STOCK PURCHASE AGREEMENT
by and between
Energy Conversion Devices, Inc.
and
TRMI Holdings Inc.
Dated as of May 1, 2000
with respect to shares of Common Stock
of
Energy Conversion Devices, Inc.
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TABLE OF CONTENTS
Page
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PART I - DEFINITIONS AND RULES OF CONSTRUCTION
1.1 Subject Matter ....................................................1
1.2 Definitions .......................................................1
1.3 Rules of Construction .............................................5
PART II - PURCHASE AND SALE, TRANSFER AND PURCHASE PRICE OF THE STOCK
2.1 Purchase and Sale of the Stock ....................................6
2.2 Transfer of the Stock; Deliveries .................................6
2.3 Purchase Price of the Stock .......................................6
2.4 Method of Payment .................................................6
2.5 Fees and Stamp and Other Transfer Taxes ...........................6
2.6 Legend of Stock ...................................................6
PART III - REPRESENTATIONS AND WARRANTIES
3.1 Seller ............................................................7
3.2 Buyer ........................................................... 13
3.3 No Other Warranties ..............................................14
PART IV - COVENANTS
4.1 Covenants of Seller ..............................................15
4.2 Covenants of Buyer ...............................................16
4.3 Covenants of Seller and Buyer ................................... 18
PART V - REGISTRATION RIGHTS
5.1 Registration .....................................................20
5.2 Expenses .........................................................20
5.3 Other Seller Stock ...............................................21
5.4 Postponement .....................................................21
5.5 Piggyback Registration ...........................................21
5.6 Primary Piggyback Registration ...................................21
5.7 Secondary Piggyback Registration .................................22
5.8 Efforts ..........................................................22
5.9 Seller Indemnity .................................................22
5.10 Information and Buyer Indemnity ..................................22
5.11 Third Party ......................................................23
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PART VI - CONDITIONS PRECEDENT
6.1 Conditions Precedent to Obligations of Buyer .....................24
6.2 Conditions Precedent to Obligations of Seller ....................26
PART VII - MISCELLANEOUS
7.1 Notices ..........................................................27
7.2 Modification .....................................................28
7.3 Governing Law ....................................................28
7.4 Assignment Binding Effect ........................................28
7.5 Counterparts .....................................................28
7.6 Invalidity .......................................................28
7.7 Entire Agreement .................................................29
7.8 Expenses .........................................................29
7.9 Waiver ...........................................................29
7.10 No Admissions ....................................................29
7.11 Survival .........................................................29
7.12 Arbitration ......................................................29
7.13 Attorneys Fees ...................................................30
7.14 Further Assurances ...............................................30
SCHEDULES
Schedule 3.1 (e) Consents
Schedule 3.1 (h) Capitalization
Schedule 3.1 (i) Option and Warrants
Schedule 3.1 (j) Subsidiaries
Schedule 3.1 (k) Compliance with Applicable Law
Schedule 3.1 (l) Litigation
Schedule 3.1 (n) Changes
Schedule 3.1 (t) Intellectual Property
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STOCK PURCHASE AGREEMENT
(Stock of Energy Conversion Devices, Inc.)
THIS STOCK PURCHASE AGREEMENT ("Agreement") dated as of May 1, 2000 is
made and entered into by and between Energy Conversion Devices, Inc., a Delaware
corporation ("Seller"), and TRMI Holdings Inc., a Delaware corporation
("Buyer").
PART ONE
SUBJECT MATTER; DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Subject Matter. The subject matter of the Agreement is the
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sale to Buyer by Seller of the Stock, the purchase by Buyer of the Stock from
Seller and the terms and conditions upon which the foregoing transactions shall
take place.
Section 1.2 Definitions. For purposes of this Agreement, including the
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Schedules, except as otherwise expressly provided or unless the context
otherwise requires, the terms defined in this Section 1.2 shall have the
meanings herein assigned to them and the capitalized terms defined elsewhere in
this Agreement, by inclusion in quotation marks and parentheses, shall have the
meanings so ascribed to them.
"Affiliate" means with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
Contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing
"Agreement" means this Stock Purchase Agreement, as it may be amended,
supplemented or modified from time to time in accordance with the terms hereof.
"Beneficial Owner" or "Beneficially Owns" has the meaning set forth in
Rule 13d-3 under the Exchange Act, and derivative terms such as "beneficially
own" shall be given corresponding meanings.
"Business Day" means a day, other than Saturday or Sunday, on which
banking institutions are open for business in New York, New York and Troy,
Michigan.
"Change of Control" means (A) Texaco Inc. shall cease to be a Beneficial
Owner, directly or indirectly through Subsidiaries, at least Seventy Five
Percent (75%) of the voting securities of the holder of the Stock, (B) or any
Person or "Group" (within the meaning of Rule 13D under the Exchange Act) of
Persons shall have become the Beneficial Owner of more than Fifty Percent (50%)
of the then outstanding voting securities of Texaco Inc., (C) the Board of
Directors of Texaco Inc. shall approve the sale of all or substantially all the
assets of Texaco Inc. to any third party or third parties in a transaction or a
series of related transactions.
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"Class A Common Stock" means the Seller's Class A Common Stock, par value
$.01 per share.
"Class B Common Stock" means the Seller's Class B Common Stock, par value
$.01 per share.
"Closing" means the closing of the sale and purchase of the Stock and of
the other transactions contemplated by this Agreement on the Closing Date at
10:00 A.M., Central Daylight time, at the offices of Seller, or at such other
time or place as the Buyer and Seller may mutually agree upon in writing.
"Closing Date" means the third Business Day following the satisfaction of
the conditions set forth in Part Seven or such other date as the Parties may
mutually agree upon in writing.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Commission" means the U. S. Securities Exchange Commission or any
governmental body succeeding to the function thereof.
"Common Stock" means the Seller's common stock, par value $.01 per share.
"Contract" means any written or oral contract, agreement, lease, plan,
instrument or other document, commitment, arrangement, undertaking, practice or
authorization that is or may be binding on any Person or its property under
applicable Law.
"Corporate Documents" means the Certificate of Incorporation and By-Laws
of a Delaware corporation or the equivalent documents of a corporation organized
under the laws of another jurisdiction, as amended or restated.
"Default" means (i) a breach of or default under any Contract, (ii) the
occurrence of an event that with the passage of time or the giving of notice or
both would constitute a breach of or default under any Contract, or (iii) the
occurrence of an event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination, renegotiation or
acceleration under any Contract.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Group" means the Seller and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Seller, are treated as a single employer
under Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Financial Statements" means the financial statements as at June 30, 1999
and the notes to such statements audited by Deloitte Touche LLP and the
unaudited 6 month financial statements as at December 31, 1999.
"GAAP" means generally accepted accounting principles in the United States
of America.
"Governmental Entity" means a government organization, subdivision, agency
or authority thereof, whether foreign or domestic.
"Law" means any law (including common law), statute, ordinance, rule,
regulation, or decree of any Governmental Entity.
"Lien" means any mortgage, lien, security interest, pledge, encumbrance,
restriction on transferability, defect of title, charge or claim on any property
or property interest.
"Losses" means any and all losses, liabilities, claims, demands,
penalties, fines, settlements, damages (excluding consequential damages, which
shall be deemed to include without limitation, loss of profits, revenues or
income, loss of cost of capital, business reputation or opportunity) and any
related expenses (including, without limitation, legal, accounting, consulting
and investigation expenses and litigation costs).
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Options" means the options to purchase Seller Stock.
"Party" means any of Seller or Buyer.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, estate, unincorporated organization or
Governmental Entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) which is covered by Title IV of ERISA or subject to the minimum funding
standard under Section 412 of the Code and either (i) is maintained, or
contributed to, by any member of the ERISA Group for employees of any member of
the ERISA Group or (ii) has at any time within the preceding five years been
maintained, or contributed to, by any Person which was at such time a member of
the ERISA Group for employees of any Person which was at such time a member of
the ERISA Group.
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"Proceeding" means any action, claim, suit, arbitration, subpoena,
discovery request, proceeding or investigation by or before any court or grand
jury, any Governmental Entity or arbitration tribunal or in any administrative
proceeding.
"SEC Reports" means the forms, reports and documents filed with the
Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Seller Stock" means the authorized and issued stock of the Seller,
including the Common Stock, Class A Common Stock and Class B Common Stock and
any stock which may hereinafter be issued, whether common or preferred, from
time to time outstanding.
"Subsidiary" means, with respect to any Person, any other Person of which
a majority of the capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
such Person.
