SECURITIES PURCHASE
AGREEMENT
This Securities Purchase Agreement
(this “Agreement” ) is dated as of April 9,
2007, by and among Solar Power, Inc., a California corporation, and
all predecessors thereto (the “Company” ) and
the investors identified on the signature pages hereto (each, an
“Investor” and collectively, the
“Investors” ).
WHEREAS, subject to the terms and
conditions set forth in this Agreement and pursuant to Section 4(2)
of the Securities Act (as defined below) and Rule 506 promulgated
thereunder, the Company desires to issue and sell to each Investor,
and each Investor, severally and not jointly, desires to purchase
from the Company certain securities of the Company, as more fully
described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of
the mutual covenants contained in this Agreement, and for other
good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and the Investors agree as
follows:
ARTICLE 1.
DEFINITIONS
1.1. Definitions.
In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms shall have the
meanings indicated in this Section 1.1:
“Action”
means any action, suit, inquiry,
notice of violation, proceeding (including any partial proceeding
such as a deposition) or investigation pending or threatened in
writing against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator,
governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market, stock
exchange or trading facility.
“Affiliate” means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or
is under common control with a Person, as such terms are used in
and construed under Rule 144.
“Business
Day” means any day
except Saturday, Sunday and any day which is a federal legal
holiday or a day on which banking institutions in the State of
California are authorized or required by law or other governmental
action to close.
“Buy-In”
has the meaning set forth in Section
4.1(c).
“California
Courts” means the
state and federal courts sitting in the City of Sacramento,
California.
“Closing”
means the closing of the purchase
and sale of the Shares pursuant to Article II.
“Closing
Date” means the
Business Day on which all of the conditions set forth in Sections
5.1 and 5.2 hereof are satisfied, or such other date as the parties
may agree.
“Commission” means the Securities and Exchange
Commission.
“Common
Stock” means the
common stock of the Company, par value $0.0001 per share, and any
securities into which such common stock may hereafter be
reclassified.
“Common Stock
Equivalents” means
any securities of the Company or any Subsidiary which entitle the
holder thereof to acquire Common Stock at any time, including
without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into
or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock or other securities that entitle the holder
to receive, directly or indirectly, Common Stock.
“Company
Counsel” means
Bullivant Houser Bailey PC.
“Company
Deliverables” has
the meaning set forth in Section 2.2(a).
“Disclosure
Materials” has the
meaning set forth in Section 3.1(h).
“Exchange
Act” means the
Securities Exchange Act of 1934, as amended.
“GAAP”
means U.S. generally accepted
accounting principles.
“Intellectual Property
Rights” has the
meaning set forth in Section 3.1(p).
“Investment
Amount” means, with
respect to each Investor, the Investment Amount indicated on such
Investor’s signature page to this Agreement.
“Investor
Deliverables” has
the meaning set forth in Section 2.2(b).
“Investor
Party” has the
meaning set forth in Section 4.7.
“Lien”
means any lien, charge, encumbrance,
security interest, right of first refusal or other restrictions of
any kind.
“Material Adverse
Effect” means any
of (i) a material and adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and
adverse effect on the results of operations, assets, prospects,
business or condition (financial or otherwise) of the Company and
the Subsidiaries, taken as a whole, or (iii) an adverse impairment
to the Company’s ability to perform on a timely basis its
obligations under any Transaction Document.
“Outside
Date” means April
10, 2007.
“Per Share Purchase
Price” equals
$1.00.
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“Person”
means an individual or corporation,
partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of
any kind.
“Proceeding” means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or
threatened.
“Rule 144”
means Rule 144 promulgated by the
Commission pursuant to the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same
effect as such Rule.
“SEC
Reports” has the
meaning set forth in Section 3.1(h).
“Securities
Act” means the
Securities Act of 1933, as amended.
“Share Delivery
Date” has the
meaning set forth in Section 4.1(c).
“Shares”
means the shares of Common Stock
issued or issuable to the Investors pursuant to this
Agreement.
“Short
Sales” include,
without limitation, all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act
and all types of direct and indirect stock pledges, forward sale
contracts, options, puts, calls, swaps and similar arrangements
(including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated
brokers.
