Exhibit 1
NOTE PURCHASE AND SALE AGREEMENT
This Note Purchase and Sale Agreement (the "Agreement") is made and entered into
as of December 31, 2001, by and between Ilion Technology Corporation, a Delaware
corporation ("Ilion"), Arch Hill Capital N.V., a Netherlands company (the
"Investor") and Lithium Technology Corporation ("LTC").
RECITALS
WHEREAS, LTC and Ilion have entered into an Agreement to terminate the
LTC-Ilion Merger Agreement, and all related agreements (the "LTC-Ilion
Termination Agreement").
WHEREAS, Ilion is the holder of certain convertible notes issued by LTC
as set forth herein;
WHEREAS, the Investor desires to purchase and Ilion desires to sell
such convertible notes on the terms set forth herein;
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. SALE OF THE PROMISSORY NOTES
In consideration of all the aggregate benefits to Ilion pursuant to the
LTC-Ilion Termination Agreement, at the Closing (as defined below) Ilion agrees
to sell to the Investor and the Investor agrees to purchase, subject to all of
the terms and conditions hereof, the promissory notes of LTC set forth on Annex
A (the "Notes") for the purchase price set forth on Annex A which are
convertible into the number of shares of LTC Common Stock (the "Shares") set
forth on Annex A.
2. CLOSING
The closing of the purchase and sale of the Notes will take place on
December 31, 2001 (the "Closing"). At the Closing, Ilion will deliver to the
Investor the Notes to be purchased by such Investor and the duly executed
Assignment in the form attached hereto as Annex B against receipt by Ilion of
the purchase price set forth on Annex A.
3. REISSUANCE OF NOTES
At the Closing, LTC will cancel the outstanding Notes and reissue a
note in the form attached hereto as Annex C in the name of the Investor for the
principal amount set forth on Annex A.
4. REPRESENTATIONS AND WARRANTIES OF ILION
Ilion hereby represents and warrants to the Investor and LTC as
follows:
4.1 Organization and Good Standing; Power and Authority;
Qualifications. Ilion (a) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and (b) has all
requisite corporate power and authority and all authorizations, licenses and
permits necessary to own, lease and operate its properties, to carry on its
business as presently conducted and as proposed to be conducted and to enter
into and carry out the transactions contemplated by this Agreement.
4.2 Authorization of the Agreement. The execution, delivery
and performance by Ilion of this Agreement has been duly authorized by all
requisite corporate action on the part of Ilion, and this Agreement constitutes
a legal, valid and binding obligation of Ilion, enforceable against Ilion in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by general principles of equity.
4.3 No Conflict. The execution, delivery and performance by
Ilion of this Agreement and the consummation by Ilion of the transactions
contemplated hereby will not (a) violate any provision of law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body applicable to Ilion, or
any of its properties or assets, (b) conflict with or result in any breach of
any of the terms, conditions or provisions of, or constitute (with due notice or
lapse of time, or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any
encumbrance upon any of the properties or assets of Ilion under any material
contract to which Ilion is a party or (c) violate the Certificate of
Incorporation or the Bylaws of Ilion.
4.4 No Set-off, Defenses etc. Ilion is the beneficial owner
and owner of record of the Notes and owns the Notes free and clear of any and
all liens or other encumbrances of any nature. Ilion has not permitted any
set-off to be made under, or made any transfer or assignment of, the Notes or
made any agreement for the foregoing. Ilion has no knowledge of any defenses
against performance under the Notes that any party may have.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents and warrants to Ilion and LTC as
follows:
5.1 Organization and Good Standing; Power and Authority. The
Investor (i) is a corporation duly organized, validly existing and in good
standing under the laws of its organization, and (ii) has all requisite
corporate power and authority and all authorizations, licenses and permits
necessary to own, lease and operate its properties, to carry on its business as
presently conducted and as proposed to be conducted and to enter into and carry
out the transactions contemplated by this Agreement.
5.2 Authorization of the Agreement. This Agreement constitutes
a valid and legally binding obligation of the Investor except to the extent that
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general principles of equity.
