EXECUTION COPY
ASSET PURCHASE AGREEMENT
BY AND AMONG
EEI ACQUISITION CO., LLC
ELECTRO ENERGY INC.
AND
LITHIUM NICKEL ASSET HOLDING COMPANY I, INC.
DATED AS OF
March 31, 2006
TABLE OF CONTENTS
ARTICLE I - PURCHASE AND SALE OF ACQUIRED ASSETS.............................1
1.1 Purchase and Sale of Assets..........................................1
1.2 Assumption of Liabilities............................................1
1.3 Purchase Price.......................................................2
1.4 Lock-Up..............................................................2
ARTICLE II - CLOSING.........................................................2
2.1 The Closing..........................................................2
2.2 Option to Close......................................................3
2.3 Deliveries by Seller.................................................3
2.3 Deliveries by Buyer..................................................3
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER.......................3
3.1 Organization.........................................................4
3.2 Authorization........................................................4
3.3 Execution; Validity of Agreement.....................................4
3.4 Consents and Approvals; No Violations................................4
3.5 No Undisclosed Liabilities...........................................5
3.6 Encumbrances.........................................................5
3.7 Absence of Certain Changes or Events.................................5
3.8 Brokers' and Finders' Fees...........................................5
3.9 Title to Property; Condition of Property; Absence of Liens...........5
3.10 Intellectual Property................................................5
3.11 Litigation...........................................................6
3.12 Material Contracts...................................................6
3.13 No Liquidation, Insolvency or Winding-Up.............................6
3.14 Bulk Transfer Laws...................................................7
3.15 Tax Returns and Audits...............................................7
3.16 Statutes; Court Orders...............................................7
3.17 Intentionally Omitted................................................7
3.18 Environmental Matters................................................7
3.19 Intentionally Omitted................................................8
3.20 Intentionally Omitted................................................8
3.21 Representations Complete.............................................8
3.22 Investment Intent....................................................8
3.23 Bankruptcy Case......................................................9
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER.........................9
4.1 Organization; Qualification of Buyer.................................9
4.2 Authorization........................................................9
4.3 Execution; Validity of Agreement.....................................9
4.4 Consents and Approvals; No Violations...............................10
4.5 Capitalization......................................................10
4.6 Electro Energy SEC Reports..........................................10
4.7 Brokers or Finders..................................................11
4.8 "AS IS" Transaction.................................................11
ARTICLE V - COVENANTS.......................................................12
5.1 Manager and Member Aproval..........................................12
5.2 Access to Information; Confidentiality..............................12
5.3 Regulatory Filings; Commercially Reasonable Efforts.................12
5.4 State Takeover Laws.................................................13
5.5 Third-Party Consents................................................13
5.6 Publicity...........................................................13
5.7 Ancillary Agreements................................................14
5.8 Subsequent Actions..................................................14
5.9 Notice of Certain Matters...........................................14
5.10 Transfer of Permits.................................................14
5.11 Facility Status.....................................................14
5.12 Easement............................................................14
5.13 Release.............................................................14
5.14 Bankruptcy Court Consent............................................14
5.15 Payment of Tax Liens................................................14
5.16 Environmental Clean-Up..............................................15
5.17 Evidence of Discharge...............................................15
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ARTICLE VI - INTENTIONALLY OMITTED..........................................15
ARTICLE VII - TERMINATION...................................................15
7.1 Termination.........................................................15
7.2 Effect of Termination...............................................15
ARTICLE VIII - INDEMNIFICATION..............................................15
8.1 Survival............................................................15
8.2 Indemnification.....................................................16
8.3 Limitations on Indemnification......................................16
8.4 Escrow Arrangements.................................................17
8.5 Indemnification Procedure...........................................17
8.6 Third Party Claims..................................................17
ARTICLE IX - DEFINITIONS AND INTERPRETATION.................................18
9.1 Definitions.........................................................18
9.2 Interpretation......................................................23
ARTICLE X - MISCELLANEOUS...................................................23
10.1 Fees and Expenses...................................................23
10.2 Amendment and Modification..........................................23
10.3 Notices.............................................................23
10.4 Counterparts........................................................24
10.5 Entire Agreement; No Third Party Beneficiaries......................24
10.6 Severability........................................................25
10.7 Governing Law.......................................................25
10.8 Venue...............................................................25
10.9 Extension; Waiver...................................................25
10.10 Assignment; Successors..............................................25
10.11 Survival............................................................25
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LIST OF EXHIBITS AND SCHEDULES
Seller Disclosure Schedules
---------------------------
Schedule I Acquired Assets
Schedule 3.13(a) Bankruptcy Orders
Schedules 3.15(a)-(g) Tax Audits
Schedule 3.18(a) Hazardous Materials Activities
Schedule 5.5 Third Party Consents
Schedule 5.10 Permits
Schedule 5.17 Liens and Encumbrances
Buyer Disclosure Schedules
--------------------------
Schedule 4.6 SEC Reports
Exhibits
--------
EXHIBIT A: Escrow Agreement
EXHIBIT B: Lease Agreements with Guaranty of Leases
EXHIBIT C-1: Purchase Warrant
EXHIBIT C-2: Lease Warrant
EXHIBIT D: Lock-Up Agreement
EXHIBIT E: Registration Rights Agreement
EXHIBIT F: Xxxx of Sale
EXHIBIT G: Bankruptcy Court Order
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of March 31, 2006 (this
"Agreement"), is entered into by and among EEI Acquisition Co., LLC, a Delaware
limited liability company or its wholly owned designated subsidiary ("Buyer"),
Electro Energy Inc., a Florida corporation ("Parent"), and Lithium Nickel Asset
Holding Company I, Inc., a Delaware corporation ("Seller"). CERTAIN CAPITALIZED
TERMS USED IN THIS AGREEMENT HAVE THE MEANINGS ASSIGNED TO THEM IN ARTICLE IX.
WHEREAS, Seller is the owner of certain assets and properties located in
Alachua County, Florida.
WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell
to Buyer the Acquired Assets (as defined herein) in consideration of the
Purchase Price and on the terms and conditions set forth herein and in the
Ancillary Agreements (the "Acquisition"); and
WHEREAS, as a further condition and inducement to Buyer to enter into this
Agreement and incur the obligations set forth herein, at the Closing, Buyer,
Seller and the Escrow Agent named therein shall enter into an escrow agreement
substantially in the form attached hereto as Exhibit A (the "Escrow Agreement"),
pursuant to which Buyer shall place a portion of the Purchase Price, equal to
the Escrow Amount, in an escrow account to secure the representations,
warranties, covenants and agreements of Seller herein and in the Lease Agreement
(as defined herein); and
WHEREAS, as a further condition and inducement to Buyer to enter into this
Agreement and incur the obligations set forth herein, at the Closing, Buyer and
Seller shall enter into several lease agreements, each substantially in the form
attached hereto as Exhibit B (collectively the "Lease Agreements"), pursuant to
which Buyer, or its designee, shall lease from Seller certain portions (the
"Leased Areas") of the Alachua Facility (as defined herein), together with an
option to purchase a portion of the same and certain related documents referred
to therein, including but not limited to the Guaranty of Leases by Parent, Lease
Escrow Agreement, Subordination, Non-Disturbance and Attornment Agreement (the
"SNDA", which shall be in a commercially standard form to be agreed upon by the
Buyer and Seller) and the Waste Treatment Facility Agreement (which shall be in
a form to be agreed upon by Buyer and Seller) (collectively, the "Real Property
Agreements"); and
WHEREAS, in connection with the Acquisition, Buyer on the one hand, and
Seller on the other hand, desire to make certain representations, warranties,
covenants and other agreements.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, and for
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS
1.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees at the Closing to sell, convey,
transfer and assign to Buyer, and Buyer hereby agrees to purchase from Seller,
all rights, title and interest in and to the Acquired Assets. The parties
acknowledge and agree that Buyer is not purchasing any other assets of Seller
whether located at the Alachua Facility or otherwise, all of which shall remain
the property of Seller.
1.2 ASSUMPTION OF LIABILITIES. Buyer does not hereby and shall not at
any time assume any liabilities or obligations of Seller of any nature
whatsoever except as may be specifically set forth herein (the "Excluded
Liabilities"). Without limiting the foregoing, Excluded Liabilities shall
include:
(a) any liability of Seller for Taxes, including, but not limited to,
all liabilities for or in respect of any Taxes for all periods ending on or
prior to the Closing Date;
(b) any liability for product liability claims arising from the
manufacture, sale, use or production of any Acquired Asset or other product or
service produced, imported, sold or provided by Seller or its Predecessors in
Interest prior to the Closing;
(c) any liability for infringement claims arising from any product or
service produced by or as a result of the use of the Acquired Assets prior to
the Closing;
(d) any liability of Seller or its Predecessors in Interest under this
Agreement or any other Ancillary Agreements;
(e) any liability for legal, accounting and audit fees and any other
expenses incurred by Seller or its Predecessors in Interest in connection with
this Agreement or any other Ancillary Agreements;
(f) any liability of Seller or its Predecessors in Interest relating
primarily or exclusively to any asset of Seller or its Affiliates other than the
Acquired Assets;
(g) all liabilities relating to the ownership or use of the Acquired
Assets or the Alachua Facility by any person or entity at or before the Closing;
(h) all liabilities relating to the tax collector of Alachua County (the
"Alachua County Tax Collector"), or to any Ad Valorem taxes for tax years prior
to calendar year 2006, or to the claims or rights of any holders of any tax
certificates issued for any tax year prior to calendar year 2006, or to any
obligation of any debtors or the Seller under any motion, order or approved
action within the Bankruptcy Case, including any payment or performance
obligation required to remove any liens or encumbrances on the Acquired Assets;
and
(i) any liabilities or legal responsibility whatsoever, express or implied,
to any Person or Governmental Authority, whether known or unknown, including but
not limited to statutory, regulatory, contract, consent or common law, of Seller
or its Predecessors in Interest, regarding the Property, Acquired Assets or the
Alachua Facility including response action, as a Potentially Responsible Party,
for an actual or threatened release of a hazardous material or any other
Pre-Existing Environmental Conditions in existence prior to the Closing Date.
1.3 PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, in consideration of the sale, assignment, transfer and conveyance
to Buyer of the Acquired Assets, at the Closing,
(a) The Parent shall issue to Seller Five Million Seven Hundred
Fifty Thousand (5,750,000) unregistered shares (the "Stock Consideration")
of its common voting stock, par value $.001 per share (the "Electro Energy
Common Stock") subject to the registration rights referenced in Section
1.5 herein, less the Escrow Amount which shall be held in an escrow
account to secure the representations, warranties, covenants and
agreements of Seller herein and in the Lease Agreements, in each case, in
accordance with the Escrow Agreement; and
(b) The Parent shall issue to Seller, substantially in the form
attached hereto as Exhibit C-1, a six-year warrant to purchase Two Million
(2,000,000) unregistered shares of Electro Energy Common Stock at an
exercise price of seven dollars ($7.00) per share, subject to the vesting
schedule set forth therein (the "Purchase Warrant"). The Purchase Warrant
shall be issued in the form of two warrant instruments: one for 1,500,000
shares and the other for 500,000 shares, the latter representing the
"Relinquished Warrant" as defined in subparagraph 1.5(b)(iii) below and
shall bear a legend referring to the terms of that subparagraph.
