant Shares.
-4-
e. Limited Public Market. The Holder is aware that there is
currently a very limited "over-the-counter" public market for the Corporation's
registered securities and that the Corporation became a "reporting issuer" under
the Securities Exchange Act of 1934, as amended, on January 27, 1995. There is
no guarantee that a more established public market will develop at any time in
the future. The Holder understands that this Warrant and the Warrant Shares are
all unregistered and may not presently be sold in even this limited public
market. The Holder understands that this Warrant and the Warrant Shares cannot
be readily sold or liquidated in case of an emergency or other financial need.
The Holder has sufficient liquid assets available so that the purchase and
holding of this Warrant and the Warrant Shares will not cause it undue financial
difficulties.
g. Investment Experience. The Holder is an "accredited
investor" as that term is defined in Regulation D promulgated by the Securities
and Exchange Commission. The term "accredited investor" under Regulation D
refers to:
(1) A person or entity who is a director or executive officer of the
Corporation;
(2) Any bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Exchange Act; insurance company as
defined in Section 2(13) of the Securities Act; investment company
registered under the Investment Company Act of 1940; or a business
development company as defined in Section 2(a)(48) of that Act; Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; employee benefit plan
within the meaning of the Employee Retirement Income Security Act of
1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings
and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decision made
solely by persons that are accredited investors;
(3) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(4) Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring this
Warrant or the Warrant Shares, with total assets in excess of
$5,000,000;
(5) Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds
$1,000,000;
-5-
(6) Any natural person who had an individual income in excess of
$200,000 during each of the previous two years or joint income with
that person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in the
current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring this Warrant or the Warrant
Shares, whose purchase is directed by a person who has such knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of the prospective investment; or
(8) Any entity in which all of the equity owners are accredited
investors.
As used in this Section 6(g), the term "net worth" means the excess of
total assets over total liabilities. For the purpose of determining a
person's net worth, the principal residence owned by an individual
should be valued at fair market value, including the cost of
improvements, net of current encumbrances. As used in this Section
6(g), "income" means actual economic income, which may differ from
adjusted gross income for income tax purposes. Accordingly, the
undersigned should consider whether it should add any or all of the
following items to its adjusted gross income for income tax purposes in
order to reflect more accurately its actual economic income: Any
amounts attributable to tax-exempt income received, losses claimed as a
limited partner in any limited partnership, deductions claimed for
depletion, contributions to an IRA or Keogh retirement plan, and
alimony payments.
h. Restrictions On Transfer Re Regulation S.
(1) Not A "U.S. Person." The Holder hereby certifies
that (i) it is not a "U.S. Person" as defined under Rule 902, Section (o) of
Regulation S promulgated under the Securities Act (a copy of which is attached
hereto as Schedule 2) and is not acquiring this Warrant or the Warrant Shares
for the account or benefit of any U.S. Person, and (ii) it is acquiring this
Warrant and the Warrant Shares in an "offshore transaction" as defined under
Section (i) of such Rule 902 (a copy of which is attached hereto as Schedule 3).
(2) Transfer Restrictions. The Holder shall not
attempt to have registered any transfer of this Warrant or the Warrant Shares
not made in accordance with the provisions of Regulation S. In addition to any
other restrictions on transfer set forth in this Warrant, the Holder agrees to
transfer this Warrant or the Warrant Shares only (i) in accordance with the
provisions of Regulation S, pursuant to registration under the Securities Act,
or pursuant to an available exemption from registration, and (ii) in accordance
with any applicable state securities laws. Unless so registered or exempt
therefrom, such transfer restrictions shall include but not be limited to and
the Holder warrants and represents the following:
(i) The Holder shall not sell this Warrant
or the Warrant Shares publicly or privately, or through any short sale, or other
hedging transaction to any U.S. Person, whether directly or indirectly, or for
the account or benefit of any such U.S. Person for the restrictive period
mandated by Regulation S after the purchase of this Warrant or the Warrant
Shares, as applicable, unless registered or exempt from registration;
-6-
(ii) Any other offer or sale of this Warrant
or the Warrant Shares shall be made only if (A) during the restrictive period
any subsequent purchaser certifies in writing that it is not a U.S. Person and
is not acquiring this Warrant or the Warrant Shares for the account or benefit
of any U.S. Person, or (B) after the restrictive period this Warrant and the
Warrant Shares are purchased in a transaction that did not require registration
under the Securities Act and applicable Blue Sky laws; and
(iii) Any transferee of this Warrant or the
Warrant Shares shall agree in writing to resell this Warrant or the Warrant
Shares, as applicable, only in accordance with the provisions of Regulation S,
pursuant to registration under the Securities Act, or pursuant to an available
exemption from registration.