5.3 No Conflict. The execution, delivery and performance by
the Investor of this Agreement and the consummation by the Investor of the
transactions contemplated hereby will not (a) violate any provision of law,
statute, rule or regulation, or any ruling, writ, injunction, order, judgment or
decree of any court, administrative agency or other governmental body applicable
to the Investor, or any of its properties or assets, (b) conflict with or result
in any breach of any of the terms, conditions or provisions of, or constitute
(with due notice or lapse of time, or both) a default (or give rise to any right
of termination, cancellation or acceleration) under, or result in the creation
of any encumbrance upon any of the properties or assets of the Investor under
any material contract to which the Investor is a party or (c) violate any
organizational document of the Investor.
5.4 Investment Representation.
The Investor represents to LTC and Ilion as follows:
(a) The Investor has received and had the opportunity to review LTC's
Form 10-KSB dated December 31, 2000, Form 10-QSB dated March 31, 2001, Form
10-QSB dated June 30, 2001, Form 10-QSB dated September 30, 2001, Form 8-K dated
February 14, 2001, and Form 8-K dated December 12, 2001 (collectively, the
"Disclosure Documents").
(b) The Investor or Investor's designated representatives have had the
opportunity to conduct a satisfactory initial due diligence investigation of LTC
and have had an opportunity to review the Disclosure Documents and to have all
of their questions related thereto satisfactorily answered. Notwithstanding the
foregoing LTC and Ilion acknowledge that the Investor expects to perform a
further due diligence investigation of LTC as the Investor and LTC move toward
closing, inter alia, the merger transaction, all as more accurately described in
that certain Letter of Intent dated December 5, 2001, as extended, between LTC
and GAIA Akkumulatorenwerke GmbH. However, Investor acknowledges and agrees that
the extent of due diligence performed to date of LTC is sufficient to make an
investment decision with respect to the Notes and Shares being purchased
hereunder.
(c) The Investor acknowledges that the Notes and Shares are speculative
and involve a high degree of risk and the Investor represents that it is able to
sustain the loss of the entire amount of its investment.
(d) The Investor (or its members and/or officers) has previously
invested in unregistered securities and has sufficient financial and investing
expertise to evaluate and understand the risks of the Notes and Shares.
(e) The Investor has received from LTC or Ilion, and is relying on, no
representations except as set forth in this Agreement, the Disclosure Documents
or the 3-Year Preliminary Budget and the Income/Expense Budget prepared by LTC
or projections with respect to LTC's business and prospects which Investor
acknowledges are forward-looking documents that involve risks and uncertainties
that could cause actual results to differ materially from those projected in the
budgets and projections.
(f) The Investor is an "accredited investor" within the meaning of
Regulation D under the Securities Act of 1933 (the "Securities Act").
(g) The Investor acknowledges that the Notes and Shares have not been
registered under the Securities Act and applicable state securities laws, and
accordingly, constitute "restricted securities" for purposes of the Securities
Act and such state securities laws.
(h) The Investor acknowledges that it will not be able to transfer the
Notes and Shares except upon compliance with the registration requirements of
the Securities Act and applicable state securities laws or exemptions therefrom.
(i) The certificates and/or instruments evidencing the Notes and Shares
will contain the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY AND ITS COUNSEL AND FROM ATTORNEYS REASONABLY ACCEPTABLE TO
THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
6. REPRESENTATIONS AND WARRANTIES OF LTC
LTC hereby represents and warrants to the Investor and Ilion as
follows:
6.1 Organization and Good Standing; Power and Authority;
Qualifications. LTC (a) is a corporation duly organized, validly existing and in
good standing under the laws of the Delaware, and (b) has all requisite
corporate power and authority and all authorizations, licenses and permits
necessary to own, lease and operate its properties, to carry on its business as
presently conducted and as proposed to be conducted and to enter into and carry
out the transactions contemplated by this Agreement.
6.2 Authorization of the Agreement. The execution, delivery
and performance by LTC of this Agreement and the Notes have been duly authorized
by all requisite corporate action on the part of LTC, and this Agreement and the
Notes constitute legal, valid and binding obligations of LTC, enforceable
against LTC in accordance with their terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general principles of equity.
6.3 No Conflict. The execution, delivery and performance by
LTC of this Agreement and the Notes and the consummation by LTC of the
transactions contemplated hereby will not (a) violate any provision of law,
statute, rule or regulation, or any ruling, writ,
injunction, order, judgment or decree of any court, administrative agency or
other governmental body applicable to LTC, or any of its properties or assets,
(b) conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time, or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any encumbrance upon any of the properties
or assets of LTC under any material contract to which LTC is a party or (c)
violate the Certificate of Incorporation or the Bylaws of LTC.
