ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
on this 13th day of January 2001 (the "EFFECTIVE DATE"), by and between VALENCE
TECHNOLOGY, INC., a Delaware corporation ("PURCHASER"), WEST COAST VENTURE
CAPITAL, INC., a California corporation ("SELLER"), and the 1981 KARA XXX XXXX
TRUST, an inter vivos trust, of which Xxxxx X. Xxxx, an individual, is the sole
trustee and Kara Xxx Xxxx, an individual, is the sole beneficiary (the "TRUST").
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms have the following
meanings:
1.1 "AAA" The American Arbitration Association.
1.2 "ACQUIRED ASSETS": The meaning set forth in Section 2.1 of this
Agreement.
1.3 "ACQUISITION PRICE": The meaning set forth in Section 2.3 of this
Agreement.
1.4 "AFFILIATE" of, or a Person "AFFILIATED" with, a Person, is (a) a
Person that, directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such Person; (b) any
corporation (and any parent or subsidiary thereof), partnership, organization or
other entity of which such Person is an officer, director, co-venturer or
partner or is, directly or indirectly, the beneficial owner of 10% or more of
any class of Equity Securities thereof, (c) any trust or other estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as a trustee or in a similar fiduciary capacity, or (d) any relative or
spouse of such Person.
1.5 "ANCILLARY AGREEMENTS": The Registration Rights Agreement and Guaranty.
1.6 "ASSETS": All of the real, personal and mixed property and assets,
equipment and inventory of a Person, whether tangible or intangible, including,
with respect to Seller, the Mortgage Loans.
1.7 "BUSINESS CONDITION": of a person shall mean and include the business
operations, financial condition, Assets, properties, Contracts, cash flow,
value, earning power and property of such Person.
1.8 "CAPITAL STOCK": of any Person means any and all shares, interests,
warrants, subscription rights, participations or other equivalents (however
designated) of capital stock.
1.9 "CODE": The Internal Revenue Code, as amended.
1.10 "CONSENTS AND PERMITS": The meaning set forth in Section 5.15 of this
Agreement.
1.11 "CONTRACT": means and includes any agreement, contract, understanding,
commitment and/or arrangement (whether written or oral), including, without
limitation, leases, licenses, options, assignments and guarantees.
1.12 "DAMAGES": The meaning set forth in Section 8.2 of this Agreement.
1.13 "GUARANTY": The agreement, attached hereto as Exhibit "A" whereby the
Trust guarantees timely payment of the Mortgage Loans to the Purchaser.
1.14 "HSR ACT": The Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976.
1.15 "INDEMNIFIED PARTY": The meaning set forth in Section 8.2 of this
Agreement.
1.16 "IRS": The meaning set forth in Section 12.17 of this Agreement.
1.17 "LIENS": means any and all liens, charges, encumbrances, mortgages,
pledges, security interests, options or other rights to acquire, adverse claims
and restrictions.
1.18 "MATERIAL ADVERSE EFFECT": means an effect which, individually or in
the aggregate with any other effect could, with or without notice or the passage
of time or both, be materially adverse to (i) the Acquired Assets or the title
to, or the use, ownership, possession or condition of, the Acquired Assets , or
(ii) this Agreement, the Ancillary Agreements or the transactions contemplated
hereby and thereby.
1.19 "MORTGAGE LOANS": Loans secured by a mortgage or deed of trust on real
property.
1.20 "MORTGAGED PROPERTY": The real property securing each Mortgage Loan.
1.21 "NOTICES": The meaning set forth in Section 12.4 of this Agreement.
1.22 "PERSON": means any individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government bureau or agency or other subdivision thereof or other entity or
whatsoever kind or nature.
1.23 "REGISTRATION RIGHTS AGREEMENT": The agreement attached hereto as
Exhibit "B" between the Trust and the Purchaser, which grants certain rights to
the Trust to register the Shares with the SEC.
1.24 "REGULATORY AUTHORITY": The Federal Deposit Insurance Corporation, the
California Department of Real Estate, the California Department of Corporations,
the California Department of Insurance or any other state or federal
governmental agency or authority having jurisdiction over the Seller Parties.
1.25 "RETURNS": The meaning set forth in Section 5.9(a) of this Agreement.
1.26 "SEC": The Securities and Exchange Commission of the United States.
1.27 "SELLER PARTIES": The meaning set forth in Section 5 of this
Agreement.
1.28 "SHARES": The meaning set forth in Section 2.3 of this Agreement.
1.29 "SHORT PERIOD": means, with respect to any Taxable Year of any of the
Seller Parties which begins before the date hereof and ends thereafter, the
portion thereof beginning with the first day of such year and ending on the date
hereof.
1.30 "TAX", "TAXES" and "TAXABLE": means any federal, state, local, foreign
or other tax or governmental charge, together with any interest and any penalty,
addition to Tax or additional
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amount imposed by any Taxing Authority due from, or allocable under any
applicable law or agreement to, Seller and/or Subsidiary.