(3) Restrictions On Resales In the United States. The
Holder understands and acknowledges that the Securities Act prohibits resales of
securities in the United States except pursuant to an effective registration
statement or an exemption from registration for which the securities and the
Holder holding such securities qualifies. The Holder understands and
acknowledges the requirements for qualifying for an exemption from registration
afforded by Section 4 of the Securities Act and that there can be no assurance
that the Holder will be able to qualify for such an exemption from registration.
7. Reservation of Shares. The Corporation agrees at all times during
the Exercise Period to have authorized and reserved, for the exclusive purpose
of issuance and delivery upon exercise of this Warrant, a sufficient number of
shares of its common stock to provide for the exercise of the rights represented
hereby.
8. Adjustment for Re-Classification of Capital Stock. If the
Corporation at any time during the Exercise Period shall, by subdivision,
combination or re-classification of securities, change any of the securities to
which purchase rights under this Warrant exist under the same or different
number of securities of any class or classes, this Warrant shall thereafter
entitle the Holder to acquire such number and kind of securities as would have
been issuable as a result of such change with respect to the Warrant Shares
immediately prior to such subdivision, combination, or re-classification. If
shares of the Corporation's common stock are subdivided into a greater number of
shares of common stock, the purchase price for the Warrant Shares upon exercise
of this Warrant shall be proportionately reduced and the Warrant Shares shall be
proportionately increased; and conversely, if shares of the Corporation's common
stock are combined into a smaller number of common stock shares, the price shall
be proportionately increased, and the Warrant Shares shall be proportionately
decreased.
9. Public Offering Lock-Up. For a period of up to one-hundred-eighty
(180) days (the "Stand-off Period"), Holder shall not if requested by the
Corporation at any time in contemplation of a public registration, sell, pledge
or otherwise transfer any Warrant Shares (or any other shares exchanged
therefor). Notwithstanding the foregoing, the Corporation may exercise this
public offering lock-up only one time.
10. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the
-7-
Corporation of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant or stock certificate, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and upon reimbursement to the Corporation of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Corporation will make and deliver a new Warrant
or stock certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate.
11. Assignment. The Holder of this Warrant shall not assign or transfer
this Warrant or any of the Warrant Shares without the transferee meeting the
suitability requirements set forth in Section 6 (above) and without the consent
of the Corporation and in compliance with applicable state and federal
securities laws. In giving its consent, the Corporation may request an opinion
of counsel reasonably acceptable to it that such transfer is in compliance with
all applicable state and federal securities laws.
12. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
between California residents entered into and to be performed entirely within
the State of California.
13. Notices. Any notice required or permitted under this Warrant shall
be given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified by hand or professional courier service or for
mailings from and to any address in North America (Canada, United States and
Mexico) five (5) days after deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party in the Subscription Agreement,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
14. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and disbursements in addition to
any other relief to which such party may be entitled.
15. Amendments. Any terms of this Warrant may be amended with the
written consent of the Corporation and the holders of Series C Warrants
representing not less than 67% of the shares of Common Stock issuable upon
exercise of all Series C Warrants.
Dated: October 25, 1996 U.S. ELECTRICAR, INC.
By: /s/ Roy Kusumoto
---------------------------
Roy Y. Kusumoto, President
-8-
NOTICE OF EXERCISE
To: U.S. ELECTRICAR, INC.
