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EXHIBIT 10.29
LITHIUM TECHNOLOGY CORPORATION
$_________ CONVERTIBLE NOTE
PURCHASE AGREEMENT
October 23, 1996
Mr. _____________________
_________________________
____________, ___________
Dear Sir:
Lithium Technology Corporation, a corporation organized under the laws
of the State of Delaware (the "Company"), proposes to issue and sell to you
(hereinafter the addressee of this Agreement is sometimes referred to
individually as the "Purchaser") $_________ principal amount of the Company's
10% Convertible Notes (the "Notes") that are convertible into shares (defined
below as the "Escrowed Shares") of the Company's common stock (the "Common
Stock"). The Notes and the Escrowed Shares will be offered and sold to you
without being registered under the United States Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon certain exemptions therefrom.
The Notes and the Escrowed Shares are sometimes collectively referred to herein
as the "Securities".
In connection with the offer and sale of the Notes and the Escrowed
Shares, the Purchaser has been provided with copies of the Company's Report on
Form 10-KSB for the year ended December 31, 1995, Reports on Form 10-QSB for the
quarters ended March 31, 1996 and June 30, 1996, all of the Company's reports on
Form 8-K filed with the United States Securities and Exchange Commission ("SEC")
during 1996, the Company's Registration Statement on Form SB-2 as filed with the
SEC on September 3, 1996, the Company's Registration Statement on Form S-8 as
filed with the SEC on October 9, 1996, and all of the Company's press releases
issued during 1996 (collectively, the "Disclosure Documents").
1. Purchase and Delivery.
(a) Upon the basis of the representations and warranties and
other terms and conditions herein contained, the Company hereby
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agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase
from the Company, the aforesaid principal amount of Notes. The Purchaser agrees
to purchase the principal amount of the Notes as set forth opposite the
Purchaser's name on the signature page of this Agreement.
(b) Payment for the Notes shall be made by the Purchaser in
United States Dollars by wire transfer or certified or official bank check or
checks, payable to the order of the Company in New York Clearing House or other
next day funds, as instructed by the Company, in the aforesaid amount at 10:00
a.m., New York City time, on the date hereof or at such other time and date as
the Purchaser and the Company may agree upon in writing, such time and date
being herein called the "Closing Date", against delivery of (i) the Notes to the
Purchaser and (ii) such other documents and closing deliveries as are mutually
agreed upon.
(c) The principal amount of the Notes shall be repaid on the
earlier to occur of (i) the expiration of the period of ninety (90) days from
and after the Closing Date or (ii) the closing of an underwritten offering of
the Company's Common Stock registered with the SEC and as described in the
commitment letter between the Company and ▇▇▇▇▇▇▇ & Co. attached hereto as
Exhibit A (hereinafter the "Underwritten Offering"). The repayment date shall
hereinafter be referred to as the "Maturity Date". The Company shall have the
right upon five (5) days prior written notice to extend the Maturity Date of the
Notes on two (2) occasions (respectively the "First Extension" and the "Second
Extension") for periods not to exceed thirty (30) days. The Company shall not
have the right to extend the Maturity Date of the Notes beyond the closing date
of the Underwritten Offering. In the event that (a) the Company has not
delivered either of the aforesaid extension notices and (b) the Company has not
repaid the Notes as of the then applicable Maturity Date, the Company shall
nevertheless be deemed to have elected to extend the Notes as if the Company
actually had delivered the extension notice, and the First Extension Shares
and/or the Second Extension Shares as applicable (as defined in the stock
purchase agreement referred to in Section 1(d) hereof as Exhibit B) shall be
deemed to have been earned by the Purchaser. Interest on the Notes arising on or
before the 150th day after the Closing Date shall be paid and satisfied in full
by the Investment/Interest Shares issued to the Purchaser in accordance with the
stock purchase agreement referred to in Section 1(d) hereof as Exhibit B. In the
event that any principal amount of the Notes remains unpaid or not converted
into Escrowed Shares on or after 151st day after the Closing Date, the unpaid
principal amount (until paid or converted into Escrowed Shares) shall accrue
interest at the rate of 10.0% per annum based on a 360-day year, which interest
(i) shall accrue for, and be payable in cash at the end of, the first six months
commencing on such 151st day and (ii) shall thereafter accrue and be payable in
cash on a monthly basis in arrears.