1.31 "TAXABLE YEAR": means, with respect to any Tax, the calendar or fiscal
year, or shorter period, for which the Tax is computed and the Return for such
Tax is filed.
1.32 "TAXING AUTHORITY": means any governmental authority (domestic or
foreign) responsible for the imposition of any Tax.
SECTION 2. SALE OF ASSETS; PURCHASE PRICE.
2.1 AGREEMENT TO PURCHASE AND SELL ASSETS.1. For and in consideration of
the payment by Purchaser to Seller of the Acquisition Price, and upon all of the
terms and subject to the conditions hereinafter set forth, on the date hereof,
Seller agrees to sell, convey, assign, transfer and deliver and Purchaser agrees
to purchase all of the properties, assets, powers and rights, wherever located,
listed on SCHEDULE 2.1 (the "Acquired Assets"), free and clear of any Liens. The
Acquired Assets shall include, without limitation, all of the records of Seller
which are appropriate incidents to the ownership and/or operation of the
Acquired Assets, and Purchaser shall receive possession of, and all right, title
and interest in and to, all such books and records on the date hereof, except as
otherwise agreed by Purchaser and Seller. All books and records of Seller
insofar as they relate to the Acquired Assets prior to the date hereof and are
retained by Seller shall be maintained for a period which is at least as long as
the period required by law.
2.2 RIGHT OF ENDORSEMENT. After the date hereof, Purchaser shall have the
absolute and unconditional right and authority to endorse, without recourse, the
name of Seller on any check or any other evidence of indebtedness received by
Purchaser on account of any Acquired Asset, and Seller shall deliver to
Purchaser, and letters of instruction executed by the President and the
Secretary or an Assistant Secretary of Seller, sufficient to permit Purchaser to
deposit such checks or other evidences of indebtedness in bank accounts in the
name of Purchaser. Seller shall immediately instruct in writing all appropriate
borrowers to send future payments regarding each Mortgage Loan to Purchaser,
except as otherwise agreed by Purchaser and Seller.
2.3 ACQUISITION PRICE. At the date hereof, subject to all of the terms and
conditions set forth in this Agreement, Purchaser agrees to give to Seller a
total purchase price (the "ACQUISITION PRICE") consisting of that number of
shares of Purchaser's common stock, $0.001 par value per share (the "SHARES"),
which is equal to (x) the value of the Acquired Assets (excluding the 250,000
shares of Common Stock held by the Trust) divided by $8.484 plus (y) an
additional 250,000 shares of Common Stock. Seller shall retain its existing
certificate representing 250,000 shares of Common Stock (identified on Schedule
2.1 hereof) in lieu of surrendering such certificate for a newly issued
certificate representing the additional 250,000 shares of Common Stock. The
value of the Assets for this purpose will equal the sum of the amount of cash
held by Seller plus the balance due on each note or loan (identified on Schedule
2.1 hereof) as of the end of the business day immediately preceding the date
hereof.
2.4 TAX FREE REORGANIZATION. The parties intend that the transactions
contemplated by this Agreement (the "TRANSACTIONS") will be a reorganization
described in section 368(a)(1)(C) of the Code, and each party agrees to report
the Transactions consistently with such intent. The use of the terms "purchase,"
"sale," "Purchaser, and "Seller" are merely for convenience, and shall not be
construed to mean that the Transactions are taxable. Seller Parties agree,
however, that (i) Purchaser's actions with respect to the Acquired Assets shall
not be constrained in any way, and (ii)
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Buyer shall have no liability to any person for the tax treatment of the
Transaction to the Seller Parties.
SECTION 3. NO ASSUMPTION OF OBLIGATIONS
The Purchaser shall not assume any liabilities, obligations or commitments
of any of the Seller Parties of any kind, known or unknown, contingent or
otherwise, of whatsoever kind or nature, and the same shall remain the sole
responsibility of the Seller Parties.
SECTION 4. DELIVERIES
4.1 PAYMENTS. Within two (2) business days of the date hereof, Purchaser
shall issue and deliver to Seller the Acquisition Price in the form of a
certificate for the Shares.
4.2 PRORATION; DISCHARGE OF MONETARY LIENS. At the date hereof, settlement
of all prorated items shall be made. If, after the date hereof, Purchaser
receives a personal property tax xxxx retroactively imposing a Tax for any
period prior to the date hereof, or imposing a greater Tax than that upon which
the prorations hereunder were determined, any such Tax relating to a period
prior to the date hereof shall be paid by Seller or reimbursed to Purchaser by
Seller, at the election of Purchaser. If, on the date hereof, the Acquired
Assets or any portion thereof is subject to any monetary lien or special
assessments, Seller shall satisfy and obtain the discharge of the Acquired
Assets from any and all such Liens at the date hereof hereunder. If, following
the date hereof, Purchaser or Seller receives a refund of any Tax which is
subject to proration hereunder and which covers a period which extends both
prior to and subsequent to the date hereof hereunder, the Purchaser and Seller
shall prorate any such refund between them as of the date hereof.
