Document:

Exhibit 10.5

Exhibit 10.5

FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into this
18th day of May, 2009, by and among GOLD HILL VENTURE LENDING 03, LP (as modified from
time to time, “Lenders”), GOLD HILL VENTURE LENDING 03, LP (“Gold Hill”) in its capacity as
Administrative Agent on behalf of the Lenders, SILICON VALLEY BANK (“SVB”), in its capacity as
Collection Agent on behalf of the Lenders, and LENDINGCLUB CORPORATION, a Delaware corporation
(“Borrower”).

Recitals

A. Administrative Agent, Collection Agent, Lenders and Borrower have entered into that certain
Loan and Security Agreement dated as of February 19, 2008 (the “First Amendment” and as the same
may from time to time be further amended, modified, supplemented or restated, the “Loan
Agreement”).

B. Lenders have extended credit to Borrower for the purposes permitted in the Loan Agreement.

C. Borrower has requested that SVB and Gold Hill make an additional term loan in the principal
amount of Four Million Dollars ($4,000,000) (the “Supplemental Term Loan”) available to Borrower
pursuant to a Loan and Security Agreement by and among SVB, as Administrative Agent and as a
Lender, Gold Hill and Borrower dated of even date herewith.

D. SVB and Lenders have agreed to make the Supplemental Term Loan, on the condition, among
others, that Borrower enter into this Agreement, but only to the extent, in accordance with the
terms, subject to the conditions and in reliance upon the representations and warranties set forth
below.

Agreement

Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to
be legally bound, the parties hereto agree as follows:

1. Definitions. Capitalized terms used but not defined in this Agreement shall have the
meanings given to them in the Loan Agreement.

2. Outstanding Advances. Borrower represents and warrants to Administrative Agent, Collection
Agent, and Lenders that as of the date of this Agreement, (a) the outstanding principal balance of
the Advances is                                          Dollars ($                    ), and (b) that all such
sums are due and owing to Lenders, without offset or defense of any kind or nature and in the event
Borrower has any offsets or defenses thereto,
Borrower hereby irrevocably waives all such offsets and defenses. Borrower acknowledges and
agrees that there is no further availability to request Advances.

 

 

 

3. Amendments to Loan Agreement.

3.1 Section 2.6 (Mandatory Prepayment Upon Prepayment of Eligible Loans). Section 2.6 is
hereby amended by deleting it in its entirety and replacing it with the following:

2.6 Mandatory Prepayment Upon Prepayment of Eligible Loans. Upon the request of
Lenders, Borrower shall pay to Collection Agent, for the benefit of Lenders, the aggregate
amount of Financed Loans which have been repaid or Charged-off, in whole or in part.

3.2 Section 6.9 (Right to Invest). Section 6.9 is hereby deleted in its entirety and replaced
with “Reserved”.

3.3 Section 8.11 (Cross-Default with SVB Loan Agreement). Section 8.11 is hereby amended by
deleting it in its entirety and replacing it with the following:

8.11 Cross-Default with the SVB Loan Agreement and the SVB/Gold Hill Loan Agreement.
An Event of Default occurs under the SVB Loan Agreement or the Loan and Security Agreement
by and among SVB, as Administrative Agent and as a Lender, Gold Hill and Borrower dated May
18, 2009.

3.4 Section 13 (Definitions). Section 13 is amended by deleting the following terms and their
respective definitions and replacing them with the following:

“Minimum Collateral Value” means (a) from May 18, 2009 until all of the Obligations
with respect to the Advances, including without limitation, all principal, accrued interest
and the Final Payment, have been repaid in full in cash, a principal amount equal to Two
Hundred Fifty Thousand Dollars ($250,000) and (b) thereafter, Zero Dollars ($0.00).

“Pledged CD” shall mean the certificate of deposit number                      issued to
Borrower by Collection Agent which is secured by a Lien in favor of Administrative Agent,
for itself and for the benefit of the Lenders with respect to the Obligations under this
Agreement.

3.5 Supplemental Term Loan. The Loan Agreement is hereby amended to include the Supplemental
Term Loan as “Permitted Indebtedness” and the Liens in favor of SVB and Gold Hill securing the
Supplemental Term Loan as “Permitted Liens”.

3.6 Prior Amendment. That certain Second Amendment to Loan and Security Agreement by and among
Administrative Agent, Collection Agent, Lenders and Borrower dated March 12, 2009 is hereby renamed
the Third Amendment to Loan and Security Agreement.

 

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4. Limitation of Amendment.

4.1 This Agreement is effective for the purposes set forth herein and shall be limited
precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or
modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any
right or remedy which Lenders may now have or may have in the future under or in connection with
any Loan Document.

4.2 This Agreement shall be construed in connection with and as part of the Loan Documents and
all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan
Documents are hereby ratified and confirmed and shall remain in full force and effect.

5. Representations and Warranties. To induce Administrative Agent, Collection Agent, and
Lenders to enter into this Agreement, Borrower hereby represents and warrants to Administrative
Agent, Collection Agent, and Lenders as follows:

5.1 Immediately after giving effect to this Agreement (a) the representations and warranties
contained in the Loan Documents are true, accurate and complete in all material respects as of the
date hereof (except to the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) no Event of Default has occurred and
is continuing;

5.2 Borrower has the power and authority to execute and deliver this Agreement and to perform
its obligations under the Loan Agreement;

5.3 Borrower has previously delivered its organizational documents to Administrative Agent,
which remain true, accurate and complete and have not been amended, supplemented or restated since
their delivery and are and continue to be in full force and effect;

5.4 The execution and delivery by Borrower of this Agreement and the performance by Borrower
of its obligations under the Loan Agreement have been duly authorized by all necessary action on
the part of Borrower;

5.5 The execution and delivery by Borrower of this Agreement and the performance by Borrower
of its obligations under the Loan Agreement do not and will not contravene (a) any law or
regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding
on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or
authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of
Borrower;

5.6 The execution and delivery by Borrower of this Agreement and the performance by Borrower
of its obligations under the Loan Agreement do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on Borrower, except as
already has been obtained or made; and

 

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5.7 This Agreement has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to or affecting
creditors’ rights.

6. Counterparts. This Agreement may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same instrument.

7. Effectiveness. This Agreement shall be deemed effective upon the following conditions: (a)
the due execution and delivery to Administrative Agent of this Agreement by each party hereto and
(b) payment of Administrative Agent’s legal fees and expenses in connection with the negotiation
and preparation of this Agreement.

[Signature page follows.]

 

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In Witness Whereof, the parties hereto have caused this Agreement to be duly executed
and delivered as of the date first written above.