6.4 No Undisclosed Liabilities. LTC does not have any
liabilities or obligations (whether or not absolute or contingent) and none of
its assets is subject to any liabilities or obligations which are not fairly
reflected in the Disclosure Documents, other than liabilities incurred in the
ordinary course of business consistent with past practice or other than those
set forth on set Schedule 6.4 attached hereto.
6.5. Litigation. There is no lawsuit, claim, action,
investigation or proceeding pending or, to the knowledge of LTC, threatened
against LTC or any of LTC's affiliates, directors, officers or agents relating
to LTC or its business other than those set forth on Schedule 6.5 attached
hereto. LTC is not in default under any judgment, order, injunction, rule or
decree of any governmental entity or judicial authority.
6.6. Disclosure Documents. All of the Disclosure Documents
have been duly filed by LTC, were in compliance with all applicable requirements
and were complete and correct in all material respects as of the date at which
the information was furnished, and contained no untrue statement of a material
fact nor omitted to state a material fact required to be included therein or
necessary in light of the circumstances under which it was made in order to make
the statements made therein not misleading.
6.7 No Set-off, Defenses etc. LTC has not made any set-off
under the Notes and has no claims therefor or any defenses against performance
under the Notes.
7. REGISTRATION RIGHTS
7.1 Demand Registration of Shares.
(a) Demand Registration. At any time after April 30, 2002 and
prior to the April 30, 2004, the Investor or any Permitted Transferees (as
herein defined) holding in the aggregate at least 50% of the Shares may demand
registration under the Securities Act of the Shares. The registration requested
pursuant to this Section 7.1(a) is referred to herein as the "Demand
Registration".
(b) Number of Demand Registrations; Notice. The Investor ( for
the purposes of Sections 7.1(b) to 7.9, inclusive, a reference to the "Investor"
shall include any Permitted Transferee holding in the aggregate at least 50% of
the Shares) shall be entitled to one Demand Registration. Subject to the
limitations contained in the following paragraphs of this Section 7.1, after the
receipt of such Demand Registration, (i) LTC will be obligated and required to
include in such Demand Registration all Shares with respect to which LTC shall
receive from the
Investor the written request of the Investor for inclusion in such Demand
Registration, and (ii) LTC will use its best efforts in good faith to effect
promptly the registration of such Shares.
(c) Restrictions on Demand Registration. LTC will not be
obligated to effect a Demand Registration within one hundred twenty (120) days
after the effective date of a registration statement in which Shares of the
Investor are included pursuant to the exercise of "piggyback rights" pursuant to
Section 7.2 hereof. LTC may postpone for a period not exceeding ninety (90) days
the filing or the effectiveness of a registration statement for a Demand
Registration if LTC provides the Investor with written notice that in LTC's good
faith judgment such Demand Registration might have an adverse effect on any
proposal or plan by LTC to engage in any acquisition of assets (other than in
the ordinary course of business) or any merger, consolidation, tender offer,
public offering or similar transaction, provided that, in such event, the
Investor will be entitled to withdraw such Demand Registration request and that,
if such request is withdrawn, such Demand Registration will not be considered
the one (1) Demand Registration to which the Investor is entitled.
7.2 Participation in Registered Offerings ("Piggyback Rights"
for Shares). If LTC proposes or is required to register any of its shares or
other equity securities for public sale for cash under the Securities Act (other
than on Forms S-4 or S-8 or similar registration forms), it will at each such
time or times give written notice to the Investor of its intention to do so.
Upon the written request of the Investor given within twenty (20) days after
receipt of any such notice, LTC shall use its best efforts to cause to be
included in such registration any Shares held by the Investor and requested to
be registered under the Securities Act and any applicable state securities laws;
provided, that if the managing underwriter advises that less than all of the
shares to be registered should be offered for sale so as not materially and
adversely to affect the price or salability of the offering being registered by
LTC, the Investor (but not LTC to the extent it desires to include shares for
its own account) shall reduce the number of their Shares to be included in the
registration statement as required by the underwriter to the extent requisite of
all prospective sellers of the securities proposed to be registered (other than
LTC) on a pro rata basis according to the amounts of securities proposed to be
registered by all prospective sellers to permit the sale or other disposition
(in accordance with the intended method of disposition thereof as aforesaid) by
the prospective seller or sellers of the securities so registered. The
registration requested pursuant to this Section 7.2 is referred to herein as the
"Piggyback Registration".