"Tax" means taxes of any kind, levies or other like assessments, customs
duties, imposts, charges, or fees, including, without limitation, income,
minimum, gross receipts, ad valorem, value added, excise, real or personal
property, asset, sales, use, license, payroll, transaction, capital, net worth
and franchise taxes, withholding, employment, social security, workers
compensation, utility, severance, production, unemployment compensation,
occupation, premium, windfall profits, transfer and gains taxes or other
governmental taxes imposed by or payable to the United States, or any other
state, county, local or foreign government or subdivision or agency thereof,
and each instance such term shall include any interest, penalties or additions
attributable thereto.
"Warrants" means the warrants to purchase Seller Stock.
"Other Definitions." The following terms have the meaning ascribed to
them in the Sections noted:
Term Section
---- -------
"Average Price" 2.3
"Business Combination" 4.1(c) (ii)
"Business Combination Notice" 4.1(c) (ii)
"Claim Notice" 5.11(a)
"Disputed Claim" 5.11(c)
"HSR Act" 4.3(g)
"Intellectual Property" 3.1(t)
"Indemnitee" 5.11(a)
"Indemnitor" 5.11(a)
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"Material Contract" 3.1(p)
"Notice Period" 5.11
"Patents" 3.1(t)
"Piggyback Registration" 5.5
"Preemptive Rights Notice" 4.1(d)
"Purchase Price" 2.3
"Schedules" 3.1
"Stock" 2.1
"Stock Registration" 5.1
Section 1.3 Rules of Construction. For purposes of this Agreement,
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including the Disclosure Schedules hereto:
(a) General. Unless the context otherwise requires, (i) "or" is not
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exclusive; (ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP; (iii) words in the singular include the
plural and words in the plural include the singular; (iv) words in the masculine
include the feminine and words in the feminine include the masculine; (v) any
date specified for any action that is not a Business Day shall be deemed to mean
the first Business Day after such date; (vi) a reference to a Person includes
its successors and permitted assigns and (vii) "Dollars" or "$" shall mean
United States Dollars.
(b) Parts and Sections. References to Parts and Sections are, unless
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otherwise specified, to Parts and Sections of this Agreement. Neither the
captions to Parts or Sections hereof nor the Table of Contents shall be deemed
to be a part of this Agreement.
(c) Other Agreements. References herein to any agreement or other
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instrument shall, unless the context otherwise requires (or the definition
thereof otherwise specifies), be deemed references to the same as it may from
time to time be changed, amended or extended. There is no incorporation by
reference unless expressly stated.
PART TWO
PURCHASE AND SALE, TRANSFER
AND PURCHASE PRICE OF THE STOCK
Section 2.1 Purchase and Sale of the Stock. At the Closing, Seller agrees
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to issue and sell to Buyer, and Buyer agrees to purchase from Seller Common
Stock equal to Twenty Percent (20%) of the Seller Stock issued and outstanding
at the Closing Date (taking into account the issuance to Buyer) the Stock, which
on the date of this Agreement is approximately Three Million Seven Hundred
Thirty Seven Thousand (3,737,000) shares of the Common Stock of Seller (the
"Stock"), on the terms and subject to the conditions set forth in this
Agreement.
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Section 2.2 Transfer of the Stock; Deliveries. At the Closing, subject to
---------------------------------
the provisions of this Agreement, Seller shall deliver to Buyer the certificates
evidencing the Stock, to convey to Buyer good, marketable and unemcumbered title
to, and legal and beneficial ownership of, the Stock. The Stock certificates
shall be legended to reflect that the Stock has not been registered with the
Commission and is subject to the restrictions contained herein. At the Closing,
Seller shall also deliver to Buyer, and Buyer shall deliver to Seller, the
certificates, opinions, and other instruments and documents referred to in Part
Seven.
Section 2.3 Purchase Price of the Stock. The purchase price for the Stock
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shall be the average of the closing prices for the Common Stock for NASDAQ
National Market Issues as reported in The Wall Street Journal for the five
trading days immediately preceding the execution of this Agreement ("Average
Price") multiplied by total number of shares of the Stock (the "Purchase
Price"). No later than five (5) Business Days prior to the Closing Date, the
Buyer and Seller will agree upon the Average Price and the Purchase Price and
two (2) Business Days prior to the Closing Date Seller will notify Buyer of the
exact number of shares of Seller Stock outstanding and the Parties will agree on
the exact number of shares of Stock to be purchased.
Section 2.4 Method of Payment. The Purchase Price shall be payable in
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immediately available funds by means of a wire transfer to Seller's account at
Standard Federal Bank, 2600 West Big Beaver Road, Troy, Michigan, 48084, ABA
routing number 272471674, account number 1054400890 (with immediate telephone
notice to Steve Zumsteg at (248) 280-1900 or to such other account number and
depository as Seller may by written notice direct.
Section 2.5 Fees and Stamp and Other Transfer Taxes. Buyer shall pay all
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sales, documentary, stamp and other transfer taxes, if any, payable in respect
of this Agreement or for the transfer of the Stock to Buyer hereunder.
Section 2.6 Legend of Stock. With respect to the legend of the Stock:
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(a) Legend. The Stock to be issued to the Buyer shall bear the following
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legend:
"The securities represented hereby have not been registered under
the Securities Act of 1933, as amended, and may not be offered,
sold, transferred or otherwise disposed of unless registered with
the Securities and Exchange Commission of the United States and the
securities regulatory authorities of applicable states or unless an
exemption from such registration is available. The sale, pledge,
hypothecation or transfer of the securities represented by this
certificate is subject to a right of first offer and first refusal set
forth in a certain Stock Purchase Agreement dated as of May 1, 2000.
In addition, the securities represented by this certificate are
subject to a voting agreement contained in the foregoing Stock
Purchase Agreement which may affect the rights of the holder of
this certificate. Copies of such agreement may be obtained upon
written request to the Secretary of Energy Conversion Devices, Inc."
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(b) Removal of Legend. The Seller agrees to remove the first sentence of
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the above legend at the request of the Buyer (i) at such time as the shares of
Stock are freely transferable pursuant to Rule 144(k), (ii) at such time as the
shares of Common Stock are registered for public sale as set forth in Part Five,
or (iii) upon delivery of an opinion of counsel reasonably acceptable to the
Seller to the effect that such shares may be transferred without registration
under the Securities Act. The Seller agrees to remove the second and third
sentences of the above legend at the request of Buyer in connection with any
sale of Stock pursuant to a bona fide public offering registered under the
Securities Act or if, in connection with any other sale of Stock in accordance
with this Agreement, after giving effect to such sale, the purchaser of such
Stock and purchasers' Affiliates would not Beneficially Own an aggregate of more
than Five Percent (5%) of the then outstanding Seller Stock.
PART THREE
REPRESENTATIONS AND WARRANTIES
Section 3.1 Seller. Seller hereby represents and warrants to Buyer that,
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except as set forth on the Schedules attached to this Agreement (collectively,
the "Schedules"), the following are correct as of the date of this Agreement:
(a) Organization and Standing. Seller is a corporation duly organized,
-------------------------
validly existing and in good standing under the laws of the State of Delaware
and is in good standing as foreign corporation in all jurisdictions where the
nature of its properties or business require it.
(b) Authority. Seller has all requisite corporate power and authority to
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execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of Seller and this
Agreement has been duly executed and delivered by Seller.
(c) Validity of Agreement. This Agreement constitutes the legal, valid
---------------------
and binding obligation of Seller, enforceable against Seller in accordance with
its terms, except as enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, or other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights generally, and (ii) general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
(d) No Violation. Neither the execution or delivery by Seller of this
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Agreement, nor the performance by Seller of its obligations under this
Agreement, nor the consummation of the transactions contemplated hereby,
(i) contravene or violate any provision of the Corporate Documents of Seller,
(ii) contravene or violate any statute, law, writ, judgment, decree, order,
regulation or rule of any court or Governmental Entity to which Seller or any
of its material assets may be subject, (iii) violate, conflict with, constitute
a Default under, permit the termination of, result in a loss of any material
benefit to which Seller or any of its Subsidiaries is entitled, (iv) result
in the creation of or imposition of
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a Lien on any material asset of Seller or any Subsidiary, or (v) require the
consent or approval of any Person (other than consents or approvals already
obtained or which will be obtained on or prior to Closing) under, any Material
Contract to which Seller is a party, or by which Seller (or its assets or
properties) is bound.