(c) The Parent shall issue to Seller, in connection with the Lease
Agreements, a four-year warrant to purchase One Million (1,000,000)
unregistered shares of Electro Energy Common Stock at an exercise price of
seven dollars ($7.00) per share (the "Lease Warrant" and, together with
Purchase Warrant, the "Warrants"). The Warrants and the Stock
Consideration are collectively referred to as the "Purchase Price").
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1.4 LOCK-UP. The Stock Consideration (other than the Registrable Shares
(as defined in Section 1.5(b) below) shall be subject to a lock-up agreement
(the "Lock-Up Agreement") substantially in the form attached hereto as EXHIBIT
D.
1.5 REGISTRATION RIGHTS.
(a) INITIAL REGISTRATION. In connection with the Financing,
and the registration of shares of common stock of the Company which
is to occur in connection therewith, Seven Hundred Fifty Thousand
(750,000) shares of the Stock Consideration are to be included in
the related registration statement (the "Financing Registration
Statement") in accordance with the Registration Rights Agreement
substantially in the form attached hereto as Exhibit E (the
"Registration Rights Agreement").
(b) Subsequent Registration. In connection with the filing of
a registration statement after Closing (other than the Financing
Registration Statement) (the "Subsequent Registration Statement")
and in accordance with the Registration Rights Agreement,
(i) Parent shall notify Seller, in writing, no later
than 30 days prior to its filing with the
Securities and Exchange Commission (the "SEC") of
the Subsequent Registration Statement (the "Filing
Date");
(ii) in the event that the Filing Date is more than one
year after the date of the Closing, the Seller may
elect, by sending written notice to the Parent
within 10 business days after the date on which
the Company's notice is so given, that the
Subsequent Registrable Shares are not to be
included in the Subsequent Registration Statement,
(iii) in the event that (A) the Filing Date is less than
one year after the date of the Closing; or (B)
Seller fails to provide timely notice in
accordance with Section 1.5(b)(ii) above, then:
(1) Parent shall include Four Hundred Thousand
(400,000) shares of the Stock Consideration (the
"Subsequent Registrable Shares")in the Subsequent
Registration Statement; and (2) Five Hundred
Thousand (500,000) of the Purchase Warrants (the
"Relinquished Warrants") shall immediately become
cancelled, null, void and of no further effect and
Seller shall immediately relinquish and tender to
Parent such warrant instrument or instruments
evidencing Seller's former ownership of the
Relinquished Warrants ;
The aggregate 1,150,000 shares of the Stock Consideration which are
the subject of this Section 1.5(a) and (b) shall be referred to as
the "Registrable Shares")
ARTICLE II
CLOSING
2.1 THE CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement (the "Transactions") shall take place at: (a) the
offices of Lev & Berlin, P.C., 000 Xxxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx,
Xxxxxxxxxxx at 9:30 a.m., Eastern time, on or about April 5, 2006; or (b) in the
event the parties are unable to close upon such date after Buyer, Parent and
Seller have used commercially reasonable best efforts to do so, at such time,
place and later date that the parties shall mutually agree upon after good faith
negotiations (the "Closing Date").
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2.2 OPTION TO CLOSE. Notwithstanding anything to the contrary contained
herein, on or prior to the Termination Date, the Buyer and Parent shall have the
option, in their sole discretion, by giving Seller two (2) business day's notice
thereof, to proceed with the Closing in accordance with the terms of this
Agreement by giving written notice to Seller of their intention to proceed with
the Closing. Upon receiving such notice, Seller shall be obligated to proceed
with the Closing in accordance with the terms of this Agreement; provided that
(i) it shall be a condition to Seller's obligation to proceed with the Closing
that Buyer shall have obtained financing on terms acceptable to Buyer in its
sole discretion in the aggregate amount of approximately Ten to Eleven Million
Dollars ($10,000,000 to 11,000,000) or such other higher amount as determined by
the Buyer in its sole discretion (the "Financing") and (ii) it shall be
conditions of Buyer and Parent's obligation to close that (a) there shall have
been no material adverse change with respect to the quality, condition or repair
of the Acquired Assets or the Alachua Facility between the time of Buyer's
walk-through inspection of same pursuant to section 3.9 below and the Closing
and (b) all of Seller's representations, warranties and covenants set forth
herein shall be true and accurate in all material respects. Buyer and Parent
shall have no obligation to exercise their option rights under this Section 2.2.
The option referred to in this Section 2.2 and this Agreement shall
automatically terminate on the Termination Date, and thereafter there shall be
no liability or obligation hereunder on the part of any party.
2.3 DELIVERIES BY SELLER. At the Closing, Seller shall deliver, or cause
to be delivered, to Buyer at Seller's sole cost, in the manner and form and to
the locations reasonably specified by Buyer:
(a) The Acquired Assets;
(b) A duly executed xxxx of sale substantially in the form
attached hereto as Exhibit F (the "Xxxx of Sale");
(c) Duly executed assignments/sublicenses of the Transferred
Intellectual Property Rights, and the Energizer Release;
(d) (i) an incumbency certificate for the officers of Seller
executing this Agreement and other documents to be delivered to Buyer pursuant
to the terms hereof; (ii) the Certificate of Incorporation of Seller, as
certified by the Secretary of State of the State of Delaware and by the
Secretary of Seller as being true and complete as of the Closing Date; (iii)
Seller's Bylaws certified by the authorized Officer of Seller as being true and
complete as of the Closing Date; and (iv) a copy of the resolutions of Seller's
Board of Directors certified by an authorized Officer of Seller as of the
Closing Date authorizing the execution, delivery and performance of this
Agreement and the consummation the Transactions;
(e) Executed copies of each of the Ancillary Agreements;
(f) The opinion of Seller's counsel as to corporate and
commercial matters reasonably requested by Buyer;
(g) The opinion of Seller's counsel with respect to bankruptcy
matters reasonably requested by Buyer; and
(h) Such other duly executed, good and sufficient instruments
of sale, conveyance, assignment or transfer, in form and substance reasonably
acceptable to Buyer's counsel, executed by Seller, reasonably necessary so as to
vest in Buyer good and valid title in and to the Acquired Assets (including,
with respect to any Acquired Assets located or to be located in any
jurisdiction, one or more bills of sale or similar conveyance documents as may
be required under the law of the applicable jurisdiction to validly convey,
assign and transfer to Buyer good and valid title to such Acquired Assets).
2.4 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver to Seller,
or cause to be delivered, to Seller at Buyer's sole cost, in the manner and form
reasonably specified by Seller, the following:
(a) The Purchase Price less the Escrow Amount;
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(b) (i) an incumbency certificate authorizing Buyer's Managing Member to
execute this Agreement and other documents to be delivered to Seller pursuant to
the terms hereof; and (ii) a copy of the resolutions of Buyer's Managing Member
certified by Buyer's Managing Member as of the Closing Date authorizing the
execution, delivery and performance of this Agreement and the consummation of
the Transactions;
(c) A certificate of the secretary of Parent dated as of the Closing
Date certifying copies of the resolutions of (i) Parent's Board of Directors
authorizing the execution, delivery and performance of this Agreement and the
related documents; and (ii) Parent's Board of Directors and Shareholders
authorizing the issuance of the Purchase Price;
(d) The opinion of Buyer's and Parent's counsel as to corporate and
commercial matters reasonably requested by Seller; and
(e) Executed copies of each of the Ancillary Agreements.
2.5 DELIVERIES BY PARENT. Executed copies of each of the Ancillary
Agreements to be executed by Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 ORGANIZATION. Seller is a corporation duly formed, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate or other power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted. Seller has obtained a Certificate of Authority to do
business in the state of Florida.
3.2 AUTHORIZATION. Seller has all requisite power and authority to
execute and deliver this Agreement and the Ancillary Agreements and to
consummate the Transactions. The execution, delivery and performance by Seller
of this Agreement and the consummation of the Transactions by Seller have been
duly authorized by the Board of Directors and stockholders of Seller in
accordance with the laws of the state of Delaware and Seller's Certificate of
Incorporation and Bylaws. No other corporate or similar action on the part of
Seller is necessary to authorize the execution and delivery of this Agreement
and the Ancillary Agreements to be executed by Seller or the consummation by
Seller of any of the Transactions.
3.3 EXECUTION; VALIDITY OF AGREEMENT. This Agreement has been duly
executed and delivered by Seller and, assuming due and valid authorization,
execution and delivery hereof by Buyer, is a valid and binding obligation of
Seller, enforceable against it in accordance with its terms except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws of general application affecting
enforcement of creditors' rights generally and (b) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of a
court before which any proceeding therefor may be brought.
3.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) At or before Closing (except for the regulatory filings that cannot
be accomplished prior to closing), all governmental authorizations and approvals
as may be specifically required hereunder, including without limitation those
set forth on Schedule 5.5 attached hereto, shall have been obtained, and any
other applicable requirements of the Securities Act, the Exchange Act, the HSR
Act, applicable foreign antitrust Laws and state securities laws shall have been
complied with; and
(b) None of the execution, delivery or performance of this Agreement or
the Ancillary Agreements by Seller, the consummation by Seller of the
Transactions or compliance by Seller with any of the provisions hereof shall:
(w) conflict with or result in any breach of any provision of Seller's
Certificate of Incorporation or Bylaws as presently in effect; (x) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity including but not limited to those governmental authorities exercising
jurisdiction over the permits, licenses and authorizations set forth in Schedule
5.10; (y) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any material contract of Seller or Seller's Predecessors in
Interest; or (z) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Seller or Seller's Predecessors in Interest.
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3.5 NO UNDISCLOSED LIABILITIES. Except as otherwise specifically set
forth in this Agreement, there are no liabilities or obligations with respect to
the Alachua Facility or the Acquired Assets, individually or in the aggregate,
that would be required to be disclosed in a consolidated balance sheet of Seller
(including the related notes thereto, where appropriate) prepared in accordance
with GAAP.
