Exhibit 2.1
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TECHNOLOGY PURCHASE AGREEMENT
This Agreement is dated this 19th day of March, 2003 by and between ASI
Technology Corporation ("ASI"), a Nevada corporation, having a principal place
of business located 000 Xxxxxxxx Xxxxxxx Xxxxx, Xx. 000, Xxxxxxxxx, Xxxxxx 00000
and Xxxxxxxx Technologies, Inc., a Florida Corporation ("Xxxxxxxx"), having a
principal place of business located at 00 Xxxxxxx Xxxx Xxxxx #000 Xxxxxxxxxx, XX
00000.
RECITALS
WHEREAS, ASI has acquired, developed and patented certain gas plasma
antenna ("GPA") technology that utilizes ionized gas in a vessel as an antenna
to both receive and transmit radio frequency signals and as a
reflector/shield/filter for radio frequency signals. As a result of ASI's
inventions it was awarded, by assignment and/or has pending the patents and
patent applications listed on Exhibit A.
WHEREAS, this GPA technology is believed to have commercial viability
in both commercial and Department of Defense applications but will require
further development, additional capital and research.
WHEREAS, ASI desires to pursue other business ventures and desires to
sell and otherwise assign all of its right, title, interest and benefit in and
to its GPA technology, including the related patents, patent applications,
current contracts and contract proposals and backlog and related technology,
equipment and all other intellectual property rights related thereto, as defined
in paragraph 1 a) hereof, to Xxxxxxxx according to the terms and conditions set
forth below in order to allow further development of this technology to be
completed.
WHEREAS, ASI and Xxxxxxxx desire to cooperate as provided herein with
respect to existing government contracts.
WHEREAS, Xxxxxxxx is a company looking for new technology to purchase
and exploit and Xxxxxxxx desires to purchase ASI's GPA issued and pending
patents and related technology, current contracts and contract proposals and
backlog and equipment according to the terms and conditions below.
TERMS
Now, therefore, in consideration of the mutual promises described below
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereby agree to be legally bound as follows:
1. Definitions. For purposes of this Agreement, the following definitions apply:
a) "Technology" shall be defined as all right, title, interest, and
benefit of ASI and all powers and privileges of ASI (including to make, have
made, use, or sell under patent law; to copy, adapt, distribute, display, and
perform under copyright law; and to use and disclose under trade secret law) in
and to all proprietary rights embodied in or comprising the GPA technology as of
the Closing ("Proprietary Rights"), defined as follows:
(1) All United States and foreign patents and patent
applications, including, without limitation, the issued patents and patent
applications listed on Exhibit A hereto, patent license rights and patentable
inventions, any continuation or continuation-in-part of, division of,
or substitution for any such applications, any United States patent issued
thereon, any reissue or reexamination application filed on any such United
States patent, any reissue patent or reexamined patent issuing thereon, and any
extension of any such United States patent or reissue patent and any and all
applications for patent in any country foreign to the United States on any
invention disclosed in any of said patents or patent applications described
above and any patents granted thereon;
(2) All trade secrets, know-how, confidential or proprietary
information, including, without limitation, the confidential and proprietary
information identified in Exhibit B hereto, shop rights, technical data,
technology licenses, concepts, drawings, schematics, prototypes, improvements,
enhancements, upgrades, materials, works of authorship, derivative, and
derivative works, mask works, engineering files, system documentation, flow
charts, computer software code and design specifications acquired or developed
by ASI or any of its affiliates that are embodied or incorporated in or derived
from the Proprietary Rights or in connection with the development of the
programming, inventions, processes, and apparati entailed by the Proprietary
Rights;
(3) The equipment identified in Exhibit C hereto;
(4) All trademarks, service marks and trade names, including
without limitation, the trademark and trade name identified in Exhibit D hereto
(including, in the case of trademarks, service marks and trade names, all
goodwill appertaining thereto), moral rights (defined as any right to claim
authorship of a work, any right to object to any distortion or other
modification of a work, and any similar right, existing under the law of any
country in the world, or under any treaty), and copyrights;
(5) All market research and information, contact lists,
marketing materials, business plans, notes, documents and records pertaining in
any way to any of the Proprietary Rights and any existing or future products
incorporating any of the Proprietary Rights or any item described in any of the
foregoing paragraphs and any agreements with any other parties to contribute to
the further development of any of the Proprietary Rights; and
(6) All other intellectual property rights and legal
protections in every and all countries and jurisdictions owned or claimed by ASI
or any of its affiliates and embodied in or comprising any of the Proprietary
Rights; provided, however, that the Technology and Proprietary Rights shall not
include any of ASI's rights, titles or interests in and to any of the contracts
and contract proposals listed in Exhibit E hereto, the assignment of which from
ASI to Xxxxxxxx shall be as provided in Section 5 hereof.