(e) No Consent Required. Except as set forth in Schedule 3.1 (e), no
-------------------
consent, approval, permit, authorization or other action by or filing with, any
Governmental Entity is required in connection with the execution, delivery and
performance by Seller of this Agreement or the consummation of the transactions
contemplated hereby. The Seller has all material governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted. Neither the Seller nor any Person action on its
behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Seller under circumstances which would
require, under the Securities Act, the integration of such offering with the
offering and sale of the Stock) which might subject the offering, issuance or
sale of the Stock to the registration requirements of Section 5 of the
Securities Act.
(f) Ownership of Stock. The Stock, when issued and delivered in accordance
------------------
with the terms of this Agreement will be validly issued and outstanding, fully
paid and non-assessable, free and clear, (except as set forth in Section
4.2(b)) of any and all proxies or proxy agreements, voting trust arrangements
and Liens, and Seller may transfer and deliver the Stock to Buyer at the
Closing.
(g) Corporate Documents. The Corporate Documents of Seller (copies of
-------------------
which have been made available to Buyer) constitute true, correct and complete
copies of the Corporate Documents of Seller and reflect all amendments thereto
through and including the Closing Date.
(h) Capitalization. Seller's authorized Seller Stock consists of Thirty
--------------
Million Nine Hundred Thousand Thirty Thousand (30,930,000) shares of which
Fourteen Million Nine Hundred Forty Nine Thousand Nine Hundred and One
(14,949,901) are issued and presently outstanding and held as set forth on
Schedule 3.1(h). All outstanding shares have been validly issued, are fully
paid and nonassessable, were not issued in violation of the terms of any
Contract binding upon Seller and were issued in compliance with all Corporate
Documents of Seller.
(i) Options or Warrants. Except as set forth in Schedule 3.1(i), there
-------------------
are (i) no existing Contracts, subscriptions, Options, Warrants, calls,
commitments or other rights of any kind to purchase or otherwise acquire
from Seller, at any time, or upon the happening of any stated event, shares
of the capital stock or other securities of Seller, whether or not presently
issued or outstanding; (ii) no outstanding securities of Seller that are
convertible into or exchangeable for capital shares or other securities of
Seller; (iii) no Contracts, subscriptions, Options, Warrants, calls,
commitments or rights to purchase or otherwise acquire from Seller any such
convertible or exchangeable securities; and (iv) no preemptive rights with
respect to the issuance of any shares of capital stock of Seller.
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(j) Subsidiaries. Except as set forth on Schedule 3.1(j), Seller has no
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Subsidiaries and holds no interest in any partnership other equity interest in
any corporation, joint venture, trust or other entity. Each Subsidiary of the
Seller (i) is a corporation or limited liability company duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or formation; (ii) has all powers (corporate or otherwise) and all
material governmental licenses, authorizations, permits, consents and approvals
are required to carry on its business as now conducted; and (iii) is duly
qualified to do business as a foreign corporation or limited liability company
and is in good standing in each jurisdiction where such qualification is
necessary. Seller owns the outstanding capital stock or other voting securities
or other equity interest of each Subsidiary set forth on Schedule 3.1(j),
directly or indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other voting securities or other
equity interests). Except as set forth on Schedule 3.1(j), there are no
outstanding (i) securities of any Subsidiary of the Seller convertible into or
exchangeable for shares of capital stock or voting securities or other equity
securities of any Subsidiary of the Seller or (ii) Options or other rights to
acquire from the Seller or any Subsidiary of the Seller, or other obligation of
the Seller or any Subsidiary of the Seller to issue, any capital stock, voting
securities.
(k) Compliance with Applicable Law. Except as set forth on Schedule 3.1
------------------------------
(k), Seller and its Subsidiaries has been and is in compliance with all
applicable Laws the failure to comply with which would have a material adverse
effect on the Seller and its Subsidiaries.
(l) Litigation. Except as set forth in Schedule 3.1 (l), there are no
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Proceedings pending or, to the knowledge of the Seller, threatened against the
Seller or its Subsidiaries before any court or arbitration tribunal or before or
by any Governmental Authority which, if adversely determined, would have a
material adverse effect on the Seller and its Subsidiaries.
(m) Financial Statements. The Financial Statements are true and complete
--------------------
in all material respects and have been prepared in accordance with GAAP and
fairly represent in all material respects, as of the dates thereof, the
financial position of the Seller, and for the periods therein referred to, the
results of operations and cash flows of the Seller.
(n) Absence of Certain Changes. Except as set forth on Schedule 3.1(n),
--------------------------
Since the December 31, 1999, the business of the Seller and its Subsidiaries has
been conducted in the ordinary course consistent with past practices and there
has not been any event, occurrence, development or state of circumstances or
facts which has had or could reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the Seller and its Subsidiaries or
an adverse effect on the ability of the Seller to perform its obligations under
this Agreement. The Parties acknowledge that for purposes of the foregoing
representation and warranty, changes in the trading price of Seller Stock as a
result of conditions generally affecting the economy or securities markets, or
changes generally affecting the industries in which Seller operates, shall not
be taken into account in determining whether there has been an event,
occurrence, development or state of circumstances or facts which has had or
could reasonably be expected to have a material adverse effect on the Seller and
its Subsidiaries.
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(o) SEC Reports. Since June 30, 1997, the Seller has filed all required
-----------
SEC Reports when due (or within permitted extension periods) in accordance with
the Exchange Act. As of their respective dates (or, in the case of any amended
SEC Report, as of the date of the amendment), the SEC Reports complied in all
material respects with all applicable requirements of the Exchange Act or the
Securities Act, as the case may be. As of their respective dates (or in the case
of any amended SEC Report, as of the date of the amendment), none of the SEC
Reports contained any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(p) Material Contracts. Each of the agreements, contracts, lease and
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commitments listed as an exhibit to the Form 10-K, any of the Form 10-Qs or any
Form 8-K filed with the Commission since June 30,1997 (each a "Material
Contract") is a legal, valid and binding agreement of the Seller or a Subsidiary
of the Seller, as the case may be, and is in full force and effect, none of the
Seller, such Subsidiary or, to the knowledge of the Seller, any other party
thereto is in default or breach and, to the best knowledge of the Seller, no
event or circumstance has occurred that, with notice or lapse of time or both,
would constitute any event of default thereunder in each case except for any
such default or breach that could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Seller and
its Subsidiaries.
(q) Compliance with ERISA. Each member of the ERISA Group has fulfilled
---------------------
its obligations, if any, under the minimum funding standards of ERISA and the
Code with respect to each Plan and is in compliance in all material respects
with the presently applicable provisions of ERISA and the Code with respect to
each Plan to the extent the ERISA Group maintains such plans. No member of the
ERISA Group has sought a waiver of the minimum funding standards under Section
412 of the Code in respect of any Plan. Additionally, no member of the ERISA
Group has (i) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security under
ERISA or the Code or (ii) incurred any liability under Title IV of ERISA other
than a liability to the Pension Benefit Guaranty Corporation for premiums under
Section 4007 of ERISA, except in cases where such action or inaction could not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on Seller and its Subsidiaries.
(r) Taxes. (i) Except as could not reasonably be expected to have,
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individually or in the aggregate, a material adverse effect on the Seller and
its Subsidiaries:
(A) The Seller has paid on time all Taxes shown to be due
on such reports or returns at the time filed and such filings
were true, correct and complete in all material respects;
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(B) The Seller has duly deposited on time with the appropriate
taxing authority, as required by Law, all Taxes required to be
withheld, or reported to be withheld, from its employees' wages
and all other Taxes payable by the Seller with respect to such
wages;
(C) No Tax lien on any of the properties of the Seller except for
liens for real estate Taxes not yet due and payable; and
(D) The Seller has duly filed, pursuant to applicable Laws, all
state, federal, local and foreign governmental tax reports,
returns, information statements, schedules or certificates and
all other reports and returns required to be filed by it pursuant
to any Law of any authority in connection with the determination,
assessment or collection of any Taxes or the administration of
any Laws relating to any Taxes.
(ii) The charges, accruals and reserves for Taxes reflected on the
Financial Statements (including any provision for deferred income taxes)
are adequate under GAAP, consistently applied, to cover the Tax
liabilities accruing through the date thereof. There is no Proceedings or
audit, or claim pending or, to the knowledge of the Seller, threatened
against or with respect to it in respect of any Tax. Neither the Seller
nor any of its Subsidiaries (A) has any obligation under any Tax sharing
agreement, Tax allocation agreement or Tax indemnity agreement or any
other agreement or arrangement in respect of any Tax with any Person
other than the Seller or its Subsidiaries or (B) has been a member of an
affiliated, consolidated, combined or unitary group other than one
of which the Seller was the common parent.