3.6 ENCUMBRANCES. Except as set forth on Schedule 3.6 or in the
Bankruptcy Court Order, there are no Liens or Encumbrances on the Acquired
Assets and, as of the Closing, Seller will have good and marketable title to the
Acquired Assets, free and clear of all Liens and Encumbrances.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since May 13, 2005 (the "LOI
Date"), there has not been, occurred or arisen any:
(a) transaction by Seller or the Predecessors in Interest related to the
Acquired Assets except: (i) in the maintenance of the Alachua Facility or the
Acquired Assets as conducted prior to that date and consistent with past
practices; and (ii) in connection with the Bankruptcy Case as necessary and
appropriate to consummate the Transactions in accordance with the terms and
conditions of this Agreement; and
(b) (i) sale, license or transfer of any Intellectual Property Rights of
Seller or the Predecessors in Interest related to the Acquired Assets or
entering into any agreement with respect to any Intellectual Property Rights of
Seller or any of its Subsidiaries related to the Acquired Assets with any
Person, (ii) purchase or license of any Intellectual Property Rights or entering
into any agreement with respect to the Intellectual Property Rights of any
Person related to the Acquired Assets, or (iii) entering into any agreement with
respect to the development of any Intellectual Property Rights with a third
party related to the Acquired Assets.
3.8 BROKERS' AND FINDERS' FEES. Neither Seller nor the Predecessors in
Interest nor any of their Affiliates has or has created or incurred any
liability or obligation to pay any fees, commissions or other compensation to
any broker, agent or finder with respect to the Transactions.
3.9 ACQUIRED ASSETS.
(a) As of Closing, Seller will have good and valid title to the Acquired
Assets, free and clear of any Liens or Encumbrances. The Seller represents that,
without any independent inquiry or warranty as to their condition, it has no
actual knowledge of any material adverse change in the condition or repair of
the Acquired Assets (other than normal wear and tear) since August 1, 2005.
Seller represents that prior to the Closing it will use commercially reasonable
efforts consistent with its past practices to protect the Acquired Assets from
theft and damage. Prior to Closing, Seller will permit Buyer to inspect the
Alachua Facility and the Acquired Assets to determine whether they are, in
Buyer's sole discretion, in acceptable condition and repair.
(b) Schedule I hereof sets forth a list of the Acquired Assets,
including without limitation the Transferred Intellectual Property Rights.
(c) There are no Operating Agreements to which any of the Acquired
Assets or the Alachua Facility is subject.
(d) Seller has not received notice of any condemnation proceedings
or eminent domain proceedings of any kind pending against the Acquired Assets or
the Alachua Facility or any portion thereof.
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(e) Seller has not received any notice alleging that the improvements
comprising part of the Alachua Facility violate: (i) any applicable deed
restrictions or applicable covenants, restrictions or other similar agreements;
(ii) any existing site plan approvals, zoning or subdivision regulations; (iii)
any urban redevelopment plans, as modified by any duly issued variances; or (iv)
any land use permits.
(f) Since November 3, 2005, the date of the Phase II Environmental Site
Assessment conducted by Dynamic Environmental Associates, Inc., Seller has not
received any notice alleging that the improvements comprising part of the
Alachua Facility violate any Law or Environmental Law.
3.10 INTELLECTUAL PROPERTY.
(a) The "Transferred Intellectual Property Rights" shall consist of
Seller's rights with respect to technology relating to manufacture of those
certain battery products known and designated as "18650" lithium-ion cells (the
"18650 Li-Ion Cells"). As of Closing, Seller shall have delivered a general
release from Energizer Corporation pursuant to which Energizer shall release
Buyer from any claims by Energizer Corporation or its successors and assigns
claiming infringement or improper use of any technology, software or other
Intellectual Property in connection with the use of the Acquired Assets,
including without limitation use of the 18650 Li-Ion Cell (the "Energizer
Release"). There are no proceedings or actions known to Seller, its Predecessors
in Interest or any of their Subsidiaries before any court, tribunal (including
the PTO or equivalent authority anywhere in the world) related to any such
Transferred Intellectual Property Rights. Neither Seller nor any of its
Subsidiaries have any knowledge of any facts or circumstances that would render
any Transferred Intellectual Property Rights invalid or unenforceable (it being
understood that no representation is made regarding whether or not such
Transferred Intellectual Property Rights could have been claimed or asserted in
a more expansive manner than has been done).
(b) At Closing, Seller will transfer all of its right title and interest
(if any) in and to any Intellectual Property needed to use and/or operate the
Acquired Assets.
(c) To the extent that any Transferred Intellectual Property Rights were
originally owned, invented or created by or for any third party, including any
Predecessor in Interest or any of its Subsidiaries (other than Energizer with
respect to the manufacture of 18650 Li-Ion Cells): (i) Seller has a written
agreement with such third party or parties with respect thereto, pursuant to
which Seller has obtained complete, unencumbered and unrestricted ownership and
is the exclusive owner of, all such Transferred Intellectual Property Rights by
valid assignment or otherwise; (ii) the transfers from Seller to Buyer hereunder
do not violate such third party agreements; (iii) such third parties have not
retained and do not have any rights or licenses with respect to the Transferred
Intellectual Property Rights; and (iv) no basis exists for such third party to
challenge or object to this Agreement or the Transactions.
3.11 LITIGATION. Except for the Bankruptcy Case or actions preceding the
Bankruptcy Case, there is no action, suit or proceeding of any nature pending,
or to Seller's knowledge threatened, by or against Seller or the Predecessors in
Interest with respect to or involving the Acquired Assets, the Alachua Facility
or the Transactions. There is no investigation by a Governmental Entity pending,
or to Seller's knowledge, threatened, by or against Seller or the Predecessors
in Interest with respect to or involving the Alachua Facility or the Acquired
Assets. No Governmental Entity has provided Seller or the Predecessors in
Interest with notice challenging or questioning the legal right of Seller or the
Predecessors in Interest to use or operate the Acquired Assets, to use, occupy
or lease the Alachua Facility or to consummate the Transactions.
3.12 MATERIAL CONTRACTS. Except as otherwise set forth in Section 5.10
below, there are no material contracts, agreements, licenses, Environmental
Permits or Governmental Authorizations in effect affecting or relating to the
use, operation or disposition of the Acquired Assets or the Alachua Facility.
3.13 NO LIQUIDATION, INSOLVENCY OR WINDING-UP.
(a) As of Closing, and except (i) in connection with the Bankruptcy Case
and (ii) as set forth on Schedule 3.13(a), no order will have been made,
petition presented or resolution passed for the winding-up or liquidation of
Seller and there will not be outstanding any:
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(A) Appointment of a receiver over the whole or part of the assets
of Seller;
(B) Voluntary arrangement between Seller and any of its creditors
under any bankruptcy, insolvency or similar law; or
(C) Distress or execution or other process levied in respect of
Seller or any of the Predecessors in Interest that remains undischarged.
(b) Other than in connection with the Bankruptcy Case, as of Closing, to
Seller's knowledge, there will be no circumstances that would entitle any Person
to present a petition for the winding-up or administration of Seller or to
appoint a receiver over the whole or any part of the undertaking or assets of
Seller.
3.14 BULK TRANSFER LAWS. Other than in connection with the Bankruptcy
Case, as of the Closing, there will be no current or past creditors of Seller or
any of the Predecessors in Interest to whom any law, rule or regulation requires
the delivery of notice or from whom any form of consent is required in
conjunction with undertaking the Transactions.
3.15 TAX RETURNS AND AUDITS.
(a) Except as disclosed on Schedule 3.15(a), as of the Closing Date,
Seller and its Affiliates have paid all Taxes they are required to pay, if any,
in respect of the Acquired Assets or the Alachua Facility.
(b) Except as disclosed on Schedule 3.15(b), no audit or other
examination of any Tax Return of Seller or any of the Predecessors in Interest
is in progress, nor has Seller or any of the Predecessors in Interest been
notified of any request for such an audit or other examination.
(c) Except as disclosed on Schedule 3.15(c), neither Seller nor any of
the Predecessors in Interest has or knows of any basis for the assertion of any
claim for any liabilities for unpaid Taxes for which Buyer would become liable
as a result of the Transactions.
(d) Except as disclosed on Schedule 3.15(d), there are (and immediately
following the Closing there will be) no Liens or Encumbrances on any of the
Acquired Assets relating to or attributable to Taxes.
(e) Except as disclosed on Schedule 3.15(e), neither Seller nor any of
the Predecessors in Interest knows of any basis for the assertion of any claim
relating or attributable to Taxes that, if adversely determined, would result in
any Lien on any of the Acquired Assets.
3.16 STATUTES; COURT ORDERS. As of the date hereof there are and as of
the Closing there will be no (i) order or injunction of a court of competent
jurisdiction in effect precluding the consummation of the Transactions; and (ii)
pending suit, action or proceeding by any Governmental Entity seeking to
restrain or prohibit the consummation of the Transactions.
3.17 INTENTIONALLY OMITTED.
3.18 ENVIRONMENTAL MATTERS.
(a) ENVIRONMENTAL LIABILITIES. Except as set forth in Schedule 3.18(a),
no action, proceeding, revocation, amendment procedure, writ, injunction or
claim is pending, or to the knowledge of Seller, threatened, concerning any
Environmental Permit, Hazardous Material or any activity or conduct now or
previously occurring that would give rise to the Release of any Hazardous
Materials ("Hazardous Materials Activity") of Seller or any of the Predecessors
in Interest. Seller has no knowledge of any fact or circumstance that could
involve Seller or the Predecessors in Interest in any environmental litigation
or impose upon Seller or any of the Predecessors in Interest any environmental
liability, except as set forth in Schedule 3.18(a).
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(b) Seller acknowledges and agrees that, except as otherwise
specifically set forth herein, it has the sole and exclusive liability and
responsibility to implement, maintain, and complete any and all environmental
assessments, remediation, removal, decontamination and clean up to the
satisfaction of any and all Government Entities having jurisdiction and/or
authority over such matters and in strict compliance with Environmental Law for
all environmental conditions relating to a Release, a Hazardous Materials
Activity or any violation of Environmental Law that (i) occurred or existed
prior to the Closing Date , including without limitation all conditions, facts
and circumstances described and disclosed in sections 3.18 (a) and the Schedule
referred to therein; and (ii) any Release, Hazardous Materials, Hazardous
Materials Activity or any violation of Environmental Laws or any Environmental
Claim that occurs or arises after the Closing Date as a result of or in
connection with the clean-up, remediation, removal or decontamination of any
such pre-existing environmental condition, regardless of whether such are known
or unknown, or are, have been or will be the subject of any Environmental Claim
associated with the Acquired Assets, the Leased Areas and the Alachua Facility
as of the Closing Date (collectively, "Pre-Existing Environmental Conditions").
Seller shall notify all Government Entities of the Closing of the Transactions
to the extent necessary and appropriate to comply with Environmental Law, and,
if required by applicable Environmental Law, such notification shall include a
provision that Seller shall remain solely and exclusively responsible for all
duties and obligations under any and all consent orders and consent decrees, and
applicable law, as they relate to Pre-Existing Environmental Conditions. Seller
acknowledges that Buyer is not acquiring or assuming in any manner any of the
legal liability or responsibility for Pre-Existing Environmental Conditions.
Seller hereby acknowledges and warrants its continuing obligation after Closing
to satisfy its legal obligations for Pre-Existing Environmental Conditions.