(1) The undersigned hereby elects to purchase __________ shares of
Common Stock of Electricar, Inc., pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price for such shares in full.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, for
investment, and that the undersigned will not offer, sell or otherwise dispose
of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended (the "Securities
Act"), including, but not limited to, Regulation S promulgated thereunder, or
any state securities laws.
(3) The undersigned hereby certifies that either (i) the undersigned is
not a U.S. Person (as such term is defined in Regulation S under the Securities
Act), or (ii) the undersigned has delivered to the Corporation an opinion of
counsel to the effect that this Warrant and the Warrant Shares to be delivered
upon exercise thereof have been registered under the Securities Act or an
exemption from such registration is available.
(4) The undersigned further certifies that this Warrant is not being
exercised in the United States and understands and agrees that the Warrant
Shares may not be delivered to the United States absent registration under the
Securities Act or an available exemption from such registration.
(5) Please issue a certificate representing said shares of Common Stock
in the name of the undersigned.
(6) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned.
___________________________
(Name)
_________________ ___________________________
(Date) (Signature)
-9-
WARRANT
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES
ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION
THEREOF. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION AND QUALIFICATION WITHOUT AN OPINION OF COUNSEL FOR THE
HOLDER, CONCURRED IN BY COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED.
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT ARE SUBJECT TO
RESTRICTIONS ON TRANSFER PURSUANT TO REGULATION S PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED EXCEPT PURSUANT TO THE PROVISIONS UNDER REGULATION S OR PURSUANT
TO REGISTRATION UNDER SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION.
THE WARRANTS AND WARRANT SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND (i) THE WARRANTS AND THE WARRANT SHARES
MAY NOT BE EXERCISED, OFFERED OR SOLD BY OR ON BEHALF OF U.S. PERSONS, (ii) THE
WARRANTS MAY NOT BE EXERCISED IN THE UNITED STATES AND (iii) THE WARRANT SHARES
MAY NOT BE DELIVERED IN THE UNITED STATES UNLESS, IN EACH CASE, THERE IS A
REGISTRATION STATEMENT IN EFFECT COVERING THE WARRANTS AND WARRANT SHARES OR
THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN THAT CERTAIN OCTOBER 25, 1996
SUBSCRIPTION AGREEMENT BETWEEN THE ORIGINAL HOLDER HEREOF AND THE COMPANY.
No. Series C-12
1,500,000 Shares
CASHLESS EXERCISE WARRANT TO PURCHASE COMMON STOCK
U.S. ELECTRICAR, INC., a California corporation (the "Corporation"),
hereby grants to FONTAL INTERNATIONAL LTD. (the "Holder"), the right to purchase
from the Corporation one million five hundred thousand (1,500,000) shares of the
common stock of the Corporation (the "Warrant Shares"), subject to the terms and
conditions set forth below. This Warrant is one of a duly authorized series of
Warrants of the Corporation (which Warrants are identical except for the
variations necessary to express the name of the Holder and number of "Warrant
Shares"), which Warrants together are designated "Series C Warrants" acquired
pursuant to the terms and conditions set forth in that certain October 25, 1996
Subscription Agreement (the Subscription Agreement").
1. Term. This Warrant may be exercised at any time after the date
hereof through October 25, 1997 (the "Exercise Period").
2. Purchase Price. The purchase price for each share of the
Corporation's common stock purchasable hereunder shall be Thirty Cents ($0.30),
subject to adjustment as provided in Section 8 below (the "Warrant Exercise
Price").