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(d) In the event that the principal amount of the Notes is not
repaid on or before the expiration of the period of ninety (90) days from and
after the Closing Date, the Company shall on the 91st day from and after the
Closing Date, in accordance with the applicable terms of the stock purchase
agreement in substantially the form of Exhibit B hereto, cause to be issued to
the Purchaser and deposited with an escrow agent mutually satisfactory to the
Purchaser and the Company, pursuant to an exemption from registration of the
Common Stock under Regulation S under the Securities Act the number of shares of
Common Stock of the Company equal to U.S. $3,500,000 divided by 70% of the
lesser of (i) the Current Market Value of the Company's Common Stock on the date
of issuance of such shares or (ii) the Current Market Value of the Company's
Common Stock on the Closing Date, which quotient shall then be multiplied by the
fraction whose numerator is the principal amount of the Purchaser's Notes on the
Closing Date and whose denominator is $1,750,000 (the "Escrowed Shares")
provided, however, that in the event that the Company exercises the First
Extension and the Current Market Value of the Company's Common Stock is less on
the 121st day after the Closing Date than the Current Market Value of the
Company's Common Stock was on the 91st day after the Closing Date, then the
number of Escrowed Shares determined in accordance with this sentence, issued to
the Purchaser, and deposited with the aforementioned escrow agent shall be
recalculated as of the 121st day as if the Current Market Value of the Company's
Common Stock referred to in sub-clause (i) of this Section 1(d) were determined
on such 121st day after the Closing Date; and further, provided, that in the
event that the Company exercises the Second Extension and the Current Market
Value of the Company's Common Stock is less on the 151st day after the Closing
Date than the Current Market Value of the Company's Common Stock was on either
the 91st day after the Closing Date or the 121st day after the Closing Date,
then the number of Escrowed Shares determined in accordance with this sentence,
issued to the Purchaser, and deposited with the aforementioned escrow agent
shall be recalculated as of the 151st day after the Closing Date as if the
Current Market Value of the Company's Common Stock referred to in sub-clause (i)
of this Section 1(d) were determined on such 151st day after the Closing Date.
It is the expressed understanding of the Purchaser and the Company that the
Escrowed Shares shall not be released from escrow until and unless an Event of
Default (as defined in the Notes) has occurred under the Notes, or as otherwise
provided herein or in the Escrow Agreement.
(e) For purposes of this Agreement, the term "Current Market
Value" shall mean the average of the daily averages of the closing bid and
closing asked prices of the Common Stock for the five (5) trading days
immediately preceding the days on which the calculation is being made and given
effect.
(f) In the event the Company pre-pays the Notes in full
on or before the 39th day after the Closing Date, the Company shall
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receive from the Purchaser (to be retired into the Company's treasury) the
number of the Purchaser's Investment/Interest Shares (as defined in the stock
purchase agreement referred to in Section 1(d) hereof as Exhibit B) or other
shares of the Company's Common Stock owned by the Purchaser that is equal to:
Principal Amount of
Purchaser's Notes on Prepayment Prepayment
$43,750 X Closing Date divided by Discount Price = Discount
--------------------
$1,750,000 Shares
For purposes of this Agreement the term "Prepayment Discount Price" shall mean
the greater of (i) the Current Market Value of the Company's Common Stock on the
Closing Date or (ii) the Current Market Value of the Company's Common Stock on
the day of such pre-payment.
(g) The Notes shall be issued in substantially the form
attached hereto as Exhibit C.
2. Conversion Privilege and Conversion Rate. Subject to and upon
compliance with the provisions of this Section 2, at the option of the Purchaser
after an Event of Default, all or a portion of the outstanding Notes may be
converted into the number of Escrowed Shares (calculated as to the nearest 1/100
of a share) calculated by taking the number of Escrowed Shares issued to the
Purchaser pursuant to Section 1(d), and multiplying such number of Escrowed
Shares by the fraction whose numerator is the principal amount of the Notes
being so converted, and whose denominator is the principal amount of the
Purchaser's Notes on the Closing Date. Such conversion right shall expire upon
the earlier of (i) repayment of the Notes or (ii) November 2, 1998, and such
conversion right shall be the Purchaser's exclusive remedy in the event of the
Company's failure to pay the principal amount of the Notes. In the event that
any or all of the principal amount of the Purchaser's Notes remains unpaid at
the close of business on November 2, 1998, such unpaid principal amount shall be
converted in full into the Escrowed Shares as provided herein, which Escrowed
Shares shall be delivered to the Purchaser by the Escrow Agent and shall
constitute payment in full of any and all obligations under the Notes other than
any accrued and unpaid interest.