4.3 DELIVERY OF ANCILLARY AGREEMENTS.
(a) ASSIGNMENTS. At the date hereof, Seller shall deliver to Purchaser all
assignments or instruments of title as Purchaser reasonably requests, all in a
form appropriate for recordation with the applicable state or local agency,
regarding all of the Acquired Assets, in order to convey all right, title and
interest in such Acquired Assets to Purchaser free and clear of all Liens.
(b) ANCILLARY AGREEMENTS. At the date hereof, Purchaser and Seller shall
each execute and deliver to the other the Registration Rights Agreement and the
Guaranty.
(c) MONEY. At the date hereof, Seller shall deliver any Acquired Asset
consisting of cash by wire transfer to Purchaser's account according to
Purchaser's written instruction.
4.4 DELIVERY OF POSSESSION. At the date hereof, Seller shall deliver to
Purchaser possession of the Acquired Assets, together with all files, documents,
papers, agreements and other records included in the Acquired Assets except as
otherwise agreed by Purchaser and Seller.
SECTION 5. REPRESENTATION AND WARRANTIES OF SELLER
As a material inducement for Purchaser to enter into this Agreement and to
perform its obligations hereunder, Seller and the Trust (together the "SELLER
PARTIES") hereby jointly and severally represent, warrant to and agree with
Purchaser, as of the date of this Agreement, each of the following:
5.1 Business Organization.
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(a) Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of California.
(b) Each of the Seller Parties has the requisite power and authority to
own, operate and lease its properties and to carry on its respective businesses
as it is now being conducted. Neither the ownership or leasing of property or
the conduct of its business requires any of the Seller Parties to qualify to do
business in any state where it is not presently qualified.
(c) The Trust is an inter vivos trust, created by written instrument dated
______, 1981, and governed by the laws of California, of which Xxxxx X. Xxxx, a
legally competent adult who does not reside with Xxxx X. Xxxx, is the sole
trustee, and of which Xxxx Xxxx, a legally competent adult who does not reside
with Xxxx X. Xxxx, is the sole beneficiary.
5.2 CAPITALIZATION. All Capital Stock of Seller is owned by the Trust.
5.3 TITLE. At the date hereof, Seller has and will transfer to Purchaser
good, absolute and marketable title in and to all of the Acquired Assets, free
and clear of any and all Liens.
5.4 AUTHORIZATION.
(a) Each of the Seller Parties has all right, power and authority necessary
to enter into and carry out the terms and conditions of this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors and shareholder of Seller, and no other
corporate proceeding on the part of Seller is necessary to authorize this
Agreement or the Ancillary Agreements or to consummate the transactions so
contemplated.
(b) The Trust has all right, legal capacity and power necessary to enter
into and carry out the terms and conditions of this Agreement and the Ancillary
Agreements to which the Trust is a party and to consummate the transactions
contemplated hereby and thereby.
(c) Each of the Seller Parties has taken all actions required by law, its
charter documents, bylaws, indenture or other agreements or restrictions or as
otherwise required to be taken to authorize the execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby.
(d) Each of this Agreement and the Ancillary Agreements to which each is a
party, have been duly and validly executed and delivered by each of the Seller
Parties, and constitute the valid and binding obligation of each of the Seller
Parties, as applicable, enforceable in accordance with their respective terms
subject to applicable bankruptcy, reorganization or other similar laws affecting
creditors' rights generally.
5.5 NO VIOLATION. The execution and delivery of this Agreement and the
Ancillary Agreements by each of the Seller Parties, the consummation by each of
the Seller Parties of the transactions contemplated hereby and thereby, and the
compliance by each of the Seller Parties with any of the terms or provisions
hereof and thereof will not (a) conflict with, result in a breach of, or violate
any provision of the Articles of Incorporation, Bylaws, or trust document of any
of the Seller Parties, or (b) violate any Agency Approval or any statute, code,
ordinance, order, writ, injunction,
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ruling, law, rule or regulation of any court or Regulatory Authority, directed
or applicable to any of the Seller Parties or any of their respective Assets.
5.6 NO UNDISCLOSED LIABILITIES. Seller has no liabilities or obligations of
any nature (whether absolute, accrued, contingent or otherwise) that could have
a Material Adverse Effect.
5.7 TAX RETURNS AND AUDITS. Except as set forth on SCHEDULE 5.9 hereto:
(a) no deficiency for any Tax or claim for additional Taxes by any Taxing
Authority has been proposed, asserted or assessed against Seller, except where
such delinquency would not have a Material Adverse Effect;
(b) there are no liens for Taxes upon the Acquired Assets of any of the
Seller Parties except Liens for current Taxes not yet due;
(c) none of the Seller Parties has been a United States real property
holding corporation within the meaning of Code section 897(c)(2);
5.8 LITIGATION. There is no claim, legal action, suit, arbitration,
investigation or hearing directly or indirectly affecting any of the Acquired
Assets and there are no other legal, administrative or governmental proceedings
pending or threatened, against any of the Seller Parties, the Acquired Assets or
directly or indirectly relating to this Agreement, the Ancillary Agreements or
the transactions contemplated hereby or thereby (or in which any of the Seller
Parties is plaintiff, defendant or otherwise a party thereto).