7.3 Obligations of the Investor. It shall be a condition
precedent to the obligation of LTC to register any Shares pursuant to this
Section 7 that the Investor shall furnish to LTC such information regarding the
Shares held and the intended method of disposition thereof and other information
concerning the Investor as LTC shall reasonably request and as shall be required
in connection with the registration statement to be filed by LTC. If after a
registration statement becomes effective LTC advises the Investor that LTC
considers it appropriate to amend or supplement the applicable registration
statement, the Investor shall suspend further sales of the Shares until LTC
advises the Investor that such registration statement has been amended or
supplemented.
7.4 Registration Proceedings. Whenever LTC is required by the
provisions of this Section 4 to effect the registration of the Shares under the
Securities Act, LTC shall:
(i) Prepare and file with the SEC a registration statement with
respect to such securities and use its best efforts to cause
such registration statement to become and remain effective;
(ii) Prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus
contained therein as may be necessary to keep such
registration statement effective;
(iii) Furnish to the Investor and to the underwriters of the
securities being registered such reasonable number of copies
of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering
of such securities;
(iv) Use its best efforts to register or qualify the securities
covered by such registration statement under such state
securities or Blue Sky Laws of such jurisdictions as the
Investor may reasonably request within twenty (20) days
following the original filing of such registration statement,
except that LTC shall not for any purpose be required to
execute a general consent to service of process or to qualify
to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified;
(v) Notify the Investor, promptly after it shall receive notice
thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a
part of such registration statement has been filed;
(vi) Notify the Investor promptly of any request by the SEC for the
amending or supplementing of such registration statement or
prospectus or for additional information; and
(vii) Prepare and promptly file with the SEC and promptly notify the
Investor of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be
delivered under the Securities Act, any event shall have
occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
Notwithstanding any provision herein to the contrary, LTC
shall not be required to amend, supplement, or update a
prospectus
contained in any registration statement if to do so would
result in an unduly burdensome expense to LTC.
7.5 Expenses. With respect to the inclusion of the Shares in a
registration statement pursuant to this Section 7, all registration expenses,
fees, costs and expenses of and incidental to such registration, inclusion and
public offering in connection therewith shall be borne by LTC; provided,
however, that the Investor shall bear their own professional fees and pro rata
share of the underwriting discount and commissions. The fees, costs and expenses
of registration to be borne by LTC shall include, without limitation, all
registration, filing, printing expenses, fees and disbursements of counsel and
accountants for LTC, fees and disbursements of counsel for the underwriter or
underwriters of such securities (if LTC and/or selling security holders are
required to bear such fees and disbursements), and all legal fees and
disbursements and other expenses of complying with state securities or Blue Sky
Laws of any jurisdiction in which the securities to be offered are to be
registered or qualified.
