SUBSCRIPTION AGREEMENT
This
Subscription Agreement (this “Agreement”), dated
effective as of October 15, 2004, by and between Ener1, Inc., a
Florida corporation (together with its successors and permitted
assigns, the “Issuer”), and the undersigned investor
(together with its successors and permitted assigns, the
“Investor”).
RECITALS
Subject
to the terms and conditions of this Agreement, the Investor desires
to subscribe for and purchase, and the Issuer desires to issue and
sell to the Investor, 150,000 shares (the “Shares”) of
the Issuer’s Series B 7% Convertible Preferred Stock, par
value USD .01 per share (the “Series B Preferred”),
having a face value of USD 100.00 per share (said Series B
Preferred being further described in the Certificate of
Designations attached hereto as Exhibit A ), said Series B
Preferred and warrants (the “Warrants,” and together
with the Series B Preferred, the “Securities”) to
purchase (i) 4,166,666 shares of the Issuer’s common stock,
par value $0.01 per share, at an exercise price of $1.25 per share,
and (ii) 4,166,666 shares of the Issuer’s common stock, par
value $0.01 per share, at an exercise price of $1.50 per share
(collectively, the “Common Stock”), the terms of the
Warrants being more fully described in the forms thereof, attached
hereto as Exhibit B and C , respectively. The Issuer is
offering the Securities in a private placement (the “Private
Placement”) to the Investor for an aggregate purchase price
of Fifteen Million United States Dollars (USD 15,000,000 (the
“Purchase Price”), and on the other terms and
conditions contained in this Agreement, including its
exhibits.
TERMS OF AGREEMENT
In
consideration of the mutual representations and warranties,
covenants and agreements contained herein, the parties hereto agree
as follows:
ARTICLE 1
SUBSCRIPTION AND ISSUANCE OF SECURITIES
1.1 Subscription and Issuance of Securities .
Subject to the terms and conditions of this Agreement, the Issuer
will issue and sell to the Investor and the Investor subscribes for
and will purchase from the Issuer the Securities set forth in the
above recital.
1.2 Legend . Any certificate or certificates
representing the Securities shall bear the following
legend:
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THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY
STATE WITH RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND ALSO MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE
WITH ANY APPLICABLE RULES OF THE SECURITIES AND EXCHANGE
COMMISSION.
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ARTICLE 2
CLOSING
2.1 Closing . The closing of the transaction
shall take place on October 15, 2004. The Closing shall take
place at a location or locations agreed to between the parties
hereto. In the Closing, the Issuer and Investor shall exchange fax
signatures and subsequently exchange executed hardcopies of the
agreements contemplated herein. The Investor shall wire to the
Issuer USD 15,000,000 in accordance with the below wire transfer
instructions, upon receipt of the Issuer’s signature via
facsimile on this Subscription Agreement, Certificate of
Designations and the Warrants. The Investor and the Issuer shall
exchange hard copy signed versions of this Agreement and the other
agreements contemplated herein via international overnight courier,
and the Issuer shall also send to the Investor original stock
certificates for the Series B Preferred in denominations of 150,000
shares within ten (10 days of receipt of the above wired
payment.
Wire Transfer
Instructions:
Wachovia Bank NA
200 South Biscayne Blvd., 15th Floor
Miami, FL 33131
Phone: 305-789-5036
Acct Manager: John Costa
SWIFT:
PNBPUS33CHA
ABA: 063000021
Acct: 2000016080449Acct
Name: Ener1 Inc Money Market
Beneficiary:
Ener1, Inc.
500 W. Cypress Creek Road, Suite 100
Fort Lauderdale, FL 33309
Phone: 954-556-4020
2.2 Termination . This Agreement may be terminated at
any time prior to the Closing:
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(a)
by mutual written consent of the Issuer and the
Investor;
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(b)
by the Investor, upon a material breach of any material
representation, warranty, covenant, or agreement on the part of the
Issuer set forth in this Agreement, or if any material
representation and warranty of the Issuer shall have become untrue
in any material respect, in either case such that the conditions in
Section 6.1 would be incapable of being satisfied by the date of
the Closing; or
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(c)
by the Issuer, upon a material breach of any material
representation and warranty, covenant or agreement on the part of
the Investor set forth in this Agreement, or if any material
representation and warranty of the Investor shall have become
untrue in any material respect, in either case such that the
conditions in Section 6.2 would be incapable of being satisfied by
the date of the Closing.