3.19 INTENTIONALLY OMITTED.
3.20 INTENTIONALLY OMITTED.
3.21 REPRESENTATIONS COMPLETE. None of the representations or warranties
made by Seller on behalf of itself or any of the Predecessors in Interest (as
modified by the Schedules hereto), nor any statement made in any Schedule,
certificate or instrument furnished by Seller pursuant to this Agreement
contains any untrue statement of a material fact, or omits to state any material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which made, not misleading.
3.22 INVESTMENT INTENT. Seller understands that the shares of Electro
Energy Common Stock it will receive pursuant to the terms of this Agreement and
which are issuable upon the exercise of the Warrants have not been registered
under the Securities Act. Seller also understands that these shares are being
offered and sold pursuant to an exemption from registration under the Securities
Act based in part upon Seller's representations contained in the Agreement.
Seller hereby represents and warrants as follows:
(a) ACQUISITION FOR OWN ACCOUNT. Seller is acquiring the shares of
Electro Energy Common Stock for Seller's own account for investment only, and
not with a view towards their distribution other than pursuant to an effective
registration statement or a valid exemption from registration under the
Securities Act.
(b) SELLER CAN PROTECT ITS INTEREST. Seller represents that by reason of
its, or of its management's, business or financial experience, Seller has the
capacity to protect its own interests in connection with the Transactions.
(c) BUYER INFORMATION. Seller has had an opportunity to discuss Electro
Energy's business, management and financial affairs with directors, officers and
management of Electro Energy and has had the opportunity to review Electro
Energy's operations and facilities. Seller has also had the opportunity to ask
questions of and receive answers from Electro Energy and its management
regarding the terms and conditions of this investment.
(d) LEGENDS. To the extent applicable, each certificate or other
document evidencing any of the shares of Electro Energy Common Stock delivered
pursuant to the terms of this Agreement shall be endorsed with the legends
substantially in the form set forth below:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD,
DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FILED BY THE ISSUER WITH THE SECURITIES AND EXCHANGE
COMMISSION COVERING SUCH SECURITIES UNDER THE SECURITIES
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH REGISTRATION IS NOT REQUIRED."
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THE SALE, TRANSFER, ASSIGNMENT, EXCHANGE, PLEDGE OR GRANT
OF A SECURITY INTEREST IN ALL OR ANY OF THE SHARES
EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO A LOCK-UP
AGREEMENT, DATED ON OR ABOUT April 5, 2006, BY AND BETWEEN
THE ISSUER AND THE HOLDER OF THIS CERTIFICATE. A COPY OF
SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE
ISSUER. SUCH AGREEMENT PROVIDES FOR CERTAIN RESTRICTIONS
AS TO THE OWNERSHIP AND TRANSFER OF THE SHARES EVIDENCED
BY THIS CERTIFICATE. BY ACCEPTING THIS CERTIFICATE, THE
HOLDER AGREES TO BE BOUND BY SAID AGREEMENT.
3.23 BANKRUPTCY CASE. The Seller has taken all actions and completed and
satisfied all requirements in and with respect to the Bankruptcy Case necessary
and appropriate to consummate the Transactions in accordance with the terms and
conditions of this Agreement. None of the duties, obligations, covenants,
representations or warranties of the parties hereto will conflict with, violate,
breach or contravene any order, ruling, judgment or other requirement of the
Bankruptcy Case or any Law affecting or relating to the Bankruptcy Case.
Pursuant to the Bankruptcy Court Order, the Bankruptcy Court has fully
authorized the consummation of the Transactions in accordance with the terms and
conditions of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
4.1 ORGANIZATION; QUALIFICATION OF BUYER AND ELECTRO ENERGY. (i) Buyer
hereby represents and warrants to Seller that Buyer is a limited liability
company duly formed, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted. (ii) Parent hereby
represents and warrants to Seller that Parent is a corporation duly formed,
validly existing and in good standing under the laws of the State of Florida and
has all requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted.
4.2 AUTHORIZATION. (i) Buyer hereby represents and warrants to Seller as
follows: Buyer has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution,
delivery and performance by Buyer of this Agreement and the consummation of the
Transactions by Buyer have been duly authorized by Buyer's Managers and no other
limited liability company action on the part of Buyer is necessary to authorize
the execution and delivery of this Agreement and the Ancillary Agreements by
Buyer or the consummation by Buyer of any of the Transactions. (ii) Parent
hereby represents and warrants to Seller as follows: Parent has all requisite
corporate power and authority to execute and deliver this Agreement, deliver the
Purchase Price, and take all other actions necessary to permit the Buyer to
consummate the Transactions. The delivery of the Purchase Price has been duly
authorized by Parent's Stockholders and Board of Directors and no other
corporate action on the part of Parent is necessary to authorize the delivery of
the Purchase Price or any other action required of Parent hereunder necessary to
permit Buyer to consummate any of the Transactions.
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4.3 EXECUTION; VALIDITY OF AGREEMENT. Buyer and Parent hereby represents
and warrants to Seller as follows: this Agreement has been duly executed and
delivered by Buyer and Parent and, assuming due and valid authorization,
execution and delivery hereof by Seller, is a valid and binding obligation of
Buyer and Parent, enforceable against Buyer and Parent in accordance with its
terms except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors' rights generally and (b)
the availability of the remedy of specific performance or injunctive or other
forms of equitable relief may be subject to equitable defenses and would be
subject to the discretion of the court before which any proceeding therefor may
be brought.
4.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Buyer hereby represents and
warrants to Seller as follows: Except for (a) the filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, the HSR Act,
and applicable foreign antitrust laws and state securities laws and (b) in the
case of (y) below, except as would not have a Buyer Material Adverse Effect,
none of the execution, delivery or performance of this Agreement by Buyer, the
consummation by Buyer of the Transactions or compliance by Buyer with any of the
provisions hereof shall: (w) conflict with or result in any breach of any
provision of the Certificate of Formation and Operating Agreement of Buyer, each
as presently in effect; (x) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity; (y) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any material contract of
Buyer; or (z) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer. Parent hereby represents and warrants to Seller
as follows, except for the filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of, the
Securities Act, the Exchange Act, the HSR Act, and applicable foreign antitrust
laws and state securities laws, none of the delivery of the Purchase Price nor
the performance of any other action necessary to permit the Buyer to consummate
the Transactions shall: (w) conflict with or result in any breach of any
provision of the Certificate of Incorporation and By-Laws of Parent, each as
presently in effect; (x) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity; (y) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any material contract of
Parent; or (z) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent.
4.5 CAPITALIZATION.
(a) Buyer and Parent, jointly and severally, hereby represent and
warrant to Seller as follows: As of the date hereof, the authorized and issued
membership interests in Buyer consist of 100 Units of membership interests.
Parent owns one hundred percent (100%) of the issued and outstanding membership
interests of the Buyer. There are no outstanding Buyer options, warrants or
other membership interest equivalents. There are no other classes of membership
interests of Buyer authorized.
(b) Buyer and Parent, jointly and severally, hereby represent and
warrant to Seller as follows: As of the date hereof, the authorized capital
stock of Parent consists of (i) 50,000,000 shares of Electro Energy Common
Stock, of which 16,683,431 shares are issued and outstanding; and (ii) 10,000
shares of preferred stock, par value $.001 per share, 5,600 of which have been
designated Series A Convertible Preferred Stock, of which 197 are issued and
outstanding. No shares are held in treasury. As of the date hereof,
approximately 3,000,000 shares of Electro Energy Common Stock are reserved for
issuance upon the exercise of options outstanding under Parent's stock incentive
plans. As of the date hereof, approximately 1,678,590 shares of Electro Energy
Common Stock are reserved for issuance upon the exercise of warrants. All the
outstanding shares of Electro Energy Common Stock are duly authorized, validly
issued, fully paid and non-assessable.
4.6 PARENT SEC REPORTS. Buyer and Parent, jointly and severally, hereby
represent and warrant to Seller as follows: Except as otherwise set forth in
Schedule 4.6 hereof, Parent has filed all required forms, reports, schedules,
statements and other documents (including exhibits and other information
incorporated therein) with the SEC since June 9, 2004 through the date hereof
(collectively, the "Electro Energy SEC Reports"). As of their respective dates,
or, if amended, as of the date of the last such amendment, each Electro Energy
SEC Report, (a) complied in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder applicable to such Electro Energy SEC Reports and (b) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets included in or incorporated
by reference into the Electro Energy SEC Reports (including the related notes
and schedules) fairly presents in all material respects the consolidated
financial position of Parent and its Subsidiaries as of its date, and each of
the consolidated statements of operations, stockholders' equity and cash flows
included in or incorporated by reference into the Electro Energy SEC Reports
(including any related notes and schedules) fairly presents in all material
respects the financial position, results of operations and cash flows, as the
case may be, of Parent and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and the absence of footnotes), in each case in accordance with GAAP
consistently applied during the periods involved, except as may be noted
therein. There is no investigation by the SEC threatened or pending, or, to the
knowledge of the Buyer, contemplated with respect to any Electro Energy SEC
Reports, including, without limitation, revenue recognition thereunder or any of
Parent's officers, directors or principal stockholders.
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4.7 BROKERS OR FINDERS. Buyer and Parent, jointly and severally, hereby
represent and warrant to Seller as follows: neither Buyer nor Parent nor any of
its Subsidiaries has entered into any contract entitling any agent, broker,
investment banker, financial advisor or other firm or Person to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the Transactions.
4.8 "AS IS" TRANSACTION. The Buyer hereby acknowledges and agrees that,
except as otherwise expressly provided in this Agreement, Seller makes no
representations or warranties whatsoever, express or implied, with respect to
any matter relating to the Acquired Assets or any business related thereto
including, without limitation, income to be derived or expenses to be incurred
in connection with the Acquired Assets, the physical condition of any personal
property comprising a part of the Acquired Assets, the value or transferability
of the Acquired Assets (or any portion thereof), the merchantability or fitness
of the Acquired Assets (or any portion thereof) for any particular purpose or
any other matter. Without in any way limiting the foregoing, Seller hereby
disclaims any warranty (express or implied) of merchantability or fitness for
any particular purpose as to any portion of the Acquired Assets. The Buyer
further acknowledges that it has conducted an independent inspection and
investigation of the physical condition of the Acquired Assets and all such
other matters relating to or affecting the Acquired Assets as the Buyer deemed
necessary or appropriate and that in proceeding with its acquisition of the
Acquired Assets, the Buyer is doing so based solely upon such independent
inspections and investigations, subject to final inspection of the Acquired
Assets prior to closing as set forth in paragraph 3.9(a) and the
representations, warranties and covenants of the Seller expressly set forth
herein . Accordingly, if the Closing occurs, the Buyer will accept the Acquired
Assets at the Closing "AS IS," "WHERE IS," and "WITH ALL FAULTS", subject only
to the representations, warranties and covenants of the Seller expressly set
forth herein.