(a) Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the Purchaser shall surrender all the Notes, duly
endorsed, in accordance with the escrow agreement substantially in the form of
Exhibit D hereto (the "Escrow Agreement") accompanied by written notice to the
Company that the Purchaser elects to convert such Notes, unless otherwise
provided herein.
(b) Notes shall be deemed to have been converted
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immediately prior to the close of business on the day of surrender of such Notes
for conversion in accordance with the foregoing provisions, and at such time the
rights of the Purchaser of such Notes shall cease except for the right of the
Purchaser to receive the specified shares, and the Purchaser shall be treated
for all purposes as the record holder of such Common Stock at such time. As
promptly as practicable on or after the conversion date but within three days
thereafter if the Purchaser has an agent in New York City to accept delivery of
the stock certificates and within five days thereafter if the Purchaser does not
have an agent in New York City to accept delivery of the stock certificates, the
Company shall issue and shall deliver to the Purchaser a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share. All shares
of Common Stock delivered upon conversion thereof shall bear a restrictive
legend to comply with applicable securities laws.
(c) Fractions of Shares. No fractional shares of Common Stock
shall be issued upon conversion of Notes. Instead of any fractional share of
Common Stock which would otherwise be issuable upon conversion of any Notes, the
Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the Current Market Value per share of Common Stock
on the business day immediately preceding the day of conversion.
3. Company's Representations and Warranties. The Company hereby
represents and warrants to, and agrees with, the Purchasers that:
(a) The Disclosure Documents do not contain any untrue
statement of a material fact or omit to state any material fact as of their
respective dates of filing with the SEC and/or issuance to the media (as
applicable) necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. There has been no
material adverse change in the Company's business or financial condition since
October 14, 1996.
(b) The Company has been duly incorporated, is validly
existing, and is in good standing under the laws of the State of Delaware with
corporate power and authority to own its property and to conduct its business as
described in the Disclosure Documents and to enter into and perform its
obligations under this Agreement.
(c) All of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and will not subject the holders thereof to personal liability by
reason of being such holders. There are no preemptive rights of any shareholder
of the Company with respect to any securities of the Company. The shares of
Common Stock issuable upon conversion of the Notes have been duly and validly
authorized
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and reserved for issuance and, when issued and delivered in accordance with the
terms of this Agreement, will be duly and validly issued, fully paid and
non-assessable. The Company is a "Domestic Issuer" and a "Reporting Issuer," as
such terms are defined by Rule 902 of Regulation S. The Company has registered
its common stock pursuant to Section 12(b) or (g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), is in full compliance with all
reporting requirements of either Section 13(a) or 15(d) of the Exchange Act, and
the Company's common stock trades on the Electronic Bulletin Board. The Company
has not offered the Notes or its shares (which are the subject matter of this
Agreement or the note agreements, stock purchase agreements, and/or warrants of
even date herewith) to any person in the United States, any identifiable group
of U.S. citizens abroad, or to any U.S. Person (as defined by Regulation S). At
the time the buy order (if any) was originated, the Company and/or its agents
reasonably believed the Purchaser was outside the United States and was not a
U.S. Person based on the Purchaser's representations set forth herein. The
Company and/or its agents reasonably believe that the sale of Escrowed Shares
has not been prearranged with a buyer in the United States. The execution and
delivery of this Agreement and the consummation of the issuance of the Escrowed
Shares and the transactions contemplated by this Agreement do not and will not
(1) require the consent, authorization, or approval of any third party or any
government body, or (2) conflict with or result in a material breach by the
Company of any of the terms or provisions of, or constitute a material default
under, the articles of incorporation or bylaws of the Company, or any indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
or any existing applicable decree judgment or order of any court, Federal or
State regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets. The Company
will instruct its transfer agent to issue one or more share certificates
representing the Escrowed Shares with the following restrictive legend set forth
below in the name of the Purchaser and in such denominations to be specified by
the Purchaser prior to closing:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ISSUED PURSUANT TO REGULATION S UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF TO ANY U.S.