“Subsidiary” means any “significant subsidiary”
as defined in Rule 1-02(w) of the Regulation S-X promulgated by the
Commission under the Exchange Act.
“Trading
Day” means (i) a
day on which the Common Stock is traded on a Trading Market (other
than the OTC Bulletin Board), or (ii) if the Common Stock is not
listed on a Trading Market (other than the OTC Bulletin Board), a
day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as
reported by the Pink Sheets LLC (or any similar organization or
agency succeeding to its functions of reporting prices);
provided , that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.
“Trading
Market” means
whichever of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ Global Market, the NASDAQ Capital Market or
OTC Bulletin Board on which the Common Stock is listed or quoted
for trading on the date in question.
“Transaction
Documents” means
this Agreement and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
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ARTICLE 2.
PURCHASE AND SALE
2.1. Closing.
Subject to the terms and conditions set forth in this Agreement, at
the Closing the Company shall issue and sell to each Investor, and
each Investor shall, severally and not jointly, purchase from the
Company, the Shares representing such Investor’s Investment
Amount. The Closing shall take place at the offices of Company
Counsel, 1415 L Street, Suite 1000, Sacramento, California, on the
Closing Date or at such other location or time as the parties may
agree.
(a) At the Closing, the Company
shall deliver or cause to be delivered to each Investor the
following (the “Company Deliverables”
):
(i) a
certificate evidencing a number of Shares equal to such
Investor’s Investment Amount divided by the Per Share
Purchase Price, registered in the name of such Investor;
(b) At
the Closing, each Investor shall deliver or cause to be delivered
to the Company the following (the “Investor
Deliverables” ):
(i) its
Investment Amount, in United States dollars and in immediately
available funds, by wire transfer to an account designated in
writing by the Company for such purpose.
ARTICLE 3.
REPRESENTATIONS AND
WARRANTIES
3.1. Representations
and Warranties of the Company. The Company hereby makes the
following representations and warranties to each
Investor:
(a)
Subsidiaries . The Company has no direct or indirect
Subsidiaries other than as specified in the SEC Reports. The
Company owns, directly or indirectly, all of the capital stock of
each Subsidiary free and clear of any and all Liens, and all the
issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights.
(b)
Organization and Qualification . The Company and each
Subsidiary are duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Neither
the Company nor any Subsidiary is in violation of any of the
provisions of its respective articles of incorporation, bylaws or
other organizational or charter documents. The Company and each
Subsidiary are duly qualified to conduct its respective businesses
and are in good standing as a foreign corporation or other entity
in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the
case may be, could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse
Effect.
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(c)
Authorization; Enforcement . The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution
and delivery of each of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of
the Company and no further action is required by the Company in
connection therewith. Each Transaction Document has been (or upon
delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.
(d)
No Conflicts . The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by
the Company of the transactions contemplated thereby do not and
will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s articles of
incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.
(e)
Filings, Consents and Approvals . The Company is not
required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental
authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction
Documents, other than (i) filings required by state securities
laws, (ii) the filing of a Notice of Sale of Securities on Form D
with the Commission under Regulation D of the Securities Act, (iii)
the filings required in accordance with Section 4.5 and (v) those
that have been made or obtained prior to the date of this
Agreement.
(f)
Issuance of the Shares . The Shares have been duly
authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens. The Company has
reserved
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from its duly authorized capital
stock the shares of Common Stock issuable pursuant to this
Agreement in order to issue the Shares.
(g)
Capitalization . The number of shares and type of all
authorized, issued and outstanding capital stock of the Company,
and all shares of Common Stock reserved for issuance under the
Company’s various option and incentive plans, is specified in
the SEC Reports. Except as specified in the SEC Reports, no
securities of the Company are entitled to preemptive or similar
rights, and no Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate
in the transactions contemplated by the Transaction Documents.
Except as specified in the SEC Reports, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares
of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of
Common Stock. The issue and sale of the Shares will not,
immediately or with the passage of time, obligate the Company to
issue shares of Common Stock or other securities to any Person
(other than the Investors) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities.
