PURCHASE AGREEMENT
among
TELCORDIA TECHNOLOGIES, INC.
VALENCE TECHNOLOGY (NEVADA), INC.
VALENCE TECHNOLOGY CAYMAN ISLANDS LIMITED
AND
VALENCE TECHNOLOGY, INC.
DATED AS OF
NOVEMBER 3, 2000
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into as
of November 3, 2000, by and among Telcordia Technologies, Inc., a Delaware
corporation ("SELLER"), Valence Technology, Inc., a Delaware corporation
("PARENT"), Valence Technology (Nevada), Inc., a Nevada corporation ("US
PURCHASER"), and Valence Technology Cayman Islands Limited, a Cayman Islands
company ("FOREIGN PURCHASER") (hereinafter, US Purchaser and Foreign Purchaser
are individually referred to herein as a "PURCHASER" and collectively referred
to as the "PURCHASERS").
R E C I T A L S
Parent is engaged in the design, development, manufacture and marketing
of rechargeable lithium polymer batteries for portable communication devices
("Parent's Business"). Seller is, among other things, engaged in the design,
development and commercialization of lithium and sodium ion polymer battery
technology ("Seller's Business"). In accordance with the provisions of this
Agreement, the Purchasers desire to purchase, and Seller desires to sell to the
Purchasers, certain assets relating to Seller's lithium and sodium ion polymer
battery technology. The Purchasers desire Parent to make payment to Seller on
their behalf, which payment shall be treated as a direct or indirect capital
contribution to the Purchasers.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE 1
DEFINED TERMS
1.1 DEFINED TERMS. For purposes of this Agreement the following terms shall
have the meanings set forth below:
"AFFILIATE" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a Person.
"ALLOCATION DATE" has the meaning set forth in SECTION 2.7.
"APPLICABLE LAWS" means all laws, statutes, rules, regulations, ordinances,
judgments, orders, decrees, injunctions, and writs of any Governmental Entity as
may be in effect on or prior to the Closing.
"ASSUMED CONTRACTS" means (a) Contracts, (b) Third Party Licenses, and (c)
all contracts entered into or assumed by the Purchasers on or after the date of
this Agreement and before the Closing in accordance with the applicable
provisions of SECTION 4.1.
"XXXX OF SALE AND ASSIGNMENT AGREEMENT" means the Xxxx of Sale and
Assignment Agreement between Parent and Seller substantially in the form of
EXHIBIT A attached hereto.
"BUSINESS DAY" means any other day than (i) a Saturday or Sunday or (ii) a
day on which commercial banks in Nevada or New Jersey are authorized or required
to be closed.
"CLOSING" means the consummation of the transactions contemplated by this
Agreement in accordance with the provisions of SECTION 2.4.
"CLOSING DATE" means the date on which the Closing occurs.
"CODE" shall mean the United States Internal Revenue Code of 1986, as
amended and the rules and regulations promulgated thereunder.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Section 11.1.
"CONSENT" means all governmental consents and approvals and all consents
and approvals of third parties, in each case that are necessary in order to
transfer the Purchased Assets to the Purchasers and otherwise to consummate the
transactions contemplated hereby.
"CONTRACTS" has the meaning set forth in Section 3.1(j).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"GOVERNMENTAL ENTITY" means any foreign, national, state, provincial or
local government, any political subdivision or any governmental, judicial,
public or statutory instrumentality, tribunal, agency, authority, body or
entity, or other regulatory bureau, authority, body or entity having legal
jurisdiction over the activity or Person in question and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of, or
pertaining to, government.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"INTELLECTUAL PROPERTY" means the Knowledge Transfer Book, Trademarks, and
Patents, including the contract and licensing rights, and legal claims and
defenses related to any of the foregoing as may exist now and/or hereafter come
into existence, and all renewals and extensions thereof, whether registered or
not, licensed to or owned by Seller.
"KNOWLEDGE" means, with respect to a specified party hereto, the actual
knowledge of such party's officers and directors, as applicable, together with
such additional knowledge as would be acquired by a reasonable person upon
conducting reasonable and diligent inquiry concerning the subject matter in
question.
"KNOWLEDGE TRANSFER BOOK" means the compilation of ideas, formulas,
compositions, manufacturing and production processes and techniques, technical
data, research, techniques, performance criteria and the like as such is
provided to current licensees of Seller's Business, including the copyrights,
copyright registrations and applications for registration related
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thereto and further including the right to practice all inventions, processes
and techniques described therein.
"LICENSE AGREEMENT" means that certain license agreement to be entered into
between the Purchasers and Seller substantially in the form of EXHIBIT B
attached hereto.
"LIENS" has the meaning set forth in SECTION 3.1(H).
"PARENT" has the meaning set forth in the first paragraph of this
Agreement.
"PARENT INDEMNIFIED COSTS" means any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs, and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) incurred by any of
the Parent Indemnified Parties that result from any and all actions, suits,
proceedings, claims, demands, assessments and judgments, based on or resulting
from (a) Seller's ownership of the Purchased Assets prior to the Closing Date,
including any and all liabilities arising under the Assumed Contracts which
relate to events occurring prior to the Closing Date; (b) any breach or default
by Seller of any representation, warranty, covenant or agreement under this
Agreement or any agreement or document executed in connection herewith; and (c)
any and all obligations or liabilities of Seller under any contract or agreement
not expressly assumed by the Purchasers pursuant to the terms hereof.
"PARENT INDEMNIFIED PARTIES" means Parent, the Purchasers and each officer,
director, employee, stockholder and Affiliate of Parent or either Purchaser.
"PARENT SEC DOCUMENTS" has the meaning set forth in SECTION 3.2(H) hereof.
"PARENT'S BUSINESS" has the meaning set forth in the recitals of this
Agreement.
"PATENTS" means the patents and patent applications listed in SCHEDULE 1.1
attached hereto, including (i) the patent rights in such patents and patent
applications, and the inventions covered thereby, including, without limitation,
the exclusive right to make, use and sell the inventions, (ii) any additional
patent rights, which are continuations, continuations-in-part, divisionals or
substitutes of such patents or patent applications , and the inventions covered
thereby, (iii) any reexaminations, reissues, renewals or extensions of any and
all of the foregoing patents or patent applications, and (iv) foreign
counterparts of any and all of the foregoing, in each such patent or patent
application.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust, joint stock company, joint venture, unincorporated
organization, or other entity.
"PURCHASED ASSETS" has the meaning set forth in SECTION 2.1 hereof.
"PURCHASE PRICE" means the consideration payable by Parent to Seller as
provided in SECTION 2.3 hereof.
"PURCHASERS" has the meaning set forth in the first paragraph of this
Agreement.
"SCHEDULES" means the Schedules attached hereto.
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"SEC" means the Securities and Exchange Commission or any successor agency.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SELLER" has the meaning set forth in the first paragraph of this
Agreement.
"SELLER'S BUSINESS" has the meaning set forth in the recitals to this
Agreement.
"SELLER INDEMNIFIED COSTS" means any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs, and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) incurred by any of
the Seller Indemnified Parties that result from any and all actions, suits,
proceedings, claims, demands, assessments and judgments, based on or resulting
from (a) Parent's ownership of the Purchased Assets on and after the Closing
Date, including any and all liabilities arising under the Assumed Contracts
which relate to events occurring on and after the Closing Date; (b) any breach
or default by Parent or any Purchaser of any representation, warranty, covenant
or agreement under this Agreement or any agreement or document executed in
connection herewith; and (c) after the Closing, any and all obligations or
liabilities of Parent under any contract or agreement expressly assumed by the
Purchasers pursuant to the terms hereof.
"SELLER INDEMNIFIED PARTIES" means Seller and each officer, director,
employee, stockholder and Affiliate of Seller.
"SHARES" has the meaning set forth in SECTION 2.3 hereof.
"TAXES" means taxes, charges, fees, imposts, levies, interest, penalties,
additions to tax or other assessments or fees of any kind of a similar nature to
taxes, including, but not limited to, income, gross receipt, transfer,
corporate, capital, excise, property, sales, use, turnover, value added and
franchise taxes, deductions, withholdings and customs duties, imposed by any
Governmental Entity including any interest, penalties or additions attributable
thereto, and any payments with respect thereto required under any tax-sharing
agreement.
"THIRD PARTY LICENSES" has the meaning set forth in SECTION 3.1(K)(II).
"TRADEMARKS" means the trademark application listed on SCHEDULE 1.2
attached hereto and any common law rights associated therewith.
"TRANSACTION DOCUMENTS" has the meaning set forth in SECTION 3.1(B).
1.2 REFERENCES AND TITLES. All references in this Agreement to Exhibits,
Schedules, Articles, Sections, subsections, and other subdivisions refer to the
corresponding Exhibits, Schedules, Articles, Sections, subsections, and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any Articles, Sections, subsections, or other
subdivisions of this Agreement are for convenience only, do not constitute any
part of such Articles, Sections, subsections or other subdivisions, and shall be
disregarded in construing the language contained therein. The words "THIS
AGREEMENT," "HEREIN," "HEREBY," "HEREUNDER," " and "HEREOF," and words of
similar import, refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The words "THIS SECTION," "THIS
SUBSECTION," and words of similar import, refer only
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to the Sections or subsections hereof in which such words occur. The word "OR"
is not exclusive, and the word "INCLUDING" (in its various forms) means
"INCLUDING WITHOUT LIMITATION." Pronouns in masculine, feminine, or neuter
genders shall be construed to state and include any other gender and words,
terms, and titles (including terms defined herein) in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
expressly requires. Unless the context otherwise requires, all defined terms
contained herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms.