	 	 	 	 	 
	LENDERS:	 	 
	 
	 	 	 	 
	GOLD HILL VENTURE LENDING 03, LP	 	 
	 
	 	 	 	 
	By: Gold Hill Venture Lending Partners 03, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Robert Helm	 	 
	 

	 	 	 	 
	 

	 	Name: Robert Helm	 	 
	 

	 	Title:   Managing Director	 	 
	 
	 	 	 	 
	ADMINISTRATIVE AGENT:	 	 
	 
	 	 	 	 
	GOLD HILL VENTURE LENDING 03, LP	 	 
	 
	 	 	 	 
	By: Gold Hill Venture Lending Partners 03, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Robert Helm
 

Name: Robert Helm
	 	 
	 

	 	Title:   Managing Director	 	 
	 
	 	 	 	 
	COLLECTION AGENT:	 	 
	 
	 	 	 	 
	SILICON VALLEY BANK	 	 
	 
	 	 	 	 
	By:

	 	/s/ Vera Shokina
 

Name: Vera Shokina
	 	 
	 

	 	Title:   Relationship
Manager	 	 
	 
	 	 	 	 
	BORROWER:	 	 
	 
	 	 	 	 
	LENDINGCLUB CORPORATION	 	 
	 
	 	 	 	 
	By:

	 	/s/ Renaud Laplanche
 

Name: Renaud Laplanche
	 	 
	 

	 	Title:   Chief Executive Officer	 	 

[Signature Page to 4th Amendment to Loan and Security Agreement (GH)]ex10-85.htm

     

    
      

      

    

    Exhibit
10.85

    

      ASSET
PURCHASE AGREEMENT

       

       

      This Asset
Purchase Agreement (the “Agreement”)
is entered into as of August ____, 2008, by and among:  Porous
Power Technologies, LLC, a Colorado limited liability company (“Purchaser”)
and Lithium
Technology Corporation, a Delaware corporation (“Seller”).  Certain
capitalized terms used in this Agreement are defined on Exhibit A.

       

      1.           Sale Of
Assets; Related Transactions.

       

      1.1           Sale of Assets. Contemporaneously with
the execution and delivery of this Agreement, Seller shall cause to be sold,
assigned, transferred, conveyed and delivered to Purchaser good and valid title
to the Assets (as defined below), free of any Encumbrances, on the terms and
subject to the conditions set forth in this Agreement.  As used in
this Agreement, “Assets”
shall mean:

       

      (a)           all
equipment, furniture and other tangible assets of Seller used in the conduct of
the Business, including all of the equipment, furniture and other tangible
assets of Seller identified on Part
1.1(a) of the Disclosure Schedule;

       

      (b)           Seller’s
rights under all Assumed Contracts, all of which are set forth on Part
1.1(b) of the Disclosure Schedule; and

       

      (c)           all
customers lists, books, records, files, data, inventories and work-in-progress
of Seller associated with the Assumed Contracts.

       

      1.2           Excluded
Assets.  Purchaser shall not acquire, and there shall be
excluded from the Assets (collectively, the “Excluded
Assets”):

       

      (a)           Seller’s
interest in (i) cash on hand or in banks and cash equivalents of Seller; (ii)
all rights to collect from customers (and to retain) all fees and other amounts
payable, or that may become payable, to Seller with respect to services
performed on behalf of Seller on or prior to the Closing Date; and (iii) all
accounts receivable, notes receivable and other receivables of
Seller;

       

      (b)           
all Proprietary Assets owned, licensed or held by Seller and used in the
Business, all associated goodwill, rights, privileges, claims, past, present and
future causes of action and options relating to such Proprietary Assets,
including, but not limited to, all of the Proprietary Assets;

       

      (c)           all
Governmental Authorizations utilized in the conduct of the Business;
and

       

      (d)           all
books, records, files and data of Seller related to the Business not described
in Section 1.1(c) above.

       

      1.3           Licenses to Seller Proprietary
Assets. Seller hereby grants Purchaser a nonexclusive, irrevocable,
worldwide, royalty-free, fully paid license, with the right to grant sublicenses
through multiple tiers, under the Seller Proprietary Assets for 10 years after
the Closing Date to (a) use and practice such Seller Proprietary Assets
including, without limitation, to make, use, have made, sell, offer to sell,
import or otherwise exploit any product, method, process, or service of
Purchaser and  (b) to use, modify, reproduce, distribute, publicly
perform, publicly display, and create derivative works of any Seller Proprietary
Assets in order to exercise its rights granted under subsection (a) (the “License”).

       

      1.4           Purchase Price.  As
consideration for the sale of Assets to Purchaser and the grant of the
License:

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (a)           Purchaser
shall pay Seller US$1.00 in cash (the “Purchase
Price”); and

       

      (b)           At
the Closing, Purchaser shall assume the Assumed Liabilities (as defined in
Section 1.6 below).

       

      1.5           Sub Lease Agreement. In
connection with the execution of this Agreement, the parties shall will enter
into a Sub-lease Agreement for the sublease of a portion of the facility of
Seller at 5115 Campus Drive, Plymouth Meeting, PA 19462 in a form mutually
agreed upon by the parties. .

      

      1.6           No other Liabilities or Obligations
Assumed. Purchaser shall not assume any Liability of Seller, other than
the Assumed Liabilities.  Without limiting the generality of the
foregoing, nothing contained herein shall cause Purchaser to assume (a) any
Liabilities arising out of the conduct of the Business prior to the Closing,
whether known or unknown on the Closing Date, other than the Assumed
Liabilities; (b) any Taxes:  (i) payable with respect to the business,
assets, properties or operations of Seller relating to the Business with respect
to periods or portions thereof ending on or prior to the Closing Date or (ii)
incident to or arising as a consequence of the negotiation or consummation by
Seller of this Agreement and the Transactions; (c) any Liability arising prior
to or as a result of the Closing to any employees, agents or independent
contractors of Seller, or under any benefit arrangement with respect thereto;
provided that Purchaser shall be liable for any such Liabilities resulting from
Purchaser’s employment of Seller’s employees after the Closing Date; (d) any
Liability arising prior to, as a result of or after the Closing from any Seller
Contract that is not an Assumed Contract; and (e) any Liability of Seller
arising or incurred in connection with the negotiation, preparation and
execution of this Agreement and the Transactions and fees and expenses of
Seller’s counsel, accountants and other experts.  Purchaser does assume and
agree to discharge, when due, the Assumed Liabilities.  For purposes
of this Agreement, “Assumed
Liabilities” shall mean
only the following Liabilities of Seller: the obligations of Seller under
the Assumed Contracts, but only to the extent such obligations (w) arise after
the Closing Date; (x) do not arise from or relate to any breach by Seller of any
provision of any of such Assumed Contracts that, with notice or lapse of time,
would constitute or result in a breach of any of such Assumed Contracts; (y) do
not arise from any event, circumstance or condition occurring or existing on or
prior to the Closing Date; and (z) are ascertainable (in nature and amount) by
reference to the express terms of the Assumed Contracts.

       

      1.7           Sales Taxes.  Seller shall bear and pay,
and shall reimburse Purchaser and its respective affiliates for, any sales
Taxes, use Taxes, transfer Taxes, documentary charges, recording fees or similar
Taxes, charges, fees or expenses that may become payable in connection with the
sale of the Assets to Purchaser or in connection with any of the other
Transactions.