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2.3 Effect of Termination . In the event of
termination of this Agreement pursuant to Section 2.2, this
Agreement shall forthwith become void, there shall be no liability
on the part of the Issuer or the Investor to each other and all
rights and obligations of any party hereto shall cease; provided,
however, that nothing herein shall relieve any party from liability
for the willful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
As
a material inducement to the Investor entering into this Agreement
and subscribing for the Shares, the Issuer represents and warrants
to the Investor as follows:
3.1 Corporate Status . The Issuer is a
corporation, duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is
incorporated.
3.2 Corporate Power and Authority . The Issuer
has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and consummate
the transactions contemplated hereby. The Issuer has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby.
3.3 Enforceability . This Agreement has been
duly executed and delivered by the Issuer and constitutes a legal,
valid and binding obligation of the Issuer, enforceable against the
Issuer in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors’ rights generally and general equitable principles,
regardless of whether such enforceability is considered in a
proceeding at law or in equity.
3.4 No Violation . The execution and delivery
by the Issuer of this Agreement, the consummation of the
transactions contemplated hereby, and the compliance by the Issuer
with the terms and provisions hereof (including, without
limitation, the Issuer’s issuance to the Investor of the
Shares as contemplated by and in accordance with this Agreement),
will not result in a default under (or give any other party the
right, with the giving of notice or the passage of time (or both),
to declare a default or accelerate any obligation under) or violate
the Articles of Incorporation or By-laws of the Issuer or any
material contract to which the Issuer is a party (except to the
extent such a default would not, in the case of a contract, have a
Material Adverse Effect on the Issuer), or any requirement of law
applicable to the Issuer, or result in the creation or imposition
of any material lien upon any of the capital stock, properties or
assets of the Issuer or any of its subsidiaries (except where such
lien would not have a Material Adverse Effect on the Issuer). No
consents, filings, authorizations or other actions of any
governmental authority are required for the Issuer’s
execution, delivery and performance of this Agreement. No consent,
approval, waiver or other action by any Person under any contract
to which the Issuer is a party or by which the Issuer or any of its
properties or assets are bound is required or necessary for the
execution, delivery or performance by the Issuer of this Agreement
and the consummation of the transactions contemplated hereby,
except where the failure to obtain such consents would not have a
Material Adverse Effect on the Issuer.
3.5 Valid Issuance of Securities . Upon
payment of the Purchase Price by the Investor and delivery to the
Investor of the certificates for the Securities, such Securities
will be validly issued, fully paid and non-assessable.
3.6 SEC Filings and Other Filings . The Issuer
has made all filings required to be made by it under the Securities
Act and the Exchange Act, and any rules and regulations promulgated
thereunder (the “SEC Filings”) and pursuant to any
other requirements of law (the “Other Filings”), except
for such failures to make any such filings that would not have a
material adverse effect on the Issuer. The SEC Filings and the
Other Filings, when filed, complied in all material respects with
all applicable requirements of the Securities Act, the Exchange Act
and other requirements of law. None of the SEC Filings or the Other
Filings, at the time of filing, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein
not misleading in light of the circumstances in which they were
made. The Issuer has made accessible to the Investor true, accurate
and complete copies of all SEC Filings which were filed with the
SEC. Each balance sheet included in the SEC Filings (including any
related notes and schedules) fairly presents in all material
respects the consolidated financial position of the Issuer as of
its date, and each of the other financial statements included in
the SEC Filings (including any related notes and schedules) fairly
presents in all material respects the consolidated results of
operations or other information therein of the Issuer for the
periods or as of the dates therein set forth in accordance with
GAAP consistently applied during the periods involved (except that
the interim reports are subject to adjustments which might be
required as a result of year end audit and except as otherwise
stated therein).