PERSON (AS SUCH TERM IS DEFINED UNDER REGULATION S) UNTIL THE
41st DAY FOLLOWING THE DATE OF THEIR PURCHASE BY THE
REGISTERED HOLDER. AS SUCH, THIS LEGEND, AND ANY EXISTING STOP
TRANSFER INSTRUCTIONS TO THE TRANSFER AGENT SHALL EXPIRE ON
_______, 1996.
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The Company further warrants that no instructions other than these
instructions, and instructions for a "stop transfer" until the end of the
Restricted Period (as defined by Regulation S), have been given to the transfer
agent and also warrants that the Escrowed Shares shall otherwise be freely
transferable on the books and records of the Company after the end of the
Restricted Period in compliance with Regulation S. The Company will notify the
transfer agent of the date of completion of the offering and of the date of
expiration of the Restricted Period. The Company has taken and will take no
action that will affect in any way the running of the Restricted Period or the
ability of the Purchaser to resell the Escrowed Shares in accordance with
applicable securities laws and this Agreement; and the Company will comply with
all applicable securities laws and regulations with respect to the sale of the
Escrowed Shares, including but not limited to the filing of all reports required
to be filed in connection therewith with the Securities and Exchange Commission
or any stock exchange or NASDAQ or any other regulatory authority.
(d) The Notes have been duly authorized by the Company and,
when issued, delivered and paid for pursuant to this Agreement, will have been
duly executed, issued and delivered and will constitute valid and legally
binding obligations of the Company, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, and subject, as to the enforcement of the conversion right with
respect to securities held by foreign persons, to the Exon-▇▇▇▇▇▇ provision of
the Omnibus Trade and Competitiveness Act of 1988 ("Exon-▇▇▇▇▇▇").
(e) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and legally binding
obligation of the Company, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles, and
subject, as to the enforcement of the conversion right with respect to
securities held by foreign persons, to the Exon-▇▇▇▇▇▇ provision of the Omnibus
Trade and Competitiveness Act of 1988 ("Exon-▇▇▇▇▇▇").
(f) Neither the Company nor any of its affiliates (as defined
in Rule 501(b) under the Securities Act, each an "Affiliate") or any person
acting on its or their behalf (other than the Purchaser) has engaged or will
engage in any directed selling efforts (as that term is defined in Regulation S
under the Securities Act ("Regulation S") with respect to the Securities and
Company, and its Affiliates and any person acting on their behalf (other than
the Purchaser) have complied, and will comply, with the offering restrictions
requirement of Rule 903 of Regulation S assuming for such purposes that the
representations, warranties and covenants of the Purchaser contained in this
Agreement are true and
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correct or have been and will be complied with. The Company has not entered
into, and will not enter into, any contractual agreement with respect to the
distribution of the Securities except for the arrangements with the Purchaser.
(g) To the best of the Company's knowledge after due
investigation none of the Company's current products are included in any of the
U.S. Government's control lists including without limitation munitions lists,
U.S. Commerce Department lists, missile control lists, and chemical control
lists.
4. Purchaser's Representations and Warranties. The Purchaser hereby
represents and warrants to, and agrees with, the Company that:
(a) The Purchaser (if not a natural person) has been duly
organized, is validly existing, and is in good standing under the laws of the
jurisdiction of its formation with corporate or other power and authority to own
its property and to conduct its business and to enter into and perform its
obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement
by the Purchaser has been duly authorized by all necessary action of the
Purchaser.
(c) This Agreement constitutes the legal, valid and binding
obligation of the Purchaser enforceable in accordance with its terms, except as
the same may be modified by bankruptcy, insolvency, moratorium and other similar
laws affecting creditors' rights generally and by general principles of equity.
(d) The Purchaser has received and reviewed the Company's
Disclosure Documents and the Purchaser or the Purchaser's designated
representative has concluded a satisfactory due diligence investigation of the
Company and has had an opportunity to have all their questions regarding the
Company satisfactorily answered.
(e) The Purchaser is acquiring the Securities for investment
purposes only without intent to distribute the same, and acknowledges that (A)
the Securities have not been registered under the Securities Act and applicable
state securities laws, and accordingly, constitute "restricted securities" for
purposes of the Securities Act and such state securities laws, (B) the Purchaser
will not be able to transfer the Securities except upon compliance with the
registration requirements of the Securities Act and applicable state securities
laws or exemptions therefrom including without limitation Regulation S, (C) the
certificates evidencing the Securities may contain a legend to the foregoing
effect, (D) the Securities are speculative and involve a high degree of risk and
the Purchaser is able to sustain the loss of the entire amount
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of his/its investment, and (E) the Purchaser has previously invested in
unregistered securities and has sufficient financial and investing expertise to
evaluate and understand the risks of the Securities.