5.9 RESTRICTIONS; BURDENSOME AGREEMENTS. None of the Acquired Assets, other
than securities law restrictions applicable to the shares of Common Stock
included in the Acquired Assets, is subject to, or bound or affected by, any
charter, by-law or other corporate restriction, or any order, judgment, decree,
law, statute, ordinance, rule, regulation or other restriction of any kind or
character, which would, individually or in the aggregate have a Material Adverse
Affect.
5.10 COMPLIANCE WITH APPLICABLE LAW. Each of the Seller Parties holds all
licenses, franchises, permits and authorizations necessary for the lawful
conduct of its respective business as such business is now being conducted and,
each has, in the conduct of its respective business, continuously complied with,
and has not been and is not in default in any respect under, any applicable
laws, statutes, orders, rules, regulations, policies, and/or guidelines of any
federal, state or local governmental authority, Regulatory Authority or Agency
except where the failure to hold such licenses or permits would not have a
Material Adverse Effect. .
5.11 BROKERS AND FINDERS. None of the Seller Parties, or any officers,
directors or employees of the Seller Parties has incurred, directly or
indirectly, any liability for any brokerage fees, commissions, finders' fees or
other similar charges in connection with this Agreement, the Ancillary
Agreements or the transactions contemplated hereby or thereby.
5.12 GENERAL CONSENTS. No approvals, authorizations, consents, orders or
other actions of, or filings with (collectively, the "CONSENTS AND PERMITS"),
any Regulatory Authorities or other third parties are required (a) in connection
with the consummation of the transactions contemplated under this Agreement or
the Ancillary Agreements; (b) to prevent the violation, breach or termination
of, or any default under, or the creation of any Lien on any Acquired Asset
pursuant to the terms of, any law, regulation, order or other requirement or any
other Contract binding upon any of the Seller Parties or to which it or any of
their Assets may be subject, as a result of the transactions
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contemplated by this Agreement or the Ancillary Agreements; (c) to insure that
the Acquired Assets are transferred to Purchaser free and clear of any Liens and
in compliance with all applicable laws, rules and regulations including those of
any investor or Regulatory Authority; and (d) for continued use, ownership,
possession or disposition of the Acquired Assets or any interest therein. All
such Consents and Permits have been obtained and are in full force and effect
without any restriction or modification.
5.13 ENVIRONMENTAL COMPLIANCE MATTERS. Neither of the Seller Parties has
received any notice of any claim, proceeding or investigation under federal,
state or local law relating to air, soil, subsurface and water pollution, soil
monitoring and the storage, treatment, disposal, removal, remediation, release,
discharge or emission of any Hazardous Material (as defined below) which could
in any way, directly or indirectly, relate to any of the Acquired Assets. For
the purposes of this Agreement, "Hazardous Material" shall include and mean any
flammables, asbestos, explosives, radioactive materials, hazardous wastes, toxic
substances or related materials, including without limitation of any substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "toxic substances" under any applicable federal,
state, or local laws, rules, regulations or orders or which federal, state or
local laws, rules, regulations or orders designate as potentially dangerous to
public health and/or safety when present in the environment.
5.14 MORTGAGE LOANS. Except as set forth on SCHEDULE 5.18 attached to this
Agreement:
(a) Seller has provided to Purchaser true and correct copies of the
documents and other information with respect to each Mortgage Loan. All parties
to the mortgage note, deed of trust or mortgage and other documents contained in
the Loan File had legal capacity to enter into the Mortgage Loan and to execute
and deliver each such documents and each such document has been duly and
properly executed by such parties, and is the valid and binding obligation of
all parties thereto, enforceable in accordance with its terms;
(b) all taxes, governmental assessments, insurance premiums, water, sewer
and municipal charges, leasehold payments and ground rents which have previously
become due and owing as of the date hereof have been paid;
(c) none of the terms of any Mortgage Loan have been impaired, waived,
altered or modified in any respect, except by a written instrument, a copy of
which has been delivered to Purchaser and which has been recorded, if necessary,
to protect the interests of Seller. Each Mortgage Loan and all activities
conducted in connection therewith by Seller, and any other Person involved in
the processing, underwriting, origination and funding of any Mortgage Loan,
complied and continue to comply in all respects with any and all applicable
requirements of any federal, state or local law, any Regulatory Authority;
(d) All costs, fees and expenses incurred in making or closing of any
Mortgage Loan were paid, and the mortgagor is not entitled to any refund of any
amounts paid or due under the mortgage note, security instrument or other
documents related to the Mortgage Loan;
(e) Each Mortgage Loan contains customary and enforceable provisions such
as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, . There is no homestead or other exemption available to a
mortgagor which would interfere with the right to sell the Mortgage Property at
a trustee's sale or the right to foreclose;
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(f) To the knowledge of the Selling Parties, no Mortgage Loan IN WHICH
SELLER has any interest is subject to any right of rescission, set-off,
counterclaim or defense, including, without limitation, the defense of usury,
nor will the operation of any of the terms of the documents underlying such
Mortgage Loan, or the exercise of any right thereunder, render such Mortgage
Loan unenforceable, in whole or in part;
(g) there is no default, breach, violation or event of acceleration
existing under any Mortgage Loan in which Seller has any interest and no event
has occurred which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute such a default, breach, violation
or event of acceleration;
(h) Each mortgage is a valid, subsisting and enforceable first lien on the
respective Mortgaged Property, including all buildings on the Mortgaged Property
and all installations and mechanical, electrical, plumbing, heating and air
conditioning systems located in or affixed to such buildings which constitute
part of the Mortgaged Property under applicable law, and all additions,
alterations and replacements made at any time with respect to the foregoing.