       

      1.8           Allocation.  Within
60 days following the Closing, Purchaser shall deliver to Seller a statement
setting forth Purchaser’s good faith determination of the manner in which the
Purchase Price is to be allocated among the Assets.  Except as
required by law, the allocation prescribed by such statement shall be conclusive
and binding upon Seller and Purchaser for all purposes and Seller and Purchaser
shall not file any Tax Return or other document with, or make any statement or
declaration to, any Governmental Body that is inconsistent with such
allocation.

       

      1.9           Closing.  The
closing of the sale of the Assets to Purchaser (the “Closing”)
shall take place at 10:00 a.m. at the offices of Cooley Godward Kronish llp, 380
Interlocken Crescent, Suite 900, Broomfield, Colorado 80021 on the date hereof,
or at such other time or place as the parties may mutually agree.  The
date on which the Closing takes place shall be referred to as the “Closing
Date”.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      1.10           Further
Assurances.  From and after the Closing Date, the Seller shall
cooperate with the Purchaser and the Purchaser’s affiliates and Representatives,
and shall execute and deliver such documents and take such other actions as the
Purchaser may reasonably request, for the purpose of evidencing the Transactions
and putting the Purchaser in possession and control of all of the
Assets.  The Seller hereby irrevocably nominates, constitutes and
appoints the Purchaser as the true and lawful attorney-in-fact of the Seller
(with full power of substitution) effective as of the Closing Date, and hereby
authorizes the Purchaser, in the name of and on behalf of the Seller, to
execute, deliver, acknowledge, certify, file and record any document, to
institute and prosecute any Proceeding and to take any other action (on or at
any time after the Closing Date) that the Purchaser may deem appropriate for the
purpose of (i) collecting, asserting, enforcing or perfecting any claim,
right or interest of any kind that is included in or relates to any of the
Assets, (ii) defending or compromising any claim or Proceeding relating to
any of the Assets; provided that Purchaser shall
obtain Seller’s consent, not to be unreasonably withheld, prior to compromising
any such Proceeding, or (iii) otherwise carrying out or facilitating any of
the Transactions.  The power of attorney referred to in the preceding
sentence is and shall be coupled with an interest and shall be irrevocable, and
shall survive the dissolution or insolvency of the Seller.

      

      2.           Representations
And Warranties Of Seller

       

      Except as
set forth in the Disclosure Schedule, Seller hereby represents and warrants to
Purchaser as follows as of the Closing Date:

       

      2.1           Due Organization.  The
Seller is a corporation duly organized, validly existing and in good
standing under the laws of Delaware.

       

      2.2           Assets.

       

      (a)           Seller
is the sole owner of the Assets and Seller Proprietary Assets and has full and
exclusive right to assign the rights assigned herein;

       

      (b)           all
of the Assets (including the Seller Proprietary Assets) are free and clear of
all Encumbrances;

       

      (c)           the
Assets and Seller Proprietary Assets constitute all the Assets necessary to
enable the Seller to conduct the Business in the manner in which such Business
is being conducted;

       

      (d)           none
of the Seller Proprietary Assets infringe, conflict with or violate any
Proprietary Assets of any third party;

       

      (e)           Seller
has maintained the Assets and Seller Proprietary Assets in confidence and has
not granted, directly or indirectly, any rights or interest whatsoever in the
Assets or Acquired Proprietary Assets to any third party;

       

      (f)           all
employees, agents, consultants, or contractors of Seller who have contributed
to, participated in the development of or have access to any of the Assets or
Seller Proprietary Assets either (1) is a party to a “work-for-hire” agreement
under which the Seller (or any predecessor in interest, if applicable) is deemed
to be the original owner/author of all property rights therein; or (2) has
executed an assignment or an agreement to assign in favor of the Seller (or any
predecessor in interest, if applicable) all right, title and interest in such
material; and

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (g)           all
Seller Proprietary Assets which are patents, trademarks, service marks and
copyrights that are registered with any Governmental Body are valid and
subsisting, and all documents, instruments, and fees necessary to establish,
perfect, and maintain the rights of the Seller in the Seller Proprietary Assets
have been and will be in the future validly executed, delivered, and filed in a
timely manner with the appropriate Governmental Body.  Each of the
Assets that is registered is and at all times has been in compliance with all
legal requirements and all filings, payments, and other actions required to be
made or taken to maintain such Asset in full force and effect have been made by
the applicable deadline.

       

      2.3           No Conflicts.  No
claim, whether or not embodied in an action past or present, of any
infringement, of any conflict with, or of any violation of any Proprietary
Asset, has been made or is pending or threatened against Seller relative to the
Assets.  Seller agrees to promptly inform the Purchaser of any such
claim arising or threatened in the future with respect to the Assets or any part
thereof.

       

      2.4           Contracts.  Except
as set forth in Part
2.4 of the Disclosure Schedule, there are no Seller Contracts: (i) for or
in any way relating to the sale, license, purchase, development or support of
any Asset or any Seller Proprietary Assets); (ii) restricting the operation of
the Seller’s business with respect to, or its right to use, any of the Assets or
any Seller Proprietary Assets); or (iii) that are otherwise material to the
operation of the Business or use of the Assets.  

       

      2.5           Compliance with Legal
Requirements.  Except as set forth in Part 2.5
of the Disclosure Schedule: (a) the Seller is, and has been, in material
compliance with each Legal Requirement that is or was applicable to it or to the
conduct of the Business or the ownership or use of any of its Assets; and
(b) no event has occurred, and no condition or circumstance exists, that
might (with or without notice or lapse of time) constitute or result directly or
indirectly in a violation by the Seller of, or a failure on the part of the
Seller to materially comply with, any Legal Requirement.

       

      2.6           Governmental
Authorizations.  The Governmental Authorizations held by the
Seller constitute all of the Governmental Authorizations necessary to permit the
Seller to own and use the Assets in the manner in which they are currently owned
and used and in the manner in which they are proposed to be owned and
used.  Each such Governmental Authorization is valid and in full force
and effect and the Seller is and has at all times been in material compliance
with all of the terms and requirements of each such Governmental
Authorization.

       

      2.7           Environmental and Safety
Laws.  The Seller is not in violation of any applicable
statute, law or regulation relating to the environment or occupational health
and safety, and to its Knowledge, no material expenditures are or will be
required in order to comply with any such existing statute, law or
regulation.  