(s) No Undisclosed Liabilities. Except as and to the extent set forth in
--------------------------
the Financial Statements, the Seller has no liabilities or obligations of any
nature (absolute, accrued, contingent or otherwise) which would be required by
GAAP to be reflected in the Financial Statements, except for liabilities and
obligations (i) incurred in the ordinary course of business and consistent with
past practice since January 1, 2000, (ii) disclosed in the Schedules to this
Agreement, or (iii) which would not have, individually or in the aggregate, a
material adverse effect on Seller and its Subsidiaries.
(t) Intellectual Property. Schedule 3.1 (t) is a true and complete list of
---------------------
all patents issued to the Seller (the "Patents" ). The Seller and each of its
Subsidiaries owns, or has the legal right to use, the Patents, patent
applications, trademarks, trademark applications, tradenames, copyrights,
technology, know-how and processes and other intellectual property rights
necessary for each of them to conduct its business as currently conducted (the
"Intellectual Property"). No claim has been asserted and is pending or, to the
knowledge of the Seller, threatened to be asserted by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Seller know or
should know, upon reasonable inquiry, of any facts or circumstances that could
provide a reasonable basis for any such claim. To the best knowledge of the
Seller, the use of such Intellectual Property by the Seller and its Subsidiaries
does not infringe on the rights of any Person, except for such infringements
which could not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the Seller's ability to conduct its
business.
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(u) Environmental Compliance. With respect to the Seller and its
------------------------
Subsidiaries:
(i) No notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending, or to the Seller's best knowledge, threatened by any governmental
or other entity, (x) with respect to any alleged material violation by the
Seller or any of its Subsidiaries of any environmental Law, (y) with
respect to any alleged failure by the Seller or any of its Subsidiaries to
have any material permit, certificate, license, approval, registration or
authorization required under any environmental Law in connection with the
conduct of their businesses or (z) with respect to any Regulated Activity
or any release, as defined in 42 U.S.C 9601 (22), of any hazardous
substance which could reasonably be expected to have, individually or in
the aggregate, a material adverse effect.
(ii) Neither the Seller nor any of its Subsidiaries has engaged in
any Regulated Activity other than in compliance in all material respects
with all applicable environmental Laws.
(iii) To the best knowledge of the Seller, no release, as defined in
42 U.S.C. 9601 (22), of any hazardous substance has occurred at or on any
property now or previously owned or leased by the Seller or any of its
Subsidiaries which could reasonably be expected to have, individually or
in the aggregate, a material adverse effect on the Seller and its
Subsidiaries.
(iv) To the best knowledge of the Seller, there are no
environmental liabilities that could reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the
Seller and its Subsidiaries.
(v) Buy-Back of Shares. There has been no Seller Stock purchased by the
------------------
Seller on the Five (5) trading days prior to the date of this Agreement.
Section 3.2 Buyer. Buyer hereby represents and Warrants to Seller as of
-----
the date of this Agreement as follows:
(a) Organization and Standing. Buyer is a Delaware corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Authority. Buyer has all requisite corporate power and authority to
---------
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of Buyer and this
Agreement has been duly executed and delivered by Buyer.
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(c) Validity of Agreement. This Agreement constitutes the legal, valid and
---------------------
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as enforcement may be subject to (i) bankruptcy, insolvency,
reorganization or other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights generally, and (ii) general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law).
(d) No Violation. Neither the execution or delivery by Buyer of this
------------
Agreement, nor the performance by Buyer of its obligations under this Agreement,
nor the consummation of the transactions contemplated hereby, (i) contravene or
violate any provision of the Corporate Documents of Buyer, (ii) contravene or
violate any statute, law, writ, judgment, decree, order, regulation or rule of
any court or Governmental Entity to which Buyer or any of its assets may be
subject, or (iii) violate, conflict with, constitute a Default under, permit the
termination of, or require the consent or approval of any Person (other than
consents or approvals already obtained or which will be obtained on or prior to
Closing) under, any Contract to which Buyer is a party, or by which Buyer (or
its assets or properties) is bound.
(e) No Consent Required. Except for compliance with the HSR Act, no
-------------------
consent, approval, permit, authorization or other action by, or filing with, any
Governmental Entity is required in connection with the execution, delivery and
performance by Buyer of this Agreement or the consummation of the transactions
contemplated hereby.
(f) Private Placement. With respect to the Stock:
-----------------
(i) Buyer understands that the offering and sale of the Stock is
intended to be exempt from registration under the Securities Act pursuant
to Section 4(2) of the Securities Act and any applicable state securities
or blue sky laws.
(ii) The Stock to be acquired by Buyer pursuant to this Agreement is
being acquired for its own account and without a view to the resale or
distribution of the Stock or any interest therein other than in a
transaction exempt from registration under the Securities Act.
(iii) Buyer is an "Accredited Investor" as such term is defined in
Regulation D under the Securities Act.
(iv) Buyer has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and
risks of its investment in Stock and Buyer is capable of bearing the
economic risks of such investment, including a complete loss of its
investment in Stock. Buyer understands that its investment in the Stock
involves a high degree of risk.
(v) Buyer has been furnished with and carefully read a copy of the
Form 10-K, each of the Form 10-Q's and this Agreement and has been given
the opportunity to ask
13
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questions of, and receive answers from, the Seller concerning the terms
and conditions of Stock and other related matters. Seller has made
available to Buyer or its agents all documents and information relating
to an investment in the Stock requested by or on behalf of Buyer.
(vi) Buyer understands that the Stock have not been and, except as
provided herein, are not being registered under the Securities Act or
any state securities laws, and may not be offered, sold, pledged or
otherwise transferred except in compliance with the Securities Act or
state securities laws.
Section 3.3 No Other Warranties. Except as otherwise provided herein,
-------------------
there are no express or implied warranties that apply to the transactions
contemplated herein.
14
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PART FOUR
COVENANTS
Section 4.1 Covenants of Seller. Seller covenants to Buyer as follows:
-------------------
(a) Corporate Action. As soon as practicable, but in any event prior to
----------------
Closing, Seller shall approve the acquisition of the Stock by Buyer under
Section 203 of the Delaware General Corporation Law. Seller agrees that it
will not adopt any amendments to its Corporate Documents or take or recommend
to its stockholders any action which would (i) impose limitations on the legal
rights of Buyer including, without limitation, any action which would impose
restrictions: (A) based upon the size of security holding, the business in
which Buyer is engaged or other considerations applicable to Buyer and not to
stockholders generally; (B) with reference to the Common Stock generally, by
means of the issuance (other than pursuant to Options outstanding as of the
date of this Agreement) or proposal to issue any other class of securities
having voting power disproportionately greater than the equity investment in
the Seller represented by the Common Stock; (ii) deny any benefit to Buyer as
a holder of Common Stock that is made available to other holders of Common
Stock generally; or (iii) alter voting or other rights of the holders of
Common Stock so that such rights (or the vote required with respect to any
matter) are determined in reference to the amount of Common Stock held by Buyer.
(b) Marketing Position. Within six (6) months after Closing, Seller
------------------
shall create a Vice President of Marketing position for the purpose of
commercialization of the Seller's technology.
(c) Restrictions. For so long as Buyer and its Affiliates Beneficially
------------
Own an aggregate of more than Five Percent (5%) of Seller Stock:
(i) without Buyer's prior written consent, Seller shall not,
directly or indirectly issue more than Nine and Nine Tenths Percent
(9.9%) of the Seller Stock (or Options or Warrants or other securities
convertible into Seller Stock) to any other Person in one or a series
of related transactions;
(ii) if Seller determines to pursue a merger, consolidation or
sale of all or substantially all of its assets (a "Business Combination")
(other than pursuant to an unsolicited proposal in which case Section
4.1 (c) (iii) below will govern), it will not initiate such a Business
Combination, until Forty-Five Business (45) Days after it has given
prior written notice of its intent to pursue such transaction (a
"Business Combination Notice") to Buyer. During such Forty-Five Business
Day period Seller shall negotiate in good faith such a Business
Combination with the Buyer. If Buyer and Seller are unable to enter
into a definitive agreement with respect to a Business Combination
within that period, then, subject to Section 4.1 (c) (iii) below,
Seller shall be free to initiate such discussions with other parties; and
15
<PAGE>
(iii) Seller will not enter into a binding agreement with any Person
relating to a Business Combination, whether pursuant to an unsolicited
proposal from any other Person or initiated by the Seller, unless it has
provided Buyer with a Business Combination Notice at least Ten (10)
Business Days prior to entering in to such an agreement. Such business
Combination Notice shall set forth in reasonable detail the terms and
conditions of the proposed Business Combination, including the fair market
value of the consideration to be received by Seller or its stockholders.