3.7 Use of Proceeds . The proceeds of the
offering and sale of the Securities of the Issuer offered hereby,
net of payment of expenses, will be used by the Issuer for the
purchase of common stock in a lithium battery company to be formed
by the Issuer and Delphi Automotive Systems, LLC.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
As
a material inducement to the Issuer entering into this Agreement
and issuing the Shares, the Investor represents and warrants to the
Issuer as follows:
4.1 Power and Authority . The Investor is an
entity duly organized, validly existing and in good standing under
the laws of the state or province and country of its incorporation
or formation. The Investor has the corporate, partnership or other
power and authority under applicable law to execute and deliver
this Agreement and consummate the transactions contemplated hereby,
and has all necessary authority to execute, deliver and perform its
obligations under this Agreement and consummate the transactions
contemplated hereby. The Investor has taken all necessary action to
authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby.
4.2 No Violation . The execution and delivery
by the Investor of this Agreement, the consummation of the
transactions contemplated hereby, and the compliance by the
Investor with the terms and provisions hereof, will not result in a
default under (or give any other party the right, with the giving
of notice or the passage of time (or both), to declare a default or
accelerate any obligation under) or violate any charter or similar
documents of the Investor or any contract to which the Investor is
a party or by which it or its properties or assets are bound, or
violate any requirement of law applicable to the Investor, other
than such violations or defaults which, individually and in the
aggregate, do not and will not have a Material Adverse Effect on
the Investor.
4.3 Consents/Approvals . No consents, filings,
authorizations or actions of any Governmental Authority are
required for the Investor’s execution, delivery and
performance of this Agreement. No consent, approval, waiver or
other actions by any Person under any contract to which the
Investor is a party or by which the Investor or any of its
properties or assets are bound is required or necessary for the
execution, delivery and performance by the Investor of this
Agreement and the consummation of the transactions contemplated
hereby.
4.4 Enforceability . This Agreement has been
duly executed and delivered by the Investor and constitutes a
legal, valid and binding obligation of the Investor, enforceable
against the Investor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditor’s rights generally and general
equitable principles, regardless of whether enforceability is
considered in a proceeding at law or in equity.
4.5 Investment Intent . The Investor is
acquiring the Securities with no present intention of distributing
or selling such Securities and further agrees not to transfer such
Securities in violation of the Securities Act or any applicable
state securities law. The Investor agrees that it will not sell or
otherwise dispose of any of the Securities unless such sale or
other disposition has been registered under the Securities Act or,
in the opinion of counsel acceptable to the Issuer, is exempt from
registration under the Securities Act and has been registered or
qualified or, in the opinion of such counsel acceptable to the
Issuer, is exempt from registration or qualification under
applicable state securities laws. The Investor understands that the
offer and sale by the Issuer of the Securities being acquired by
the Investor hereunder has not been registered under the Securities
Act by reason of their contemplated issuance in transactions exempt
from the registration and prospectus delivery requirements of the
Securities Act pursuant to Section 4(2) thereof, and that the
reliance of the Issuer on such exemption from registration is
predicated in part on these representations and warranties of the
Investor. The Investor acknowledges that pursuant to Section 1.2 of
this Agreement a restrictive legend consistent with the foregoing
has been or will be placed on the certificates representing the
Securities.
4.6 Accredited Investor . The Investor is an
“accredited investor” as such term is defined in Rule
501(a) of Regulation D under the Securities Act (a copy of which is
attached hereto as Exhibit D ), and has such knowledge
and experience in financial and business matters that it is capable
of evaluating the merits and risks of the investment to be made by
it hereunder.
4.7 Adequate Information . The Investor has
received from the Issuer, and has reviewed, such information which
the Investor considers necessary or appropriate to evaluate the
risks and merits of an investment in the Securities.
4.8 Opportunity to Question . The Investor has
had the opportunity to question, and has questioned, to the extent
deemed necessary or appropriate, representatives of the Issuer so
as to receive answers and verify information obtained in the
Investor’s examination of the Issuer.
4.8 No Other Representations . No oral or
written representations have been made to the Investor in
connection with the Investor’s acquisition of the Shares
which were in any way inconsistent with the information reviewed by
the Investor. The Investor acknowledges that no representations or
warranties of any type or description have been made to it by any
Person with regard to the Issuer, any of its subsidiaries, any of
their respective businesses, properties or prospects or the
investment contemplated herein, other than the representations and
warranties set forth in Article III hereof.