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 AGREEMENT TO SELL AND BUY. Subject to the terms and conditions set
forth in this Agreement, Seller shall sell, assign, transfer and deliver to the
Purchasers on the Closing Date, and the Purchasers shall acquire from Seller on
the Closing Date, valid title, ownership and possession of the following assets
(the "PURCHASED ASSETS"), free and clear of any Liens or liabilities (except for
liabilities assumed by the Purchasers in accordance with SECTION 2.5):
(a) All Intellectual Property including a complete copy of the Knowledge
Transfer Book as updated through the Closing Date;
(b) All Assumed Contracts;
(c) All books and records relating to the Assumed Contracts, Patents and
Trademarks, including executed copies of the Assumed Contracts, or if no
executed agreement exists, summaries of such Assumed Contracts, subject to the
right of Seller to copy and have such books and records made reasonably
available to Seller for tax and other legitimate organization purposes after the
Closing; and
(d) All causes of action, damages and other rights of every kind, if any
may exist, for infringement of Intellectual Property prior to the date of this
Agreement.
2.2 ALLOCATION AMONG PURCHASERS. The parties agree that, as between US
Purchaser and Foreign Purchaser, the Purchased Assets listed in SECTION 2.1
shall be allocated as follows:
(a) Legal title to all of the Intellectual Property shall be held by US
Purchaser;
(b) US Purchaser shall have the exclusive and perpetual right to exploit
the Intellectual Property in the United States, including, but not limited to,
the right (i) to manufacture, market, distribute, sell and license batteries and
related products utilizing, embodying or incorporating the Intellectual
Property, (ii) to use the Intellectual Property to provide technical support,
training and other services, (iii) to sublicense the Intellectual Property to
third parties for any of the foregoing purposes, and (iv) to improve the
Intellectual Property and use it in further research into similar technology;
(c) US Purchaser shall have the limited, non-exclusive and perpetual right
to license the Intellectual Property to unrelated parties for use outside of the
United States in cases
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where Parent or the Purchasers deem it is necessary or appropriate for the
licensor of the Intellectual Property to be an entity organized in the United
States;
(d) Subject to the rights allocated to US Purchaser in the immediately
preceding clause, Foreign Purchaser shall have the exclusive and perpetual right
to exploit the Intellectual Property outside the United States, including, but
not limited to, the right (i) to manufacture, market, distribute, sell and
license batteries and related products utilizing, embodying or incorporating the
Intellectual Property, (ii) to use the Intellectual Property to provide
technical support, training and other services, (iii) to sublicense the
Intellectual Property to third parties for any of the foregoing purposes, and
(iv) to improve the Intellectual Property and use it in further research into
similar technology;
(e) The Third Party Licenses shall be allocated as specified in SCHEDULE
2.2(E); and
(f) US Purchaser shall be allocated the Assumed Contracts (other than those
Third Party Licenses which are identified on SCHEDULE 2.2(E) as being assigned
to Foreign Purchaser) and any remaining assets not specifically allocated to
Foreign Purchaser under this Agreement.
2.3 PURCHASE PRICE. As payment for the Purchased Assets, Parent shall
deliver to Seller a stock certificate or certificates representing an aggregate
of three million (3,000,000) duly authorized and issued, fully paid and
nonassessable shares of Parent's common stock, par value $0.001 per share (the
"SHARES"), registered in the name of Seller in such denominations as Seller may
request (the "PURCHASE PRICE"). The parties acknowledge that the Purchase Price
shall be paid by Parent on behalf of the Purchasers, and that the number of
Shares paid on behalf of each Purchaser shall be as follows:
US Purchaser 300,000 Shares
Foreign Purchaser 2,700,000 Shares
Total 3,000,000 Shares.
2.4 CLOSING. Subject to the satisfaction or waiver of the conditions set
forth in ARTICLE 8, the Closing will take place at the offices of Troop Xxxxxxx
Xxxxxx Xxxxxxx & Xxxxx, LLP., 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx,
at 10:00 a.m., local time on the earlier of (a) December 15, 2000, or (b) the
first Business Day after the conditions to closing set forth in ARTICLE 8 shall
have been satisfied or waived, or at such other place and time as Parent and
Seller may agree (the day on which the Closing takes place being the "CLOSING
Date").
2.5 ASSUMPTION OF LIABILITIES AND OBLIGATIONS. As of the Closing Date, US
Purchaser or Foreign Purchaser, as applicable, shall assume and undertake to
pay, discharge and perform all the obligations and liabilities and shall receive
all rights of Seller arising under the Assumed Contracts relating to the time
period beginning on or arising out of events occurring on or after the Closing
Date. All other obligations, liabilities and rights of Seller, including (i)
subject to the terms of SECTION 2.6 below, obligations, liabilities or rights
under any Assumed Contract for which a Consent, if required, has not been
obtained as of the Closing, and (ii) any obligations, liabilities and rights
arising under the Assumed Contracts or otherwise related to the Purchased Assets
that relate to the time period prior to the Closing Date or arise out of events
occurring prior to the Closing Date, shall remain the sole and exclusive
obligation, liability or right of Seller. Other
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than as specified in the first sentence of this SECTION 2.5, neither Parent nor
US Purchaser or Foreign Purchaser, as applicable, directly or indirectly, shall
assume any liabilities, obligations or rights of Seller and they shall not be
liable therefor. This SECTION 2.5 is not intended to and shall not benefit any
person other than Seller, Parent, US Purchaser and Foreign Purchaser, as
applicable. Seller shall retain all rights to payments accruing under any
Assumed Contract prior to the Closing Date, including those Assumed Contracts
set forth on Schedule 2.5, and Parent shall promptly remit to Seller any such
payments received by Parent or any Purchaser. Nothing in this SECTION 2.5 shall
create or be construed as creating any third party beneficiary right in any
Person.
2.6 DEEMED ASSIGNMENT OF ASSUMED CONTRACTS. To the extent that the
assignment hereunder of any of the Assumed Contracts shall require the consent
of any other party (or in the event that any of the same shall be
non-assignable), neither this Agreement nor any actions taken hereunder shall
constitute an assignment or an agreement to assign if such assignment or
attempted assignment would constitute a breach thereof or result in a loss or
diminution thereof; provided, however, that Seller shall cooperate with US
Purchaser or Foreign Purchaser, as applicable, to establish a reasonable
arrangement designed to provide US Purchaser or Foreign Purchaser, as
applicable, with the benefits and burdens of any such Assumed Contract,
including appointing US Purchaser or Foreign Purchaser, as applicable, to act as
its agent to perform all of Seller's obligations under such Assumed Contract and
to collect and promptly remit to US Purchaser or Foreign Purchaser, as
applicable, all compensation received by Seller pursuant to such Assumed
Contract and to enforce, for the account and benefit of US Purchaser or Foreign
Purchaser, as applicable, any and all rights of Seller against any other Person
arising out of the breach or cancellation of such Assumed Contract by such other
Person or otherwise (any and all of which arrangements shall constitute, as
between the parties hereto, a deemed assignment or transfer).
2.7 ALLOCATION. On or before the date (the "ALLOCATION DATE") that is 30
days after the Closing Date, Seller, the Purchasers and Parent shall negotiate
in good faith an allocation of the Purchase Price among the Purchased Assets
that complies with Section 1060 of the Code with respect to the allocation of
the Purchase Price. If the allocation is not agreed upon on or before the
Allocation Date, then Parent, the Purchasers and Seller agree that the
allocation shall be made and consistently reported by Parent, the Purchasers and
Seller in compliance with Section 1060 of the Code based upon an asset valuation
supplied by a party to be mutually agreed upon by Parent, the Purchasers and
Seller. The cost of such appraisal shall be shared equally by Parent and Seller.
Parent will order such appraisal as soon as practicable after such date as
Parent, the Purchasers and Seller fail to agree on such allocation. The
appraisal, if required, shall be provided to Seller within 45 days after the
date of such order.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES REGARDING SELLER. Seller represents and
warrants to Parent and each Purchaser as follows (with the understanding that
Parent and the Purchasers are relying on such representations and warranties in
entering into and performing this Agreement).
(a) ORGANIZATION, GOOD STANDING, ETC. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it was organized, has all requisite corporate power and
authority to own, lease and operate its properties and to carry on
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its business as now being conducted. Seller is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so qualified or licensed and in good standing would not
have a material adverse affect on the business, properties, condition (financial
or otherwise) or assets of Seller.