The Business Combination Notice will include a copy of any written offer,
term sheet or similar document received by Seller in connection with the
proposed transaction. If Buyer, within Ten (10) Business Days after the
delivery of the Business Combination Notice by Seller, notifies Seller of
its intention to enter into a Business Combination with Seller on the
terms and conditions set forth in the Business Combination Notice, then
Seller and Buyer will act promptly and in good faith to negotiate a
definitive agreement reflecting such terms and conditions. If the parties,
so acting, are unable to negotiate and execute such definitive agreement
within a period of Ten (10) Business Days after the date Buyer's notice is
given to Seller, then Seller, by delivery of written notice to Buyer, may
discontinue such negotiations. Seller may, within 120 days after the
delivery of notice discontinuing such negotiations, enter into a
definitive agreement providing for a Business Combination upon terms and
conditions not materially less favorable, in the aggregate, to Seller and
its stockholders than the terms and conditions set forth in the Business
Combination Notice.
(d) Preemptive Rights. For as long as Buyer and its Affiliates
-----------------
Beneficially Own an aggregate of more than Five Percent (5%) of the Seller
Stock, if the Seller shall issue any Seller Stock, Buyer shall have the right to
purchase an amount of Seller Stock so that, after the issuance of all such
Seller Stock, Buyer would, in the aggregate, hold the same proportionate
interest in such Seller Stock as is held by it prior to the issuance of any such
additional Seller Stock. If such Seller Stock is Common Stock, the purchase
price thereof shall be calculated as provided in Section 2.3 hereof utilizing
the five days preceding the first announcement of the relevant transaction. If
such Seller Stock is not Common Stock, the purchase price shall be the issue
price of such security. In connection with any issuance by Seller subject to the
provisions of this Section 4.1(d), Seller shall promptly deliver a notice (a
"Preemptive Rights Notice") of such issuance to the Buyer, provided that if such
issuance is pursuant to the exercise of Options or Warrants or other convertible
Seller Stock and represents less than 20,000 shares, Seller may aggregate such
requests and deliver a Preemptive Rights Notice to Buyer relative thereto at the
end of the fiscal quarter in which the issuance is made. Buyer's right to
purchase securities under this Section 4.1(d) with respect to any issuance of
securities shall terminate fifteen (15) Business Days after the delivery of the
Preemptive Rights Notice.
Section 4.2 Covenants of Buyer. Buyer covenants to Seller as follows:
------------------
(a) Restrictions on Certain Actions by Buyer. For so long as Buyer and its
Affiliates Beneficially Own an aggregate of more than Five Percent (5%) of
Seller Stock, without Seller's prior consent:
16
<PAGE>
(i) Buyer shall not, and shall cause each of its Affiliates not to,
acquire, directly or indirectly, equity interest in excess of Twenty
Percent (20%) of the Seller Stock; and
(ii) Buyer agrees that it will not, and will not cause or permit
any of its Affiliates to (A) propose to enter into, directly or
indirectly, any merger, consolidation, recapitalization, business
combination or other similar transaction involving Seller or any of its
Affiliates (it is agreed that this restriction relates to proposals for
all or substantially all of Sellers business and in no way limits the
ability of the Buyer to propose joint ventures or other arrangements to
develop and commercialize Sellers technologies similar to those
contemplated in Section 4.3(e)); (B) make or in any way participate in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of
the Commission) to vote, or seek to advise or influence any person with
respect to the voting of any voting securities of Seller or any of its
Affiliates; (C) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Securities Act) with respect to any
voting securities of Seller or any of its Affiliates; (D) disclose any
intention, plan or arrangement inconsistent with the foregoing; or (E)
advise, assist or encourage any other Persons (including specifically
Seller's shareholders) in connection with any of the foregoing. Buyer
further agrees during such period not to, and not to cause or permit any
of its Affiliate to take any action which might require Seller or any of
its Affiliates to make a public announcement regarding the possibility of
a merger, consolidation, business combination or other similar
transaction.
(b) Voting Agreement. For as long as Buyer and its Affiliates Beneficially
-----------------
Own an aggregate of more than Five Percent (5%) of the Seller Stock, and so
long as:
(i) (A) Stanford Ovshinsky or Iris Ovshinsky are the Beneficial
Owners of the Class A Common Stock, or (B) Robert Stempel is the
Beneficial Owner of the Class B Common Stock, and
(ii) Stanford Ovshinsky continues to be willing to serve as Chief
Executive Officer or Robert Stempel continues to be willing to serve as
Chairman of the Board;
Buyer agrees to vote and to cause each of its Affiliates that holds any Stock
to vote, whether at an annual or special meeting of Stockholders, by consent
in lieu thereof or otherwise, all Stock which it Beneficially Owns, directly or
indirectly, in accordance with the votes cast by the holders of the Class A
Common Stock (prior to the conversion of the Class A Common Stock into Common
Stock) or Class B Common Stock (after the conversion of the Class A Common
Stock into Common Stock).
(c) Change of Control. Buyer shall notify Seller promptly if there is
-----------------
a Change of Control.
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<PAGE>
Section 4.3 Covenants of Seller and Buyer. Seller and Buyer covenant to
-----------------------------
each other as follows:
(a) Compliance with Conditions Precedent. Seller and Buyer shall each use
------------------------------------
its best efforts to cause the conditions precedent set forth in Part Six, as
applicable to such Party, to be fulfilled and satisfied as soon as practicable.
(b) Brokers. Each Party shall have sole responsibility for the fees and
-------
expenses of any financial or other advisor retained by it with respect to the
transactions contemplated hereby and neither Party shall have responsibility for
the fees and expenses of any advisors retained by the other.
(c) Press Release. The Parties agree to consult with each other before
-------------
issuing any press release or making any public statement with respect to this
Agreement and the transactions contemplated hereby. Neither Party shall make any
press release or other announcement respecting this Agreement without the
consent of the other unless a Party refuses to consent and the Party desiring to
make the release or other announcement is advised by its counsel that the
release or other announcement is required to comply with any statute, law or
regulation.
(d) Board of Directors. With respect to the Board of Directors of the
------------------
Seller:
(i) Buyer shall be entitled to designate nominees for director of
Seller's Board of Directors. For so long as Buyer and its Affiliates
Beneficially Own an aggregate of more than Five Percent (5%) of Sellers
Stock, Buyer shall be entitled to designate one nominee; to the extent
Buyer and its Affiliates Beneficially Own an aggregate of more than Ten
Percent (10%) of Seller Stock, then Buyer may designate two nominees or
one-fifth of the number of directors then serving, whichever is greater.
Seller agrees to appoint two nominees designated by Buyer to the Board of
Directors of Seller as soon as practical after Closing and in any event at
the next regular meeting of the Board of Directors. Subsequently, Seller
agrees to use its best efforts to take all actions necessary to have
Buyer's nominees elected to the Board of Director and Committees,
including without limitation, the nominee in the Seller's proxy statement,
recommending a vote for such nominee and casting proxies given to Seller
in the favor of such nominee. The directors nominated pursuant to this
Section 4.3(d) shall be entitled to receive the same compensation and
benefits that are provided to the other non-executive members of the Board
of Directors.
(ii) For so long as Buyer and its Affiliates Beneficially Own an
aggregate of more than Five Percent (5%) of Seller's Stock, Buyer shall
also be entitled to have one of its designee's serve on appropriate
committees of the Board of Directors, including the Audit Committee and
any committee established for the purpose of succession planning.
(e) Ovonic Solid Hydrogen Storage System and Ovonic Regenerative Fuel
-----------------------------------------------------------------
Cell Technologies
-----------------
18
<PAGE>
(i) Seller and Buyer intend, as soon as practicable after Closing,
to enter into joint ventures to promote the development and
commercialization of Ovonic Solid Hydrogen Storage Systems and Ovonic
Regenerative Fuel Cell technology. In concept Seller would provide each
venture with a license of Seller's Intellectual Property relating to the
respective field and Buyer would provide funding to some agreed level. The
agreements for each joint venture will provide for a set term during which
definable progress must be identified or the joint ventures will
terminate, in which event the right to control the Intellectual Property
will revert to Seller. The Parties also acknowledge that it may be
appropriate to include third parties in either or both of these joint
ventures and the Parties will work together to identify potential
co-venturers. Both Buyer and Seller shall have the right to nominate their
employees for secondment to these joint ventures, subject to the
concurrence of the other Party.