7.6 Indemnification of the Investor. Subject to the conditions
set forth below, in connection with any registration of the Shares pursuant to
this Section 7, LTC agrees to indemnify and hold harmless the Investor, any
underwriter for the offering and each of their officers and directors and agents
and each other person, if any, who controls the Investor or the underwriter
(each, an "Investor Indemnified Party"), within the meaning of Section 15 of the
Securities Act, as follows:
(i) Against any and all loss, claim, damage and expense
whatsoever arising out of or based upon (including,
but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or
defending any litigation, commenced or threatened, or
any claim whatsoever based upon) any untrue or
alleged untrue statement of a material fact contained
in any preliminary prospectus (if used prior to the
effective date of the registration statement), the
registration statement or the prospectus (as from
time to time amended and supplemented), or in any
application or other document executed by LTC or
based upon written information furnished by LTC filed
in any jurisdiction in order to qualify LTC's
securities under the securities laws thereof, or the
omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to
make the statements therein not misleading, or any
other violation of applicable federal or state
statutory or regulatory requirements or limitations
relating to action or inaction by LTC in the course
of preparing, filing, or implementing such registered
offering; provided, however, that the indemnity
agreement contained in this section shall not apply
to any loss, claim, damage, liability or action
arising out of or based upon any untrue or alleged
untrue statement or omission made in reliance upon
and in conformity with any information furnished in
writing to LTC by or on behalf of the Investor
expressly for use in connection therewith or arising
out of any action or inaction of the Investor;
(ii) Subject to the proviso contained in Subsection (i)
above, against any and all loss, liability, claim,
damage and expense whatsoever to the extent of the
aggregate amount paid in settlement of any
litigation, commenced or threatened, or of any claim
whatsoever based upon any untrue statement or
omission (including, but not limited to, any and all
expense whatsoever reasonably incurred in
investigating, preparing or defending against any
such litigation or claim) if such settlement is
effected with the written consent of LTC; and
(iii) In no case shall LTC be liable under this indemnity
agreement with respect to any claim made against any
Investor Indemnified Party person unless LTC shall be
notified, by letter or by facsimile confirmed by
letter, of any action commenced against such Investor
Indemnified Party, promptly after such person shall
have been served with the summons or other legal
process giving information as to the nature and basis
of the claim. The failure to so notify LTC, if
prejudicial in any material respect to LTC's ability
to defend such claim, shall relieve LTC from its
liability to the indemnified person under this
Section 7, but only to the extent that LTC was
prejudiced. The failure to so notify LTC shall not
relieve LTC from any liability which it may have
otherwise than on account of this indemnity
agreement. LTC shall be entitled to participate at
its own expense in the defense of any suit brought to
enforce any such claim, but if LTC elects to assume
the defense, such defense shall be conducted by
counsel chosen by it, provided such counsel is
reasonably satisfactory to the Investor Indemnified
Party in any suit so brought. In the event LTC elects
to assume the defense of any such suit and retain
such counsel the Investor Indemnified Party in the
suit, shall, after the date they are notified of such
election, bear the fees and expenses of any counsel
thereafter retained by them, as well as any other
expenses thereafter incurred by them in connection
with the defense thereof; provided, however, that if
the Investor Indemnified Party reasonably believe
that there may be available to them any defense or
counterclaim different than those available to LTC or
that representation of such Investor Indemnified
Party by counsel for LTC presents a conflict of
interest for such counsel, then such Investor
Indemnified Party shall be entitled to defend such
suit with counsel of their own choosing and LTC shall
bear the fees, expenses and other costs of such
separate counsel.
7.7 Indemnification of LTC. the Investor agrees to indemnify and hold
harmless LTC, each underwriter for the offering, and each of their officers and
directors and agents and each other person, if any, who controls LTC and the
underwriter within the meaning of Section 15 of the Securities Act and any other
stockholder selling securities pursuant to the Registration Statement against
any and all such losses, liabilities, claims, damages and expenses as are
indemnified against any person by LTC under Section 7.6 (i), (ii) and (iii)
above; provided, however, that such indemnification by the Investor hereunder
shall be limited to any losses, liabilities, claims, damages, or expenses to the
extent caused by any untrue statement of a
material fact or omission of a material fact (required to be stated therein or
necessary to make statements therein not misleading), if any made (or in
settlement of any litigation effected with the written consent of such sellers,
alleged to have been made) in any preliminary prospectus, the registration
statement or prospectus or any amendment or supplement thereof or in any
application or other document in reliance upon, and in conformity with, written
information furnished in respect of such seller by or on behalf of such seller
expressly for use in any preliminary prospectus, the registration statement or
prospectus or any amendment or supplement thereof or in any such application or
other document or arising out of any action or inaction of such seller in
implementing such registered offering. Notwithstanding the foregoing, the
indemnification obligation of the Investor shall not exceed the purchase price
of the Shares paid by the Investor. In case any action shall be brought against
LTC, or any other person so indemnified, in respect of which indemnity may be
sought against any seller, such seller shall have the rights and duties given to
LTC, and each other person so indemnified shall have the rights and duties given
to the Investor, by the provisions of Section 7.6. The person indemnified agrees
to notify the sellers promptly after the assertion of any claim against the
person indemnified in connection with the sale of securities.