(b) AUTHORITY. Seller has all requisite corporate power and authority to
enter into this Agreement, the Xxxx of Sale and Assignment Agreement, the
License Agreement, and each other agreement, document, and instrument required
to be executed in accordance herewith (collectively, the "TRANSACTION
DOCUMENTS") to which Seller is a party and to consummate the transactions
contemplated hereby or thereby. The execution and delivery of the Transaction
Documents by Seller and the consummation by Seller of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Seller and no other corporate proceedings on the part of
Seller are necessary to authorize any Transaction Document or to consummate the
transactions contemplated hereby and thereby. The Transaction Documents have
been, or upon execution and delivery will be, duly executed and delivered and
constitute, or upon execution and delivery will constitute, the valid and
binding obligations of Seller, enforceable against Seller in accordance with
their respective terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(c) NO CONFLICT. The execution and delivery of the Transaction Documents by
Seller do not and the performance by Seller of the transactions contemplated
hereby or thereby will not, subject to obtaining the consents, approvals,
authorizations, and permits and making the filings set forth on SCHEDULE 3.1(C),
(i) violate, conflict with, or result in any breach of any provision of Seller's
charter, bylaws or other organizational documents or any resolution adopted by
the board of directors or shareholders of Seller, (ii) violate, conflict with,
or result in a violation or breach of, or constitute a default under (with or
without due notice or lapse of time or both), or permit the termination or
cancellation of, or entitle any party to accelerate any obligation, or result in
the loss of any benefit, or give rise to the creation of any Lien upon any of
the Purchased Assets under, any of the terms, conditions, or provisions of any
loan or credit agreement, note, bond, mortgage, indenture, or deed of trust, or
any license, lease, agreement, or other instrument or obligation to which Seller
is a party or by which or to which it or any of the Purchased Assets may be
bound or subject, or (iii) violate any Applicable Law by which or to which
Seller or any of the Purchased Assets is bound or subject.
(d) APPROVALS. Except as set forth on SCHEDULE 3.1(D), no Consent of any
Governmental Entity, or any other Person, is required in connection with
execution, delivery and performance by Seller of any Transaction Document or the
consummation of the transactions contemplated hereby and thereby.
(e) COMPLIANCE WITH APPLICABLE LAWS. The Seller is in compliance with, and
has not violated any, Applicable Law. No notice, charge, claim, or action has
been received by Seller or has been filed, commenced or, to the Knowledge of
Seller, threatened against Seller alleging any
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such violation or noncompliance and no investigation or review by any
Governmental Entity is pending or, to the Knowledge of Seller, threatened.
(f) ABSENCE OF LITIGATION. There is no private or governmental action,
suit, proceeding, claim, arbitration or investigation pending before any
Governmental Entity, or, to the knowledge of Seller, threatened against Seller
or any of its properties, in each case involving or arising out of or connected
to Seller's Business or the Purchased Assets that would reasonably be expected
to have a material adverse effect on the Seller's Business or the Purchased
Assets. There is no judgment, writ, injunction, decree or order against Seller
involving or arising out of or in any manner connected to Seller's Business or
the Purchased Assets. To the Knowledge of Seller, no circumstances exist that
could reasonably be expected to result in a claim against Seller involving or
arising out of or in any manner connected to Seller's Business or the Purchased
Assets as a result of the conduct of Seller's Business (including, without
limitation, any claim of infringement of any intellectual property right).
(g) INSURANCE. SCHEDULE 3.1(G) sets forth an accurate summary of all
general liability, malpractice liability, theft, and other forms of insurance
and all fidelity bonds held by or applicable to Seller's Business or the
Purchased Assets. All such policies are in full force and effect, all premiums
with respect thereto covering all periods up to and including the date of this
Agreement have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. To the Knowledge of Seller, no event
has occurred, including the failure by Seller to give any notice or information
or the delivery by Seller of any inaccurate or erroneous notice or information,
which limits or impairs the rights of Seller under any such insurance policies.
All pending claims, if any, made against Seller that are covered by such
insurance policies have been disclosed to and accepted by the appropriate
insurance companies without reservation of rights and are being defended by such
appropriate insurance companies and are described in SCHEDULE 3.1(G).
(h) TITLE TO PURCHASED ASSETS; LIENS AND ENCUMBRANCES. Seller has, and at
the Closing will transfer to the Purchasers and the Purchasers will thereupon be
vested with, good, valid and marketable title to all of the Purchased Assets.
All of the Purchased Assets are free and clear of all liens, pledges, claims
(including, without limitation, claims of fraudulent transfer or recovery under
applicable bankruptcy laws, insolvency laws or any other law affecting
creditor's rights generally), security interests, restrictions, mortgages, deeds
of trust, tenancies, and other possessory interests, conditional sale or other
title retention agreements, assessments, covenants, restrictions, rights of
first refusal, defects in title, encroachments and other burdens, options or
encumbrances of any kind (collectively, "LIENS"). At the Closing, all of the
Purchased Assets shall be free and clear of all Liens.
(i) TAXES. There are no Liens for Taxes upon the Purchased Assets. Seller
has not received notice of any Tax deficiency or delinquency with respect to the
Purchased Assets that has not been previously paid. No audit relating to or
involving the Purchased Assets is pending or, to the Knowledge of Seller,
threatened. All monies required to be collected by Seller from customers for
Taxes and the portion of any Taxes to be paid by Seller to any Governmental
Entity or set aside in accounts for such purposes have been so paid or set
aside. There are no legal, administrative, or tax proceedings pursuant to which
Seller is or could be made liable for any Taxes, penalties, or interest, the
liability for which could extend to the Purchasers or Parent as transferee of
the Purchased Assets. None of the Purchased Assets directly or indirectly
secures any debt the
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interest on which is exempt from tax under ss. 103(a) of the Code, and none of
the Purchased Assets is "tax-exempt use property" within the meaning of ss.
168(h) of the Code.
(j) CERTAIN AGREEMENTS. SCHEDULE 3.1(J) hereto is a complete and accurate
list of each Assumed Contract and each contract, other than Third Party
Licenses, which is being purchased and assumed by Parent under this Agreement
("Contracts"). Except as set forth on SCHEDULE 3.1(J), each Assumed Contract is
a valid and binding obligation of the Seller and is in full force and effect
without amendment. Except as set forth on SCHEDULE 3.1(J), Seller and, to the
Knowledge of Seller, each other party to such Assumed Contracts, has performed
in all material respects the obligations required to be performed by them under
such Assumed Contracts and are not, with or without lapse of time or the giving
of notice, or both, in breach or default thereunder and no facts or
circumstances exist which, with or without lapse of time or the giving of
notice, or both, would give rise to any such default. Except as disclosed in
SCHEDULE 3.1(J), Seller has not received (i) any notice, written or otherwise,
of a default by Seller under any Assumed Contract listed on SCHEDULE 3.1(J) or
(ii) any notice, written or otherwise, that any other party to any such Assumed
Contract has terminated or canceled, or intends to terminate or cancel, such
Assumed Contract. SCHEDULE 3.1(J) identifies, as to each such Assumed Contract
listed thereon, (w) whether the consent of the other party thereto is required,
(x) whether notice must be provided to any party thereto (and the length of such
notice), (y) whether any payments are required (and the amount of such
payments), in each case in order for such Assumed Contract to continue in full
force and effect upon the consummation of the transactions contemplated by the
Transaction Documents, and (z) whether such Assumed Contract can be canceled by
the other party without liability to such other party due to the consummation of
the transactions contemplated by the Transaction Documents. A complete copy of
each Assumed Contract set forth on SCHEDULE 3.1(J) will be provided to Parent
prior to the Closing Date .
(k) INTELLECTUAL PROPERTY
(i) SCHEDULE 3.1(K) sets forth a complete and accurate list of all
Intellectual Property included in the Purchased Assets. Seller owns or has the
valid right to use all such Intellectual Property as currently used in
connection with Seller's Business. The Intellectual Property is solely and
exclusively owned by Seller free and clear of all Liens, and Seller is listed in
the records of the appropriate United States, state or foreign agency as the
sole owner of record for all registrations and applications for any such
Intellectual Property. Except as set forth on SCHEDULE 3.1(K), all Intellectual
Property has been duly maintained, is valid and subsisting, in full force and
effect, has not been cancelled, expired, abandoned and has not fallen into the
public domain. There is no pending or, to the Knowledge of Seller, threatened
opposition, interference or cancellation proceeding before any Governmental
Entity in any jurisdiction against the Intellectual Property. Except as set
forth on SCHEDULE 3.1(K), the consummation of the transactions contemplated by
the Transaction Documents will not alter or impair any of the Intellectual
Property or require the consent of any Governmental Entity or Person in respect
of any such Intellectual Property. The Knowledge Transfer Book, as amended and
updated through the Closing Date, is accurate and complete in all respects.
(ii) SCHEDULE 3.1(K) contains an accurate and complete list of all
licenses, contracts and other agreements with any Person (the "THIRD PARTY
LICENSES") which in any way relate to the license or other use or exhibition of
the Intellectual Property. There is no dispute under any Third Party License
regarding the scope of or performance under such agreements, or any
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disputes arising from claims that the Intellectual Property that are subject to
the Third Party Licenses infringe the intellectual property rights of other
Persons. The Third Party Licenses are valid and binding obligations of all
parties thereto, enforceable in accordance with their terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies (regardless of whether enforcement is sought in a proceeding
at law or in equity), and there exists no event or condition which would result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default by Seller, or, to the Knowledge of Seller, by any
other Person under any such Third Party License. Except as set forth on the
Schedule 3.1(k) no Intellectual Property is subject to any proceeding or
outstanding decree, order, judgment or settlement agreement or stipulation that
restricts in any manner the use, transfer or licensing thereof by Seller or may
affect the validity, use or enforceability of such Intellectual Property. Except
as set forth on the SCHEDULE 3.1(K), Seller has not been sued or named in any
suit, action or proceeding which involves a claim of infringement,
misappropriation or unfair competition or received notice from any Person
asserting any infringement, misappropriation or unfair competition, and does not
know of any basis therefore with respect to the Intellectual Property.