Such lien is subject only to (a) the lien of current real property taxes and
assessments not yet due and payable; (b) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of the date
of recording which contain no enforceable provisions for forfeiture or reversion
of title and are acceptable to mortgage lending institutions generally for
properties similar to the Mortgaged Property, and are specifically referred to
in the lender's title insurance policy delivered to the originator of the
Mortgage Loan and (i) referred to or otherwise considered in the appraisal made
for the originator of the Mortgage Loan or (ii) which do not adversely affect
the appraised value of the Mortgaged Property as set forth in such appraisal;
and (c) other matters expressly disclosed in any applicable title insurance
policy which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
5.15 DISCLOSURE. No representation or warranty made by any of the Seller
Parties in this Agreement or any Ancillary Agreement to which each is a party or
in any Schedule, Exhibit to be furnished pursuant to or by any of the Seller
Parties in connection with this Agreement or any Ancillary Agreement contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact required to make the statements or information herein or
therein contained not misleading.
5.16 EXPERIENCE. The Seller Parties have substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Purchaser so that the Seller Parties are capable of
evaluating the merits and risks of its investment in the Purchaser and have the
capacity to protect the Seller Parties' own interests.
5.17 INVESTMENT. The Seller Parties are acquiring the Shares for investment
for their own accounts, not as a nominee or agent, and not with the view to, or
for resale in connection with, any distribution thereof. The Seller Parties
understand that the Shares to be purchased have not been, and will not be,
registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
by reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of Seller Parties'
representations as expressed herein.
5.18 ACCREDITED INVESTORS. Seller Parties are "accredited investors" as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
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5.19 RULE 144. The Seller Parties acknowledge that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from such registration is available. The Seller Parties are aware
of the provisions of Rule 144 promulgated under the Securities Act which permit
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions.
5.20 LEGENDS. It is understood that the certificates evidencing the Shares
may bear one or all of the following legends:
(a) "These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel satisfactory to the
Company that such registration is not required or unless sold pursuant to Rule
144 of such Act."
SECTION 6. REPRESENTATIONS AND WARRANTIES OF PURCHASER
As a material inducement to the Trust and Seller to execute and deliver
this Agreement and the Ancillary Agreements, and perform their obligations
hereunder and thereunder, Purchaser hereby represents and warrants as of the
Effective Date the following:
6.1 ORGANIZATION, GOOD STANDING AND POWER. Purchaser is a corporation duly
incorporated, validly existing, and in good standing under the laws of Delaware
and has the requisite corporate power to own, lease, and operate its properties
and assets, and to conduct its business as it is now being conducted. Purchaser
has the requisite corporate power and authority to enter into and perform its
obligations under this Agreement, and to issue and sell the Shares in accordance
with the terms hereof and thereof. The execution, delivery, and performance of
this Agreement by Purchaser and the consummation by it of the transactions
contemplated hereby have been, or prior to the closing will have been, duly and
validly authorized by all necessary corporate action, including compliance with
applicable listing rules of The Nasdaq Stock Market. The undersigned officer of
Purchaser has full authority to execute this Agreement and to bind Purchaser
hereby. This Agreement has been duly executed and delivered by Purchaser . This
Agreement constitutes a valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its terms.
6.2 ISSUANCE OF SHARES. The Shares to be issued under this Agreement have
been duly authorized by all necessary corporate action, including compliance
with applicable rules of The Nasdaq Stock Market, and when paid for or issued in
accordance with the terms hereof, the Shares shall be validly issued and
outstanding, fully paid and non-assessable.
6.3 COMPLIANCE WITH LAWS. In connection with the purchase of the Acquired
Assets and the issuance of the Shares Purchaser has complied with all applicable
federal securities laws, including the rules and regulations of the Securities
and Exchange Commission.