(ii) The joint venture agreements referred to in Section 4.3 (e) (i)
will provide that Seller shall give Buyer the first opportunity to
participate in new or existing initiatives before commencing discussions
with third parties relating to development and commercialization
initiatives in the fields of hydrogen storage systems and Ovonic
Regenerative Fuel Cell technology. If one of the ventures described in
Section 4.3(e) (i) has been terminated because of the failure of Buyer to
diligently pursue the development of the technology, then Seller shall not
be obligated to provide Buyer the first opportunity to participate in
subsequent initiatives utilizing that technology.
(f) Transfer Rights/Right of First Refusal. Buyer and Seller agree:
--------------------------------------
(i) Buyer shall not sell, hypothecate, or otherwise transfer the
Stock prior to the first anniversary of the Closing Date. On any sale of
the Stock by Buyer to a single purchaser or a "group" (within the meaning
of Section 13(d)(3) of the Securities Act) which represents more than Five
Percent (5%) in the Seller Stock then outstanding, Buyer agrees to make
the sale of the Stock by it subject to the agreement of the purchaser to
be bound by the restrictions set forth in Section 4.2 (a) and (b).
(ii) If there is a Change of Control or if, after the first
anniversary of the Closing Date, Buyer desires to sell any the Stock, then
Seller shall have a right to purchase the Stock. If Buyer intends to sell
the Stock then it shall deliver a written notice to the Seller setting
forth the proposed sale price and other proposed terms of sale, including
the identity of any proposed transferee. If Seller intends to purchase the
Stock, Seller shall notify Buyer in writing within Forty Five (45)
Business Days of receipt of the Buyer's notice of intent to sell or a
notice of Change of Control. In the case of a Change of Control, the price
will be calculated on the same basis as the Purchase Price. In the case of
an intent to sell, the acceptance will be on the specified terms and
conditions specified in the notice. In either case, if Buyer does not
receive Seller's acceptance within Forty Five (45) Business Days of
Buyer's notice, Seller will have waived its right to purchase pursuant to
this Section 4.3(f)(ii).
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<PAGE>
(iii) Notwithstanding Section 4.3(f)(ii), prior to the completion of
a sale of the Stock to a Person, Buyer shall grant Seller a right of first
refusal with respect to the specific terms offered by a Person. Buyer
shall notify Seller in writing of the terms and conditions upon which the
Person is willing to purchase the Stock. Seller shall have the right to
purchase the Stock on the terms and conditions set forth in such notice.
If Buyer does not receive Seller's acceptance within ten (10) Business
Days of Buyer's notice Seller shall have waived its right to purchase and
Buyer may sell the Stock on terms and conditions no less favorable to the
proposed purchaser than specified in its notice.
(c) Certain Filings and Consents. With respect to certain filings and
----------------------------
consents, the Parties agree that:
(i) Buyer and Seller shall promptly make all required submissions
under the Hart Scott Rodino Antitrust Improvements Act of 1976 as amended
("HSR Act");
(ii) Buyer and Seller shall cooperate with one another in (x)
determining whether any filings are required to be made or consents,
approvals, permits or authorizations are required to be obtained under
any Laws of the United States or any other country in which Seller has
business activities, and (y) making any such filings, furnishing
information required in connection therewith and seeking timely to
obtain any such consents, permits, authorizations, approvals or waivers;
and (iii) Buyer shall promptly endeavor to obtain, and Seller shall
reasonably cooperate in connection with such endeavors, each consent set
forth on Schedules 3.1(e), 3.2(e) and 4.3(g), and (iv) Seller shall
promptly endeavor to obtain, and Buyer shall reasonably cooperate in
connection with such endeavors, each consent set forth on Schedules
3.1(e), 3.2(e) and 4.3(g).
PART FIVE
REGISTRATION RIGHTS
Section 5.1 Registration. Upon the terms and subject to the conditions set
------------
forth in this Part Five, any time after the first anniversary of the Closing,
Buyer may request a single registration (a "Stock Registration") under the
Securities Act, of all or at least 250,000 shares of the Stock.
Section 5.2 Expenses. The expenses of the holders of the Stock (other than
--------
underwriting discounts and commission applicable to the Stock of the Buyer to be
sold) shall be paid by the Seller in connection with the Registration.
Section 5.3 Other Seller Stock. The Seller shall not include in the Stock
------------------
Registration any securities which are not Stock, without the prior written
consent of the Buyer. If the Stock Registration is an underwritten offering and
the managing underwriters advise Seller that in their opinion the number of
shares of the Stock and, if permitted hereunder, other Seller Stock requested to
be included in such offering, exceeds the number of shares of the Stock and
other Stock which can be sold in an orderly manner in such offering within a
price range acceptable to
20
<PAGE>
the Buyer, the Seller shall include in such registration prior to the inclusion
of any Seller Stock, which is not Stock, the Stock requested to be included,
which in the opinion of such underwriters can be sold in an orderly manner
within the price range of such offering.
Section 5.4 Postponement. The Seller may postpone for up to One Hundred
------------
Eighty (180 days) the filing or the effectiveness of a registration statement
for the Stock Registration if the Seller determines in good faith that such
Stock Registration would reasonably be expected to have an adverse effect on any
proposal or plan by the Seller to engage in any acquisition of assets (other
than in the ordinary course of business), merger, consolidation or tender offer
or to enter into any material license agreement, joint venture arrangement or
similar transaction; provided that in such event, the holders of the Stock shall
be entitled to withdraw such request and if such request is withdrawn, such
Stock Registration shall not count as the permitted Stock Registration hereunder
and the Seller shall pay all expenses in connection with such registration.
Section 5.5 Piggyback Registration. Whenever the Seller proposes to
----------------------
register any of its securities under the Securities Act (other than pursuant to
a Stock Registration and other than registrations on Form S-4, Form S-8 or any
similar or successor registration forms) and the registration form to be used
may be used for the registration of the Seller Stock (a "Piggyback
Registration"), the Seller shall give prompt written notice to the Buyer of its
intention to effect such a registration and shall include in such registration
all Seller Stock with respect to which the Seller has received written requests
for inclusion therein within 15 days after the giving of the Seller's notice.
The expenses of the holders of the Seller Stock (other than underwriting
discounts and commissions applicable to the Stock of Buyer) shall be paid by the
Seller in connection with all Piggyback Registrations.
Section 5.6 Primary Piggyback Registration. If a Piggyback Registration is
------------------------------
an underwritten primary registration on behalf of the Seller, and the managing
underwriters advise the Seller in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a price range
acceptable to the Seller, the Seller shall include in such registration (i)
first, the securities the Seller proposes to sell, (ii) second, the Stock and
any other securities requested to be included in such registration by holders
entitled to registration rights in connection therewith, pro rata among such
holders based on the number of shares requested to be included in such
registration, and (iii) third, other securities requested to be included in such
registration.
Section 5.7 Secondary Piggyback Registration If a Piggyback Registration
--------------------------------
is an underwritten secondary registration on behalf of holders of the Seller's
securities, and the managing underwriters advise the Sellers in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in an orderly manner in such
offering within a price range acceptable to the holders initially requesting
such registration, the Seller will include in such registration (i) first, the
securities requested to be included therein by the holders requesting such
registration, (ii) second, the Stock and any other securities requested to be
included in such registration by holders entitled to registration rights in
21
<PAGE>
connection therewith, pro rata among such holders based on the number of shares
requested to be included in such registration, and (iii) third, other securities
requested to be included in such registration.
Section 5.8 Efforts. Whenever the holders of Stock have requested that any
-------
Stock be registered pursuant to this Agreement, the Seller shall use its
reasonable best efforts to effect the registration and the sale of such Stock in
accordance with the intended method of disposition.
Section 5.9 Seller Indemnity. The Seller shall indemnify, to the extent
----------------
permitted by Law, Buyer and the permitted assigns of the Stock , its officers
and directors and each Person who controls such holder (within the meaning of
the Securities Act) against all Losses caused by any untrue or alleged untrue
statement of material fact contained in any registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Seller by such holder expressly for use therein or by such holder's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Seller has furnished such holder with a sufficient
number of copies of the same. In connection with an underwritten offering, the
Seller shall indemnify such underwriters, their officers and directors and each
Person who controls such underwriters (within the meaning of the Securities Act)
to the same extent as provided above with respect to the indemnification of the
holders of the Stock.