3. Exercise of Warrant. This Warrant may be exercised in whole or in
part (except for a cashless exercise which shall require exercise in full) , but
not for less than one hundred thousand (100,000) Warrant Shares (or such lesser
number of Warrant Shares as may at the time of exercise constitute the maximum
number exercisable) and in excess of 100,000 Warrant Shares in increments of
10,000 Warrant Shares. It is exercisable, subject to the satisfaction of
applicable securities laws, at any time during the Exercise Period by the
surrender of the Warrant to the Corporation at its principal office together
with the Notice of Exercise annexed hereto duly completed and executed on behalf
of the Holder, accompanied by payment in full of the amount of the aggregate
purchase price of the Warrant Shares in immediately available funds, except if
exercised under the cashless exercise option as provided below. The Corporation
agrees that the Warrant Shares so purchased shall be issued as soon as
practicable thereafter, and that the Holder shall be deemed the record owner of
such Warrant Shares as of and from the close of business on the date on which
this Warrant shall be surrendered, together with payment in full as required
above. It shall be a condition to the exercise of this Warrant that the Holder
or any transferee hereof certify to the Corporation, at the time of exercise,
either that he or it is not a U.S. Person (as defined in Regulation S under the
Securities Act of 1933, as amended (the "Securities Act") and that this Warrant
is not being exercised on behalf of a U.S. Person, or to provide an opinion of
counsel that the Warrant and the Warrant Shares to be delivered upon exercise
thereof have been registered under the Securities Act or that an exemption from
the registration requirements of the Securities Act is available. It shall be a
further condition to the exercise of this Warrant that the Warrant may not be
exercised in the United States and the Warrant Shares may not be delivered to
the United States absent registration under the Securities Act or an available
exemption from registration.
4. Cashless Exercise Option. Notwithstanding the foregoing, if on the
date of exercise the "Fair Market Value" of one Warrant Share is equal to or
greater than twice the Warrant Exercise Price and during the preceding 20
trading days prior to the date of exercise under this Warrant the average
trading volume was in excess of 100,000 shares per day, then in lieu of
exercising this Warrant for cash, the Holder may elect to receive Warrant Shares
equal to the value of this Warrant (or equal to the value of the portion of the
Warrant Shares thereof being cancelled) which shall be that number of Warrant
Shares equal to the quotient obtained by dividing (Z) the product obtained when
(i) the number of Warrant Shares being exercised/cancelled under this Warrant is
multiplied by (ii) the value of one Warrant Share for which this Warrant is
being cancelled on the exercise date (determined by subtracting the Warrant
Exercise Price for one Warrant Share on the exercise date from the "Fair Market
Value" (as hereinafter defined) of one Warrant Share on the exercise date) by
(ZZ) the Warrant Exercise Price for one Warrant Share on the exercise date
illustrated as follows:
X = Y(A-B)
------
B
Where X = the number of Warrant Shares to be issued to Holder
Y = the number of Warrant Shares being exercised/cancelled under this
Warrant
A = the "Fair Market Value" of one Warrant Share on the date of
exercise
B = Exercise Price on the date of exercise
Fair Market Value of one share of a Warrant Share shall mean:
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a. If the Corporation's Common Stock is listed on a national securities
exchange or is quoted on the National Association of Securities Dealers, Inc.
Automated Quotation/ National Market System (NASDAQ/NMS), then the average price
of all of the closing or last sales prices, respectively, reported for the
twenty (20) trading days immediately preceding the exercise date.
b. If the Corporation's Common Stock is not listed on a national
securities exchange or quoted on NASDAQ/NMS, but is traded in the
over-the-counter market, then the average price of all of the mean prices
between the closing bid and asked prices of the Corporation's publicly traded
stock as listed and traded on the NASDAQ electronic bulletin board during the
twenty (20) trading days immediately preceding the exercise date.
In the event of a cashless exercise, the entire Warrant must be
surrendered, and no new Warrant shall be issued. In no event shall a cashless
exercise entitle the Holder to exercise more than the Warrant Shares set forth
on page 1 of this Warrant, less any number previously exercised.
5. Warrant Confers No Rights of Shareholder. The Holder shall not have
any rights as a shareholder of the Corporation with regard to the Warrant Shares
prior to actual exercise resulting in the purchase of the Warrant Shares.