6.4 NO CONFLICT. Purchaser's execution of the Agreement and the Ancillary
Agreements and consummation of the transactions contemplated by such documents
do not and will not conflict with any provision of the Purchaser's certificate
or bylaws, or of any material agreement to which Purchaser is a party; will not
give rise to a default with respect to any legal obligation of Purchaser however
arising; and do not violate any judgment, order, decree, or other court or
governmental mandate affecting Purchaser or a material portion of Purchaser's
assets.
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6.5 NO ADVERSE CHANGE. Since December 31, 2000, there has not occurred any
change in the financial condition, business or operations of Purchaser and its
subsidiaries that would have a Material Adverse Effect on the Purchaser.
6.6 BOARD OF DIRECTOR APPROVAL. This Agreement, the Ancillary Agreements
and the transactions contemplated hereby and thereby have been approved by the
disinterested directors of the Board of Directors of Purchaser in accordance
with the General Corporation Law of the State of Delaware.
6.7 HSR FILING. The transactions contemplated by this Agreement and the
Ancillary Agreements do not give rise to an obligation to make a filing under
the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act.
SECTION 7. INDEMNIFICATION
7.1 NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements
of fact contained in any certificate, Schedule, Exhibit, or other document or
instrument or writing delivered by or on behalf of the Trust or Seller to
Purchaser or by or on behalf of Purchaser to the Seller Parties shall be deemed
to be representations and warranties by the delivering party to the receiving
party under this Agreement. All representations and warranties of the Trust or
Seller shall survive any and all inspections, examinations or audits on behalf
of Purchaser, and shall be binding upon the parties to this Agreement, their
successors and assigns, and the representations and warranties of the parties
hereto shall survive until such time as the applicable statute of limitations
expire with respect to the matters set forth therein.
7.2 INDEMNIFICATION BY THE TRUST AND SELLER. The Trust and the Seller,
jointly and severally, hereby covenant and agree with Purchaser that, regardless
of any investigation made at any time by or on behalf of Purchaser or any
information Purchaser may have and regardless of the closing of the transactions
contemplated herein, the Seller Parties jointly and severally shall indemnify
Purchaser, Purchaser's directors, officers and Affiliates, and each of their
successors and assigns (each, a "PURCHASER INDEMNIFIED PARTY") and hold them
harmless from, against and in respect of any and all costs, losses, claims,
liabilities, fines, penalties, incidental and consequential damages, lost
profits and expenses (including interest which may be imposed in connection
therewith and court costs and fees and disbursements of counsel) (collectively,
the "DAMAGES") incurred by any of them in connection with:
(a) any breach of, or any inaccuracy in, any of the representations,
warranties, covenants or agreements made by the Trust or Seller in this
Agreement, any Ancillary Agreement, Exhibit or Schedule to this Agreement or the
Ancillary Agreements or any certificate, instrument or writing delivered in
connection herewith or therewith;
(b) any taxes of any kind whatever, or expenses, interest or penalties
relating thereto, which arise out of or result from the execution and delivery
of this Agreement or the Ancillary Agreements, or the transactions contemplated
hereby and thereby;
(c) any actual, pending or threatened litigation existing against or
affecting Seller or the Trust;
(d) any failure of Seller, prior to the date hereof, to reconcile or
account properly for all funds held Seller for the benefit of a borrower;
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(e) any repairs, adjustments or modifications required to any latent or
patent defects existing in the Acquired Assets existing at the date hereof which
exceed, in the aggregate for all such repairs, $5,000. The cost of such repairs
shall include the allocable portion of wages of full-time employees of the
Purchaser attributable to the performance of such services;
(f) any action, suit, proceeding, compromise, settlement, assessment or
judgment arising out of or incidental to any of the matters indemnified against
in this Section; PROVIDED, HOWEVER, that neither the Trust nor Seller, as
applicable, shall be obligated to indemnify a Purchaser Indemnified Party under
this Section with respect to any settlement of a claim to which either or both
the Trust or Seller, as applicable, has not consented, which consent shall not
unreasonably be withheld, delayed or conditioned.
No provision of this Section 7.2 shall be deemed to restrict or prevent the
Purchaser's full compliance with the terms of that certain Indemnity Agreement
between Purchaser and Xxxx X. Xxxx or any provision of Purchaser's Certificate
of Incorporation or Bylaws.
If, by reason of the claim of any third Person relating to any of the
matters subject to indemnification under this Section, a Lien, attachment,
garnishment or execution is placed upon any of the Acquired Assets of any
Purchaser Indemnified Party, the Trust and/or Seller, as applicable, shall also,
promptly upon demand, furnish an indemnity bond satisfactory to Purchaser
Indemnified Party to obtain the prompt release of such Lien, attachment,
garnishment or execution. The Seller Parties' liability pursuant to these
indemnity obligations shall not exceed $22,000,000.
