A123 Systems (AONE) Amends Purchase Agreement, Will File 49.6M Common Shelf for Underlying Notes
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On May 23, 2012, A123 Systems, Inc. (Nasdaq: AONE) entered into an Amended and Restated Securities Purchase Agreement (the “Amended Purchase Agreement”) with institutional investors (the “Purchasers”), which amended and restated in its entirety the Securities Purchase Agreement, dated as of May 11, 2012, that the Company previously entered into with the Purchasers. Pursuant to the terms of the Original Purchase Agreement, the Company agreed to sell to the Purchasers $50.0 million aggregate principal amount of senior convertible notes and warrants to purchase shares of the Company’s common stock equal to 30% of the number of shares underlying the Notes assuming conversion at the initial conversion price.
The following is a summary of the material terms of the amendments to the Original Purchase Agreement as set forth in the Amended Purchase Agreement, the Notes and the Warrants.
The Company is required to repay the Notes in twenty-seven semi-monthly installments (“Installment Dates”), commencing on June 15, 2012 and thereafter on the 1st and 15th of each month. The amortization payment on each Installment Date is 1/29th of the principal amount of the Notes, subject to certain adjustments, provided that the amortization payment on the June 15, 2012, July 1, 2012 and July 15, 2012 Installment Dates will be 1 2/3 times the amortization payment on the other Installment Dates.
The Company has agreed to deposit $30.0 million of the expected proceeds from the Notes into a bank account subject to an account control agreement that will be released upon:
The Purchasers will also have the right at any time, and from time to time, after August 15, 2012, to elect to convert up to $30.0 million aggregate principal amount of Notes at a price equal to 85% of the closing price of the Company’s common stock on the trading day immediately preceding the conversion date. However, the Purchasers may not convert more than $3.5 million aggregate principal amount of the Notes on any given trading date.
Registration Rights Agreement
In connection with the Amended Purchase Agreement, the Company has also agreed to enter into a Registration Rights Agreement with the Purchasers pursuant to which the Company will agree to register the shares of common stock underlying the Notes and Warrants. The Company will agree to file an initial registration statement with respect to 49,602,469 shares of common stock initially underlying the Notes 20 days after the closing date and file a subsequent registration statement on the earlier of (i) three calendar days after the Shareholder Approval has been obtained and (ii) July 3, 2012 to register the remainder of the common stock underlying the Notes and Warrants. If the Company fails to register the appropriate number of shares of common stock, or fails to file the required registration statements on a timely basis or the initial registration statement is not declared effective within 60 days (or 75 days if reviewed by the Securities and Exchange Commission) after the date of the issuance of the Notes, or maintained, or if the subsequent registration statement is not declared effective by August 20, 2012, or maintained, or if all of such registered shares of common stock cannot be sold on any date after such registration statements are declared effective, the Company will agree to make a cash payment to the Purchasers equal to 2% of the then-outstanding principal amount of the Notes, and accrued but unpaid interest thereon.
The following is a summary of the material terms of the amendments to the Original Purchase Agreement as set forth in the Amended Purchase Agreement, the Notes and the Warrants.
The Company is required to repay the Notes in twenty-seven semi-monthly installments (“Installment Dates”), commencing on June 15, 2012 and thereafter on the 1st and 15th of each month. The amortization payment on each Installment Date is 1/29th of the principal amount of the Notes, subject to certain adjustments, provided that the amortization payment on the June 15, 2012, July 1, 2012 and July 15, 2012 Installment Dates will be 1 2/3 times the amortization payment on the other Installment Dates.
The Company has agreed to deposit $30.0 million of the expected proceeds from the Notes into a bank account subject to an account control agreement that will be released upon:
- the Company obtaining, on or prior to June 30, 2012, shareholder approval of (a) the issuance of shares of the Company’s common stock in connection with the conversion, interest payments and amortization of the Notes and (b) an increase in the authorized number of shares of Common Stock of the Company; and
- the effectiveness, on or prior to the deadlines described below, of one or more registration statements covering the shares of common stock underlying the Notes and the Warrants.
The Purchasers will also have the right at any time, and from time to time, after August 15, 2012, to elect to convert up to $30.0 million aggregate principal amount of Notes at a price equal to 85% of the closing price of the Company’s common stock on the trading day immediately preceding the conversion date. However, the Purchasers may not convert more than $3.5 million aggregate principal amount of the Notes on any given trading date.
Registration Rights Agreement
In connection with the Amended Purchase Agreement, the Company has also agreed to enter into a Registration Rights Agreement with the Purchasers pursuant to which the Company will agree to register the shares of common stock underlying the Notes and Warrants. The Company will agree to file an initial registration statement with respect to 49,602,469 shares of common stock initially underlying the Notes 20 days after the closing date and file a subsequent registration statement on the earlier of (i) three calendar days after the Shareholder Approval has been obtained and (ii) July 3, 2012 to register the remainder of the common stock underlying the Notes and Warrants. If the Company fails to register the appropriate number of shares of common stock, or fails to file the required registration statements on a timely basis or the initial registration statement is not declared effective within 60 days (or 75 days if reviewed by the Securities and Exchange Commission) after the date of the issuance of the Notes, or maintained, or if the subsequent registration statement is not declared effective by August 20, 2012, or maintained, or if all of such registered shares of common stock cannot be sold on any date after such registration statements are declared effective, the Company will agree to make a cash payment to the Purchasers equal to 2% of the then-outstanding principal amount of the Notes, and accrued but unpaid interest thereon.
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