6. Holder Representations and Warranties. The Holder represents and
warrants to the Corporation that:
a. Purchase For Own Account/Regulation S. The Holder
understands that neither this Warrant nor the Warrant Shares issuable upon the
exercise of this Warrant have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), or any state securities laws, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment as
expressed herein. The Holder is acquiring this Warrant for investment for its
own account, and not with a view to, or for resale in connection with, any
distribution thereof, and it has no present intention of selling or distributing
this Warrant. The Holder agrees that any Warrant Shares issuable upon exercise
of this Warrant will be acquired for investment for its own account, and not
with a view to, or for resale in connection with, any distribution thereof, and
such Warrant Shares will not be registered under the Securities Act and
applicable state securities laws and that such Warrant Shares may have to be
held indefinitely unless they are subsequently registered or qualified under the
Securities Act and applicable state securities laws or, based on an opinion of
counsel reasonably satisfactory to the Corporation, an exemption from such
registration and qualification is available. The Holder further understands that
the Corporation is relying on the rules and regulations governing offers and
sales made outside the United States to non-"U.S. Persons" pursuant to
Regulation S under the Securities Act. The Holder, by acceptance hereof,
consents to the placement of the following restrictive legends, or similar
legends, on each certificate to be issued to the Holder by the Corporation in
connection with the issuance of such Warrant Shares:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY
STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR LAWS COVERING SUCH SECURITIES, OR (B) THE HOLDER
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITIES
SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION
REQUIREMENTS UNDER APPLICABLE STATE LAW.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER PURSUANT TO REGULATION S PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO THE PROVISIONS UNDER
REGULATION S OR PURSUANT TO REGISTRATION UNDER SUCH ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER SET FORTH IN THAT CERTAIN MAY 1, 1996 [Don, review]
INVESTMENT BANKING AGREEMENT BETWEEN THE ORIGINAL HOLDER HEREOF AND THE
COMPANY.
b. Access to Data. The Holder has had an opportunity to
discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information which the Holder has deemed
necessary or appropriate for deciding whether or not to purchase this Warrant
and the Warrant Shares, including the information provided or otherwise
disclosed under the Subscription Agreement. The Holder acknowledges that no
other representations or warranties, oral or written, have been made by the
Corporation or any agent thereof except as set forth in this Agreement.
c. No Fairness Determination. The Holder is aware that no
federal, state or other agency has made any finding or determination as to the
fairness of the investment, nor made any recommendation or endorsement of this
Warrant or the Warrant Shares.
d. Knowledge And Experience. The Holder has such knowledge and
experience in financial and business matters, including investments in other
start-up companies, that it is capable of evaluating the merits and risks of the
investment in this Warrant and the Warrant Shares, and it is able to bear the
economic risk of such investment. Further, the Holder has such knowledge and
experience in financial and business matters that he is capable of utilizing the
information made available to him in connection with the offering of this
Warrant and the Warrant Shares, of evaluating the merits and risks of an
investment in this Warrant and the Warrant Shares and of making an informed
investment decision with respect to this Warrant and the Warrant Shares.
-4-
e. Limited Public Market. The Holder is aware that there is
currently a very limited "over-the-counter" public market for the Corporation's
registered securities and that the Corporation became a "reporting issuer" under
the Securities Exchange Act of 1934, as amended, on January 27, 1995. There is
no guarantee that a more established public market will develop at any time in
the future. The Holder understands that this Warrant and the Warrant Shares are
all unregistered and may not presently be sold in even this limited public
market. The Holder understands that this Warrant and the Warrant Shares cannot
be readily sold or liquidated in case of an emergency or other financial need.