Section 5.10 Information and Buyer Indemnity. In connection with any
-------------------------------
registration statement in which a holder is participating, Buyer shall furnish
and shall cause each such holder to furnish to the Seller in writing such
information and affidavits as the Seller reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by Law. Buyer shall indemnify the Seller, its directors and officers
and each Person who controls the Seller (within the meaning of the Securities
Act) against any Losses, resulting from any untrue or alleged untrue statement
of material fact contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in any information or
affidavit so furnished in writing by Buyer or the other holders, if any;
provided that the obligation to indemnify shall be limited to the net amount of
proceeds received by such holder from the sale of Stock pursuant to such
registration statement.
Section 5.11(a) Third Party. In the event that any claim for which a Party
-----------
providing indemnification hereunder (the "Indemnitor") would be liable to a
Party entitled to indemnification hereunder (the "Indemnitee") is asserted
against or sought to be collected from Indemnitee by a third party, Indemnitee
shall promptly notify Indemnitor of such claim, specifying the nature of such
claim and the amount or the estimated amount thereof to the extent then feasible
(which estimate shall not be conclusive of the final amount of such claim) (the
"Claim Notice"). Indemnitor shall have fifteen (15) days from its receipt of the
Claim Notice
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(the "Notice Period") to notify Indemnitee (i) whether or not it disputes its
liability to Indemnitee hereunder with respect to such claim, and (ii) if it
does not dispute such liability, whether or not it desires, at its sole cost and
expense, to defend Indemnitee against such claim; provided, however, that
Indemnitee is hereby authorized prior to and during the Notice Period to file
any motion, answer or other pleading which it shall deem necessary or
appropriate to protect its interests. In the event that Indemnitor notifies
Indemnitee within the Notice Period that it does not dispute such liability and
desires to defend against such claim or demand, then, except as hereinafter
provided, Indemnitor shall have the right to defend by appropriate proceedings,
which proceedings shall be promptly settled or prosecuted to a final conclusion
in such a manner as to avoid any risk of Indemnitee becoming subject to
liability. If Indemnitee desires to participate in, but not control, any defense
or settlement, it may do so at its own cost and expense. If Indemnitor disputes
its liability with respect to such claim, or elects not to defend against such
claim, whether by not giving timely notice as provided above or otherwise,
Indemnitee shall have the right but not the obligation to defend against such
claim, and the amount of any such claim, or if the same be contested by
Indemnitor or by Indemnitee, then that portion thereof as to which such defense
is unsuccessful, shall be conclusively deemed to be a liability of Indemnitor
hereunder (subject, if it has timely disputed liability, to a determination as
provided in Sections 5.11 and 7.12 that the disputed liability is covered by
these indemnification provisions).
(b) Party's Claim. In the event that Indemnitee shall have a claim against
-------------
Indemnitor hereunder which does not involve a claim or demand being asserted
against or sought to be collected from it by a third party, Indemnitee shall
promptly send a Claim Notice with respect to such claim to Indemnitor. If
Indemnitor does not notify Indemnitee within the Notice Period that it disputes
such claim, the amount of such claim shall be conclusively deemed a liability of
Indemnitor hereunder.
(c) Disputed Claim. If Indemnitor shall notify Indemnitee during the
--------------
Notice Period that it disputes any claim (the "Disputed Claim"), then the
Disputed Claim shall be submitted to arbitration pursuant to the provisions of
Section 7.12 of this Agreement.
PART SIX
CONDITIONS PRECEDENT
Section 6.1 Conditions Precedent to Obligations of Buyer. Subject to
--------------------------------------------
waiver as set forth in Section 7.9, the obligations of Buyer to consummate the
transactions contemplated by this Agreement are subject to the fulfillment prior
to or at the Closing of each of the following conditions:
(a) Representations and Warranties True at Closing. The representations
----------------------------------------------
and warranties of Seller contained in this Agreement or in any certificate or
document delivered pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, shall be true and correct when made, and shall
be true and correct on and as of the Closing Date as though such representations
and warranties were made at and as of such date except as otherwise contemplated
herein.
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(b) Compliance with Agreement. On and as of the Closing Date, Seller shall
-------------------------
have performed and complied with all agreements and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
(c) Officer's Certificate. Buyer shall have received certificates from
---------------------
appropriate officers of Seller, dated the Closing Date, certifying that (i) each
of the conditions described in Sections 7.1(a) and 7.1(b) has been fulfilled,
(ii) such officers know of no state of facts which would render materially
incorrect as of the Closing Date any representation or warranty of Seller
contained herein.
(d) Incumbency Certificates. Buyer shall have received a certificate of
-----------------------
Seller dated the Closing Date certifying to the incumbency of the officers of
Seller signing for it and as to the authenticity of their signatures.
(e) Opinion of Counsel. Seller shall have delivered to Buyer the opinion
------------------
of Roger John Lesinski, Esq., General Counsel of Seller, or such other counsel
designated by Seller, dated the Closing Date to the effect that:
(1) Seller has been duly organized and is validly existing and in
good standing under the laws of the State of Delaware.
(2) Seller has the corporate power and authority to enter into and
perform this Agreement and to consummate the transactions contemplated
thereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated thereby by Seller have been
duly authorized by all requisite corporate action and this Agreement and
instruments conveying the Stock have been duly executed and delivered by
Seller.
(3) This Agreement is the legal, valid and binding obligation of
Seller and is enforceable against Seller in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights in
general. The enforceability of Seller's obligations under this Agreement
is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(4) The execution and delivery by Seller of this Agreement and the
performance by Seller of its obligations under this Agreement does not (a)
conflict with or result in a violation of the Corporate Documents of
Seller or any statute, law, regulation, rule, order, writ, judgment or
decree of any court or Governmental Entity, known to me as counsel, to
which Seller or any of its assets may be subject, or (b) violate, conflict
with, constitute a Default under, permit the termination of, or require
the consent or approval of any Person (other than consents or approvals
already obtained) under, any Contract known to me to which Seller is a
Party, or by which Seller (or its assets or properties) is bound.
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(5) Seller's authorized Seller Stock consists of Thirty Million Nine
Hundred Thousand Thirty Thousand (30,930,000) shares of which Fourteen
Million Nine Hundred Forty Nine Thousand Nine Hundred and One (14,949,901)
are issued and presently outstanding held as set forth on Schedule 3.1(h).
All outstanding shares have been validly issued, are fully paid and
nonassessable, were not issued in violation of the terms of any Contract
binding upon Seller and were issued in compliance with all Corporate
Documents of Seller.
(6) The Stock, when issued and delivered in accordance with the
terms of this Agreement will be validly issued and outstanding, fully paid
and non-assessable, free and clear of any and all proxies or proxy
agreements, voting trust arrangements and Liens.
In rendering the foregoing opinion, counsel may rely upon certificates of
officers of Seller as to factual matters.
(f) Consents; No Obstructive Proceedings. All government consents,
------------------------------------
registrations, declarations or filings with, or expiration of waiting periods
imposed by or agreed with any governmental entity necessary for the purchase and
sale of the Stock, including under the HSR Act, shall have been obtained, filed
or discharged or shall have occurred. On the Closing Date, there shall be no
suit, action or other proceeding, or injunction, writ, final judgment or
preliminary restraining order or any order of any nature issued by a court or
Governmental Entity of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as herein provided and no
proceeding or lawsuits shall have been commenced or threatened by any
Governmental Entity or other Person with respect to any of the transactions
contemplated by this Agreement.
Section 6.2 Conditions Precedent to Obligations of Seller. Subject to
---------------------------------------------
waiver as set forth in Section 7.9, the obligations of Seller to consummate the
transactions contemplated by this Agreement are subject to the fulfillment prior
to or at the Closing of each of the following conditions:
(a) Representations and Warranties True at Closing. The representations
----------------------------------------------
and warranties of Buyer contained in this Agreement or in any certificate or
document delivered pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, shall be true and correct when made, and shall
be true and correct on and as of the Closing Date as though such representations
and warranties were made at and as of such date except as otherwise contemplated
herein.
(b) Compliance with Agreement. On and as of the Closing Date, Buyer shall
-------------------------
have performed and complied with all agreements and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
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(c) Officer's Certificates. Seller shall have received certificates from
----------------------
appropriate officers of Buyer, dated the Closing Date, certifying that (i) each
of the conditions described in Sections 7.2(a) and 7.2(b) has been fulfilled,
and (ii) such officers know of no state of facts which would render materially
incorrect as of the Closing Date any representation or warranty of Buyer
contained herein.