SECTION 8. FURTHER AGREEMENTS OF THE PARTIES
8.1 TRANSFER OF SERVICING RIGHTS. Within three (3) business days after the
date hereof, Seller shall have complied with Purchaser's reasonable requests
pertaining to the processing and shipping of loan files, insurance files, tax
records, collection records, accounting records and any other records that
Purchaser deems necessary to convert and service the Mortgage Loans in
accordance with the requirements of any Regulatory Authority. In addition,
Seller shall cooperate with Purchaser, at Seller's cost, in providing necessary
information and documents that are necessary or convenient to Purchaser's
ownership, use, possession or disposition of the Acquired Assets (or any
interest therein) within a reasonable time after the date hereof.
8.2 PAYMENTS RECEIVED AFTER THE DATE HEREOF.. Seller shall remit to
Purchaser all funds received in connection with the Mortgage Loans after the
date of this Agreement, including but not limited to tax, insurance, principal,
interest, mortgage guaranty or mortgage insurance payments, insurance loss
drafts and tax refunds, and all other types of payments, without offset of
deduction within three business days after the receipt thereof. Seller shall
endorse and deliver to Purchaser any and all such payments received by it from
and after the date hereof. Purchaser shall be entitled to the service fees and
other servicing related income on all such payments. Such funds shall be
identified by Seller's loan numbers and forwarded to Purchaser at Seller's
expense by overnight, next business day delivery, at the following address: at
000 Xxxxxxxxx Xxx, Xxxxxxxxx, Xxxxxx 00000. In addition, Seller shall deliver to
Purchaser, promptly after receipt by Seller, copies of all correspondence
received from any mortgagor or anyone else relating to any of the Mortgage
Loans.
8.3 FURTHER AGREEMENTS OF THE TRUST, PURCHASER, AND SELLER. The Trust and
Seller, on the one hand, and Purchaser, on the other, shall upon the request of
the other party from time to time execute and deliver to the other party, as
applicable, such further bills of sales, endorsements and other good and
sufficient instruments of title, conveyance, transfer and assignment as may be
Page 11
necessary or desirable in order to vest in Purchaser the Acquired Assets free
and clear of any and all Liens, including, without limitation, executing and
delivering such documents as may be necessary to name Purchaser as an additional
insured on each policy of title, hazard or other insurance covering the Acquired
Assets.
Each of Purchaser, Seller and the Trust acknowledge and agree that any and
all information which has been disclosed by one party to the other, its
employees, consultants and agents, during the discussions and negotiations
leading to the execution of this Agreement and the Ancillary Agreements,
constitutes confidential information. Each party hereby expressly agrees, for
itself and on behalf of its directors, principal officers, managers, employees,
agents, consultants and representatives, that it and they will not at any time,
use or disclose, other than in accordance with the terms and provisions of this
Agreement, any of such confidential information ; PROVIDED, HOWEVER, that each
party may use or disclose such confidential information of the other without
restriction if such information (a) were or are available to such party on a
non-confidential basis from a source other than the other party; or (b) were or
become generally available to the public (other than as a result of an
impermissible disclosure by such party or its Affiliates); and PROVIDED,
FURTHER, that if any party is requested or required (by oral question,
interrogatories, requests for information or documents, subpoena or similar
process) to disclose any of such information of the other, such disclosure may
be made without liability hereunder (although notice of such request or
requirement shall be given to the relevant party so that, if practicable, that
party may seek a protective order against such disclosure). Notwithstanding the
foregoing, no provision of this Section shall in any manner whatsoever prevent
or inhibit (x) the Trust, Seller or Purchaser from disclosing any information to
any Regulatory Authority that may be required as a condition of granting its
consent to this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby or (y) Purchaser from disclosing any such
confidential information (i) to any Affiliate of Purchaser or, (ii) to the
extent necessary to comply with the requirements of any statute, rule or
regulation of any public or private entity. Each party acknowledges that in the
event of a violation by the other of the terms and provisions of this Section,
available remedies at law would not be adequate; and accordingly, in such event
such party may proceed to protect and enforce its rights under this Section by a
suit in equity for specific performance hereof, or for an injunction against the
violation hereof. Notwithstanding the foregoing, the parties hereto acknowledge
and agree that the information disclosed in that certain press release dated as
of January 18, 2000 relating to the purchase and sale of the Acquired Assets is
not confidential information for purposes of this Agreement.
Except with respect to the press release dated as of January 18, 2000
relating to the purchase and sale of the Acquired Assets, no party may issue a
press release or otherwise make a public statement or announcement with respect
to the transaction contemplated hereby without the prior consent of the other
parties, except to the extent required by applicable law, rule or regulation.
SECTION 9. MISCELLANEOUS
9.1 EXPENSES. Except as specifically provided to the contrary in this
Agreement, each party hereto shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby; provided, however, that real
estate transfer taxes occasioned solely by reason of the sale and transfer of
the Purchaser Assets in accordance with this Agreement shall be borne by Seller.