The Holder has sufficient liquid assets available so that the purchase and
holding of this Warrant and the Warrant Shares will not cause it undue financial
difficulties.
g. Investment Experience. The Holder is an "accredited
investor" as that term is defined in Regulation D promulgated by the Securities
and Exchange Commission. The term "accredited investor" under Regulation D
refers to:
(1) A person or entity who is a director or executive officer of the
Corporation;
(2) Any bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Exchange Act; insurance company as
defined in Section 2(13) of the Securities Act; investment company
registered under the Investment Company Act of 1940; or a business
development company as defined in Section 2(a)(48) of that Act; Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; employee benefit plan
within the meaning of the Employee Retirement Income Security Act of
1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings
and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decision made
solely by persons that are accredited investors;
(3) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(4) Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring this
Warrant or the Warrant Shares, with total assets in excess of
$5,000,000;
(5) Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds
$1,000,000;
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(6) Any natural person who had an individual income in excess of
$200,000 during each of the previous two years or joint income with
that person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in the
current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring this Warrant or the Warrant
Shares, whose purchase is directed by a person who has such knowledge
and experience in financial and business matters that he is capable of
evaluating the merits and risks of the prospective investment; or
(8) Any entity in which all of the equity owners are accredited
investors.
As used in this Section 6(g), the term "net worth" means the excess of
total assets over total liabilities. For the purpose of determining a
person's net worth, the principal residence owned by an individual
should be valued at fair market value, including the cost of
improvements, net of current encumbrances. As used in this Section
6(g), "income" means actual economic income, which may differ from
adjusted gross income for income tax purposes. Accordingly, the
undersigned should consider whether it should add any or all of the
following items to its adjusted gross income for income tax purposes in
order to reflect more accurately its actual economic income: Any
amounts attributable to tax-exempt income received, losses claimed as a
limited partner in any limited partnership, deductions claimed for
depletion, contributions to an IRA or Keogh retirement plan, and
alimony payments.
h. Restrictions On Transfer Re Regulation S.
(1) Not A "U.S. Person." The Holder hereby certifies
that (i) it is not a "U.S. Person" as defined under Rule 902, Section (o) of
Regulation S promulgated under the Securities Act (a copy of which is attached
hereto as Schedule 2) and is not acquiring this Warrant or the Warrant Shares
for the account or benefit of any U.S. Person, and (ii) it is acquiring this
Warrant and the Warrant Shares in an "offshore transaction" as defined under
Section (i) of such Rule 902 (a copy of which is attached hereto as Schedule 3).
(2) Transfer Restrictions. The Holder shall not
attempt to have registered any transfer of this Warrant or the Warrant Shares
not made in accordance with the provisions of Regulation S. In addition to any
other restrictions on transfer set forth in this Warrant, the Holder agrees to
transfer this Warrant or the Warrant Shares only (i) in accordance with the
provisions of Regulation S, pursuant to registration under the Securities Act,
or pursuant to an available exemption from registration, and (ii) in accordance
with any applicable state securities laws. Unless so registered or exempt
therefrom, such transfer restrictions shall include but not be limited to and
the Holder warrants and represents the following:
(i) The Holder shall not sell this Warrant
or the Warrant Shares publicly or privately, or through any short sale, or other
hedging transaction to any U.S. Person, whether directly or indirectly, or for
the account or benefit of any such U.S. Person for the restrictive period
mandated by Regulation S after the purchase of this Warrant or the Warrant
Shares, as applicable, unless registered or exempt from registration;
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(ii) Any other offer or sale of this Warrant
or the Warrant Shares shall be made only if (A) during the restrictive period
any subsequent purchaser certifies in writing that it is not a U.S. Person and
is not acquiring this Warrant or the Warrant Shares for the account or benefit
of any U.S. Person, or (B) after the restrictive period this Warrant and the
Warrant Shares are purchased in a transaction that did not require registration
under the Securities Act and applicable Blue Sky laws; and
(iii) Any transferee of this Warrant or the
Warrant Shares shall agree in writing to resell this Warrant or the Warrant
Shares, as applicable, only in accordance with the provisions of Regulation S,
pursuant to registration under the Securities Act, or pursuant to an available
exemption from registration.
(3) Restrictions On Resales In the United States. The
Holder understands and acknowledges that the Securities Act prohibits resales of
securities in the United States except pursuant to an effective registration
statement or an exemption from registration for which the securities and the
Holder holding such securities qualifies. The Holder understands and
acknowledges the requirements for qualifying for an exemption from registration
afforded by Section 4 of the Securities Act and that there can be no assurance
that the Holder will be able to qualify for such an exemption from registration.