       

      2.8           Proceedings; Orders;
Litigation.  There is no pending action, suit, Proceeding or
investigation, and no Person has threatened to commence any Proceeding, that
involves Seller or that otherwise relates to or might affect the Assumed
Contracts, the Seller Proprietary Assets or any of the Assets (whether or not
Seller is named as a party thereto), and no event has occurred that could
reasonably be expected to give rise to or serve as a basis for the commencement
of any such Proceeding.  The foregoing includes, without limitation,
actions, suits, Proceedings or investigations pending or threatened involving
the prior employment of any of Seller’s employees, their use in connection with
Seller’s business of any information or techniques allegedly proprietary to any
of their former employers, or their obligations under any agreements with prior
employers.  There is no Order to which Seller, or any of the Assets,
are subject; and no Related Party of Seller is subject to any Order that relates
to the Business or to any of the Assets or Seller Proprietary
Assets.  There is no proposed Order that, if issued or otherwise put
into effect, may have an adverse effect on the Business, the Assets or the
Seller Proprietary Assets.  There is no action, suit, Proceeding or
investigation by Seller currently pending or that Seller intends to
initiate.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      2.9           Authority; Binding Nature of
Agreements.  Seller has the absolute and unrestricted right,
power and authority to enter into and to perform its obligations under this
Agreement and each of the Transaction Agreements; and the execution, delivery
and performance by the Seller of this Agreement and each of the Transaction
Agreements has been duly authorized by all necessary action on the part of the
Seller and its stockholders, board of directors and officers.  This
Agreement and each of the Transaction Agreements (assuming that each such
agreement has been duly and validly authorized, executed and delivered by
Purchaser) each constitute the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with their terms, except as
the enforceability hereof or thereof may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally or (ii) applicable
equitable principles (whether considered in a proceeding at law or in
equity).  

       

      2.10           Non-Contravention;
Consents.  Except as set forth in Part
2.10 of the Disclosure Schedule, neither the execution and delivery of
this Agreement, nor the consummation or performance of any of the Transactions,
will directly or indirectly (with or without notice or lapse of
time):

       

      (a)           contravene,
conflict with or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement or any Order to which
the Seller, or any of the Assets, is subject;

       

      (b)           cause
the Purchaser or any affiliate of the Purchaser to become subject to, or to
become liable for the payment of, any Tax;

       

      (c)           cause
any of the Assets to be reassessed or revalued by any taxing authority or other
Governmental Body;

       

      (d)           contravene,
conflict with or result in a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is to be included in
the Assets or is held by the Seller or any employee of the Seller;

       

      (e)           contravene,
conflict with or result in a violation or breach of, or result in a default
under, any provision of any Seller Contract;

       

      (f)           conflict
or violate Seller’s Certificate of Incorporation or bylaws; or

       

      (g)           result
in the imposition or creation of any Encumbrance upon or with respect to any of
the Assets.

       

      2.11           Brokers.  The Seller
has not agreed or become obligated to pay, or has taken any action that might
result in any Person claiming to be entitled to receive, any brokerage
commission, finder’s fee or similar commission or fee in connection with any of
the Transactions.

       

      2.12           Liabilities;
Seller.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (a)           Seller
is not now insolvent, nor will it be rendered insolvent by any of the
Transactions.  As used in this section, “insolvent”
means that the sum of the present fair saleable value of the assets of an Entity
as a going-concern do not and will not exceed its debts and other probable
Liabilities. Immediately after giving
effect to the payment of the Purchase Price to Seller:  (i) Seller
will be able to pay its Liabilities (other than the Assumed Liabilities) that
then exist or that become due in the usual course; and (ii) Seller will have
assets that exceed its Liabilities (other than the Assumed
Liabilities).  The Purchase Price constitutes fair value for the
Assets and the consummation of the Transactions will not constitute a fraudulent
transfer under applicable Legal Requirements relating to bankruptcy and
insolvency

      

      (b)           Seller
has never (i) made a general assignment for the benefit of creditors,
(ii) filed, or had filed against Seller, any bankruptcy petition or similar
filing, (iii) suffered the attachment or other judicial seizure of the
Assets or (iv) taken or been the subject of any action that may have an
adverse effect on Seller’s ability to comply with or perform any obligations
under any of the Transactional Agreements.  Seller is not subject to
any Order and is not bound by any Contract that may have an adverse effect on
Seller’s ability to comply with any of the Transactional Agreements, and there
is no Proceeding pending, and, no Person has threatened to commence any
Proceeding, that may have such effect.  No event has occurred, and no
claim, dispute or other condition or circumstance exists, that would reasonably
be expected to give rise to the commencement of any such
Proceeding.

       

      2.13           Phoenix Program Product
Specifications.
Part
2.13 of the Disclosure Schedule lists all Product Specifications for all
cells related to any Phoenix Program.

       

      3.           Representations
And Warranties Of Purchaser.

       

       

      Purchaser
hereby represents and warrants to Seller as follows as of the Closing
Date:

       

      3.1           Organizational
Status.  The Purchaser is a limited liability company duly
organized, validly existing and in good standing under the Laws of Colorado and
is qualified to do business in any jurisdiction where it is required to be so
qualified except where the failure to so qualify would not have a material
adverse effect on the Purchaser.

       

      3.2           Authorization.  The
Purchaser has the requisite power and authority to execute and deliver this
Agreement and to perform the Transactions performed or to be performed by
it.  Such execution, delivery and performance by the Purchaser has
been duly authorized by all necessary corporate action.  This
Agreement has been duly executed and delivered by the Purchaser and constitutes
a valid and binding obligation of the Purchaser, enforceable against it in
accordance with its terms, subject to applicable laws of bankruptcy, insolvency,
moratorium and other laws affecting the rights of creditors
generally.  The Purchaser has the requisite power and authority
(i) to conduct its business in the manner in which its business is
currently being conducted, and (ii) to own and use its assets in the manner
in which its assets are currently owned and used.

       

      4.           Closing
Deliverables of the Parties.

       

      4.1           Deliveries to be made by
Seller.  At the Closing, Seller shall deliver the following to
Purchaser:

       

      (a)           each
of the consents identified in Part
2.10 of the Disclosure Schedule;

       

      (b)           the
Sublease, executed by Seller;

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (c)           a
Bill of Sale and Assignment and Assumption Agreement, in the form attached
hereto as Exhibit
B (the
“Assignment
and Assumption Agreement”), executed by Seller; and

       

      (d)           such
other bills of sale, endorsements, assignments and other documents as may (in
the reasonable judgment of Purchaser or its counsel) be reasonably necessary or
appropriate to assign, convey, transfer and deliver to Purchaser good and valid
title to the Assets free of any Encumbrances.

      

      4.2           Deliveries to be made by Purchaser.
At the Closing, Purchaser shall deliver the following to
Seller:

       

      (a)           the
Purchase Price;

       

      (b)           the
Sublease, executed by Purchaser;

       

      (c)           the
Assignment and Assumption Agreement executed by Purchaser.

       

      5.           Covenants
and Other Agreements.

       

      5.1           Noncompetition;
Non-Solicitation.  Seller agrees that it will not, and they
will cause its employees not to, directly or indirectly, whether individually or
as principal, agent, officer, director, employee, consultant, partner, member or
stockholder (other than as the passive holder of less than 5% of the shares of a
publicly traded company) of any Entity or otherwise, alone or in association
with any other individual, Entity or group:

       

      (a)           engage
in developing, offering, selling, or providing, or attempting to develop, offer,
sell, or provide, directly or indirectly, to any person located anywhere in the
world, any (i) products, technology, or the intellectual property rights
thereto, or (ii) services (including training services), in either case, that
are the same as or similar to, or otherwise compete with the
Business;

       

      (b)           make
known to any person, entity, firm or corporation the names and addresses of any
of the customers of Purchaser or any other information pertaining to
them;

       

      (c)           solicit,
divert or take away, or attempt to divert or take away, the business or
patronage of any of the clients, customers or accounts, or prospective clients,
customers or accounts, of Purchaser; or

       

      (d)           interfere
with the business of Purchaser in any manner, including the recruiting or hiring
of any employee of Purchaser or any ex-employee of Purchaser or the Company
whose employment with Purchaser or the Company was terminated less than one (1)
year prior to the date of such interference.