(iii) There are no settlements, forbearances to xxx, consents, judgments,
or orders or similar obligations to which Seller is a party or is otherwise
bound, which (y) restricts the Intellectual Property in order to accommodate a
Person's rights, or (z) allows any Person to use any intellectual property which
would otherwise infringe the Intellectual Property. Except as set forth on
SCHEDULE 3.1(K), Seller has not granted any Person any right to use, reproduce,
distribute, market or exploit any of the Intellectual Property or any
adaptations, translations, modifications, new releases, new versions, updates,
upgrades, or derivative works based on the Intellectual Property or any portion
thereof.
(iv) Seller takes reasonable measures to protect the confidentiality of the
Intellectual Property, including requiring employees and independent contractors
having access thereto to execute written non-disclosure agreements. To the
Knowledge of Seller, no Intellectual Property has been disclosed or authorized
to be disclosed to any Person, including any employee, agent, contractor or
other entity, other than pursuant to a non-disclosure agreement that adequately
protects the proprietary interests of Seller in and to such Intellectual
Property. To the Knowledge of Seller, no party to any non-disclosure agreement
relating to the Intellectual Property is in breach thereof. If any Intellectual
Property has been conceived, developed or created by any Person acting as an
independent contractor, Seller has irrevocably obtained worldwide, perpetual
(except as otherwise provided under Applicable Law) ownership of, and is the
exclusive owner of, all such Intellectual Property by operation of law or by
valid assignment. All employees of Seller have entered into a valid and binding
written agreements with Seller sufficient to vest title in Seller of all
Intellectual Property created by such employee in the scope of his or her
employment with Seller.
(v) To the Knowledge of Seller, there is no unauthorized use, disclosure,
infringement or misappropriation of any Intellectual Property by any Person,
including any employee or former employee of Seller and no such claims are
pending against any Person by Seller. Except as set forth in SCHEDULE 3.1(K),
Seller has not entered into any agreement to indemnify any Person against any
charge of infringement of any patents, copyrights, trademarks, service marks,
trade names, trade secrets, or other proprietary rights with respect to the
Intellectual Property.
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(vi) Except as set forth on SCHEDULE 3.1(K), no Person owns or has any
rights to the Intellectual Property. At Closing, the Purchasers will obtain full
ownership of the Intellectual Property free of any obligations to pay any other
Person any royalties or other payments and free of any other Liens. No current
or former director, officer or employee of Seller (or its predecessors in
interest, if any) will, after giving effect to the transactions contemplated
herein, own or retain any rights in or to any of the Intellectual Property.
(vii) Seller has not acquired any Intellectual Property from any Person.
(l) DISCLOSURE. No representation or warranty by Seller contained in this
Agreement or in any exhibit, schedule, written statement, certificate or other
document delivered or to be delivered by a Seller pursuant to this Agreement or
in connection with the consummation of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading.
(m) SALES OF PERSONAL PROPERTY. Seller is not engaged in the business of
selling tangible personal property.
(n) BROKERS OR FINDERS. Neither Seller nor any of its Affiliates has
entered into any agreement or arrangement entitling any agent, broker,
investment banker, financial advisor or other firm or person to any brokers' or
finders' fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASERS. Parent, US
Purchaser and Foreign Purchaser represent and warrant to the Seller as follows
(with the understanding that Seller is relying on such representations and
warranties in entering into and performing this Agreement):
(a) ORGANIZATION, STANDING AND POWER. Each of Parent, US Purchaser and
Foreign Purchaser is a corporation duly formed, validly existing, and in good
standing under the laws of the jurisdiction in which it was organized and each
of Parent, US Purchaser and Foreign Purchaser has all requisite power and
authority to own, lease, and operate its properties and to carry on its business
as now being conducted. Each of Parent, US Purchaser and Foreign Purchaser is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by them or the
nature of the business conducted by them makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so qualified or
licensed and in good standing would not have a material adverse affect on the
business, properties, condition (financial or otherwise) or assets of Parent, US
Purchaser or Foreign Purchaser.
(b) AUTHORITY. Each of Parent, US Purchaser and Foreign Purchaser has all
requisite power and authority to enter into the Transaction Documents to which
it is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of such Transaction Documents by Parent, US
Purchaser and Foreign Purchaser, as applicable, and the consummation by Parent,
US Purchaser and Foreign Purchaser of the transactions contemplated hereby or
thereby have been duly authorized by all necessary action on the part of Parent,
US Purchaser and Foreign Purchaser and no other corporate proceedings on the
part of Parent, US
Page 12
Purchaser or Foreign Purchaser are necessary to authorize any Transaction
Document or to consummate the transactions contemplated hereby or thereby. The
Transaction Documents have been, or upon execution and delivery will be, duly
executed and delivered and constitute, or upon execution and delivery will
constitute, the valid and binding obligations of Parent, US Purchaser and
Foreign Purchaser, as applicable, enforceable against Parent, US Purchaser and
Foreign Purchaser in accordance with their terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies (regardless of whether enforcement is sought in a proceeding at law or
in equity).
(c) NO CONFLICT. The execution and delivery of the Transaction Documents by
Parent, US Purchaser and Foreign Purchaser do not and the performance by Parent,
US Purchaser and Foreign Purchaser of the transactions contemplated hereby or
thereby will not, subject to obtaining the consents, approvals, authorizations,
and permits and making the filings set forth on SCHEDULE 3.2(C), (i) conflict
with, violate or result in any breach of the terms, conditions or provisions of
the charter, bylaws or other organizational documents of Parent, US Purchaser or
Foreign Purchaser, as applicable, or any resolution adopted by the board of
directors or shareholders of Parent, US Purchaser or Foreign Purchaser ,
respectively, (ii) violate, conflict with, or result in a violation or breach
of, or constitute a default under (with or without due notice or lapse of time
or both), or permit the termination or cancellation of, or entitle any party to
accelerate any obligation, or result in the loss of any benefit, or give rise to
the creation of any Lien upon any of the assets of Parent, US Purchaser or
Foreign Purchaser under, any of the terms, conditions, or provisions of any loan
or credit agreement, note, bond, mortgage, indenture, or deed of trust, or any
license, lease, agreement, or other instrument or obligation to which Parent, US
Purchaser or Foreign Purchaser is a party or by which any of them or any of
their respective assets may be bound or subject, or (iii) violate any Applicable
Law by which or to which any of them or their respective assets is bound or
subject.
(d) APPROVALS. Except as set forth on SCHEDULE 3.2(D), no Consent of any
Governmental Entity is required by or with respect to Parent or either Purchaser
in connection with the execution and delivery of any Transaction Documents by
Parent or the Purchasers or the consummation by any of them of the transactions
contemplated hereby or thereby.
(e) COMPLIANCE WITH APPLICABLE LAWS. Each of the Parent and the Purchasers
are in compliance with, and have not violated any, Applicable Law. No notice,
charge, claim, or action has been received by Parent or either Purchaser or has
been filed, commenced or, to the Knowledge of Parent or either Purchaser,
threatened against Parent or the Purchasers alleging any such violation or
noncompliance and no investigation or review by any Governmental Entity is
pending or, to the Knowledge of Parent or the Purchasers, threatened.
(f) ABSENCE OF LITIGATION. There is no private or governmental action,
suit, proceeding, claim, arbitration or investigation pending before any
Governmental Entity, or, to the knowledge of Parent or either Purchaser,
threatened against Parent or the Purchasers or any of their respective
properties, in each case involving or arising out of or connected to Parent's
Business or either Purchasers' business that would reasonably be expected to
have a material adverse effect on Parent's Business or either Purchasers'
business. There is no judgment, writ, injunction, decree or order against Parent
or either Purchaser involving or arising out of or in any manner connected to
Page 13
Parent's Business or either Purchaser's business. To the Knowledge of Parent or
each Purchaser, no circumstances exist that could reasonably be expected to
result in a claim against Parent or such Purchaser involving or arising out of
or in any manner connected to Parent's Business or such Purchaser's business as
a result of the conduct of Parent's Business or such Purchaser's business
(including, without limitation, any claim of infringement of any intellectual
property right).
(g) INSURANCE. SCHEDULE 3.2(G) sets forth an accurate summary of all
general liability, malpractice liability, theft, and other forms of insurance
and all fidelity bonds held by or applicable to Parent's Business. All such
policies are in full force and effect, all premiums with respect thereto
covering all periods up to and including the date of this Agreement have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy. To the Knowledge of Parent, no event has occurred,
including the failure by Parent to give any notice or information or the
delivery by Parent of any inaccurate or erroneous notice or information, which
limits or impairs the rights of Parent under any such insurance policies. All
pending claims, if any, made against Parent that are covered by such insurance
policies have been disclosed to and accepted by the appropriate insurance
companies without reservation of rights and are being defended by such
appropriate insurance companies and are described in SCHEDULE 3.2(G).