(f) The Purchaser is not a United States person, United States
citizen or resident nor an entity organized under the laws of the United States
or any of the States, nor located in the United States, nor purchasing the
Securities directly or indirectly for the account or benefit of or on behalf of
a United States citizen or resident or such entity. The Purchaser is familiar
with and understand the provisions of Regulation S promulgated under the
Securities Act.
5. Covenants of the Company. In further consideration of the
Purchaser's agreements herein contained, the Company covenants and agrees with
the Purchaser as follows:
(a) To qualify the Escrowed Shares for offer and sale under
the state securities or blue sky laws of such jurisdictions as the Purchaser
shall reasonably request and to maintain such qualifications in effect for so
long as required for the resale of the Purchaser's Escrowed Shares by the
Purchaser, in no case to exceed one year from the date of conversion and except
that the Company shall not be required in connection therewith to qualify as a
foreign corporation.
(b) The Company agrees to reserve and keep available at all
times, free of pre-emptive rights, shares of Common Stock for the purpose of
enabling the Company to satisfy any obligations to issue shares of its Common
Stock upon conversion of the Notes.
(c) The Company agrees to prepare and cause to be filed with
the SEC not later than thirty (30) days after the Closing Date the registration
statement contemplated by that certain commitment letter between the Company and
▇▇▇▇▇▇▇ & Co. pertaining to ▇▇▇▇▇▇▇'▇ firm commitment underwriting of a public
offering of the Company's Common Stock to result in gross proceeds to the
Company of approximately $7 million to $10 million. The Company shall promptly
respond to comments received from the SEC Staff regarding such registration
statement and diligently use the Company's best efforts to achieve the
effectiveness of such registration statement as soon as possible and before the
Maturity Date of the Notes, provided that no breach of this covenant shall be
deemed to have occurred if such registration statement has not been declared
effective on or before the Maturity Date if the Company has used its best
efforts.
(d) The Company agrees to pay the legal fees and other
out-of-pocket expenses of the Purchasers arising out of the transactions
contemplated by this Agreement and related agreements upon the submission of
appropriate invoices therefor up to a
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maximum of $20,000 in the aggregate for all of the Purchasers who are purchasing
the Company's Notes pursuant to agreements of even date and like terms herewith.
(e) The Company agrees to repay the principal amount of the
Notes out of the proceeds resulting from the closing of the Underwritten
Offering (as defined hereinabove). In the event that the Company has not
satisfied this Section 5(c) by the close of business on the first business day
after the closing of the Underwritten Offering, then (notwithstanding anything
to the contrary in this Agreement) the Company shall cause the Escrowed Shares
to be issued and delivered to the Escrow Agent by the close of business on the
second business day after the closing of the Underwritten Offering.
(f) The Company agrees not to take any action (except as
required by law, court order, or legal process) under Exon-▇▇▇▇▇▇ with respect
to the transactions contemplated by this Agreement and/or any of the agreements
relating to this Agreement.
(g) The Company acknowledges and agrees that the Company shall
permit, and use its best efforts to facilitate, the assignment and transfer of
the Escrowed Shares in order to cure any violation or asserted violation of
Exon-▇▇▇▇▇▇ arising out of the Purchaser's ownership of the Escrowed Shares.
6. Company's Conditions to Closing. The Company's obligation to issue
and sell the Notes will be subject to the accuracy of the representations and
warranties of the Purchaser and to the performance by the Purchaser of its/his
obligations hereunder.
7. Purchaser's Conditions to Closing. The Purchaser's obligation to
purchase and pay for the Notes will be subject to the accuracy of the
representations and warranties on the part of the Company herein as of the
Closing Date, to the performance by the Company of its obligations hereunder and
to the following additional conditions precedent:
(a) The Purchaser shall have received from Company's Chief
Executive Officer or President and the Chief Financial Officer of the Company a
certificate, dated the Closing Date, in which such officers shall state that, to
the best of their knowledge and after reasonable investigation, the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date, and the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date.
(b) The Purchaser shall have received from the Company's Chief
Executive Officer, President and Chief Financial Officer a certification in
substantially the form of Exhibit E hereto with
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respect to the Company's use of the proceeds resulting from the sale and
purchase of the Notes.