       

      The
restrictions above shall remain in effect until the second anniversary of the
Closing Date.  References above to Purchaser shall include the Assets
and the Business being acquired and the employees being offered employment by
Purchaser hereunder.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      Seller
understands that its agreement to the restrictions imposed above is a material
term of this Agreement and that Purchaser would not have entered into this
Agreement or be willing to consummate the transactions contemplated hereby
absent such agreement. Seller further acknowledges and agrees that the
restrictions imposed above are necessary to preserve the business and goodwill
that Purchaser is acquiring under this Agreement and to protect Purchaser’s
trade secrets, proprietary information, confidential information, know-how,
business and goodwill.  Seller agrees that, in light of Purchaser’s
globally competitive business, including the Business acquired hereunder, the
restrictions above are reasonable in duration, geographical area and
scope.  Seller acknowledges that any breach by it of this Section 5.1
will cause irreparable damage to Purchaser, the damages for which may be
unreasonably difficult to measure or may be inadequate, and that in the event of
such breach, Purchaser shall be entitled to equitable relief, including
injunctive relief, without the need for proving damages or posting any bond, in
addition to any monetary damages and other remedies available to Purchaser under
this Agreement and at law.  Seller further agrees that should they
violate any obligation imposed in this Section 5.1, they shall continue to be
bound by that obligation until a period equal to the term of such obligation has
expired without violation of such obligation.

       

      The parties agree that the
restrictive covenants contained in this Section 5.1 are reasonable under the
circumstances and further agree that the covenants contained in this Section 5.1
shall be interpreted liberally in such a manner as to be effective and valid
under applicable law.  In the event any provision of this Section 5.1
or portion thereof shall be held to be illegal or unenforceable, the remainder
of this Section 5.1 or such provision shall remain in full force and
effect.  If any one or more of the provisions contained in this
Section 5.1 shall for any reason be held to be excessively broad as to duration,
geographical scope, activity or subject, such provision shall be construed by
limiting or reducing it so as to be enforceable to the maximum extent compatible
with applicable law.

       

      For
purposes of this Section 5.1, the term “Purchaser” and “Seller shall include
their respective successors and assigns (including any successor to
substantially all of the assets of Seller).  

       

      5.2           Additional Documentation.
Promptly following the Effective Date, but in any case not later than August 15,
2008, Seller shall execute and/or cause to be delivered to Purchaser or any
Governmental Body, as applicable, such instruments and other documents
(including any patent, trademark or copyright assignments in a form acceptable
to Purchasers), and shall take such other actions as Purchaser may reasonably
request (prior to, at or after the Closing), necessary to establish, perfect,
and maintain the rights of the Purchaser in the Assets.

       

      5.3           Removal of Hazardous Materials;
Indemnification. The Seller shall remove all Hazardous Materials which
are not required for operating of the Business from the facility located at 5115
Campus Drive, Plymouth Meeting, PA 19462 (the “Facility”)
by no later than December 15, 2008. Any Hazardous Materials retained at the
Facility shall be pre-approved in writing by the Purchaser. The Seller shall
defend, hold harmless and indemnify the Purchaser from any claim, suit or
proceeding, Liability, Damages, cost or expenses arising from or related to,
without limitation, the use, storage, or transport of Hazardous Materials
(including any release, leakage or exposure associated therewith) (i) by the
Seller or (ii) at the Facility prior to the date of occupancy of the Facility by
the Purchaser pursuant to the Sublease.

       

      5.4           Transition of the Business.
Seller agrees and covenants that at any time and from time to time it will
promptly execute and deliver to the Purchaser such further instruments and
documents and take such further action as the Purchaser may reasonably require
in order to carry out the full intent and purpose of this Agreement and to
transition the Business to the Purchaser, including, but not limited to: (i)
providing Purchaser with all relevant information available to assist with the
smooth transition of the Business and fulfillment of the Phoenix Program; (ii)
providing the Purchaser with all leads, contacts and other information available
in connection to the Business and which has been prospected by the Seller’s
sales group over the last 18 months; (iii) Seller shall support the purchase by
Purchaser of electrodes and other components (the “Components”),
at Seller’s direct cost, to fulfill the requirements of the Phoenix
Program,  and for the other potential programs currently contemplated
in connection with the Business; provided, however, Purchaser
may require that Seller purchase any Components needed for the Business from the
suppliers and agrees to reimburse Seller for the direct cost of such purchases;
and (iv) honoring, and requiring its employees to continue to honor, obligations
of confidentiality, inventions assignments or other legal obligations related to
the Business. The parties shall  execute and/or cause to be delivered
to the other party, such instruments and other documents, and shall take such
other actions as Purchaser may reasonably request (prior to, at or after the
Closing), including entering into a supply agreement for the Components,
necessary to give effect to this Section 5.4.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      5.5           Hiring; Waiver. The parties
acknowledge that in connection with the transition of the Business from Seller
to Purchaser, Seller shall terminate the services of certain of its employees
(the “Employees”)
and that Purchaser shall retain the services of certain of such Employees. As
between the Purchaser and Seller, the selection of such Employees and the terms
and conditions of service shall be determined at the sole discretion of the
Purchaser. Seller hereby waives any and all non-competition, non-solicitation or
similar provisions in any employment agreements, offer letters, arrangements or
understandings it is party to with such Employees in connection with the
transition of the Business and the hiring by Purchaser of such Employees in
connection therewith.

       

      5.6           Sublease of the Facility. In
connection with the transition of the Business, pursuant to the terms and
conditions of that certain [Sublease], dated on or about the date hereof,
between the Seller and the Purchaser (the “Sublease”),
the Seller shall sublease a portion of the Facility to the Purchaser.

       

      5.7           Protection of Seller
Creditors.  Seller shall not make any distribution, dividend,
liquidation, disbursement or other payment of cash, stock or property to any of
its stockholders until the date at which Seller has satisfied in full or, in the
good faith judgment of the Board of Directors of the Seller, has made adequate
provision to satisfy in full, each Liability of the Seller (including any
Liability under this Agreement).