7.8 Contribution. If the indemnification provided for in Sections 7.6
and 7.7 above are unavailable or insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative fault of the
indemnified party, on one hand, and such indemnifying party, on the other hand,
in connection with the statements or omissions which resulted in such losses,
claims, damages, or liabilities (or actions in respect thereof). The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnified party, on one hand, or such indemnifying party, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. No person who has
committed fraudulent misrepresentation (within the meaning of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof referred to above in this Section shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
7.9 Registration Rights to be Granted. If LTC shall grant to anyone
other than Investor registration rights having terms more favorable than the
rights granted pursuant to this Section 7, this Section 7 shall be deemed
amended to include such more favorable terms.
7.10 Assignment of Registration Rights. The right to have LTC register
Shares pursuant to this Agreement shall be automatically assignable to any
transferee of all or any portion of the Shares if: (a) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to LTC within a reasonable time after such
assignment, (b) LTC is, within a reasonable time after such transfer or
assignment,
furnished with written notice of (i) the name and address of such transferee or
assignee, and (ii) the securities with respect to which such registration rights
are being transferred or assigned, (c) following such transfer or assignment,
the further disposition of such securities be the transferee or assignee is
restricted under the Securities Act and applicable state securities laws and,
(d) at or before the time LTC receives the written notice contemplated by clause
(b) of this sentence, the transferee or assignee agrees in writing with LTC to
be bound by all of the provisions contained herein (the foregoing a "Permitted
Transferee").
8. BOARD OF DIRECTORS OF LTC
Arch Hill shall vote in favor of Ilion's nominee to the LTC Board of
Directors appointed pursuant to Section 5 of the LTC-Ilion Termination Agreement
for so long as Ilion has the right to nominate a director to the LTC Board
pursuant to the LTC-Ilion Termination Agreement.
9. MISCELLANEOUS
9.1 Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon the
LTC, Ilion or any Investor under this Agreement shall be by telecopy or in
writing and telecopied, mailed or delivered to each party at the telecopier
number or its address as provided below (or to such other telecopy number or
address as the recipient of any notice shall have notified the other in
writing). All such notices and communications shall be effective (a) when sent
by Federal Express or other overnight service of recognized standing, on the
Business Day following the deposit with such service; (b) when mailed, by
registered or certified mail, first class postage prepaid and addressed as
aforesaid through the United States Postal Service, upon receipt; (c) when
delivered by hand, upon delivery; and (d) when telecopied, upon confirmation of
receipt to the following:
Lithium Technology Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxx
Fax: 000-000-0000
with a copy to:
Xxxxxxxxx, Xxxxxx and Xxxxxx
000 Xxxxxxx Xxxx.
0xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Fax: 000-000-0000
Ilion Technology Corporation
Goesling Xxxxxxx Bldg.
Xxxxx 0
00 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxxx
Attention: Xxxxx Xxxxxxxxx
Fax: 000-00-0-000-0000
with a copy to:
Xxxxx Young
ASB Bank Centre
Xxxxx 00
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxxx
Fax: 000-00-0-000-0000
Arch Hill Capital X.X.
Xxxxxxxx 0
0000 XX'x Xxxxxxxxxx
Fax: 000-000-0000
with a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx, P.C.
0000 Xxxxxxxxx Xxxx, Xxxxxxxxx
14th Floor, Lenox Towers II
Xxxxxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxxxx
Fax: 000-000-0000
9.2 Nonwaiver. No failure or delay on any party in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further excise
thereof or of any other right.
9.3 Amendments and Waivers. This Agreement may not be amended or
modified, nor may any of its terms be waived, except by written instruments
signed by all of the parties. Such waiver or consent under any provision hereof
shall be effective only in the specific instances for the purpose for which
given.
9.4 Assignments. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
9.5 Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law of
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
9.6 Headings. Headings in this Agreement are for convenience of
reference only and are not part of the substance hereof or thereof.
9.7 Entire Agreement. This Agreement constitutes and contains the
entire agreement of the parties hereto and supersedes any and all prior
agreements, negotiations, correspondence, understandings and communications
among the parties, whether written or oral, respecting this Note Purchase and
Sale Agreement.
9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to conflicts
of law rules.
9.9. Jurisdiction. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby may be brought in the
courts of the State of New York located in the County of New York and the
federal courts of the United States of America located in such State and County.