4.9 Knowledge and Experience . The Investor
has such knowledge and experience in financial, tax and business
matters, including substantial experience in evaluating and
investing in common stock and other securities (including the
common stock and other securities of new and speculative
companies), so as to enable the Investor to utilize the information
made available by the Issuer to the Investor in order to evaluate
the merits and risks of an investment in the Securities and to make
an informed investment decision with respect thereto.
4.10 Independent Decision . The Investor is
not relying on the Issuer or on any legal or other opinion in the
materials reviewed by the Investor with respect to the financial or
tax considerations of the Investor relating to its investment in
the Securities . The Investor has relied solely on the
representations and warranties, covenants and agreements of the
Issuer in this Agreement (including the Exhibits hereto) and on its
examination and independent investigation in making its decision to
acquire the Securities .
4.11 Commissions . The Investor has not
incurred any obligation for any finder’s or broker’s or
agent’s fees or commissions in connection with the
transactions contemplated hereby.
4.12 Information Provided to the Issuer . All
information that the Investor has provided to the Issuer concerning
its investment in the Securities is true and correct as of the date
hereof.
ARTICLE 5COVENANTS
5.1 Further Assurances . Each party shall
execute and deliver such additional instruments and other documents
and shall take such further actions as may be necessary or
appropriate to effectuate, carry out and comply with all of the
terms of this Agreement and the transactions contemplated hereby.
Each of the Investor and the Issuer shall make on a prompt and
timely basis all governmental or regulatory notifications and
filings required to be made by it with or to any governmental
authority in connection with the consummation of the transactions
contemplated hereby. The Issuer and the Investor each agree to
cooperate with the other in the preparation and filing of all
forms, notifications, reports and information, if any, required or
reasonably deemed advisable pursuant to any requirement of law in
connection with the transactions contemplated by this Agreement and
to use their respective best efforts to agree jointly on a method
to overcome any objections by any governmental authority to any
such transactions. Except as may be specifically required
hereunder, neither of the parties hereto or their respective
affiliates shall be required to agree to take any action that in
the reasonable opinion of such party would result in or produce a
Material Adverse Effect on such party. The parties also agree to
use best efforts to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions
contemplated hereby and to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of
the parties to consummate the transactions contemplated
hereby.
5.2 Compliance with U.S. Securities Laws and Other
Laws . Each party hereto shall comply with all applicable
U.S. securities laws and other laws, including, without limitation,
the filing of all disclosure forms required by such laws and such
other reporting of the transactions contemplated herein as may be
required by applicable securities laws or other laws.
5.3 Notification of Certain Matters . Each
party hereto shall give prompt notice to the other party of the
occurrence, or non-occurrence, of any event which would be likely
to cause any representation and warranty herein to be untrue or
inaccurate, or any covenant, condition or agreement herein not to
be complied with or satisfied.
5.4 Conversion and Registration Rights . In
the event that the Issuer shall file a registration statement with
the U.S. Securities and Exchange Commission subsequent to the
issuance of the Series B Preferred hereunder, the Investor shall
have the right to convert that number of shares of its Series B
Preferred Stock equal to up to 50% of the then unredeemed aggregate
Liquidation Value of said Series B Preferred Stock into Common
Stock of the Corporation, solely for the purpose of including said
Common Stock in said registration and selling said Common Stock in
the offering for which said registration is filed. The conversion
ratio shall be established by dividing the Liquidation Value per
share of Series B Preferred by the Common Stock price established
for the Issuer’s Common Stock in the offering. Said rights of
conversion and registration shall be subject to the discretion of
the underwriters as to the inclusion of said Common Stock in said
offering and to the effectiveness of said registration
statement.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of the Investor
. The obligations of the Investor to proceed with the Closing
is subject to the following conditions any and all of which may be
waived, in whole or in part, to the extent permitted by applicable
law:
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(a)
Representations and Warranties . Each of the representations
and warranties of the Issuer contained in this Agreement shall be
true and correct in all material respects as of the Closing as
though made on and as of the Closing, except (i) for changes
specifically permitted by this Agreement, and (ii) that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date,
except in any case for such failures to be true and correct which
would not, individually or in the aggregate, have a Material
Adverse Effect on the Issuer.
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(b)
Agreement and Covenants . The Issuer shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it
on or prior to the Closing.