7. Reservation of Shares. The Corporation agrees at all times during
the Exercise Period to have authorized and reserved, for the exclusive purpose
of issuance and delivery upon exercise of this Warrant, a sufficient number of
shares of its common stock to provide for the exercise of the rights represented
hereby.
8. Adjustment for Re-Classification of Capital Stock. If the
Corporation at any time during the Exercise Period shall, by subdivision,
combination or re-classification of securities, change any of the securities to
which purchase rights under this Warrant exist under the same or different
number of securities of any class or classes, this Warrant shall thereafter
entitle the Holder to acquire such number and kind of securities as would have
been issuable as a result of such change with respect to the Warrant Shares
immediately prior to such subdivision, combination, or re-classification. If
shares of the Corporation's common stock are subdivided into a greater number of
shares of common stock, the purchase price for the Warrant Shares upon exercise
of this Warrant shall be proportionately reduced and the Warrant Shares shall be
proportionately increased; and conversely, if shares of the Corporation's common
stock are combined into a smaller number of common stock shares, the price shall
be proportionately increased, and the Warrant Shares shall be proportionately
decreased.
9. Public Offering Lock-Up. For a period of up to one-hundred-eighty
(180) days (the "Stand-off Period"), Holder shall not if requested by the
Corporation at any time in contemplation of a public registration, sell, pledge
or otherwise transfer any Warrant Shares (or any other shares exchanged
therefor). Notwithstanding the foregoing, the Corporation may exercise this
public offering lock-up only one time.
10. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the
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Corporation of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant or stock certificate, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and upon reimbursement to the Corporation of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Corporation will make and deliver a new Warrant
or stock certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate.
11. Assignment. The Holder of this Warrant shall not assign or transfer
this Warrant or any of the Warrant Shares without the transferee meeting the
suitability requirements set forth in Section 6 (above) and without the consent
of the Corporation and in compliance with applicable state and federal
securities laws. In giving its consent, the Corporation may request an opinion
of counsel reasonably acceptable to it that such transfer is in compliance with
all applicable state and federal securities laws.
12. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
between California residents entered into and to be performed entirely within
the State of California.
13. Notices. Any notice required or permitted under this Warrant shall
be given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified by hand or professional courier service or for
mailings from and to any address in North America (Canada, United States and
Mexico) five (5) days after deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party in the Subscription Agreement,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
14. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and disbursements in addition to
any other relief to which such party may be entitled.
15. Amendments. Any terms of this Warrant may be amended with the
written consent of the Corporation and the holders of Series C Warrants
representing not less than 67% of the shares of Common Stock issuable upon
exercise of all Series C Warrants.
Dated: October 25, 1996 U.S. ELECTRICAR, INC.
By: /s/ Roy Kusumoto
---------------------------
Roy Y. Kusumoto, President
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NOTICE OF EXERCISE
To: U.S. ELECTRICAR, INC.
(1) The undersigned hereby elects to purchase __________ shares of
Common Stock of Electricar, Inc., pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price for such shares in full.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, for
investment, and that the undersigned will not offer, sell or otherwise dispose
of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended (the "Securities
Act"), including, but not limited to, Regulation S promulgated thereunder, or
any state securities laws.
(3) The undersigned hereby certifies that either (i) the undersigned is
not a U.S. Person (as such term is defined in Regulation S under the Securities
Act), or (ii) the undersigned has delivered to the Corporation an opinion of
counsel to the effect that this Warrant and the Warrant Shares to be delivered
upon exercise thereof have been registered under the Securities Act or an
exemption from such registration is available.
(4) The undersigned further certifies that this Warrant is not being
exercised in the United States and understands and agrees that the Warrant
Shares may not be delivered to the United States absent registration under the
Securities Act or an available exemption from such registration.
(5) Please issue a certificate representing said shares of Common Stock
in the name of the undersigned.
(6) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned.
___________________________
(Name)
_________________ ___________________________
(Date) (Signature)
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