(h) SEC REPORTS AND FINANCIAL STATEMENTS. Parent has filed with the SEC,
and has heretofore made available to Seller true and complete copies of, all
forms, reports, schedules, statements and other documents required to be filed
by it since October 1, 1997 under the Exchange Act or the Securities Act (as
such documents have been amended since the time of their filing, collectively,
the "PARENT SEC DOCUMENTS"). As of their respective dates or, if amended, as of
the date of the last such amendment, the Parent SEC Documents and all
registration statements, including, without limitation, any financial statements
or schedules included therein (i) were accurate and complete, (ii) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading, and (iii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. Each of the
consolidated financial statements included in the Parent SEC Documents has been
prepared from, and is in accordance with, the books and records of Parent,
complies in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, has
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or in the case of unaudited financial statements,
as permitted for presentation in Quarterly Reports on Form 10-Q) and fairly
presents the consolidated financial position and the consolidated results of
operations and cash flows of Parent as at the dates thereof or for the periods
presented therein.
(i) CAPITALIZATION; SHARES. Parent has 100,000,000 authorized shares of
Common Stock, of which 37,867,898 shares were issued and outstanding as of
October 19, 2000. All such issued and outstanding shares of Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable.
Parent has reserved 3,000,000 Shares for issuance hereunder. The Shares, upon
delivery to Seller of share certificates therefor against payment in accordance
with the terms of this Agreement will be (i) validly issued, fully paid and
nonassessable, (ii) free of all Liens, and (C) issued in compliance with all
Applicable Laws.
Page 14
(j) ACTIVITIES OF FOREIGN PURCHASER; OWNERSHIP. Foreign Purchaser was
formed for the purpose of participating in the transactions contemplated by this
Agreement. Foreign Purchaser has engaged in no other business activities and has
conducted its operations only as contemplated by this Agreement. Foreign
Purchaser is a wholly-owned subsidiary of Valence Technology Cayman Islands
Inc., a Cayman Islands corporation and a wholly-owned subsidiary of Parent.
(k) OWNERSHIP OF US PURCHASER. US Purchaser is a wholly-owned subsidiary of
Parent.
(l) DISCLOSURE. No representation or warranty by Parent or either Purchaser
contained in this Agreement or in any exhibit, schedule, written statement,
certificate or other document delivered or to be delivered by a Parent or the
Purchasers pursuant to this Agreement or in connection with the consummation of
the transactions contemplated hereby contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was or will be made, in
order to make the statements herein or therein not misleading.
(m) BROKERS OR FINDERS. Neither Parent, the Purchasers nor any of their
respective Affiliates has entered into any agreement or arrangement entitling
any agent, broker, investment banker, financial advisor or other firm or person
to any brokers' or finders' fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement.
ARTICLE 4
SELLER'S COVENANTS
4.1 COVENANTS OF SELLER. Except as contemplated by this Agreement or by or
to the extent that Parent shall otherwise consent in writing, from the date of
this Agreement until the Closing, Seller covenants and agrees that Seller shall
not, without the prior written consent of Parent:
(a) conduct Seller's Business in a materially imprudent fashion and in any
manner except in the ordinary course consistent with past practice;
(b) fail to use all commercially reasonable efforts to preserve intact
Seller's Business and the Purchased Assets and preserve its relationships with
licensees, customers, suppliers and others having business dealings with Seller;
(c) fail to use commercially reasonable efforts to maintain Seller's
Business and the Purchased Assets in their current condition, or fail to
maintain or replace any of the Purchased Assets in accordance with the normal
standards of maintenance applicable in the industry;
(d) amend, terminate, or fail to use all commercially reasonable efforts to
renew any Assumed Contract, or default in any respect (or take or omit to take
any action that, with or without the giving of notice, the passage of time, or
both would constitute a default) under any
Page 15
Assumed Contract or enter into any new contract that will be assumed by the
Purchasers, hereunder;
(e) merge or consolidate with or into any other Person, dissolve, or
liquidate;
(f) sell (whether by merger, consolidation, or otherwise), transfer, lease,
or otherwise dispose of any Purchased Asset;
(g) mortgage, pledge, or subject to any Lien, any of the Purchased Assets;
or
(h) license (except in the ordinary course of business consistent with past
practice) or otherwise transfer or dispose of, any Intellectual Property, or
dispose of or disclose to any Person any trade secret, formula, process or
know-how related to the Intellectual Property and not theretofore a matter of
public knowledge; or
(i) agree to or make any commitment, orally or in writing, to take any
actions prohibited by this Agreement.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 ACCESS AND INFORMATION. Until the Closing, Seller shall afford to
Parent and its representatives (including accountants and attorneys) full
access, during normal business hours, upon reasonable notice and in such manner
as will not unreasonably interfere with the conduct of the business of Seller,
to information pertaining to Seller's Business and/or the Purchased Assets,
together with the opportunity to make copies of such information and to discuss
the business with such officers, directors, managerial personnel, accountants,
consultants, and counsel for Seller as Parent deems reasonably necessary or
appropriate for the purposes of familiarizing itself with Seller's Business and
the Purchased Assets.
5.2 COMPLIANCE WITH APPLICABLE LAWS. During the period of time commencing
on the date hereof and ending on the Closing Date, Seller hereby agrees that
Seller will operate its business in compliance in all material respects with all
Applicable Laws. If Seller (or its counsel) receive an administrative or other
order or notification relating to any violation or claimed violation of any
Applicable Law that could affect Seller's ability to consummate the transactions
contemplated by the Transaction Documents, Seller shall promptly notify Parent
in writing and use its commercially reasonable efforts to take such steps as may
be necessary to remove any such impediment to the transactions contemplated by
the Transaction Documents.
5.3 NOTIFICATION OF CERTAIN MATTERS. Each party hereto shall give prompt
written notice to the other parties of (i) the occurrence, or failure to occur,
of any event of which the notifying party becomes aware that has caused or that
would be likely to cause any representation or warranty of the notifying party
contained in this Agreement to be untrue or inaccurate in any respect at any
time from the date hereof to the Closing Date, or (ii) the failure of the
notifying party, or any of its officers, directors, employees, or agents, to
comply with or satisfy any covenant, condition, or agreement required to be
complied with or satisfied by it hereunder; provided, however, that (x) the
delivery of any notice pursuant to this SECTION 5.3 shall not limit or otherwise
affect the remedies
Page 16
available to any party hereunder, (y) shall not constitute an admission by the
notifying party that any such representation or warranty has been breached and
(z) shall not have an effect in determining whether the conditions set forth in
ARTICLE 8 have been satisfied.
5.4 THIRD PARTY CONSENTS. After the date hereof and prior to the Closing,
Seller shall use all commercially reasonable efforts, including making any
required payments, to obtain the written consent from any Person to an agreement
or instrument identified on SCHEDULE 3.1(D) or any other Assumed Contract which
is required to permit the consummation of the transactions contemplated hereby.
5.5 REASONABLE ASSISTANCE. Following the Closing Date, Seller agrees to
provide the Purchasers with reasonable access to Seller's engineer's, scientists
and inventors in order to (i) facilitate the prosecution of any and all patent
applications covering the Intellectual Property, (ii) assist the Purchasers in
interpreting the provisions of the Knowledge Transfer Book, and (iii) provide
such other information regarding the Intellectual Property as may be reasonably
requested by the Purchasers. In connection with the foregoing, the Purchasers
shall pay Sellers standard consulting rates not to exceed $2,000 per hour.
Seller also agrees to execute any and all documents reasonably requested by the
Purchasers, that are reasonably necessary to evidence and effectuate the
assignment of the Intellectual Property called for herein, including but not
limited to patent declarations and patent and trademark assignments.
5.6 INTELLECTUAL PROPERTY MAINTENANCE PAYMENTS. For a period of 90 days
following the Closing, or such shorter period as is agreed to by Parent, Seller
shall make all maintenance payments required to be made with respect to the
Intellectual Property. Parent shall reimburse Seller for any and all such
maintenance payments within 10 days of receipt of evidence of payment therefore
reasonably acceptable to Parent.
5.7 LOCKUP AGREEMENT. In connection with any registration of the offer and
sale of any securities of the Parent prior to the registration of the Shares in
accordance with the provisions of Article 6 below, upon request of the Parent or
the underwriters managing such offering of the Parent's securities, Seller
agrees not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Shares (other than those included in
the registration) without the prior written consent of the Parent or such
underwriters, as the case may be, for such period of time (not to exceed 90
days) from the effective date of such registration statement as may be requested
by Parent or such managing underwriters and to execute an agreement reflecting
the foregoing as may be requested by the underwriters at the time of Parent's
offering. In order to enforce the foregoing covenant, Parent may impose
stop-transfer instructions with respect to the Shares. Seller agrees that it
will not transfer any Shares unless each transferee agrees in writing to be
bound by all of the provisions of this SECTION 5.7.
5.8 DELIVERY OF PURCHASED ASSETS. Within ten days' of the Closing, Seller
shall deliver the Purchased Assets to the Purchasers in the State of Nevada. The
Seller shall not deliver, and the Purchasers shall not take possession of, any
of the Purchased Assets in the State of New Jersey.
ARTICLE 6
REGISTRATION STATEMENT FILING
Page 17
6.1 As promptly as reasonably practicable following the Closing, but in no
event later than the last to occur of (i) 45 days after the execution of this
Agreement, or (ii) 10 days after the Closing Date, Parent shall file with the
Securities and Exchange Commission (the "COMMISSION") a registration statement
(the "REGISTRATION STATEMENT") on any appropriate form under the Securities Act
with respect to the offering and sale or other disposition of the Shares. Parent
agrees to use all reasonable efforts to cause the Registration Statement to
become effective as soon as reasonably practicable following its filing. Seller
agrees to cooperate with and provide assistance to Parent in connection with the
registration and sale of the Shares.