Notwithstanding the foregoing,
(a) neither Seller nor any of its Affiliates shall voluntarily take, or
agree to or commit to take, any action that would materially impair the ability
of the parties hereto to consummate the Transactions in accordance with the
terms hereof or materially delay such consummation;
(b) neither Seller nor any of its Affiliates shall sell, lease, license,
mortgage or otherwise encumber or dispose of the Acquired Assets or any
properties or assets which are material, individually or in the aggregate, to
the use of the Alachua Facility;
(c) neither Seller nor any of its Affiliates shall subject itself, or
Buyer, to any material agreement, contract, obligation or understanding with
respect to the Acquired Assets or the Alachua Facility;
(d) neither Seller nor any of its Affiliates shall enter into any
contract the effect of which would be to grant to a third party following the
Closing Date any actual or potential right or license in or to any of the
Transferred Intellectual Property;
(e) neither Seller nor any of its Affiliates shall grant any rights with
respect to any of the Transferred Intellectual Property or Intellectual Property
necessary to use the Acquired Assets; and
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(f) neither Seller nor any of its Affiliates shall enter into any
contract, agreement, obligation, understanding or commitment to do any of the
foregoing.
ARTICLE V
COVENANTS
5.1 STOCKHOLDER AND DIRECTOR APPROVAL. At or prior to Closing, any and
all consents or approvals of the stockholders and board of directors of Seller
required under the applicable provisions of the Delaware General Corporations
Law, and under applicable terms of Seller's Certificate of Incorporation and
By-Laws, in each case to authorize this Agreement and the consummation of the
Transactions shall have been obtained, and shall not have been rescinded,
revoked or otherwise withdrawn in any respect.
5.2 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon the execution hereof,
and continuing until the closing of the Transactions or the earlier termination
of this Agreement (or, in the event of any claims made in accordance with
Section 8.2 or otherwise under this Agreement, until the resolution thereof),
Seller and its Affiliates shall: (i) give Buyer and its authorized
representatives reasonable access from time to time to all of its books,
records, senior personnel, offices and other facilities and properties to the
extent the same relates to the Alachua Facility or Acquired Assets, including,
without limitation, reasonable and timely access to the Leased Areas and other
portions of the Alachua Facility within which the Acquired Assets may then be
located in order for Buyer to conduct a "walk-through" inspection at Buyer's
request prior to the Closing Date; (ii) permit Buyer to make such copies of any
documents and inspections thereof from time to time as Buyer may reasonably
request; and (iii) cause its officers and other employees to furnish Buyer with
such financial and operating data and other information with respect to the
Acquired Assets and Alachua Facility, as from time to time Buyer may reasonably
request; provided, however, that any such access shall be conducted at Buyer's
expense, at reasonable times, under the supervision of personnel of Seller or
such Affiliate, as the case may be, and in such a manner as to maintain the
confidentiality of this Agreement and the Transactions in accordance with the
terms hereof. Buyer agrees to retain all information so obtained from Seller on
a confidential basis, and Seller agrees to retain any information obtained from
Buyer on a confidential basis. In the event that the Transactions shall not be
completed for any reason, each party shall return promptly to the other party
all information received by such party in this connection. Neither Buyer nor
Seller shall use any confidential information so obtained unless (i) the
Transactions are consummated or (ii) the confidential information becomes
available in the public domain.
Notwithstanding the foregoing, no information or knowledge obtained by
either Buyer or Seller during the course of any investigation conducted pursuant
to this Section shall: (a) affect or be deemed to modify in any respect any of
the representations or warranties of Seller set forth in this Agreement (or in
any certificate, instrument or other document delivered by Seller to Buyer in
connection with the Transactions), or the conditions to the obligations of the
parties to consummate the Transactions in accordance with the terms and
conditions hereof; (b) be deemed to amend or supplement the Schedules hereto, or
prevent or cure any misrepresentations, breach of warranty or breach of covenant
by Seller; or (c) otherwise limit or affect any remedies available to Buyer as a
result of or arising out of such disclosure.
5.3 REGULATORY FILINGS; COMMERCIALLY REASONABLE EFFORTS.
(a) REGULATORY FILINGS. Subject to the terms and conditions hereof,
Seller and Buyer shall coordinate and cooperate with one another and shall use
their respective commercially reasonable efforts to comply with, and shall
refrain from taking any action that would impede compliance with, all Laws, and
as promptly as practicable after the date hereof, shall make all filings,
notices, petitions, statements, registrations, submissions for information,
application or submission of other documents required by any Governmental Entity
in connection with the Transactions. Seller and Buyer each shall cause all
documents that it is responsible for filing with any Governmental Entity under
this Section to comply in all material respects with all applicable Laws.
(b) EXCHANGE OF INFORMATION. Seller and Buyer each shall promptly supply
the other with any information which may be required in order to effectuate any
filing or application pursuant to Section 5.3(a). Except where prohibited by
applicable Laws, each of the parties shall consult with the other prior to
taking a position with respect to any such filing, shall permit the other to
review and discuss in advance, and consider in good faith the views of the other
party in connection with any analyses, appearances, presentations, memoranda,
briefs, white papers, arguments, opinions and proposals before making or
submitting any of the foregoing to any Governmental Entity by or on behalf of
any party in connection with any investigations or proceedings in connection
with this Agreement or the Transactions, coordinate with the other in preparing
and exchanging such information and promptly provide the other (and its counsel)
with copies of all filings, presentations or submissions (and a summary of any
oral presentations) made by such party with any Governmental Entity in
connection with this Agreement or the Transactions; provided, that with respect
to any such filing, presentation or submission, each of the parties need not
supply the other party (or its counsel) with copies (or, in the case of oral
presentations, a summary) to the extent that any Law applicable to such party
requires such party or its Subsidiaries to restrict or prohibit access to any
such properties or information.
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(c) NOTIFICATION. Seller and Buyer each shall notify the other promptly
upon its receipt of: (i) any comments from any officials of any Governmental
Entity in connection with any filings made pursuant to this Agreement; and (ii)
any request by any officials of any Governmental Entity for amendments or
supplements to any filings made pursuant to, or information provided to comply
in all material respects with, any Laws. Whenever any event occurs that is
required to be set forth in an amendment or supplement to any filing made
pursuant to Section 5.3(a), each of the parties, as the case may be, shall
promptly inform the other party of such occurrence and cooperate in filing with
the applicable Governmental Entity such amendment or supplement.
(d) EFFORTS AND ACTIONS TO CAUSE CLOSING TO OCCUR. Upon the terms and
subject to the conditions set forth in this Agreement, the Seller and Buyer each
shall use its commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other party in doing all things necessary, proper or advisable to consummate and
make effective, in the most expeditions manner practicable, the Transactions,
including using its commercially reasonable efforts to accomplish the following:
(i) the obtaining of all necessary actions or non-actions, waivers, consents,
approvals, orders and authorizations from Governmental Entities and the making
of all necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to avoid any suit, claim,
action, investigation or proceeding by any Governmental Entity; (ii) the
resolution of such objections, if any, as may be asserted with respect to the
Transactions under the HSR Act, applicable foreign antitrust Laws or any other
antitrust, competition or fair trade Laws; (iii) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
Transactions, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed; (iv) the
execution or delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of this Agreement; and (vii)
obtain releases of any Encumbrances that may be reflected herein or in the
Schedules hereto, if any, to be released prior to the Closing; provided,
however, that notwithstanding the foregoing or anything to the contrary set
forth in this Agreement or in any agreement, certificate, instrument or other
document delivered in connection with the Transactions, nothing in this
Agreement or in any agreement, certificate, instrument or other document
delivered in connection with the Transactions shall be deemed to require Seller
or Buyer, or any Subsidiary or affiliate thereof, to agree to any divestiture by
itself or any of its affiliates of shares of capital stock or of any business,
assets or property, or the imposition of any limitation on the ability of any of
them to conduct their businesses or to own or exercise control of such assets,
properties and stock.
5.4 STATE TAKEOVER LAWS. If any state takeover law becomes or is deemed
applicable to this Agreement or the Transactions, then Seller and Buyer each
shall use its commercially reasonable efforts to assist in any effort by the
other party to render such statute inapplicable to the Transactions.
5.5 THIRD-PARTY CONSENTS. As soon as practicable following the date
hereof and in any event prior to the Closing, Seller shall use commercially
reasonable efforts to obtain any consents, waivers and approvals, including, but
not limited to, governmental action directed to governmental authorizations on
Schedule 5.5, and to provide any notices, required under this Agreement.
5.6 PUBLICITY. No party shall issue or cause the publication of any
press release or other external public announcement with respect to this
Agreement or the Transactions without prior consultation with the other parties
hereto, except as may be required by Law or by any listing agreement with a
national securities exchange or trading market; provided, however, that in the
event that Buyer and Seller are required by Law or by any listing agreement with
a national securities exchange or trading market to issue any press release or
make any public announcement with respect to this Agreement or the Transactions,
the party required to issue such press release or make such public announcement
shall, to the extent practicable within the requirements of applicable law,
consult in good faith with the other party hereto regarding the terms of such
press release or the substance of any such public announcement.
14
5.7 ANCILLARY AGREEMENTS. Each of the parties hereto shall cause each of
the Ancillary Agreements to which it is intended to be a party to be executed
and delivered to the other party at the Closing in accordance with the terms and
subject to the conditions set forth herein.
5.8 SUBSEQUENT ACTIONS. After the Closing, if Buyer determines or is
advised that any deeds, bills of sale, instruments of conveyance, assignments,
assurances or any other actions or things are necessary or desirable to vest,
perfect or confirm ownership (of record or otherwise) in Buyer, its right, title
or interest in, to or under any or all of the Acquired Assets or otherwise to
carry out this Agreement, then Seller shall execute and deliver all deeds, bills
of sale, instruments of conveyance, powers of attorney, assignments and
assurances and take and do all such other actions and things as may be
reasonably requested by Buyer in order to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
Buyer or otherwise to carry out this Agreement. After the Closing, if either
party determines or is advised that any other actions or things are necessary or
desirable to carry out this Agreement, then the other party shall execute and
deliver all assurances and take and do all such other actions and things as may
be reasonably requested to carry out this Agreement.
5.9 NOTICE OF CERTAIN MATTERS. Prior to the Closing, Seller shall give
prompt notice to Buyer of: (a) the occurrence or non-occurrence of any event,
the occurrence or non-occurrence of which could reasonably be expected to cause
any representation or warranty of Seller set forth in this Agreement to be
untrue or inaccurate at the Closing; and (b) any failure of Seller to comply
with or satisfy any covenant or agreement to be complied with by Seller under
this Agreement at the Closing; provided, however, that any disclosure by Seller
pursuant to this Section shall not: (x) affect or be deemed to modify in any
respect any of the representations or warranties of Seller set forth in this
Agreement (or in any certificate, instrument or other document delivered by
Seller (or any officer thereof) to Buyer in connection with the Transactions),
or the conditions to the obligations of the parties to consummate the
Transactions in accordance with the terms and conditions hereof; (y) be deemed
to amend or supplement the Schedules hereto, or prevent or cure any
misrepresentations, breach of warranty or breach of covenant by Seller; or (z)
otherwise limit or affect any remedies available to Buyer as a result of or
arising out of such disclosure, including, without limitation, Buyer's right to
indemnification under this Agreement.