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(c)
No Order . No governmental authority or other agency or
commission or federal or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction, or
other order (whether temporary, preliminary or permanent) which is
in effect and which materially restricts, prevents or prohibits
consummation of the Closing or any transaction contemplated by this
Agreement.
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6.2 Conditions to the Obligations of the Issuer
. The obligations of the Issuer to proceed with the Closing is
subject to the following conditions any and all of which may be
waived, in whole or in part, to the extent permitted by applicable
law:
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(a)
Representations and Warranties . Each of the representations
and warranties of the Investor contained in this Agreement shall be
true and correct as of the Closing as though made on and as of the
Closing, except (i) for changes specifically permitted by this
Agreement, and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and
correct as of such date, except in any case for such failures to be
true and correct which would not, individually or in the aggregate,
have a Material Adverse Effect on the Investor. Unless the Issuer
receives written notification to the contrary at the Closing, the
Issuer shall be entitled to assume that the preceding is accurate
in all respects at the Closing.
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(b)
Agreement and Covenants . The Investor shall have performed
or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing. Unless the Issuer receives
written notification to the contrary at the Closing, the Issuer
shall be entitled to assume that the preceding is accurate in all
respects at the Closing.
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(c)
No Order . No governmental authority or other agency or
commission or federal or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction, or
other order (whether temporary, preliminary or permanent) which is
in effect and which materially restricts, prevents or prohibits
consummation of the Closing or any transaction contemplated by this
Agreement.
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ARTICLE 7
GENERAL PROVISIONS
7.1 Notices . All notices, requests, demands,
claims, and other communications hereunder shall be in writing and
shall be delivered by certified or registered mail (first class
postage pre-paid), guaranteed overnight delivery, or facsimile
transmission if such transmission is confirmed by delivery by
certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers
which such party shall subsequently designate in writing to the
other party):
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(a) if to the
Issuer to:
Ener1,
Inc.
500 W.
Cypress Creek Road, Suite 100
Ft.
Lauderdale, FL 33309
Attn: Chief
Executive Officer
Telephone:
(954) 556.4020
Facsimile:
(954) 776-5337
with a copy
to:
Ener1,
Inc.
500 W.
Cypress Creek Road, Suite 100
Ft.
Lauderdale, FL 33309
Attn: General
Counsel
Telephone:
(954) 556.4020
Facsimile:
(954) 776-3359
(b) if to the Investor to:
Cofis
Compagnie Fiduciaire S.A.
Cours des
Bastions 4
Case postale
5325
CH-1211
Geneve 11
Attn: Mr.
Gerald Calame
Tel.: +41
(0)22 809 10 70
Fax : +41
(0)22 809 10 79
E-mail :
g.calame@cofisfiduciaire.ch
with a copy
to: [to be designated by Investor]
__________________________
__________________________
__________________________
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7.2 Remedies .
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(a)
Each of the Investor and the Issuer acknowledge that the other
party would not have an adequate remedy at law for money damages in
the event that any of the covenants or agreements of such party in
this Agreement was not performed in accordance with its terms, and
it is therefore agreed that each of the Investor and the Issuer in
addition to and without limiting any other remedy or right such
party may have, shall have the right to an injunction or other
equitable relief in any court of competent jurisdiction, enjoining
any such breach and enforcing specifically the terms and provisions
hereof, and each of the Investor and the Issuer hereby waive any
and all defenses such party may have on the ground of lack of
jurisdiction or competence of the court to grant such an injunction
or other equitable relief.
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(b)
All rights, powers and remedies under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise
of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such
party.
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7.3 Entire Agreement . This Agreement
(including the Exhibits attached hereto) and other documents
delivered at the Closing pursuant hereto, contains the entire
understanding of the parties in respect of its subject matter and
supersedes all prior agreements and understandings between or among
the parties with respect to such subject matter. The Exhibits
constitute a part hereof as though set forth in full
above.
7.4 Expenses; Taxes . Except as otherwise
provided in this Agreement, the parties shall pay their own fees
and expenses, including their own counsel fees, incurred in
connection with this Agreement or any transaction contemplated
hereby. Any sales tax, stamp duty, deed transfer or other tax
(except taxes based on the income of the Investor) arising out of
the issuance of the Securities by the Issuer to the Investor and
consummation of the transactions contemplated by this Agreement
shall be paid by the Issuer.