       

      5.8           Transfer of Moral
Rights.  In the event that any assignment of the Assets
pursuant to this Agreement may be ineffective or incomplete as a result of any
moral rights, artists’ rights, or any other similar rights worldwide (“Moral
Rights”), Seller hereby irrevocably and unconditionally transfers and
assigns to the Purchaser, effective as of the Closing Date, any and all Moral
Rights that Seller may have in or with respect to the Assets.  To the
extent that Seller cannot transfer and assign such Moral Rights to the
Purchaser, Seller hereby waives and agrees, effective as of the Closing Date,
never to assert such Moral Rights against the Purchaser or any of the
Purchaser’s licensees.  If Seller has any rights to the Assets that
cannot be assigned to the Purchaser or waived by Seller, then Seller
unconditionally and irrevocably grants to the Purchaser, effective as of the
Closing Date, during the term of such rights, an exclusive (including with
respect to Seller), irrevocable, perpetual, worldwide, fully paid and
royalty-free license, with rights to sublicense throughout multiple tiers of
sublicensees, to use, reproduce, modify, create derivative works of, distribute,
perform, display, distribute directly and indirectly, and otherwise exploit the
Assets by all means now known or later developed, and to make, have made, sell,
offer to sell, lease, offer to lease and import products and services that
contain or embody such Assets.

       

      5.9           Authorization from Others;
Consummation.  To the extent that the assignment of any lease,
contract, commitment, power or right that are among the Assets, or any claim,
right or benefit arising thereunder or resulting therefrom (the “Interests”),
shall require the consent or other approval of other parties thereto or any
third party and Purchaser shall have waived the receipt of such consent or other
approval at the Closing, this Agreement shall not constitute an assignment
thereof.  After the Closing Date (i) Seller shall use all reasonable
efforts to take promptly, or cause to be taken promptly, all actions, and to do
promptly, or cause to be done promptly, all things necessary, proper or
advisable under applicable laws in order to properly assign such Interests to
Purchaser and (ii) until such Interests have been validly and effectively
assigned to Purchaser, (a) Purchaser and Seller shall make such other
arrangements, including licenses, subcontracts, subleases and sublicenses, as
may be practicable in order to obtain for Purchaser the benefits of such
Interests and for Purchaser to assume the Liabilities of such Interest (but
solely to the extent that such Liabilities would have been Assumed Liabilities
if such Interest was an Assumed Contract under this Agreement) as contemplated
by this Agreement and (b) Seller shall hold such Interests in trust for the
benefit of Purchaser and Purchaser shall be entitled to receive all benefits
under such Interests and shall be responsible for the Liabilities under such
Interest (but solely to the extent that such Liabilities would have been Assumed
Liabilities if such Interest was an Assumed Contract under this
Agreement).

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      6.           Indemnification.

       

      6.1           Survival
of Representations and Covenants.

       

      (a)           The
covenants, obligations, and licenses of each party to this Agreement shall
survive (without limitation):  (i) the Closing and the sale of the
Assets to Purchaser; (ii) any sale or other disposition of any or all of the
Assets by Purchaser; and (iii) the death or dissolution of any party to this
Agreement.  All of said covenants and obligations shall remain in full
force and effect and shall survive for an unlimited period of time.

       

      (b)           The
representations and warranties of Seller shall expire on the first anniversary
of the Closing Date (the “Expiration
Date”); provided,
however, that the representations and warranties of Seller in Sections
2.1 (Due Organization), 2.2 (Assets), 2.8 (Environmental and Safety Laws) and
2.10 (Authority; Binding Nature of Agreement) shall survive until the expiration
of the applicable statute of limitations; provided, further, however,
that if a Claim Notice (as defined below) relating to any representation or
warranty of Seller is given to Seller on or prior to the Expiration Date, then,
notwithstanding anything to the contrary contained in this Section 6.1(b), such
representation or warranty shall not so expire, but rather shall remain in full
force and effect until such time as each and every claim (including any
indemnification claim asserted by any Indemnitee under Section 6.2) that is
based upon, or that relates to, any breach or alleged breach of such
representation or warranty has been fully and finally resolved.

       

      (c)           For
purposes of this Agreement, a “Claim
Notice” relating to a particular representation or warranty shall be
deemed to have been given if any Indemnitee, acting in good faith, delivers to
Seller a written notice stating that such Indemnitee believes that there is or
has been a breach of such representation or warranty and containing (i) a
brief description of the circumstances supporting such Indemnitee’s belief that
there is or has been such a breach, and (ii) a non-binding, preliminary estimate
of the aggregate dollar amount of the actual and potential Damages that have
arisen and may arise as a result of such possible breach.

       

      (d)           The
representations, warranties, covenants and obligations of Seller, and the rights
and remedies that may be exercised by the Indemnitees, shall not be limited or
otherwise affected by or as a result of any information furnished to, or any
investigation made by or any Knowledge of, any of the Indemnitees or any of
their Representatives.

       

      6.2           Indemnification
by Seller.

       

      (a)           Seller
shall defend, hold harmless and indemnify each of the Indemnitees from and
against, and shall compensate and reimburse each of the Indemnitees for, any
Damages that are suffered or incurred by any of the Indemnitees or to which any
of the Indemnitees may otherwise become subject at any time (regardless of
whether or not such Damages relate to any third-party claim) and that arise from
or as a result of, or are connected with:

       

      (i)           any
breach of any representation or warranty made by Seller in this Agreement or the
Disclosure Schedule;

       

      (ii)           any
breach of any covenant or obligation of Seller contained in this Agreement or
any other Transaction Agreement with respect to which Seller is a
Party;

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (iii)           any
alleged or actual infringement, misappropriation or other violation by the
Seller Proprietary Assets of any Proprietary Assets of any third
party;

       

      (iv)           any
Liability of Seller, other than the Assumed Liabilities;

       

      (v)           any
Liability to which the Purchaser or any of the other Indemnitees may become
subject and that arises directly or indirectly from or relates directly or
indirectly to any failure to comply with any bulk transfer law or similar Legal
Requirement in connection with any of the Transactions; and

       

      (vi)           any
Proceeding relating directly or indirectly to any breach, alleged breach,
Liability or matter of the type referred to in clauses (i) through (iv) above
(including any Proceeding commenced by any Indemnitee for the purpose of
enforcing any of its rights under this Section 6).

       

      7.           Miscellaneous
Provisions.

       

      7.1           Further
Assurances.  Each party hereto shall execute and/or cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the Transactions.

       

      7.2           Fees And
Expenses.  Each party shall bear and pay all fees, costs and
expenses that have been incurred or that are in the future incurred by, on
behalf of, such party in connection with the negotiation, preparation and review
of this Agreement (including the Disclosure Schedule), the other Transactional
Agreements and all bills of sale, assignments, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions, and the consummation and performance of the
Transactions.

       

      7.3           Notices.  Any notice
or other communication required or permitted to be delivered to any party under
this Agreement shall be in writing and shall be deemed properly delivered, given
and received when delivered (by hand, by registered mail, by courier or express
delivery service or by facsimile ) to the address or facsimile telephone number
set forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice given to the other parties):

       

      if to Seller:

       

      
        	 
      	
                Lithium Technology
      Corporation

                5115 Campus
      Drive

                Plymouth Meeting, PA
      19462

              
	 
      	 
      
	 
      	
                with a copy
    to:

              	 
      
	 
      	 
      
	 
      	
                [______________]

              

      

      if to Purchaser:

      

      
        	 
      	
                Porous
      Power Technologies, LLC

                2765
      Dagny Way, Suite 200

                Lafayette,
      CO 80027

                Attention:  President

                Facsimile:  (720)
      890 4888

              
	 
      	 
      
	 
      	
                with a copy
    to:

              	 
      

      

      

      
        	 
      	
                Cooley
      Godward Kronish LLP

                380
      Interlocken Crescent, Suite 900

                Broomfield,
      CO  80021-8023

                Attention:  Paul
      Gross

                Facsimile:  (720)
      566-4099

              
	 
      	 
      
	 
      	
                 

              	 
      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      7.4           Headings.  The
underlined headings contained in this Agreement are for convenience of reference
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the construction or interpretation of this
Agreement.