5.10 TRANSFER OF PERMITS. Prior to or at the Closing, in connection with
the operation of the Leased Areas or ownership and use of the Acquired Assets,
Seller agrees to transfer or cause to be transferred the Governmental
Authorizations and Environmental Permits as set forth on Schedule 5.10 attached
hereto.
5.11 FACILITY STATUS. In connection with certain Pre-Existing
Environmental Conditions, as soon as possible after Closing, Seller shall apply
for a modification of facility status (as it relates to the Alachua Facility) to
the "Natural Attenuation Monitoring Only" designation with the applicable
governmental authority, provided, however that nothing contained herein shall be
deemed an obligation by Seller to remediate or undertake any remediation of the
Premises in order to obtain such modification of facility status other than as
otherwise specifically set forth herein.
5.12 EASEMENT. Seller shall, in accordance with the Lease Agreements,
grant to Buyer a temporary, revocable easement and license for such access to
and use of the areas of the Alachua Facility as reasonably necessary and solely
for the purpose of (i) Buyer's opening for business thereat for production,
development and distribution of such lithium-ion rechargeable cell batteries,
and (ii) for any clean-up work to be performed by Buyer which may be required or
otherwise desired by Buyer. Such easement and license shall be for a term of one
(1) year commencing as of the Closing Date and expiring on the day before the
first anniversary of the Closing Date, unless sooner terminated as provided
herein, or reasonably extended by the parties in the event Buyer is unable to
complete the items set forth in (i) or (ii) above after commercially reasonable
efforts to do so. Buyer shall not materially interfere with the use and
occupancy of the Alachua Facility by Seller (other than the Leased Areas), its
agents, employees and/or contractors and other tenants of the Alachua Facility.
In the event that Buyer materially interferes with Seller's or any other
tenant's or other occupant's use or occupancy thereof, Seller shall have the
right, in addition to all other rights and remedies hereunder, at law, or in
equity, to terminate such temporary easement and license.
15
5.13 RELEASE. At or prior to Closing, Seller shall have obtained the
Energizer Release.
5.14 BANKRUPTCY COURT ORDER. Pursuant to the Bankruptcy Court Order, at
or prior to the Closing, Seller, or Seller's Predecessor in Interest shall pay
the sum of $2,500,000.00 to the Unsecured Claims Fund as defined in the
Bankruptcy Court Order.
5.15 PAYMENT OF TAX LIENS. At or prior to the Closing, Seller shall, in
accordance with the Bankruptcy Court Order: (a) pay or cause to be paid (i) all
sums due to the Alachua County Tax Collector for tangible personal property
taxes assessed against the Acquired Assets, for tax years prior to 2006 which
are required to satisfy any claim or lien which said Tax Collector may have
against the Acquired Assets, and (ii) the apportioned amounts due for tax year
2006 through Closing; and (b) shall further pay (i) all amounts required to be
paid under any agreement with the Alachua County Tax Collector, or under any
plan approved by the Bankruptcy Court for Ad Valorem taxes assessed against the
Alachua facility for tax years prior to 2006 which are required to satisfy any
claim or lien which said Tax Collector may have against the Acquired Assets, and
(ii) the apportioned amounts due for tax year 2006 through Closing.
5.16 ENVIRONMENTAL CLEAN UP. Seller shall, in accordance with certain of
the Lease Agreements, perform certain clean-up actions with respect to the
sintering building and wastewater treatment system at the Alachua Facility
within the times frames specified in such Lease Agreement or, if no time frame
is specified, then as soon as practicable following the Closing.
5.17 EVIDENCE OF DISCHARGE. At or prior to Closing, Seller shall have
delivered to Buyer evidence of (i) release of all Liens set forth on Schedule
5.17 attached hereto, and (ii) discharge of all bankruptcy proceedings with
respect to the Acquired Assets and the Alachua Facility.
ARTICLE VI
INTENTIONALLY OMITTED
ARTICLE VII
TERMINATION
7.1 TERMINATION.
(a) This Agreement may be terminated or the Transactions may be abandoned
at any time prior to the Closing Date:
(i) by the mutual written consent of Buyer and Seller; or
(ii) by Buyer at any time prior to the Termination Date for any
reason or no reason; or
(iii) by Seller if Buyer has not exercised its option under Section
2.2 on or prior to the Termination Date.
(b) This Agreement shall automatically terminate on the Termination Date
in the event that Buyer and Parent have not exercised their option under Section
2.2 on or prior to the Termination Date, and there shall be no liability or
obligation thereafter on the part of any party in connection therewith.
7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement or abandonment of the Transactions by either party pursuant to the
terms of this Agreement, written notice thereof shall forthwith be given to the
non-terminating party or parties specifying the provision hereof pursuant to
which such termination of this Agreement or abandonment of the Transactions is
made, and there shall be no liability or obligation thereafter on the part of
any party hereto except for fraud or for willful breach of this Agreement prior
to such termination of this Agreement or abandonment of the Transactions.
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ARTICLE VIII
INDEMNIFICATION
8.1 SURVIVAL. The representations, warranties and covenants of Seller
contained in this Agreement and the other Ancillary Agreements (except for those
representations, warranties and covenants contained in Section 3.15 (Tax Returns
and Audits), which shall survive until the expiration of the applicable statute
of limitations) shall survive the Closing and remain in full force and effect
(a) for a period of two (2) years following the Closing Date, (b) with respect
to matters covered by Sections 3.18 (Environmental Matters) or claims in
connection with Pre-Existing Environmental Conditions, including, but not
limited to, property damage, personal injuries, default or breach of consent
orders, consent decrees, and related non-compliance to governmental authorities,
and third parties, for a period of five (5) years following the Closing Date,
and (c) with respect to each other covenant or agreement contained in this
Agreement or any other Ancillary Agreement until the last date on which such
covenant or agreement is to be performed or, if no such date is specified, for a
period of two (2) years, except that any representation, warranty, covenant or
agreement that would otherwise terminate in accordance with clause (a), (b) or
(c) will continue to survive if a written notice of a breach thereof shall have
been timely given to the breaching party by the other party on or prior to such
termination date, until the related claim for indemnification has been satisfied
or otherwise resolved as provided in this Article VIII.
8.2 INDEMNIFICATION.
(a) INDEMNIFICATION BY SELLER. Seller agrees to indemnify and hold
Buyer, Parent, their successors and assigns, and their respective officers,
directors, employees, affiliates, stockholders, members, mangers and agents
(collectively, the "Buyer Indemnified Parties") harmless against all Losses
incurred, accrued or sustained by the Buyer Indemnified Parties, or any of them,
as a result of (A) any breach, violation or failure of a covenant,
representation or warranty of Seller contained in this Agreement, the Lease
Agreements, the Real Property Agreements, or in any certificate, instrument, or
other document delivered pursuant to this Agreement, (B) any failure by Seller
to perform or comply with any covenant applicable to it contained in this
Agreement or any failure to comply with applicable securities laws; (C) Seller's
failure to deliver to Buyer any of the Acquired Assets and the Leased Areas; and
(D) any and all liability of Seller or any Predecessor in Interest associated
with: (i) Pre-Existing Environmental Conditions, including, but not limited to,
property damage, personal injuries, default or breach of consent orders, consent
decrees, and related non-compliance to governmental authorities, and third
parties, subject to offset against insurance proceeds, if any, received by Buyer
in connection with such Pre-Existing Environmental Conditions; (ii) any claims
in connection with events, actions or liabilities arising prior to the
Bankruptcy Court Order and not discharged in connection with the Bankruptcy
Case; and (iii) Seller's obligations under Section 5.16 herein, subject to the
terms, conditions and limitations set forth in the Escrow Agreement.
(b) INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold the
Seller, its officers, directors, affiliates, members, managers, employees and
agents (collectively, the "Seller Indemnified Parties") harmless against all
Losses incurred, accrued or sustained by the Seller Indemnified Parties, or any
of them, directly or indirectly, as a result of (i) any breach of a
representation or warranty of Buyer contained in this Agreement or in any
certificate, instrument, or other document delivered pursuant to this Agreement,
or (ii) any failure by Buyer to perform or comply with any covenant applicable
to it contained in this Agreement or any failure to comply with applicable
securities laws.
(c) INDEMNIFICATION BY PARENT. Parent agrees to indemnify and hold the
Seller Indemnified Parties harmless against all Losses incurred, accrued or
sustained by the Seller Indemnified Parties, or any of them, directly or
indirectly, as a result of (i) any breach of a representation or warranty of
Parent contained in this Agreement or in any certificate, instrument, or other
document delivered by Parent pursuant to this Agreement, or (ii) any failure by
Parent to perform or comply with any covenant applicable to it contained in this
Agreement or any failure to comply with applicable securities laws.
17
8.3 LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything in Section
8.2 to the contrary,
(a) Seller shall have no indemnification obligations pursuant to Section
8.2(a) until such time as the total amount of all Losses that have been suffered
or incurred by any one or more of the Buyer Indemnified Persons, or to which any
one or more of the Buyer Indemnified Persons has or have otherwise become
subject, exceeds $75,000 in the aggregate. At such time as the total amount of
such Losses exceeds $75,000 in the aggregate, the Buyer Indemnified Persons
shall be entitled to be indemnified against the full amount of such Losses in
excess of $75,000; provided, however, if any single Loss exceeds $50,000, the
Buyer Indemnified Persons shall be entitled to be indemnified against the full
amount of such Loss.
(b) Buyer shall have no indemnification obligations pursuant to Section
8.2(b) until such time as the total amount of all Losses that have been suffered
or incurred by any one or more of the Seller Indemnified Persons, or to which
any one or more of the Seller Indemnified Persons has or have otherwise become
subject, exceeds $75,000 in the aggregate. At such time as the total amount of
such Losses exceeds $75,000 in the aggregate, the Seller Indemnified Persons
shall be entitled to be indemnified against the full amount of such Losses in
excess of $75,000; provided, however, if any single Loss exceeds $50,000, the
Seller Indemnified Persons shall be entitled to be indemnified against the full
amount of such Loss.
Notwithstanding anything to the contrary, no Indemnified Party shall be entitled
to be indemnified for any Loss incurred, accrued or sustained by such party as a
result of any Loss resulting from the negligence, willful misconduct or breach
of this Agreement by such party.
8.4 ESCROW ARRANGEMENTS.
(a) ESCROW FUND. Seller will be deemed to have received at the Closing
and Buyer will deposit the Escrow Amount into an escrow fund (the "Escrow Fund")
to be governed by the terms set forth herein and in the Escrow Agreement. The
Escrow Fund shall be available to compensate the Buyer Indemnified Parties, or
any of them, for any claims by such Buyer Indemnified Parties for any Loss or
Losses suffered or incurred by them with respect to indemnifications by Seller
under Section 8.2(a) for those claims not otherwise covered by any policy of
insurance carried by Buyer (which coverage Buyer may maintain, discontinue or
modify in its sole and exclusive discretion), including without limitation the
payment of any deductible thereunder.