6.2 Parent agrees that, subject to the provisions of the last sentence of
Section 6.1, it will (i) prepare and file with the Commission, any amendments or
supplements to the Registration Statement or prospectus which is a part thereof
which may be necessary to keep the Registration Statement effective and to
comply with the provisions of the Securities Act with respect to the offer of
the Shares covered by the Registration Statement for a period of two (2) years
from the effective date of the Registration Statement; (ii) prepare and promptly
file with the Commission and promptly notify the Seller of the filing of such
amendment or supplement to the Registration Statement or prospectus as may be
necessary to correct any statement therein or omission there from if, at any
time when a prospectus relating to the Shares is required to be delivered under
the Securities Act, any event with respect to Parent shall have occurred as a
result of which any prospectus would include an untrue statement of material
fact or omit to state any material fact necessary to make the statements therein
not misleading; (iii) in case the Seller is required to deliver a prospectus,
prepare promptly such amendment or amendments to the Registration Statement and
such prospectus or prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Securities Act; (iv) advise the
Seller promptly after Parent shall receive notice or obtain knowledge of the
issuance of any stop order by the Commission suspending the effectiveness of the
Registration Statement or amendment thereto or of the initiation or threatening
of any proceedings for that purpose, and promptly use its commercially
reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; (v) use its best efforts to
qualify the Shares for sale under the securities or "blue Sky" laws of such
states within the United States as the Seller may reasonably designate; and (vi)
furnish to the Seller, as soon as available, copies of the Registration
Statement and each preliminary and final prospectus, or supplement or amendment
required to be prepared with respect thereto, all in such quantities as they may
from time to time reasonably request.
6.3 Parent shall pay all expenses (the "REGISTRATION EXPENSES") incident to
the registration of the Shares under this Section 6.3, including, without
limitation, all registration and filing fees, all fees and expenses of complying
with securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for Parent and of its independent public accountants, premiums and other costs
of policies of insurance purchased by Parent at its option against liabilities
arising out of the public offering of such Shares. With respect to sales of
Shares, the Seller shall pay all underwriting discounts and commissions and fees
of underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Shares, the fees and
disbursements of counsel retained by the Seller and transfer taxes, if any.
6.4 Parent agrees to indemnify and hold harmless, to the full extent
permitted by law, the Seller, its officers, directors, agents and employees and
each person who controls Seller (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses
Page 18
caused by (i) any untrue or alleged untrue statement of a material fact
contained in the Registration Statement or prospectus (or any amendment thereof)
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Parent by Seller expressly for use therein or (ii)
any violation by Parent of any rule or regulation promulgated under the
Securities Act applicable to Parent and relating to action or inaction required
of Parent in connection with the Registration Statement. Promptly after receipt
by Seller under this Section 6.4 of notice of the commencement of any action
(including any governmental action), such Seller will, if a claim in respect
thereof is to be made against the Parent under this Section 6.4, notify Parent
in writing of the commencement thereof and Parent shall have the right to
participate in, and, to the extent Parent so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that Seller shall have
the right to retain its own counsel, with the fees and expenses to be paid by
Parent, if representation of Seller by the counsel retained by Parent would be
inappropriate due to actual or potential differing interests between Seller and
any other party represented by such counsel in such proceeding. The failure to
notify Parent within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve Parent of any
liability to Seller under this Section 6.4 but the omission so to notify Parent
will not relieve it of any liability that it may have to Seller otherwise than
under this Section 6.4.
6.5 LISTING OF ADDITIONAL SHARES ON NASDAQ. As promptly as reasonably
practicable following the Closing, the Parent shall prepare and submit to the
National Association of Securities Dealers an Additional Listing Application and
all other documents and fees necessary to cause the Shares to be listed on the
NMS.
ARTICLE 7
MUTUAL COVENANTS
7.1 GOVERNMENTAL CONSENTS. Promptly following the execution of this
Agreement, the parties shall proceed to prepare and file with the appropriate
Governmental Entities such requests, reports, or notifications as may be
required in connection with this Agreement and shall diligently and
expeditiously prosecute, and shall cooperate fully with each other in the
prosecution of, such matters. Each of Seller and Parent agrees to make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated herein within 10 business days of
the date hereof and to supply promptly any additional information and
documentary material that may be requested pursuant to the HSR Act. Each of
Parent and Seller shall bear its own costs and expenses related to such filing.
7.2 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its commercially reasonable
efforts to take, or cause to be taken all action and to do, or cause to be done,
all things necessary, proper, or advisable under Applicable Law to consummate
and make effective the transactions contemplated by this Agreement. If at any
time after the Closing Date, any further action is necessary or desirable to
carry out the purposes of this Agreement, the parties to this Agreement and
their duly authorized representatives shall take all such action. Without
limiting the generality of the foregoing, if, after the Closing Date, Parent
seeks
Page 19
indemnification or recovery from one or more Persons to an Assumed Contract or
otherwise seeks to enforce such Assumed Contract and, in order to obtain such
indemnification, recovery or enforcement, it is necessary for Seller to initiate
a suit, participate in any enforcement proceeding or otherwise provide
assistance to Parent, then, at the request and the sole expense of Parent,
Seller shall take such action as Parent may reasonably request in connection
with Parent's efforts to obtain such indemnification, recovery or enforcement.
ARTICLE 8
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective obligations of
each party to effect the transactions contemplated hereby are subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
and all of which may be waived in whole or in part by Seller or Parent, as the
case may be:
(a) Consents and Approvals.
(i) All authorizations, Consents, orders, or approvals of, or declarations
or filings with, or expirations of waiting periods imposed by, any Governmental
Entity or other Person necessary for the consummation of the transactions
contemplated by this Agreement shall have been obtained or occurred.
(ii) All authorizations, approvals or Consents of the board of directors
and shareholders of Parent, the Purchasers and Seller, as the case may be,
necessary for the consummation of the transactions contemplated by this
Agreement shall have been obtained.
(iii) Any waiting period (and any extension thereof) under the HSR Act
applicable to the transactions contemplated by this Agreement shall have expired
or shall have been terminated.
(b) NO INJUNCTIONS OR RESTRAINTS. There shall be no temporary restraining
order, preliminary or permanent injunction, or other order issued by any
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby.
(c) NO ACTION. No action shall have been taken nor any statute, rule, or
regulation shall have been enacted or promulgated by any Governmental Entity
that prohibits consummation of the transactions contemplated by this Agreement.
8.2 CONDITIONS TO OBLIGATIONS OF PARENT AND THE PURCHASERS. The obligation
of Parent and each Purchaser to effect the transactions contemplated hereby is
subject to the satisfaction at or prior to the Closing Date of the following
conditions unless waived, in whole or in part, by Parent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Seller set forth in this Agreement shall be true and correct in all material
respects (except for representations and warranties qualified by materiality
which shall be true and correct in all respects) as of the date of this
Agreement and, except for representations and warranties that speak as of a
Page 20
specific date other than the Closing Date (which need only be true and correct
in all respects as of such date), as of the Closing Date, with the same force
and effect as though such representations and warranties had been made on and as
of the Closing Date, and Parent shall have received a certificate to such effect
signed on behalf of Seller by an executive officer.
(b) PERFORMANCE OF OBLIGATIONS. Seller shall have performed and complied in
all material respects (provided that any covenant or agreement of Seller
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) with all obligations required to be performed or
complied with by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate to such effect signed on behalf of
Seller by an executive officer.
(c) CONSENTS AND APPROVALS. Parent shall have been furnished with evidence
reasonably satisfactory to it of the consent or approval of each Governmental
Entity or Person (including evidence of the payment of any required payments)
whose consent or approval shall be required in order to permit the consummation
of the transactions contemplated hereby and such consent or approval shall be in
form and substance satisfactory to Parent.
(d) LEGAL OPINIONS. Parent shall have received from the General Counsel of
Seller an opinion letter dated the Closing Date in a form reasonably acceptable
to Parent.
(e) LICENSE AGREEMENT. Seller shall have delivered to The Purchasers an
executed copy of the License Agreement.
(f) NO PROCEEDINGS. As of the Closing Date, no litigation or proceeding
shall be threatened or pending against Seller by any Governmental Entity or
other Person that seeks to enjoin or prevent the consummation of the
transactions contemplated hereby.
8.3 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of Seller to
effect the transactions contemplated hereby is subject to the satisfaction at or
prior to the Closing Date of the following conditions unless waived, in whole or
in part, by Seller.
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent and each Purchaser set forth in this Agreement shall be true and correct
in all material respects (except for representations and warranties qualified by
materiality which shall be true and correct in all respects) as of the date of
this Agreement and, except for representations and warranties that speak as of a
specific date other than the Closing Date (which need only be true and correct
in all respects as of such date), as of the Closing Date, with the same force
and effect as though such representations and warranties had been made on and as
of the Closing Date, and Seller shall have received a certificate to such effect
signed on behalf of Parent and each Purchaser by an executive officer thereof.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent and each Purchaser shall
have performed in all material respects (provided that any covenant or agreement
of Parent or either Purchaser contained herein that is qualified by a
materiality standard shall not be further qualified hereby) with the obligations
required to be performed by them under this Agreement at or prior to the Closing
Date, and Seller shall have received a certificate to such effect signed on
behalf of Parent and each Purchaser by an executive officer thereof.