       

      7.5           Counterparts.  This
Agreement may be executed in several counterparts, including by facsimile or
emailed PDF, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.

       

      7.6           Governing Law;
Venue.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Any legal action or other legal proceeding relating to this Agreement or the
enforcement of any provision of this Agreement may be brought or otherwise
commenced in any state or federal court located in the state of
Colorado.  Each party to this Agreement expressly and irrevocably
consents and submits to the jurisdiction of each state and federal court located
in the state of Colorado (and each appellate court located in the state of
Colorado) in connection with any such legal proceeding.

       

      7.7           Successors And Assigns; Parties In
Interest.

       

      (a)           This
Agreement shall be binding upon:  Seller and its successors and
assigns (if any), and Purchaser and its successors and assigns (if
any).  This Agreement shall inure to the benefit
of:  Seller; Purchaser; Indemnitees; and the respective successors and
assigns (if any) of the foregoing.

       

      (b)           The
Purchaser may freely assign any or all of its rights under this Agreement
(including its indemnification rights under Section 6), in whole or in
part, to any other Person without obtaining the consent or approval of any other
Person, provided that no such assignment will relieve Purchaser from any of its
obligations under this Agreement.  Seller shall not be permitted to
assign any of its rights or delegate any of its obligations under this Agreement
without the Purchaser’s prior written consent.

       

      (c)           Except
for the provisions of Section 6 hereof, none of the provisions of this
Agreement is intended to provide any rights or remedies to any Person other than
the parties to this Agreement and their respective successors and assigns (if
any).  Without limiting the generality of the foregoing, (i) no
employee of the Seller shall have any rights under this Agreement, and (ii) no
creditor of the Seller shall have any rights under this Agreement.

       

      7.8           Amendments.  This
Agreement may not be amended, modified, altered orsupplemented other than by
means of a written instrument duly executed and delivered on behalf of Purchaser
and Seller.

      

      7.9           Severability.  In
the event that any provision of this Agreement, or the application of any such
provision to any Person or set of circumstances, shall be determined to be
invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to Persons or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.

       

      7.10           Entire
Agreement.  The Transactional Agreements set forth the entire
understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof.

      

      7.11           No Interpretation Against
Drafter.  Because each of the parties has participated in
drafting this Agreement, there shall be no presumption against any party on the
ground that such party was responsible for preparing this Agreement or any part
of it.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      The
parties hereto have caused this Agreement to be executed and delivered as of the
date set forth above.

       

      

       

      
        	 
      	 
      	
                PURCHASER:

              
	 
      	 
      	 
      
	 
      	 
      	
                Porous
      Power Technologies LLC

              
	 
      	 
      	 
      
	 
      	 
      	
                By:

              	 
      
	 
      	 
      	
                Name:

              	
                Timothy
      L. Feaver

              
	 
      	 
      	
                Title:

              	
                President

              

      

      

       

      
        	 
      	 
      	
                SELLER:

              
	 
      	 
      	 
      
	 
      	 
      	
                Lithium
      Technology Corporation

              
	 
      	 
      	 
      
	 
      	 
      	
                By:

              	 
      
	 
      	 
      	
                Name:

              	
                Theo
      M. M. Kremers

              
	 
      	 
      	
                Title:

              	
                Chief
      Executive Officer

              

      

      

       

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit
A

       

      Certain
Definitions

       

      For
purposes of the Agreement (including this Exhibit A):

       

      Assumed
Contract.  “Assumed Contract” shall mean any Seller Contract
that is an Asset, as set forth on Section 1.1(b) hereof.

       

      Business.  “Business”
shall mean Seller’s flat cell technology line of business which includes, but is
not limited to all operations, business, equipment, customers, contracts,
intellectual property, and tangible and intangible assets associated with the
design, production and sales of flat energy storage cells and related
technology, including without limitation the Phoenix Program, contracts or
understandings with Oceaneering International, Inc. and similar
projects.

       

      Code.  “Code” shall
mean the Internal Revenue Code of 1986, as amended.

       

      Contract.  “Contract”
shall mean any written, oral, implied or other agreement, contract,
understanding, arrangement, instrument, note, guaranty, indemnity,
representation, warranty, deed, assignment, power of attorney, certificate,
purchase order, work order, insurance policy, benefit plan, commitment,
covenant, assurance or undertaking of any nature.

       

      Damages.  “Damages” shall include any
loss, damage, injury, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys’ fees), charge, cost
(including costs of investigation) or expense of any nature, net of any actual
cash insurance recoveries.

       

      Encumbrance.  “Encumbrance”
shall mean any lien, pledge, hypothecation, charge, mortgage, security interest,
encumbrance, equity, trust, equitable interest, claim, preference, right of
possession, lease, tenancy, license, encroachment, covenant, infringement,
interference, Order, proxy, option, right of first refusal, preemptive right,
community property interest, legend, defect, impediment, exception, reservation,
limitation, impairment, imperfection of title, condition or restriction of any
nature (including any restriction on the transfer of an asset, any restriction
on the receipt of any income derived from an asset, any restriction on the use
of any asset and any restriction on the possession, exercise or transfer of any
other attribute of ownership of an asset).

       

      Entity.  “Entity”
shall mean any corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, cooperative, foundation, society, political party, union, company
(including any limited liability company or joint stock company), firm or other
enterprise, association, organization or entity.

       

      GAAP.  “GAAP” shall
mean United States generally accepted accounting principles.

       

      Governmental
Authorization.  “Governmental Authorization” shall mean any
permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement, or right under any
Contract with any Governmental Body.

       

      Governmental
Body.  “Governmental Body” shall mean any:  (a)
nation, state, commonwealth, province, territory, county, municipality, district
or other jurisdiction of any nature; (b) federal, state, local, municipal,
foreign or other government; or (c) governmental or quasi-governmental authority
or any nature (including any governmental division, department, agency,
commission, instrumentality, official, organization, unit, body or Entity and
any court or other tribunal).

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Hazardous Materials.
“Hazardous Materials” shall mean (a) materials which are listed or
otherwise defined as “hazardous” or “toxic” under any applicable local, state,
federal and/or foreign laws and regulations that govern the existence and/or
remedy of contamination on property, the protection of the environment from
contamination, the control of hazardous wastes, or other activities involving
hazardous substances, including building materials, or (b) any petroleum
products or nuclear materials.