Each of the parties (i) consents to the exclusive jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit, action or
proceeding, (ii) irrevocably waives, to the fullest extent permitted by Law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum, (iii) will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (iv)
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any other court. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 8.1 will be deemed effective service of process on such party.
9.10 JURY TRIAL. EACH PARTY HERETO, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY
ISSUE.
9.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitutes but one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
ILION TECHNOLOGY CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------------
Xxxxx Xxxxxxxxx
Chairman and Chief Executive Officer
LITHIUM TECHNOLOGY CORPORATION
By: /s/ Xxxxx X. Xxxx
---------------------------------------
Xxxxx X. Xxxx
Chairman and Chief Executive Officer
ARCH HILL CAPITAL N.V.
By: /s/ X. X. Xxx Xxxxx
----------------------------------------
X. X. Xxx Xxxxx
Chief Executive Officer
ANNEX A
INVESTOR NAME AND PRINCIPAL AMOUNT OF NUMBER OF LTC SHARES TO
ADDRESS NOTES TO BE PURCHASED PURCHASE PRICE BE ISSUED UPON CONVERSION
------- --------------------- -------------- -------------------------
Arch Hill Capital N.V. $3,949,000 $800,000 39,490,000
Xxxxxxxx 0
0000 XX'x Xxxxxxxxxx
ANNEX B
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby irrevocably sells, assigns
and transfers unto Arch Hill Capital N.V. promissory notes issued by Lithium
Technology Corporation to Ilion Technology Corporation, formerly Pacific Lithium
Limited, in the principal amount of $3,949,000 and the right to purchase
39,490,000 shares of Common Stock, covered by the within Note and does hereby
irrevocably constitute Xxxxxxx X. Xxxxx Attorney to make such transfer on the
books of Lithium Technology Corporation maintained for the purpose, with full
power of substitution.
Dated: December 31, 2001 ILION TECHNOLOGY CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx Xxxxxxxxx
Chairman and Chief Executive Officer
ANNEX C
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR
UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS OR
(ii) THE COMPANY RECEIVES AN OPINION OF ITS COUNSEL, OR OTHER COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY, THAT THIS NOTE MAY BE PLEDGED, SOLD, ASSIGNED OR
TRANSFERRED WITHOUT ANY EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS.
LITHIUM TECHNOLOGY CORPORATION
CONVERTIBLE PROMISSORY NOTE
$3,949,000 DECEMBER 31, 2001
For value received, Lithium Technology Corporation, a Delaware
corporation ("LTC"), hereby unconditionally promises to pay to the order of Arch
Hill Capital N.V. (together with its successors, assigns and transferees,
collectively, "Investor"), the principal amount of Three Million Nine Hundred
Forty Nine Thousand Dollars ($3,949,000).
1. Maturity. This Note shall automatically convert in accordance with
the terms herein into Conversion Shares on the Maturity Date (as herein
defined).
2. Conversion.
(a) The outstanding principal amount of this Note may be converted in
whole or in part by the Investor into shares of Common Stock of LTC (the
"Conversion Shares") at the conversion price equal to $.10 per share (the
"Conversion Price") at any time after the date hereof.
(b) The outstanding principal of this Note shall automatically convert
into Conversion Shares at the Conversion Price on the first anniversary of the
date that LTC has increased its number of authorized shares of Common Stock to a
number sufficient to issues shares of Common Stock to all holders of LTC
convertible securities including the Notes (the "Maturity Date").
(c) In order to effect the conversion of all or part of the Note,
Investor shall issue a notice of conversion substantially in the form attached
hereto (the "Notice of Conversion") which may be by facsimile and surrender the
Note for conversion if the Note is not already in possession of LTC. Each
conversion of all or any portion of the
Note will be deemed to have been effected as of the close of business on the
date on which the Note has been surrendered at the principal office of LTC. At
such time as such conversion has been effected, to the extent that any portion
of the Note is converted, the rights of Investor with respect to such portion of
the Note shall cease and Investor shall be deemed to have become the holder of
record of the shares of Conversion Shares represented thereby.
(d) No fractional Common Shares shall be issued upon conversion of the
Note. In lieu of any fractional share to which the holder would otherwise be
entitled, LTC shall round up to the nearest whole Common Share.