(d) Incumbency Certificates. Seller shall have received a certificate of
-----------------------
Buyer dated the Closing Date certifying to the incumbency of the officers of
Buyer signing for it and as to the authenticity of their signatures.
(e) Opinion of Counsel. Buyer shall have delivered to Seller the opinion
------------------
of Leocadie A. Robertson , or such other counsel designated by Buyer, dated the
Closing Date, to the effect that:
(1) Buyer has been duly organized and is validly existing and in
good standing under the laws of Delaware.
(2) Buyer has the corporate power and authority to enter into and
perform this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by Buyer have been
duly authorized by all requisite corporate action and this Agreement has
been duly executed and delivered by Buyer.
(3) This Agreement is the legal, valid and binding obligation of
Buyer and is enforceable against Buyer in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights in
general. The enforceability of Buyer's obligations under this Agreement is
subject to general principles of equity (regardless of whether enforcement
is considered in a proceeding in equity or at law).
(4) The execution and delivery by Buyer of this Agreement and the
performance by Buyer of its terms does not (a) conflict with or result in
a violation of the Corporate Documents of Buyer or any statute, law, writ,
regulation, rule, order, judgment or decree of any court or Governmental
Entity, known to me as counsel, to which Buyer or any of its assets may be
subject, or (b) violate, conflict with, constitute a Default under, permit
the termination of, or require the consent or approval of any Person
(other than consents or approvals already obtained) under, any Contract
known to me to which Buyer is a Party, or by which Buyer (or its assets or
properties) is bound.
In rendering the foregoing opinion, counsel may rely upon certificates of
officers of Buyer as to factual matters.
(f) Consents; No Obstructive Proceedings. All government consents,
------------------------------------
registrations, declarations or filings with, or expiration of waiting periods
imposed by or agreed with any
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governmental entity necessary for the purchase and sale of the Stock, including
under the HSR Act, shall have been obtained, filed or discharged or shall have
occurred. On the Closing Date, there shall be no suit, action or other
proceeding, or injunction, writ, final judgment or preliminary restraining order
or any order of any nature issued by a court or Governmental Entity of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided and no proceeding or lawsuits shall have
been commenced or threatened by any Governmental Entity or other Person with
respect to any of the transactions contemplated by this Agreement.
PART SEVEN
MISCELLANEOUS
Section 7.1 Notices. All notices, consents, requests, demands, and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given or delivered upon the date of receipt if: (a) delivered personally;
(b) telecopied or telexed with receipt acknowledged; (c) mailed by registered or
certified mail return receipt requested; or (d) delivered by a recognized
commercial courier, as follows:
If to Seller to:
Energy Conversion Devices, Inc.
1675 West Maple Road
Troy, Michigan, 48084
Attn: Robert C. Stempel, Chairman
Fax: 248-280-1456
If to Buyer to: TRMI Holdings Inc.
2000 Westchester Ave
White Plains, New York 10650
Attn: William M. Wicker, Vice President
Fax: 914 253 6342
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
Section 7.2 Modification. This Agreement, including this Section 7.2,
------------
shall not be modified except by an instrument in writing signed by or on behalf
of the Parties.
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Section 7.3 Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of Delaware as applied to
contracts made and performed within the State of Delaware, without regard to
principles of conflict of laws.
Section 7.4 Assignment Binding Effect. This Agreement may not be assigned
-------------------------
by either Party without the prior written consent of the other Parties, except
Buyer may assign its rights and obligations to any wholly-owned Subsidiary of
Texaco Inc. This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and permitted assigns.
Seven 7.5 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 7.6 Invalidity. If any of the terms, provisions, covenants or
----------
restrictions of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable and unless the invalidity, voidability or
unenforceability thereof does substantial violence to the underlying intent and
sense of the remainder of this Agreement, such invalidity, voidability or
unenforceability shall not affect in any way the validity or enforceability of
any other provision of this Agreement except those which the invalidated, voided
or unenforceable provision comprises an integral part of or is otherwise clearly
inseparable from. In the event any term, provision, covenant or restriction is
held invalid, void or unenforceable, the Parties shall attempt to agree on a
valid or enforceable provision which shall be a reasonable substitute for such
invalid or unenforceable provision in light of the tenor of this Agreement and,
on so agreeing, shall incorporate such substitute provision in the Agreement.
Section 7.7 Entire Agreement. This Agreement and the Confidentiality
----------------
Agreement between the Seller and the Buyer's affiliate, Texaco Group Inc.
effective February 15, 2000 contains the entire agreement between the Parties
hereto with respect to the transactions contemplated herein and all prior or
contemporaneous understandings and agreements shall merge herein. There are no
additional terms, whether consistent or inconsistent, oral or written, which are
intended to be part of the Parties' understandings which have not been
incorporated into this Agreement.
Section 7.8 Expenses. Except as the Parties may otherwise agree or as
--------
otherwise provided herein, Buyer and Seller shall bear their respective fees,
costs and expenses in connection with this Agreement and the transactions
contemplated hereby.
Section 7.9 Waiver. No waiver by any Party, whether express or implied,
------
of any right under any provision of the Agreement shall constitute a waiver of
such Party's right at any other time or a waiver of such Party's rights under
any other provision of the Agreement unless it is made in writing and signed by
a duly authorized representative of a Party waiving the condition. No failure
by either Party hereto to take any action with respect to any breach of this
Agreement or Default by another Party shall constitute a waiver of the former
Party's right to enforce any
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provision of this Agreement or to take action with respect to such breach or
Default or any subsequent breach or Default by such other Party.
Section 7.10 No Admissions. Nothing in this Agreement shall constitute
-------------
any admission, expressed or implicit, by the Parties of any wrongdoing. Nothing
herein expressed or implied is intended to confer upon any other Person any
rights or remedies hereunder.
Section 7.11 Survival. All of the covenants, agreements, representations
--------
and warranties, and indemnities made by each Party contained in this Agreement
and in any covenants, agreements, representations and warranties, and
indemnities contained in any Schedule, certificate or other document delivered
by any such Party pursuant hereto or in connection herewith shall survive for a
period of three year from the Closing Date.
Section 7.12 Arbitration. Any dispute, controversy or disputed claim
-----------
arising under, in connection with or relating to, this Agreement, as well as any
amendment, purported amendment or termination, or any breach or violation
thereof, shall be finally settled and determined under and pursuant to the
applicable commercial arbitration rules and procedures of the American
Arbitration Association. The arbitration shall be held at New York, New York.
The arbitrator(s) shall have no affiliation or relationship with either Party or
their counsel and, when feasible, shall have training or experience in the
subject matter of the dispute. Any award or decision rendered pursuant to such
rules and procedures shall be final and binding on each of the Parties hereto
and their respective successors and assigns. Such decision or award shall be in
writing signed by the arbitrator(s) and shall state the reasons upon which the
decision or award is based. The arbitrator(s), in deciding any dispute,
controversy or claim arising under this Agreement as provided in this Section
7.12, shall look to the substantive laws of the State of Delaware for the
resolution of the dispute, controversy or claim. Judgment on any decision or
award pursuant hereto may be entered in any court having jurisdiction thereof.
Section 7.13 Attorneys Fees. In any arbitration, action or proceeding
--------------
brought to enforce any provision of this Agreement, or where any provision
hereof is validly asserted as a defense, the successful Party shall be entitled
to recover reasonable attorneys' fees in addition to its cost and expense and
any other available remedy.
Section 7.14 Further Assurances. Seller and Buyer shall provide to each
------------------
other such information regarding the Stock as may be reasonably requested and
shall execute and deliver to each other such further documents and take such
further action as may be reasonably requested by either Party to document,
complete or give full effect to the terms and provisions of this Agreement and
the transactions contemplated herein.
IN WITNESS WHEREOF, the Parties hereto have entered into this Agreement as
of the date first herein above written.
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ENERGY CONVERSION DEVICES, INC.
a Delaware corporation
By: /s/ Stanford R. Ovshinsky
-----------------------------
Name: Stanford R. Ovshinsky
Title: President and CEO
By: /s/ Robert C. Stempel
-----------------------------
Name: Robert C. Stempel
Title: Chairman
TRMI HOLDINGS INC.
a Delaware corporation
By: /s/ William M. Wicker
-----------------------------
Name: William M. Wicker
Title: Vice President
30