Page 21
(c) TECHNOLOGY TRANSFER AGREEMENT PAYMENT. Parent shall have paid
$2,000,000 to Seller at the execution of this Agreement as payment for all
amounts currently due Seller under and pursuant to that certain Technology
Transfer Agreement dated as of June 29, 1995 between Parent and Seller (the
"Existing Agreement"). Upon receipt of such payment, all rights, duties and
obligations of Parent and Seller under the Existing Agreement shall terminate
and the Existing Agreement shall be of no further force or effect.
(d) CONSENTS AND APPROVALS. Seller shall have been furnished with evidence
reasonably satisfactory to it of the consent or approval of each Governmental
Entity or Person (including evidence of the payment of any required payments)
whose consent or approval shall be required in order to permit the consummation
of the transactions contemplated hereby and such consent or approval shall be in
form and substance satisfactory to Seller.
(e) LEGAL OPINIONS. Seller shall have received from Troop Xxxxxxx Xxxxxx
Xxxxxxx & Xxxxx, LLP an opinion letter dated the Closing Date in a form
reasonably acceptable to Seller.
(f) LICENSE AGREEMENT. Each Purchaser shall have delivered to Seller an
executed copy of the License Agreement.
(g) NO PROCEEDINGS. As of the Closing Date, no litigation or proceeding
shall be threatened or pending against Parent or either Purchaser by any
Governmental Entity or other Person that seeks to enjoin or prevent the
consummation of the transactions contemplated hereby.
(h) QUALIFICATION. All authorizations, approvals or permits, if any, of any
Governmental Entity that are required in connection with the lawful issuance of
the Shares pursuant to this Agreement shall be obtained and effective as of the
Closing Date.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Agreement may be terminated prior to the Closing:
(a) by mutual consent of Parent and Seller;
(b) by either Seller or Parent:
(i) if a court of competent jurisdiction or other Governmental Entity shall
have issued an order, decree, or ruling or taken any other action (which order,
decree or ruling the parties hereto shall use their best efforts to remove), in
each case permanently restraining, enjoining, or otherwise prohibiting the
transactions contemplated by the Transaction Documents, and such order, decree,
ruling, or other action shall have become final and nonappealable; or
(ii) if the Closing shall not have occurred by December 31, 2000; provided,
however, that the right to terminate this Agreement under this clause (ii) shall
not be
Page 22
available to any party whose breach of this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date.
(c) by Seller if Parent or either of the Purchasers shall have breached any
of its representations or warranties if such representation or warranty is
qualified by materiality or breached in any material respect if not so
qualified, or breached a covenant in any material respect contained in this
Agreement, and which breach cannot be or has not been cured within 20 days after
the giving of written notice by Seller to Parent;
(d) by Parent if Seller shall have breached any of its representations or
warranties if such representation or warranty is qualified by materiality or
breached in any material respect if not so qualified, or breached a covenant in
any material respect contained in this Agreement, and which breach cannot be or
has not been cured within 20 days after the giving of written notice by Parent
to Seller.
The right of any party hereto to terminate this Agreement pursuant to this
SECTION 9.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that is in
material breach of this Agreement shall be entitled to terminate this Agreement
except with the consent of the other party.
9.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement by any party hereto pursuant to the terms of this Agreement, written
notice thereof shall forthwith be given to the other party or parties specifying
the provision hereof pursuant to which such termination is made, and this
Agreement shall forthwith become void, without liability on the part of any
party hereto, except as provided in this SECTION 9.2, and except that nothing
herein shall relieve any party from liability for any breach of this Agreement.
In the event of a termination of this Agreement by either Seller or Parent as
provided above, there shall be no liability on the part of either Parent or
Seller, except for liability arising out of a breach of this Agreement. The
provisions of ARTICLES 3, 10, and SECTION 12.1 shall survive the termination of
this Agreement.
ARTICLE 10
INDEMNIFICATION
10.1 INDEMNIFICATION OF PARENT. From and after the Closing and subject to
the provisions of this ARTICLE 10, Seller agrees to indemnify and hold harmless
the Parent Indemnified Parties from and against any and all Parent Indemnified
Costs; provided, however, that Seller's aggregate liability under this SECTION
10.1 shall not exceed twenty-five percent (25%) of the fair market value of the
Shares as determined by reference to the closing price of Parent's publicly
traded shares of Common Stock at 1:00 p.m. Pacific time on the date hereof.
10.2 INDEMNIFICATION OF SELLER. From and after the Closing and subject to
the provisions of this ARTICLE 10, Parent agrees to indemnify and hold harmless
the Seller Indemnified Parties from and against any and all Seller Indemnified
Costs.
Page 23
10.3 PROCEDURE FOR THIRD-PARTY CLAIMS. Promptly after receipt by an
indemnified party under SECTIONS 10.1 and 10.2 (each an "INDEMNIFIED PARTY") of
notice of the commencement of any action or demand or claim by a third party (a
"THIRD PARTY CLAIM") which gives rise to Parent Indemnified Costs or Seller
Indemnified Costs, as the case may be, such Indemnified Party shall, if a claim
in respect thereof is to be made against an indemnifying party (each an
"INDEMNIFYING PARTY") under such Section, give notice to the Indemnifying Party
of its assertion of such claim for indemnification and of the commencement of
the action or assertion of the Third Party Claim with respect to which the claim
for indemnification pertains. Failure to so notify the Indemnifying Party shall
not relieve the Indemnifying Party of any liability that they may have to any
Indemnified Party except to the extent that the defense of such action or Third
Party Claim is materially prejudiced thereby. If any such action shall be
brought or a Third Party Claim shall be asserted against an Indemnified Party
and it shall give notice to the Indemnifying Party, as the case may be, of the
commencement or assertion thereof, the Indemnifying Party shall be entitled, at
the sole expense of the Indemnifying Party to participate therein and, to the
extent that it shall wish, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party PROVIDED, HOWEVER, that: (i) the
Indemnifying Party shall not be permitted to enter into any settlement or
compromise, or to consent to the entry of any judgment, with respect to such
claim or proceeding unless such settlement, compromise or consent imposes no
obligation of any nature on any Indemnified Party and includes an unconditional
release of all Indemnified Parties from all liability relating to such claim or
proceeding; and (ii) if any Indemnified Party determines in good faith (after
consultation with counsel) that, under applicable standards of professional
conduct, an actual or potential conflict exists or might reasonably be expected
to arise between the position of such Indemnified Party and the position of the
Indemnifying Party or any other Person, then the Indemnified Parties, as a
group, at the expense of the Indemnifying Parties, shall be entitled to separate
counsel reasonably acceptable to the Indemnifying Party to participate in such
proceeding. After notice from the Indemnifying Party to such Indemnified Party
of its election to assume the defense thereof, the Indemnifying Party shall not
be liable to such Indemnified Party under this ARTICLE 10 for any fees of other
counsel or any other expense, in each case subsequently incurred by such
Indemnified Party in connection with the defense thereof. If the Indemnifying
Party receives notice of any action or Third Party Claim, it shall promptly
notify the Indemnified Party as to whether, at its expense, it intends to
control the defense thereof on behalf of the Indemnified Party. If the
Indemnifying Party defends an action, it shall have full control over the
litigation, including settlement and compromise thereof, subject only to the
following: no compromise or settlement thereof may be effected by the
Indemnifying Party without the Indemnified Party's consent (which shall not be
unreasonably withheld) unless (i) there is no finding or admission of any
violation of law and no effect on any other claims that may be made against the
Indemnified Party, and (ii) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party. If notice is given to the
Indemnified Party, of the commencement of any action and it does not, within 20
days after the Indemnified Party's notice is given, give notice to the
Indemnified Party of its election to assume the defense thereof, the Indemnified
Party shall have full control over the litigation, including settlement and
compromise thereof.
10.4 LIMITATION AS TO TIME. An Indemnifying Party shall not be liable to
any Indemnified Party pursuant to this ARTICLE 10 unless a written claim for
indemnification in accordance with SECTION 10.3 is given by the Indemnified
Party to the Indemnifying Party with respect thereto on or before the second
anniversary of the Closing Date, except that this time limitation shall not
apply to any claims for fraud pursuant to SECTION 12.15.
Page 24
10.5 REDUCTION OF AMOUNTS PAYABLE. The amount of any Parent Indemnified
Costs or Seller Indemnified Costs shall be reduced by any amount received by
Parent or Seller, as the case may be, under any insurance policy or from any
other party alleged to be responsible therefor. Each of the Parent Indemnified
Parties and Seller Indemnified Parties shall use their reasonable best efforts
to collect any amounts available under such insurance policy or from such other
party. If a Parent Indemnified Party or Seller Indemnified Party receives any
amount under an insurance policy or from such other party with respect to any
time subsequent to any indemnification provided by pursuant to this Agreement,
then such party shall promptly reimburse the other party for any payment made or
expense incurred in connection with providing such indemnification, up to such
amount received.
ARTICLE 11
CONFIDENTIAL INFORMATION
11.1 CONFIDENTIAL INFORMATION. During the term of this Agreement, either
party may come into possession of the other party's Confidential Information.