7.5 Amendment; Waiver . This Agreement may not
be modified, amended, supplemented, canceled or discharged, except
by written instrument executed by both parties. No failure to
exercise, and no delay in exercising, any right, power or privilege
under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or
privilege. No waiver of any breach of any provision shall be deemed
to be a waiver of any preceding or succeeding breach of the same or
any other provision, nor shall any waiver be implied from any
course of dealing between the parties. No extension of time for
performance of any obligations or other acts hereunder or under any
other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. The rights
and remedies of the parties under this Agreement are in addition to
all other rights and remedies, at law or equity, that they may have
against each other.
7.6 Binding Effect; Assignment . The rights
and obligations of this Agreement shall bind and inure to the
benefit of the parties and their respective successors and legal
assigns. The rights and obligations of this Agreement may not be
assigned by any party without the prior written consent of the
other party, which consent shall not be unreasonably
withheld.
7.7 Counterparts . This Agreement may be
executed in any number of counterparts, each of which shall be an
original but all of which together shall constitute one and the
same instrument.
7.8 Headings . The headings contained in this
Agreement are for convenience of reference only and are not to be
given any legal effect and shall not affect the meaning or
interpretation of this Agreement.
7.9 Governing Law; Interpretation . This
Agreement shall be construed in accordance with and governed for
all purposes by the laws of the State of Florida applicable to
contracts executed and to be wholly performed within such
State.
7.10 Severability . The parties stipulate that
the terms and provisions of this Agreement are fair and reasonable
as of the date of this Agreement. However, any provision of this
Agreement shall be determined by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated. If, moreover, any of those provisions
shall for any reason be determined by a court of competent
jurisdiction to be unenforceable because excessively broad or vague
as to duration, activity or subject, it shall be construed by
limiting, reducing or defining it, so as to be
enforceable.
[SIGNATURES APPEAR ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this
Subscription Agreement to be duly executed and delivered as of the
date first entered above.
ENER1, INC. (ISSUER)
By:
_____________________________
Name: Ronald N.
Stewart
Title: Executive Vice
President,
General Counsel and Secretary
Cofis Compagnie Fiduciaire S.A.
(INVESTOR)
By:
_____________________________
Name:
_____________________________
Title:
_____________________________
EXHIBIT A – CERTIFICATE OF
DESIGNATIONS
Certificate of Designations
of Series B Preferred Stock
of
Ener1, Inc.
(Pursuant to Section 607.0602 of the
Florida Business Corporation Act)
Series B Convertible Preferred
Stock.
1.
Designation . The
designation of this class of Preferred Stock is “Series B
Convertible Preferred Stock” (hereinafter, the “Series
B Preferred”). The number of shares constituting the Series B
Preferred shall be 180,000 shares, with a liquidation value of
$100.00 per share (the “Liquidation Value”).
2.
Rank . The Series
B Preferred shall rank: (i) junior to any other class or series of
capital stock of the Corporation hereafter created specifically
ranking by its terms senior to the Series B Preferred; (ii) senior
to the Corporation’s common stock, $.01 par value per share
(the “Common Stock”); (iii) senior to any class or
series of capital stock of the Corporation hereafter created not
specifically ranking by its terms senior to the Series B Preferred
(collectively, with the Common Stock, the “Junior
Securities”); and (iv) pari passu with any class or
series of capital stock of the Corporation hereafter created
specifically ranking by its terms on parity with the Series B
Preferred, in each case as to distribution of assets of the
Corporation upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (“Parity
Securities”).
3.
Dividends .
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(a)
Dividends shall be payable, to the extent allowed by applicable law
and available, on the shares of outstanding Series B Preferred as
follows:
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(i)
Semi-annually, in arrears, on November 1 of each year during which
the Series B Preferred shall be outstanding beginning November 1,
2005;
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(ii)
For the first two years after issuance of the Series B Preferred,
payment-in-kind, in the form of additional shares of Series B
Preferred, at the rate of Seven Percent (7%) of the Liquidation
Value.
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(iii)
Thereafter, in the form of cash at the rate of Seven Percent (7%)
of the Liquidation Value.
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(iv)
In the event that any dividends are not paid because not legally
allowable or not available, said dividends shall
cumulate.