9.2 ASSIGNABILITY. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective transferees, successors and assigns.
Page 12
9.3 ARBITRATION. All disputes, controversies or differences which are not
settled by common accord shall be conclusively settled by arbitration in San
Francisco, California, in accordance with the rules of the AAA, and judgment and
the award rendered by the arbitration panel may be entered in any court or
tribunal of competent jurisdiction. In any arbitration proceeding conducted
pursuant to this Section, both parties shall have the right to discovery, to
call witnesses and to cross-examine the other party's witnesses (either through
legal counsel, expert witnesses or both). All decisions of the arbitration panel
shall be final, conclusive and binding upon all parties, and shall not be
subject to judicial review.
9.4 NOTICES. All notices, requests, demands and other communications
(collectively, "NOTICES") given or made pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given if sent by telex, telecopy
or by registered or certified mail, return receipt requested, postage and fees
prepaid, or otherwise actually delivered, to the following addresses:
(a) If to Purchaser, to:
Valence Technology, Inc.
000 Xxxxxxxxx Xxx
Xxxxxxxxx, Xxxxxx 00000
Attn.: Chief Financial Officer
(b) If to the Trust, to:
Xxxxx X. Xxxx, Trustee,
00000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx
(c) If to the Seller, to:
Xxxxx X. Xxxx, Trustee,
00000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx
Any notice shall be deemed duly given when received by the addressee thereof,
provided that any notice sent by registered or certified mail shall be deemed to
have been duly given two days after the date of deposit in the United States
mails, unless sooner received. Any of the parties to this Agreement may from
time to time change its address or facsimile number for receiving notice by
giving written notice thereof in the manner set forth above.
9.5 EXHIBITS AND SCHEDULES. Each Exhibit and Schedule delivered pursuant to
the terms of this Agreement, each document, instrument, certificate delivered by
Purchaser, the Trust or Seller in connection with the transactions contemplated
hereby and each Ancillary Agreement constitutes an integral part of this
Agreement.
9.6 WAIVER AND AMENDMENT. No provision of this Agreement may be waived
unless in writing signed by all the parties to this Agreement, and waiver of any
one provision of this Agreement shall not be deemed to be a waiver of any other
provision. This Agreement may be amended only by a written agreement executed by
the parties to this Agreement.
Page 13
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED BOTH
AS TO VALIDITY AND PERFORMANCE AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES
THEREOF.
9.8 CAPTIONS; CERTAIN TERMS. The various captions and headings contained in
this Agreement are for reference only and shall not be considered or referred to
in resolving questions of interpretation of this Agreement. As used in this
Agreement, the term "including" means "including but not limited to", and the
word "or" is not exclusive unless otherwise specified.
9.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
9.10 ATTORNEYS' FEES. If any action, suit or other proceeding is instituted
to remedy, prevent or obtain relief from a default in the performance by any
party of its obligations under this Agreement, the prevailing party shall
recover all of such party's reasonable attorney's fees incurred in each and
every such action, suit or other proceeding, including any and all appeals or
petitions therefrom.
9.11 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
9.12 RIGHTS CUMULATIVE. No right granted to the parties under this
Agreement on default or breach is intended to be in full or complete
satisfaction of any damages arising out of such default or breach, and each and
every right under this Agreement, or under any other document or instrument
delivered hereunder, or allowed by law or equity, shall be cumulative and may be
exercised from time to time.
9.13 TIME OF THE ESSENCE. Time is of the essence of each provision of this
Agreement in which time is an element.
9.14 MERGER OF PRIOR NEGOTIATIONS AND AGREEMENTS. This Agreement and the
Ancillary Agreements constitute the entire agreement of the parties and
supersedes all other prior agreements, understandings, representations and
warranties, both written and oral, between the parties with respect to the
subject matter hereof.
9.15 REPORTING TO IRS. The parties agree to cooperate in preparing and
filing any returns which are required to be filed with the Internal Revenue
Service ("IRS") under any applicable section of the Code and the regulations
promulgated thereunder, all of which shall be consistent with Section 2.4. To
the extent a party, after written notice given by the other party, fails to
provide the information to be disclosed to the IRS pursuant to the Code in a
correct and timely manner, such party shall be responsible for, and shall
indemnify the other party against any penalties or interest assessed by the IRS.
9.16 THIRD PARTIES.18. No provision of this Agreement is intended to be for
the benefit of any creditor or other person to whom any debt, liability or
Page 14
obligation is owed by either party, or to create any debt, liability or
obligation in favor of any creditor or other person.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above mentioned.
PURCHASER
By: /S/ XXX X. XXXX
-----------------------------------
Xxx X. Xxxx
Chief Financial Officer
SELLER
By: /S/ XXXX X. XXXX
-----------------------------------
Xxxx X. Xxxx
President
THE TRUST
By: /S/ XXXXX X. XXXX
-----------------------------------
Xxxxx X. Xxxx
Trustee