For the purposes of this Agreement, "CONFIDENTIAL INFORMATION" means any
information that a party designates as confidential in writing or which the
receiving party knows or has reason to know is confidential. Without limiting
the foregoing, Confidential Information includes financial, business and
technical plans and strategies, inventions, new products or services,
technology, any know how and other trade secrets that Seller develops, related
to the Intellectual Property under this Agreement, and any passwords for
servers. Confidential Information does not include information which is: (a)
already known by the receiving party at time of disclosure; (b) or becomes,
through no act or fault of the receiving party, publicly known; (c) received by
the receiving party from a third party without a restriction on disclosure or
use; or (d) independently developed by the receiving party without reference to
the disclosing party's Confidential Information. The receiving party may
disclose Confidential Information to the extent required to be disclosed by a
court or governmental agency pursuant to a statute, regulation or valid order;
provided that the receiving party first notifies the disclosing party and gives
it the reasonable opportunity to seek a protective order or to contest such
required disclosure.
11.2 RESTRICTIONS. Each party will hold the disclosing party's Confidential
Information in confidence and will not use such information except as permitted
under this Agreement. Each party will use the same precautions to prevent
disclosure to third parties of such information as it uses with its own
confidential information, but in no case less than reasonable efforts.
11.3 ADDITIONAL OBLIGATIONS. The parties agree (i) not to alter or remove
any identification of any copyright, trademark or other proprietary rights
notice which indicates the ownership of any part of the Confidential
Information, and (ii) to notify the other party of the circumstances surrounding
any possession, use or knowledge of the Confidential Information by any person
or entity other than those authorized by this Agreement.
11.4 SURVIVAL. The confidentiality provision contained in this ARTICLE 11
shall survive for five (5) years following the Closing Date.
Page 25
ARTICLE 12
GENERAL PROVISIONS
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. Regardless of
any investigation at any time made by or on behalf of any party hereto or of any
information any party may have in respect thereof, each of the representations
and warranties made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing. Except as otherwise
provided in the next two sentences, the representations and warranties set forth
in this Agreement shall terminate on the two year anniversary of the Closing
Date, except that this time limitation shall not apply to any claims for fraud
pursuant to SECTION 12.15 which shall survive until the expiration of the
applicable statute of limitations. Following the date of termination of a
representation or warranty, no claim can be brought with respect to a breach of
such representation or warranty, but such termination shall not affect any claim
for a breach of a representation or warranty that was asserted in writing and in
reasonable detail before the date of termination. To the extent that such are
performable after the Closing, each of the covenants and agreements contained in
each of the Transaction Documents shall survive the Closing indefinitely.
12.2 AMENDMENT AND MODIFICATION. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.
12.3 WAIVER OF COMPLIANCE. Any failure of Parent or the Purchasers on the
one hand, or Seller, on the other hand, to comply with any obligation, covenant,
agreement, or condition contained herein may be waived only if set forth in an
instrument in writing signed by the party or parties to be bound thereby, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any other failure.
12.4 SPECIFIC PERFORMANCE. The parties recognize that should either party
refuse to perform under the provisions of this Agreement, monetary damages alone
will not be adequate. Therefore, the other party shall therefore be entitled, in
addition to any other remedies which may be available, including money damages,
to obtain specific performance of the terms of this Agreement. In the event of
any action to enforce this Agreement specifically, the refusing party hereby
waives the defense that there is an adequate remedy at law.
12.5 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of applicable law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated herein are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated herein are
consummated as originally contemplated to the fullest extent possible.
12.6 EXPENSES AND OBLIGATIONS. Except as otherwise expressly provided in
this Agreement or as provided by law, all costs and expenses incurred by the
parties hereto in connection with the consummation of the transactions
contemplated hereby shall be borne solely and entirely
Page 26
by the party which has incurred such expenses. In the event of a dispute between
the parties in connection with this Agreement and the transactions contemplated
hereby, each of the parties hereto hereby agrees that the prevailing party shall
be entitled to reimbursement by the other party of reasonable legal fees and
expenses incurred in connection with any action or proceeding.
12.7 SALES AND USE TAXES. Seller shall discharge, pay and satisfy any sales
and/or use taxes due or determined to be due to the State of New Jersey, and to
any political subdivision thereof, as a result of the transactions contemplated
hereby, except where (i) such taxes are due or determined to be due on account
of the Parent or Purchasers' failure to apply for and obtain an exemption under
the bulk sales provision of New Jersey law, and (ii) a use tax is imposed on
Parent or Purchasers as a result of its use of the Purchased Assets in the state
of New Jersey, and not as a result of the transactions contemplated hereby.
12.8 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their successors and assigns, and
nothing in this Agreement express or implied, is intended to confer upon any
other person (other than the Indemnified Parties as provided in ARTICLE 10) any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
12.9 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, mailed by registered
or certified mail (return receipt requested) or sent by facsimile transmission
(receipt of which is confirmed) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) If to Parent or any Purchaser, to
Valence Technology, Inc.
000 Xxxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx
Facsimile: (000) 000-0000
with copies to
Troop, Steuber, Pasich, Xxxxxxx & Xxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attention: C.N. Xxxxxxxx Xxxxxxx III
Facsimile: (000) 000-0000
(b) If to Seller, to
Telcordia Technologies, Inc.
000 Xxxxx Xxxxxx 0X000X
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Page 27
All notices, requests or instructions given in accordance herewith shall be
deemed given (i) on the date of delivery, if hand delivered, (ii) on the date of
receipt, if telecopied, (iii) three Business Days after the date of mailing, if
mailed by registered or certified mail, return receipt requested, and (iv) one
Business Day after the date of sending, if sent by Federal Express or other
recognized overnight courier. Any notice made by or given to Seller pursuant to
this SECTION 12.8 shall be deemed a notice made by or given to, as applicable,
all Seller hereunder.
12.10 COUNTERPARTS. This Agreement may be executed and delivered (including
by facsimile transmission) in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
12.11 ENTIRE AGREEMENT. This Agreement (which term shall be deemed to
include the exhibits and schedules hereto and the other certificates, documents
and instruments delivered hereunder) constitutes the entire agreement of the
parties hereto and supersedes all prior agreements, letters of intent and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. There are no representations or warranties, agreements,
or covenants other than those expressly set forth in this Agreement.
12.12 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the internal law of the State of Delaware (without reference to
its rules as to conflicts of law).
12.13 PUBLIC ANNOUNCEMENTS. Seller and Parent shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or the transactions contemplated hereby. Seller shall
not issue or cause the publication of any press release or other public
statement with respect to the execution of this Agreement until such time as
Parent has complied with all Applicable Laws regarding the public disclosure of
the execution of this Agreement.
12.14 ASSIGNMENT. Neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be assigned by any of the parties hereto, whether
by operation of law or otherwise. However, Seller shall be free to transfer the
Shares, subject to all Applicable Laws.
12.15 DIRECTOR, OFFICER, EMPLOYEE AND STOCKHOLDER LIABILITY. The directors,
officers, employees and stockholders of Parent and its Affiliates shall not have
any personal liability or obligation arising under this Agreement (including any
claims that Seller may assert) other than as an assignee of this Agreement.
12.16 NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of any party
under Article 11 shall be in addition to, and not exclusive of any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omissions. None of the provisions set forth in this
Agreement, including but not limited to the provisions set forth in SECTION 10.5
(relating to limitations on the period of time during which a claim for
indemnification may be brought), shall be deemed a waiver by any party to this
Agreement of any right or remedy which such party may have
Page 28
at law or equity based on any other party's fraudulent acts or omissions, nor
shall any such provisions limit, or be deemed to limit, (i) the amounts of
recovery sought or awarded in any such claim for fraud, (ii) the time period
during which a claim for fraud may be brought, or (iii) the recourse which any
such party may seek against another party with respect to a claim for fraud;
provided, that with respect to such rights and remedies at law or equity, the
parties further acknowledge and agree that none of the provisions of this
SECTION 12.15, nor any reference to this SECTION 12.15 throughout this
Agreement, shall be deemed a waiver of any defenses which may be available in
respect of actions or claims for fraud, including but not limited to, defenses
of statutes of limitations or limitations of damages.
Remainder of page intentionally left blank]
Page 29
IN WITNESS WHEREOF, Seller and Parent have caused this Agreement to be
signed as of the date first written above.
SELLER:
TELCORDIA TECHNOLOGIES, INC.
By: /S/ XXXX XXXX
------------------------------
Name: Xxxx Xxxx
Title: CVP and CFO
PARENT:
VALENCE TECHNOLOGY, INC.
By: /S/ XXX X. XXXXXX
------------------------------
Name: Xxx X. Xxxxxx
Title: CEO
THE PURCHASERS:
VALENCE TECHNOLOGY (NEVADA), INC.
By: /S/ XXX X. XXXXXX
------------------------------
Name: Xxx X. Xxxxxx
Title: CEO
VALENCE TECHNOLOGY CAYMAN ISLANDS LIMITED
By: /S/ XXX X. XXXXXX
------------------------------
Name: Xxx X. Xxxxxx
Title: CEO
Page 30
EXHIBIT INDEX
Exhibit A Xxxx of Sale and Assignment Agreement
Exhibit B License Agreement
Page 31