(c) The Purchaser shall have received on the Closing Date the
opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, dated the Closing
Date, to the effect that:
(i) The Company is validly existing and is in good
standing under the laws of the State of Delaware;
(ii) This Agreement has been duly authorized,
executed and delivered by the Company;
(iii) The Notes have been duly authorized, and when
executed and delivered to and paid for by the Purchaser in accordance with the
terms of this Agreement, will constitute valid and legally binding obligations
of the Company enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles, and
subject, as to enforcement of the conversion right of the Notes held by foreign
persons, to Exon-▇▇▇▇▇▇;
(iv) Assuming that the representations, warranties
and covenants of the Purchaser contained in this Agreement are true and correct
or have been and will be complied with, no consent, approval, authorization,
order, registration or qualification of or with any court or governmental agency
or body is required for the issuance and sale of the Securities or the
performance by the Company of its obligations thereunder, the conversion of the
Notes into shares of Common Stock, the issuance of those certain shares (the
"Escrowed Shares") to be issued in accordance with a certain stock purchase
agreement of even date herewith in the event that the Notes are not repaid on or
before the expiration of the 90-day period commencing on the Closing Date, or
the consummation by the Company of the transactions contemplated by this
Agreement.
The foregoing opinion may be limited to the laws of the United
States, the laws of the State of New Jersey, and the laws of the State of
Delaware. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ may rely as to questions of fact upon the
representations of the Company and the Purchasers set forth in this Agreement
and upon certificates of officers of the Company and of government officials. In
addition, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ may state that it has made no special
inquiry or investigation in respect of opinions that are rendered to the
knowledge and information of such firm.
8. Offering of Securities; Restrictions on Transfer.
(a) The Purchaser acknowledges and agrees that the Notes and
the Escrowed Shares issuable upon conversion of the Notes have not been and will
not be registered under the Securities Act and
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have not been and may not be offered or sold within the United States or to, or
for the account or benefit of, United States persons except in accordance with
Regulation S or pursuant to an exemption from the registration requirements of
the Securities Act. The Purchaser represents and agrees that it/he will offer
and sell the Securities only in accordance with (i) Regulation S, (ii) an
exemption from registration under the Securities Act, or (iii) an effective
registration statement under the Securities Act. Without limiting the generality
of the foregoing, the Purchaser agrees that it/he will not transfer the Notes
and Escrowed Shares on or prior to forty (40) days after the Closing Date.
(b) The Purchaser further acknowledges and agrees that neither
it/he nor its/his affiliates, nor any persons acting on its/his behalf, has
engaged or will engage in any directed selling efforts in the United States (as
defined in Regulation S) with respect to the Securities, and the Purchaser,
its/his affiliates and all persons acting on each Purchaser's behalf have
complied and will comply with the offering restrictions requirement of
Regulation S. The Purchaser agrees that, at or prior to confirmation of any sale
of Securities the Purchaser will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases the
Securities from such Purchaser during the restricted period a confirmation or
notice to substantially the following effect:
"The securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of the
distribution thereof at any time or (ii) otherwise until 40
days after the later of the date of the commencement of the
offering and the closing date, except in either case in
accordance with Regulation S under the Securities Act. Terms
used above have the meanings given to them by Regulation S."
(c) The Purchaser is not a "distributor" as that term is used
in Regulation S.
(d) The Purchaser agrees that it/he will not offer or sell the
Securities purchased from the Company hereunder by means of any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act).
(e) The Purchaser represents, warrants and agrees that it/he
will not offer or sell any Securities in any jurisdiction except under
circumstances that will result in compliance with the applicable laws thereof,
and that the Purchaser will take at
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its/his own expense whatever action is required to permit offers, sales or the
purchase and resale by it/him of the Securities. The Purchaser understands that
no action has been taken by the Company to permit a public or private offering
in any jurisdiction outside the United States where action would be required for
such purpose.
(f) The Purchaser represents and agrees that any activities
with respect to the Securities or the Common Stock in connection with the
distribution of the Securities will be conducted in compliance with the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act") including without limitation Rule 10b-7 under the Exchange Act
to the extent such Rule is applicable thereto.