(h)
SEC Reports; Financial Statements . The Company has filed
all reports required to be filed by it under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the
twelve months preceding the date hereof (or such shorter period as
the Company was required by law to file such reports) (the
foregoing materials being collectively referred to herein as the
“SEC Reports” and, together with the Schedules
to this Agreement (if any), the “Disclosure
Materials” ) on a timely basis or has timely filed a
valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act
and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the
Company included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the
periods involved, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in
all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i)
Press Releases . The Company has not disseminated any press
releases during the twelve months preceding the date of this
Agreement.
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(j)
Material Changes . Since the date of the latest audited
financial statements included within the SEC Reports, except as
specifically disclosed in the SEC Reports and Schedule
3.1(j) , (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade
payables, accrued expenses and other liabilities incurred in the
ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed
in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors,
(iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock, and (v) the Company has not issued
any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. The Company does
not have pending before the Commission any request for confidential
treatment of information.
(k)
Litigation . There is no Action which (i) adversely affects
or challenges the legality, validity or enforceability of any of
the Transaction Documents or the Shares or (ii) except as
specifically disclosed in the SEC Reports, could, if there were an
unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any Subsidiary, nor any director or officer
thereof (in his or her capacity as such), is or has been the
subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of
breach of fiduciary duty, except as specifically disclosed in the
SEC Reports. There has not been, and to the knowledge of the
Company, there is not pending any investigation by the Commission
involving the Company or any current or former director or officer
of the Company (in his or her capacity as such). The Commission has
not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or
any Subsidiary under the Exchange Act or the Securities
Act.
(l)
Labor Relations . No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of
the employees of the Company.
(m)
Compliance . Neither the Company nor any Subsidiary (i) is
in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both,
would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim
that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has
been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in
violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection,
occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. The Company is in compliance
with all effective requirements of the Sarbanes-Oxley Act of 2002,
as amended, and the rules and regulations thereunder, that are
applicable to it, except where such noncompliance could not have or
reasonably be expected to result in a Material Adverse
Effect.
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(n)
Regulatory Permits . The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in
the SEC Reports, except where the failure to possess such permits
could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect, and neither the
Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such
permits.
(o)
Title to Assets . The Company and the Subsidiaries do not
own any real property. The Company and Subsidiaries have good and
marketable title in all personal property owned by them that is
material to their respective businesses, in each case free and
clear of all Liens, except for Liens as do not materially affect
the value of such property and do not materially interfere with the
use made and proposed to be made of such property by the Company
and the Subsidiaries. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases of which the Company and
the Subsidiaries are in compliance, except as could not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.
(p)
Insurance . The Company and its Subsidiaries do not have any
insurance coverage.
(q)
Transactions With Affiliates and Employees . Except as set
forth in the SEC Reports and on Schedule 3.1(q) , none of
the officers or directors of the Company and, to the knowledge of
the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of
the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director,
trustee or partner.
(r)
Internal Accounting Controls . The Company implemented
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) pursuant to which management under
the supervision and with the participation of the Company’s
Chief Executive Officer and Chief Financial Officer, carries out a
review and evaluation of the effectiveness of the Company’s
disclosure controls and procedures, particularly during the period
in which the Company’s Form 10-KSB or 10-QSB, as the case may
be, is being prepared. The Company’s certifying officers have
evaluated the effectiveness of the Company’s controls and
procedures in accordance with Item 307 of Regulation S-B under the
Exchange Act for the Company’s most recently ended fiscal
quarter or fiscal year-end (such date, the “Evaluation
Date” ). The Company presented in its most recently filed
Form 10-KSB or Form 10-QSB the conclusions of the certifying
officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date.
Since the Evaluation Date, there have been no significant changes
in the Company’s internal controls (as such term is defined
in Item 308(c) of Regulation S-B under the Exchange Act) or, to the
Company’s knowledge, in other factors that could
significantly affect the Company’s internal
controls.
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(s)
Solvency . Based on the financial condition of the Company
as of the Closing Date (and assuming that the Closing shall have
occurred), (i) the Company’s fair saleable value of its
assets exceeds the amount that will be required to be paid on or in
respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital
to carry on its business for the current fiscal year as now
conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of
the business conducted by the Company, and projected capital
requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the
Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when
such amounts are required to be paid. The Company does not intend
to i