(b) ESCROW PERIOD; DISTRIBUTION UPON TERMINATION OF ESCROW PERIODS.
Subject to the following requirements and the Escrow Agreement, the Escrow Fund
shall be in existence immediately following the Closing and shall terminate on
the five year anniversary date thereof (the "Escrow Termination Date");
provided, however, that the Escrow Period shall not terminate with respect to
any amount which, in the reasonable judgment of Buyer, is necessary to satisfy
any unsatisfied claims specified in any Claim Certificate delivered to the
Escrow Agent prior to the termination of the Escrow Period (the "Unsatisfied
Claim Amount"). The Escrow Agent shall deliver, promptly following the Escrow
Termination Date, to Seller all amounts remaining in the Escrow Fund at the
Escrow Termination Date less the Unsatisfied Claim Amount. Any Unsatisfied Claim
Amount which Buyer has accrued but which Buyer has not sustained or incurred and
which Buyer elects to no longer accrue during the one (1) year period following
the end of the Escrow Period shall be promptly delivered to Seller by the Escrow
Agent upon appropriate instructions from Buyer. In addition, one (1) year
following the end of the Escrow Period, the Escrow Agent shall deliver to Seller
an amount equal to any Unsatisfied Claim Amounts still remaining in the Escrow
Fund less any amounts which, in the reasonable judgment of Buyer, are necessary
to satisfy any unsatisfied Losses which Buyer has sustained, incurred or
accrued.
8.5 INDEMNIFICATION PROCEDURE. An Indemnified Party seeking
indemnification shall deliver a Claim Certificate to the other party and, if
prior to the Escrow Termination Date, the Escrow Agent, if applicable. The other
party may object to any such claim set forth in such Claim Certificate by
providing written notice to such Indemnified Party and, if prior to the Escrow
Termination Date, the Escrow Agent, if applicable, specifying the basis for such
objection, within ten (10) days following delivery of such Claim Certificate. If
an objection to the amount of Losses specified in such Claim Certificate is
provided, and such objecting party and the Indemnified Party are unable to
resolve such dispute after good faith discussions within ten (10) days following
the delivery of such objection notice, such dispute shall be resolved in
accordance with appropriate legal proceedings. In the case of a claim by a Buyer
Indemnified Party, if the Seller does not object to the Claim Certificate within
the period specified, the Escrow Agent shall deliver to the Buyer Indemnified
Party, as promptly as practicable, an amount from the Escrow Fund equal to such
identified Losses, as determined in accordance with the Escrow Agreement.
18
8.6 THIRD PARTY CLAIMS. In the event an Indemnified Party becomes aware
of a third-party claim that the Indemnified Party reasonably believes may result
in a demand for indemnification pursuant hereto, the Indemnified Party shall
notify the other party (the "Indemnifying Party") of such claim, and the
Indemnifying Party shall be entitled, at its expense, to participate in the
defense of such claim. The Indemnified Party shall have the right in its sole
discretion to conduct the defense of and settle any such claim; provided,
however, that except with the consent of the Indemnifying Party, no settlement
of any such claim with third-party claimants shall be determinative of the
amount of Losses relating to such matter. In the event that the Indemnifying
Party has consented to any such settlement, the Indemnifying Party shall have no
power or authority to object under any provision hereof to the amount of any
claim by the Indemnified Party against the Indemnifying Party with respect to
such settlement. The Indemnifying Party with respect to any third- party claims
shall only be liable for Losses actually suffered by any Indemnified Party
(including amounts incurred or accrued in defense of such third- party claim)
upon a settlement or final, non-appealable finding by a court of competent
jurisdiction that all or any portion of such Losses are due and payable by the
Indemnified Party. In the event a court of competent jurisdiction issues a final
non-appealable judgment denying or refusing to grant any relief with respect to
the claim or cause of action of such third-party claimant in its entirety, then
the Indemnified Party and Indemnifying Party shall equally bear the costs of
reasonable attorneys and related fees incurred in the defense of such claim.
ARTICLE IX
DEFINITIONS AND INTERPRETATION
9.1 DEFINITIONS. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context clearly requires otherwise:
"18650 Li-Ion Cell" has the meaning set forth in Section 3.10.
"Acquired Assets" means all of the property and assets located in, or
related to, the Leased Areas in existence as of the "walk-through" inspection
conducted by Buyer prior to the Closing Date, provided however that they shall
in all events include without limitation the assets set forth on Schedule I.
"Acquisition" has the meaning set forth in the recitals.
"Affiliate" has the meaning set forth in Rule 12b-2 of the Exchange Act,
and shall also include any Predecessors in Interest.
"Agreement" or "this Agreement" means this Asset Purchase Agreement,
together with the exhibits and schedules hereto.
"Alachua County Tax Collector" has the meaning set forth in Section
1.2(h).
"Alachua Facility" means the real estate and improvements thereto located
at 00000 XX Xxxxxxx 000, Xxxxxxx, Xxxxxxx 00000.
"Ancillary Agreements" means, collectively, the Lock-Up Agreement, the
Xxxx of Sale, the Warrants, the Escrow Agreement, the Lease Agreements, the
Guaranty of Leases, the Lease Escrow Agreement, the assignment/sublicense of the
Transferred Intellectual Property Rights, and the Real Property Agreements,
including without limitation the SNDA and the Waste Facility Operating
Agreement.
"Bankruptcy Case" means that certain federal bankruptcy proceeding known
as Case #01-00335-GVL1, styled In re; Moltech Power Systems, Inc. n/k/a Battery
Park Industries, Inc. pending in the United States Bankruptcy Court for the
Northern District of Florida.
19
"Bankruptcy Court" means the United States Bankruptcy Court for the
Northern District of Florida, and any judge sitting therein, either by
appointment or special designation, having jurisdiction or responsibility for
the Bankruptcy Case.
"Bankruptcy Court Order" means the Order Authorizing Sale, Transfer and
Conveyance of substantially all real and personal property issued by the
Bankruptcy Court and dated December 5, 2005 in the form of Exhibit G hereto.
"Xxxx of Sale" has the meaning set forth in Section 2.2(b).
"Business Day" means a day other than Saturday, Sunday or any day on which
the principal commercial banks located in Danbury, Connecticut are authorized or
obligated to close under the laws of such state.
"Buyer Indemnified Parties" has the meaning set forth in Section 8.2(a).
"Buyer Material Adverse Effect" means any change, event, violation,
inaccuracy, circumstance or effect (any such item, an "Effect"), individually or
when taken together with all other Effects that have occurred prior to the date
of determination of the occurrence of the Buyer Material Adverse Effect, that is
or is reasonably likely to (a) be materially adverse to the business, assets
(including intangible assets), capitalization, financial condition or results of
operations of Buyer, taken as a whole with its Subsidiaries or (b) materially
impede Buyer's authority to consummate the Transactions in accordance with the
terms hereof and applicable Laws; provided, however, that for purposes of clause
(a) above, in no event shall any of the following, alone or in combination, be
deemed to constitute, nor shall any of the following be taken into account in
determining whether there has been or shall be, a Buyer Material Adverse Effect:
(A) any Effect resulting from compliance with the terms and conditions of this
Agreement; (B) any Effect directly related to the announcement or pendency of
the Transactions; (C) any Effect that results from changes affecting any of the
industries in which Buyer operates generally or the United States economy
generally which does not have a disproportionate Effect on Buyer; or (D) any
Effect that results from changes affecting general worldwide economic or capital
market conditions which does not have a disproportionate Effect on Buyer.
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Electro Energy Common Stock" has the meaning set forth in Section 1.3(a).
"Encumbrances" means any and all liens, charges, assessments, security
interests, options, claims, mortgages, easements, rights of way, pledges,
proxies, voting trusts or agreements, obligations, understandings or
arrangements or other restrictions on title or transfer, including without
limitation, judgments, orders, rulings or decrees issued by or on behalf of any
private party or Governmental Entity.
"Energizer Release" has the meaning set forth in Section 3.10.
"Environment" means ambient air, surface water, ground water, land surface
or subsurface strata.
"Environmental Claim" means, with respect to any Person, any actual notice
or claim, or threatened claim, written or verbal, by any other Person alleging
or asserting liability for investigatory costs, cleanup costs, monitoring costs,
Governmental Entity response costs, costs of compliance, damages to natural
resources or other property, personal injuries, fines or penalties or any other
type of damages or injury, of any kind or nature arising out of, based on or
resulting from. in whole or in part, (a) the presence or Release or threatened
Release into the Environment, of any Hazardous Material, or (b) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law.
20
"Environmental Law" means collectively the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), The Florida
Water Code, The Florida Solid Waste Disposal Act, Title 10, Part I of the Code
of Federal Regulations for the Nuclear Regulatory Commission, the Hazardous
Materials Transportation Act, The Toxic Substances Control Act of 1980, The
Clean Air Act, The Clean Water Act, Florida Department of Environmental
Protection memoranda, and any other applicable Laws or Regulations which relate
to protection of the Environment, human health or safety or to Releases or
threatened Releases of Hazardous Materials in the Environment, or otherwise
relating to the treatment, storage, disposal, transport or handling of any
Hazardous Material.
"Environmental Permits" means all environmental approvals, permits,
licenses, clearances and consents (necessary for the conduct of Seller's and the
Predecessors' in Interest Hazardous Material Activities.
"Escrow Agent" has the meaning set forth in the recitals, or any successor
entity or permitted assign.
"Escrow Agreement" has the meaning set forth in the recitals.
"Escrow Amount" means one million (1,000,000) shares of Electro Energy
Common Stock.
"Escrow Fund" has the meaning set forth in Section 8.4(a).
"Escrow Period" means the period commencing on the Closing Date and
terminating on the five year anniversary date thereof.
"Escrow Termination Date" has the meaning set forth in Section 8.4(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"Governmental Authorization" or "Government Authority" means any consent,
license, registration, approval, requirement, authorization or permit issued,
granted, given or otherwise made available by or under the authority of any
Governmental Entity or pursuant to any Law.
"Governmental Entity" means a foreign, federal, state or local court,
arbitral tribunal, administrative agency or commission or other governmental or
other regulatory authority or agency.
"Hazardous Material" means any amount of any substance, pollutant, or
material that has been designated by any Governmental Entity or by applicable
law to be radioactive, toxic, hazardous or otherwise a danger or potential
danger to health or the environment, for which clean-up goals, standards and/or
regulations are provided, or regulated or controlled by an Environmental Law,
including PCBs, asbestos, petroleum or petroleum containing product,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous or solid waste pursuant to the
United States Resource Conservation and Recovery Act of 1976, as amended, and
the regulations promulgated pursuant to said laws ( other than office and
janitorial supplies properly and safely maintained)or, any other substance,
chemical or material that could be known as a pollutant or contaminant.