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(b)
Dividends payable under this Section 3 shall be paid to the holders
of record of the outstanding Series B Preferred as their names
shall appear on the stock register of the Corporation on the record
date fixed by the Board of Directors in advance of declaration and
payment of each dividend.
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4.
Voting . The
Series B Preferred shall have no voting rights, except as required
by law.
5.
Liquidation Preference . Upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, holders
of the Series B Preferred Stock shall be entitled to be paid,
before any distribution or payment is made upon any Junior
Securities, an amount in cash equal to the aggregate Liquidation
Value of all such Series B Preferred Stock outstanding on the date
of such liquidation, dissolution or winding up, and the holders of
Series B Preferred Stock shall not be entitled to any further
payment. If upon any such liquidation, dissolution or winding up of
the Corporation, the Corporation’s assets (or proceeds
thereof) to be distributed among the holders of the Series B
Preferred Stock and any Parity Securities are insufficient to
permit payment in full to such holders of the aggregate amount
which they are entitled to be paid, then the entire assets to be
distributed shall be distributed ratably among such holders based
upon, in the case of holders of the Series B Preferred Stock, the
aggregate Liquidation Value of the Series B Preferred Stock held by
each such holder on the date of such liquidation, dissolution or
winding up and, in the case of holders of any Parity Securities,
the liquidation preference and accumulated and unpaid dividends
which they are entitled to pursuant to such Parity Securities. The
Corporation shall mail written notice of such liquidation,
dissolution or winding up, not less than 10 days prior to the
payment date statement therein, to each record holder of Series B
Preferred Stock. Neither the consolidation or merger of the
Corporation into or with any other Person or Persons, nor the
reduction of the capital stock of the Corporation, shall be deemed
to be a liquidation, dissolution or winding up of the Corporation
within the meaning of this Section 5.
6.
Conversion and Registration Rights . In the event that the
Corporation shall file a registration statement with the U.S.
Securities and Exchange Commission subsequent to the issuance of
the Series B Preferred hereunder, the holder shall have the right
to convert that number of Series B Preferred Stock equal to up to
50% of the then unredeemed aggregate Liquidation Value of said
Series B Preferred Stock into Common Stock of the Corporation,
solely for the purpose of including said Common Stock in said
registration and selling said Common Stock in the offering for
which said registration is filed. The conversion ratio shall be
established by dividing the Liquidation Value per share of Series B
Preferred by the Common Stock price established for the
Corporation’s Common Stock in the offering. Said rights of
conversion and registration shall be subject to the discretion of
the underwriters as to the inclusion of said Common Stock in said
offering and to the effectiveness of said registration
statement.
7.
Redemption . The
Series B Preferred shall be redeemable by the Corporation at any
time in part or whole at 100% of the Liquidation Value, plus
accrued and unpaid dividends. The Series B Preferred shall also
redeemable at the option of the holder thereof once 100% of the
Corporation’s 5% senior secured debentures due January 20,
2009 are liquidated through conversion, mandatory conversion,
repurchase or payment by the Corporation. If such liquidation
occurs in full before January 20, 2009, redemption shall be in
twenty-four (24) equal monthly installments beginning thirty (30)
days from the date of the Corporation’s receipt of notice
from the holder, and continuing monthly thereafter. If such
liquidation occurs on January 20,.2009, the redemption shall be in
twelve (12) equal monthly installments, the first payment beginning
thirty (30) days from January 20, 2009 and continuing monthly
thereafter. In each case, said liquidation payments shall include
all accrued and unpaid dividends. The Corporation shall notify the
holder of the Series B Preferred Stock of the occurrence of the
liquidation.
8.
Protective Provisions . For so long as any of the Series B
Preferred remains outstanding, the consent of the holder of the
Series B Preferred will be required for any amendment or change of
the rights, preferences, privileges or powers of Series B Preferred
or the issuance of any other series of preferred stock of the
Corporation which is senior to Series B Preferred.
9.
Identical Rights
. Each share of Series B
Preferred shall have the same relative rights and preferences as,
and shall be identical in all respects with, all other shares of
the Series B Preferred.
10.
Certificates . So
long as any shares of the Series B Preferred are outstanding, there
shall be set forth on the face or back of each stock certificate
issued by the Corporation a statement that the Corporation shall
furnish