(e) Within ten days after a conversion has been effected, LTC will
deliver to Investor:
(i) a certificate or certificates representing the number of Conversion
Shares issuable by reason of conversion in the name of Investor and in
such denomination or denominations as Investor has specified; and
(ii) a new Note representing any principal balance which was not
converted into Conversion Shares in connection with such conversion;
all other terms and conditions of the Note will remain in full force
and effect.
(f) The issuance of certificates for Conversion Shares upon conversion
of the Note will be delivered by LTC within ten days of the date of conversion
and will be made without charge to Investor for any issuance tax in respect
thereof or other cost incurred by LTC in connection with such conversion and the
related issuance of Conversion Shares.
(g) The Conversion Price in effect at any time and the number and kind
of securities purchasable upon the exercise of the Note shall be subject to
adjustment from time to time upon the happening of certain events as follows
after the date hereof and through and including the Maturity Date:
(i) In case LTC shall (1) declare a dividend or make a distribution on
its outstanding shares of Common Stock in shares of Common Stock, (2)
subdivide or reclassify its outstanding shares of Common Stock into a
greater number of shares, or (3) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Conversion
Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination
or reclassification shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price by a fraction, the
denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such action, and the numerator of
which shall be the number of shares of Common Stock immediately prior
to such action. Such adjustment shall be made each time any event
listed above shall occur.
(ii) Whenever the Conversion Price is adjusted pursuant to Subsection
(i) above, the number of Conversion Shares purchasable upon conversion
of the Note shall simultaneously be adjusted by multiplying the number
of Conversion Shares initially issuable upon conversion of the Note by
the Conversion Price in effect on the date hereof and dividing the
product so obtained by the Conversion Price, as adjusted.
(iii) All calculations under this Section 3(g) shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case
may be.
(iv) Whenever the Conversion Price is adjusted, as herein provided, LTC
shall promptly cause a notice setting forth the adjusted Conversion
Price and adjusted number of Conversion Shares issuable upon exercise
of the Note to be mailed to Investor, at its last address appearing in
LTC's register. LTC may retain a firm of independent certified public
accountants selected by the Board of Directors (who may be the regular
accountants employed by LTC) to make any computation required by this
Section. In the case of a dispute as to the adjustment of the
Conversion Price, the parties hereto agree to arbitrate the same in an
office of the American Arbitration Association in New York, New York
utilizing its commercial arbitration rules with an arbitrator selected
by the parties or in the event that they are unable to do so, by the
American Arbitration Association.
3. Miscellaneous.
3.1 Transfer. This Note may be transferred in whole or in part
by Investor at any time without the written consent of LTC to any other third
party.
3.2 Waiver and Amendment.
(a) LTC hereby waives to the fullest extent permitted by
applicable law, presentment, demand, notice, protest, and all other demands and
notice in connection with the delivery, acceptance, performance, default or
enforcement of this Note, and hereby consents to any extensions of time,
renewals, releases of any party to this Note, waivers or modifications that may
be granted or consented to by the holder of this Note in respect of the time of
payment or any other provisions of this Note.
(b) LTC FURTHER WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, TRIAL BY JURY IN ANY LITIGATION RELATING TO THIS NOTE.
(c) No failure or delay on the part of Investor in exercising
any of its rights, powers or privileges hereunder shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
future exercise of any right, power or privilege. The remedies provided herein
are cumulative and are not exclusive of any remedies provided by law.
3.3 Construction. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York, without regard to its conflicts of law principles.
IN WITNESS WHEREOF, this Note has been executed and delivered on the
date specified by the duly authorized representative of LTC.
LITHIUM TECHNOLOGY CORPORATION
By: /s/ Xxxxx X. Xxxx
------------------------------------
Xxxxx X. Xxxx
Chairman and Chief Executive Officer
NOTICE OF CONVERSION
TO: LITHIUM TECHNOLOGY CORPORATION
The undersigned, the holder of a promissory note in the principal
amount of $______________________, hereby surrenders such Note for conversion
into shares of Common Shares of Lithium Technology Corporation to the extent of
$____________________________ unpaid principal amount of such Note, and requests
that the certificates for such shares be issued in the name of, and delivered
to, _________________________, whose address is
_____________________________________.
Dated:_____________________________
__________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Note)
__________________________________
(Address)
__________________________________
Tax Identification Number