"Hazardous Materials Activities" has the meaning set forth in Section
3.18(a).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Indemnified Party" means the Buyer Indemnified Parties or the Seller
Indemnified Parties, or both, as the case may be.
21
"Intellectual Property" means Trademarks, Patents, copyrights, Trade
Secrets and domain names in connection with the operation or use of the Acquired
Assets (as contemplated or consistent with past practice of the Seller or the
Predecessors-in-Interest.
"Intellectual Property Rights" means any or all of the following and all
statutory and/or common law rights throughout the world in, arising out of, or
associated therewith, in connection with the operation or use of the Acquired
Assets (as contemplated or consistent with past practice of the Seller or the
Predecessors in Interest: (i) all Patents; (ii) all Trade Secret rights; (iii)
all copyrights, mask works, and mask work registrations and applications, and
any other rights in works of authorship; (iv) all industrial designs and any
registrations and applications therefor; (v) all Trademarks; (vi) all rights in
databases and data collections (including knowledge databases, customer lists
and customer databases); (vii) rights to Web site addresses and domain names;
and (viii) any similar, corresponding or equivalent rights to any of the
foregoing.
"Law" means any constitutional provision, law, statute, rule, regulation,
ordinance, treaty, order, decree, judgment, decision, certificate, holding,
injunction, rule, regulation or ruling enforceable at law or in equity, along
with the interpretation and administration thereof by any Governmental Entity
charged with the interpretation or administration thereof.
"Lease Warrant" has the meaning set forth in Section 1.3(c).
"Liens" means any Encumbrance of any kind whatsoever in respect of any
asset, other than liens for Taxes not yet due and payable.
"Loss" means any claim (including without limitation by way of
correspondence to responsible persons), loss, liability, damage, deficiency,
cost or expense, including reasonable attorneys' fees and expense of
investigation and defense.
"Material Adverse Effect" means any change, event, violation, inaccuracy,
circumstance or effect (any such item, an "Effect"), individually or when taken
together with all other Effects that have (i) occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, or (ii) been
discovered or determined by Buyer, in each case that is or is reasonably likely
to (a) be materially adverse to the Acquired Assets (including intangible
assets) or (b) materially impede Seller's ability to consummate the Transactions
in accordance with the terms hereof and applicable Laws; provided, however, that
for purposes of clause (a) above, in no event shall any of the following, alone
or in combination, be deemed to constitute, nor shall any of the following be
taken into account in determining whether there has been or shall be, a Material
Adverse Effect: (A) any Effect resulting from compliance with the terms and
conditions of this Agreement; (B) any Effect directly related to the
announcement or pendency of the Transactions; (C) any Effect that results from
changes affecting any of the industries in which Seller operates generally or
the United States economy generally which does not have a disproportionate
effect on Seller; or (D) any Effect that results from changes affecting general
worldwide economic or capital market conditions which does not have a
disproportionate effect on Seller.
"Operating Agreements" means any real and personal property lease
agreements or maintenance agreements (whether written or oral) in connection
with the use or ownership of the Acquired Assets.
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental Entity, in each case whether preliminary or final.
"Patents" means issued U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extensions thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and similar statutory
rights, as set forth on Schedule 3.10(a) hereto.
"Person" means a natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity or organization.
"Pre-Existing Environmental Conditions" has the meaning set forth in
Section 3.18(b).
22
"Predecessors in Interest" means any person or entity (i) from whom Seller
has received, directly or indirectly, all or any portion of, or any interest in
or to, any of the Acquired Assets or the Alachua Facility, including any rights
associated therewith or arising therefrom; or (ii) who has held, in whole or in
part, any ownership or other rights or interests, directly or indirectly, in any
of the Acquired Assets or the Alachua Facility.
"PTO" means the United States Patent and Trademark Office or any successor
thereto.
"Purchase Price" has the meaning set forth in Section 1.3(c).
"Purchase Warrant" has the meaning set forth in Section 1.3(b).
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, dumping, discharge, dispersal, leaching, escaping, emanation
or migration of any Hazardous Material in, into or onto the Environment.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Indemnified Parties" has the meaning set forth in Section 8.2(b).
"Stock Consideration" has the meaning set forth in Section 1.3(a).
"Subsidiary" means, with respect to any Person, (a) any corporation or
other organization, whether incorporated or unincorporated, of which (i) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries or (ii) such Person or any other Subsidiary of such Person is a
general partner (excluding any such partnership where such Person or any
Subsidiary of such party does not have a majority of the voting interest in such
partnership) and (b) any limited liability company with respect to which such
Person is the sole member.
"Tax" or "Taxes" means all federal, state, local, and foreign taxes of any
kind or nature, and other assessments of a similar nature, including any
interest, additions to tax, or penalties applicable thereto, imposed by any Tax
Authority.
"Tax Authority" means any domestic, foreign, national, state, county or
municipal or other local governmental entity, including any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising any
Tax authority or any other entity exercising Tax regulatory authority.
"Tax Returns" means all returns, reports, and information statements
required to be filed in connection with any Taxes.
"Termination Date" means the Closing Date, or such date that the Buyer and
Seller shall, in good faith, agree upon.
"Trade Secrets" means trade secrets and other know-how, show-how,
technical data, business plans, business methods, techniques, or other
confidential or proprietary information.
"Trademarks" means U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names and
all registrations and applications to register the same.
"Transactions" has the meaning set forth in Section 2.1.
"Transferred Intellectual Property Rights" means the intellectual property
rights described in Section 3.10.
23
"Unsatisfied Claim Amount" has the meaning set forth in Section 8.4(b).
9.2 INTERPRETATION.
(a) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(b) Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
(c) The words "hereof," "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified.
(d) The meaning assigned to each term defined herein shall be equally
applicable to both the singular and the plural forms of such term, and words
denoting any gender shall include all genders. Where a word or phrase is defined
herein, each of its other grammatical forms shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any other agreement or
document shall include such party's successors and permitted assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or re-enactment
thereof, any legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto.
(g) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
ARTICLE X
MISCELLANEOUS
10.1 FEES AND EXPENSES. All costs and expenses incurred by Buyer in
connection with this Agreement and the consummation of the Transactions shall be
paid by Buyer. All costs and expenses incurred by Seller in connection with this
Agreement and the consummation of the Transactions shall be paid by Seller.
10.2 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified
and supplemented in any and all respects, but only by a written instrument
signed by each of the parties expressly stating that such instrument is intended
to amend, modify or supplement this Agreement.
10.3 NOTICES. All notices, demands or requests which may be given by any
party to the other party shall be in writing and shall be deemed to have been
duly given on the date delivered in person, or sent via telefax, or on the next
Business Day if sent by overnight courier, or on the date of the third (3rd)
Business Day after deposit, postage prepaid, in the United States mail via
certified mail return receipt requested, and addressed as set forth below:
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if to Buyer, to:
EEI Acquisition Co., LLC
c/o Electro Energy Inc.
00 Xxxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx, Chairman and CEO
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Lev & Berlin, P.C.
000 Xxxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
if to Seller, to:
Lithium Nickel Asset Holding Company I, Inc.
0 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxxxxxxx, XX 00000
Attention: Mr. Xxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Topspin Partners, L.P.
Three Expressway Plaza
Xxxxxx Heights, NY 11577
Attention: Xx. Xxx X. Xxxxxxx, Chairman & CEO
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxxxx Ball Xxxxxx Xxxxxx & Xxxxxxxxxx, LLP
000 Xxx Xxxxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
The address to which such notices, demands, requests, elections or other
communications are to be given by either party may be changed by written notice
given by such party to the other party pursuant to this Section 10.3.
10.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other party.
10.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and
the Ancillary Agreements (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof and (b) are not intended
to confer any rights or remedies upon any Person other than the parties hereto.
25
10.6 SEVERABILITY. Any term or provision of this Agreement that is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is
invalid, void or unenforceable, the parties agree that the court making such
determination shall have the power to reduce the scope, duration, area or
applicability of the term or provision, to delete specific words or phrases, or
to replace any invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
10.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut without giving effect to
the principles of conflicts of law thereof.
10.8 VENUE. Each of the parties: (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Connecticut
or any Connecticut state court in the event any dispute that the parties fail to
resolve arises out of this Agreement or any of the Transactions; (b) agrees that
it shall not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court; and (c) agrees that it shall not
bring any action relating to this Agreement or any of the Transactions in any
court other than a federal or state court sitting in the State of Connecticut.
10.9 EXTENSION; WAIVER. At any time prior to the Closing Date, either
party may: (a) extend the time for the performance of any of the obligations or
other acts of the other party; (b) waive any inaccuracies in the representations
and warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement; or (c) waive compliance by the other party
with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by or on behalf of such
party. The failure or delay of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
10.10 ASSIGNMENT; SUCCESSORS. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties (whether by operation of Law or otherwise) without the prior written
content of the other party. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. If Buyer or any of its successors
or assigns (a) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (b) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary
to effectuate the purpose of this Agreement, Buyer (or any of its successors and
assigns) shall make proper provision so that the successors and assigns of Buyer
shall succeed to the obligations set forth in this Agreement and none of the
actions described in clauses (a) or (b) shall be taken until such provision is
made.
10.11 SURVIVAL. The covenants to be performed prior to the Closing set
forth in this Agreement shall not survive the Closing and shall terminate, and
be of no further force or effect, upon the Closing. The representations and
warranties set forth in this Agreement shall survive the Closing to the extent
so provided in accordance with Section 8.1 herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, Buyer and Seller each have executed this Agreement as
of the date first written above.
EEI ACQUISITION CO., LLC
By: Electro Energy, Inc., its
Managing Member
By:/s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
Hereunto Duly Authorized
LITHIUM NICKEL ASSET HOLDING
COMPANY I, INC.
By:/s/ Xxx X. Xxxxxxx
---------------------------------
Name: Xxx X. Xxxxxxx
Title: Chairman
Hereunto Duly Authorized
ELECTRO ENERGY INC.
By:/s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
Hereunto Duly Authorized
27
EXHIBIT A
ESCROW AGREEMENT
EXHIBIT B
LEASE AGREEMENTS (WITH GUARANTY OF LEASESAND LEASE ESCROW AGREEMENT)
EXHIBIT C-1
PURCHASE WARRANT
EXHIBIT C-2
LEASE WARRANT
EXHIBIT D
LOCK-UP AGREEMENT
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
EXHIBIT F
XXXX OF SALE
SCHEDULE I
----------
SELLER'S RIGHTS WITH RESPECT TO TECHNOLOGY RELATING TO MANUFACTURE OF THOSE
CERTAIN BATTERY PRODUCTS KNOWN AND DESIGNATED AS "18650" LITHIUM-ION CELLS.
EXHIBIT G
BANKRUPTCY COURT ORDER
SCHEDULES AND EXHIBITS NOT FILED