(g) (1) The Purchaser agrees that any distributor shall agree
in writing that all offers and sales of the Securities prior to the expiration
of the restricted period specified in Rule 903(c)(2) or (3), as applicable,
shall be made only: in accordance with the provisions of Rule 903 or 904;
pursuant to registration of the Securities under the Securities Act; or pursuant
to an available exemption from the registration requirements of the Securities
Act; and
(2) All offering materials and documents (other than
press releases) used in connection with offers and sales of the Securities prior
to the expiration of the restricted period specified in Rule 903(c)(2) or (3),
as applicable, shall include statements to the effect that the Securities have
not been registered under the Securities Act and may not be offered or sold in
the United States or to U.S. persons (other than distributors) unless the
Securities are registered under the Securities Act, or an exemption from the
registration requirements of the Securities Act is available. Such statements
shall appear:
(i) on the cover or inside cover page of any
prospectus or offering circular used in connection with the offer or sale of the
Securities;
(ii) in the underwriting section of any
prospectus or offering circular used in connection with the offer or sale of the
Securities;
(iii) in any advertisement made or issued by
the issuer, any distributor, any of their respective affiliates, or any person
acting on behalf of any of the foregoing. Such statements may appear in summary
form on prospectus cover pages and in advertisements.
(3) The Purchaser acknowledges and agrees that any
offer or sale of the Securities, if made prior to the expiration of a 40-day
restricted period, shall not be made to a U.S. person or for the account or
benefit of a U.S. person (other than a
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distributor).
(4) The Purchaser acknowledges and agrees that any
distributor selling Securities to a distributor, a dealer, as defined in Section
2(12) of the Securities Act, or a person receiving a selling concession, fee or
other remuneration in respect of the securities sold, prior to the expiration of
a 40-day restricted period, shall agree to send a confirmation or other notice
to the purchaser stating that the purchaser is subject to the same restrictions
on offers and sales that apply to a distributor.
(h) The Purchaser agrees that in the case of an offer or sale
of Securities prior to the expiration of the restricted period specified in Rule
903(c)(2) or (3), a applicable, by a dealer, as defined in Section 2(12) of the
Securities Act, or a person receiving a selling concession, fee or other
remuneration in respect of the securities offered or sold:
(i) neither the seller nor any person acting on his
behalf knows that the offeree or buyer of the securities is a U.S. person; and
(ii) if the seller or any person acting on the
seller's behalf knows that the Purchaser is a dealer, as defined in Section
2(12) of the Securities Act, or is a person receiving a selling concession, fee
or other remuneration in respect of the Securities sold, the seller or a person
acting on the seller's behalf sends to the Purchaser a confirmation or other
notice stating that the Securities may be offered and sold during the restricted
period only: in accordance with the provisions of Regulation S; pursuant to
registration of the securities under the Securities Act; or pursuant to an
available exemption from the registration requirements of the Securities Act.
Terms used in this Section 8 and Section 5 have the meanings
given to them by Regulation S, unless otherwise indicated. The Purchasers agree
to indemnify and hold the Company, its officers, directors, attorneys,
representatives, and shareholders, or any person who may be deemed to control
the Company, harmless from any loss, liability, claim, damage or expense,
arising out of the inaccuracy of any of the Purchasers' representations,
warranties or statements or the breach of any of the agreements contained herein
to the extent, but only to the extent, that such loss, liability, claim, damage
or expense results primarily from the Purchasers' gross negligence, recklessness
or bad faith with respect to such representation, warranty, statement or
agreement.
9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained
in this Agreement, or contained in certificates of officers of the
Company submitted hereto shall remain operative and in full force
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and effect, regardless of any termination of this Agreement, or any
investigation, or any statement as to the results thereof.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Purchaser shall be
directed to the Purchaser at the address set forth on the signature page of this
Agreement; and notices to the Company shall be directed to it at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman and
Chief Executive Officer.
11. Parties. This Agreement shall inure to the benefit of and be
binding upon the Company and the Purchaser and their respective successors and
assigns, provided that the Notes shall be non-negotiable and non-transferable.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person, firm or corporation any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained.
12. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between the Company, on the
one hand, and you on the other hand.
Very truly yours,
LITHIUM TECHNOLOGY CORPORATION
By:__________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
and Chief Executive Officer
Agreed and Accepted:
PURCHASER:
Principal Amount of
Convertible Notes to
Name of Purchaser: be Purchased:
_________________________________
Signature of Purchaser's
Authorized Officer:
_________________________________
Name of Purchaser's Authorized
Officer (Please Print):
_________________________________
Title of Purchaser's Authorized
Officer:
_________________________________
Purchaser's Address:_____________
_________________________________
Purchaser's Jurisdiction of
Organization:____________________
Purchaser's Telephone
Number:__________________________
Purchaser's Fax
Number:_________________________
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