       

      Indemnitees.  “Indemnitees”
shall mean the following Persons:  (a) Purchaser;
(b) Purchaser’s current and future affiliates; (c) the respective
Representatives of the Persons referred to in clauses “(a)” and “(b)” above; and
(d) the respective successors and assigns of the Persons referred to in
clauses “(a)”, “(b)” and “(c)” above.”

       

      Knowledge.  An individual will be
deemed to have “knowledge” of a particular fact or other matter if:

       

      (a)           such
individual is actually aware of such fact or other matter; or

       

      (b)           a
reasonably prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.

       

      A Person
(other than an individual) will be deemed to have “knowledge” of a particular
fact or other matter if any individual who is serving as a director, officer,
partner, executor, or trustee of such Person (or in any similar capacity) has,
or at any time had, knowledge of such fact or other matter.

       

      Legal
Requirement.  “Legal Requirement” shall mean any federal,
state, local, municipal, foreign or other law, statute, legislation,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation issued, enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Body.

       

      Liability.  “Liability”
shall mean any debt, obligation, duty or liability of any nature (including any
unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, conditional,
implied, vicarious, derivative, joint, several or secondary liability),
regardless of whether such debt, obligation, duty or liability would be required
to be disclosed on a balance sheet prepared in accordance with GAAP and
regardless of whether such debt, obligation, duty or liability is immediately
due and payable.

       

      Order.  “Order”
means any writ, judgment, decree, injunction or similar order of any
Governmental Body (in each case whether preliminary or final).

       

      Person.  “Person”
shall mean any individual, Entity or Governmental Body.

       

      Phoenix Program. “Phoenix
Program” shall mean the design, production and sales of energy storage cells and
related technology for use in underwater vehicles, and other applications as
provided to Phoenix International, Inc. (“Phoenix”),
including without limitation, all current and future purchase orders entered
within two years of the Effective Date between Phoenix and either Seller or
Purchaser.

       

      Proceeding.  “Proceeding”
shall mean any action, suit, litigation, arbitration, proceeding (including any
civil, criminal, administrative, investigative or appellate proceeding and any
informal proceeding), prosecution, contest, hearing, inquiry, inquest, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental Body or any arbitrator or
arbitration panel.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      Product Specifications.
“Product Specifications” shall mean any specifications, technical knowledge,
know-how, documentation, formulas related to a battery or cell, including,
without limitation electrode size, numbers of pairs of electrodes per cell,
electrolyte formula, energy rating, performance requirements, battery sizes, and
the like.

       

      Proprietary
Asset.  “Proprietary Asset” shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service mark (whether registered or unregistered), service mark
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how, customer
list, franchise, system, computer software, invention, design, blueprint,
engineering drawing, proprietary product, technology, proprietary right or other
intellectual property right or intangible asset.

       

      Related Party.  Each
of the following shall be deemed to be a “Related Party”: (a) each individual who is
an officer of Seller; (b) each stockholder holding
more than 5% of outstanding capital stock of Seller (a “Principal
Stockholder”); (c) each member of the immediate family of a Principal
Stockholder and of each of the individuals referred to in clause (a) above; and
(c) any Entity (other than Seller) in which any one of the individuals referred
to in clauses (a) and (b) above holds or held (or in which more than one of such
individuals collectively hold or held), beneficially or otherwise, a controlling
interest.

       

      Representatives.  “Representatives” shall mean
officers, directors, employees, authorized agents, attorneys, accountants and
advisors.

       

      Seller Proprietary
Assets.  “Seller
Proprietary Assets” shall mean any Proprietary Assets owned, controlled or
licensed by Seller related to or used by Seller in connection with the
Business.

       

      Seller
Contract.  “Seller Contract” shall mean any
Contract:  (a) to which Seller is a party; (b) by which Seller or any
of its assets is bound or under which Seller has any obligation; or (c) under
which Seller has acquired any right or interest.

       

      Tax.  “Tax” shall
mean any tax (including any income tax, franchise tax, capital gains tax,
estimated tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, occupation tax, inventory tax, occupancy tax, withholding tax or payroll
tax), levy, assessment, tariff, impost, imposition, toll, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), that is, has been or may in the future be
(a) imposed, assessed or collected by or under the authority of any
Governmental Body or (b) payable pursuant to any tax-sharing agreement or
similar Contract.

       

      Tax Return.  “Tax
Return” shall mean any return (including any information return), report,
statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information that is, has been or may
in the future be filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.

       

      Transactional
Agreements.  “Transactional Agreements” shall mean (a) the
Agreement; (b) the Sublease; (c) the Assignment and Assumption Agreement, (d)
and any other documents and instruments executed or delivered by the parties in
connection with the Agreement, including pursuant to Sections 5.2 or 7.1 thereof
..

       

      Transactions.  “Transactions”
shall mean (a) the execution and delivery of the respective Transactional
Agreements by the parties thereto and (b) all of the transactions
contemplated by the respective Transactional Agreements, including: (i) the sale of the Assets
by Seller to Purchaser in accordance with the Agreement; (ii) the assumption of the
Assumed Liabilities by Purchaser; and (iii) the performance by the parties of
their respective obligations under the Transactional Agreements, and the
exercise by the parties of their respective rights under the Transactional
Agreements.

       

      

       

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit
B

       

      Bill
of Sale and Assignment and Assumption Agreement

       

      

       

      DISCLOSURE
SCHEDULE

       

      
        
          
            
              
                
                  	
                          1.1.a.

                        	
                          

                            Furnishings and Equipment List

                            See attached List

                          

                        

                

                 

              

            

          

        

      

      
        
          
            	
                    1.1.b.

                  	
                    Assumed
      Contracts 

                      Seller
      transfers all rights to Phoenix cells as represented by Phoenix Purchase
      Orders 007161 and 003959 and any follow-on contracts.  Purchaser
      is aware that theses two Purchase Orders have been cancelled but Purchaser
      has the right to those contracts should they become active
      again.  Seller transfers rights to all other flat-cell business
      as identified in 1.1c to
Purchaser.

                    

                  

          

      

      
        
          	
                  1.1.c.

                	
                  Customer
      Lists
Seller to provide Purchaser with a list of all customers for
      flat-cell batteries over the last 18 months.  This list should
      provide the customer name, contacts, and amount of
    business.

                

        

         

      

      
        	
                2.4.

              	
                List
      of Seller Contracts Restricting Business

                  Seller
      is to provide a list and documentation of any Non-Disclosure Agreements,
      Licenses or Trade Secrets it entered into that may restrict Purchaser’s
      ability to conduct business with the assets and contract rights Purchaser
      receives.

                

              

      

      

      
        	
                2.5.

              	
                Compliance
      with Legal Requirements

                Seller to provide a list of any exceptions to
      Section 2.5.

              

      

       

      
        	
                2.10.

              	
                Non-Contravention
      and Consents
Seller to provide a list of any exceptions to Section
      2.10.

              

      

       

      
        	
                2.13.

              	
                Phoenix
      Program Product Specifications

                  Seller
      to provide the specifications for the Phoenix Program battery
      cells.

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