b) "Gross Revenues from Contracts" shall include all amounts actually
received by ASI from the government contracts relating to the Technology
existing at the Closing as listed on Exhibit E hereto or awarded to ASI prior to
the Closing other than amounts received by ASI in payment of invoices issued or
effective on or before the Closing.
c) "Securities" shall be the shares of Xxxxxxxx common stock issued to
ASI as part of the Technology Purchase Price.
d) "Market Price" on any trading day shall be the volume weighted
average price per share of Xxxxxxxx'x common stock from the hours of 9:30 AM to
4:00 PM (Eastern) as reported
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by Bloomberg Financial using the AQR function. The average Market Price per
share for a period shall be the average of each trading day's Market Price
during such period.
2. Assignments; Technology Purchase Price.
a) ASI hereby agrees to sell, assign and transfer, and at the Closing
shall sell, assign and transfer, to Xxxxxxxx in perpetuity (or for the longest
period of time otherwise permitted by law), and Xxxxxxxx hereby agrees to
purchase and accept, all of ASI's right, title, interest and benefit in and to
the Technology and Proprietary Rights. As payment for such sale, assignment and
transfer, Xxxxxxxx agrees to pay ASI in cash an amount equal to One Hundred
Fifty Thousand Dollars ($150,000) (the "Cash Payment"), payable as hereinafter
provided, and to issue to ASI and its designees, in the aggregate, a number of
shares of the Securities having an aggregate value of Eight Hundred Fifty
Thousand Dollars ($850,000) computed as described below (collectively the
"Technology Purchase Price") which the parties agree equals or exceeds the fair
market value of the Technology and Proprietary Rights determined on the basis of
arms-length negotiations.
b) The Cash Payment shall be paid as follows:
(1) A nonrefundable amount equal to Ten Thousand Dollars
($10,000) shall be paid upon execution and delivery of this Agreement.
(2) A nonrefundable amount equal to Ten Thousand Dollars
($10,000) shall be paid every thirty (30) days following the execution and
delivery of this Agreement and the balance of the Cash Payment shall be paid at
Closing.
c) The Securities constituting a portion of the Technology Purchase
Price shall be issued to ASI at Closing. The number of shares of the Securities
shall be equal to the quotient obtained by dividing (i) $850,000 by (ii) 85% of
the average Market Price per share of Xxxxxxxx common stock during the twenty
(20) trading days immediately preceding the date of Closing. For example: If
Xxxxxxxx common stock average Market Price for the twenty (20) trading days
immediately preceding the date of Closing is $.20/share, the number of shares of
Securities issued to ASI shall be equal to $850,000 divided by $.17 (85% of
$.20), resulting in 5,000,000 shares of Xxxxxxxx common stock. Xxxxxxxx
acknowledges and agrees that a number of Securities equal to five percent (5%)
of the number of Securities issuable to ASI hereunder shall be issued by
Xxxxxxxx to Patriot Scientific Corporation ("Patriot") pursuant to that certain
Purchase Agreement between ASI and Patriot dated as of August 20, 1999 (the
"Patriot Agreement").
3. The Closing and Closing Date. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Technology and the Proprietary Rights as
provided for in this Agreement shall be consummated at a closing (the "Closing")
to be held at the offices of ASI Technology Corporation, 000 Xxxxxxxx Xxxxxxx
Xxxxx, Xx. 000, Xxxxxxxxx, Xxxxxx 00000 at 10:00 a.m. on the earlier of (i) the
date on which the last of the contracts listed in Exhibit E hereto has been
assigned to Xxxxxxxx and (ii) the date that is ninety (90) days from the date of
this Agreement, or at such other place, time and date as ASI and Xxxxxxxx may
mutually agree in writing. The date on which the Closing shall actually take
place is herein referred to as the "Closing Date".
4. Closing Deliveries and Conditions.
a) ASI's Closing Deliveries and Conditions of Xxxxxxxx'x Obligations.
The obligations of Xxxxxxxx to consummate the transactions set forth in this
Agreement are subject
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to the fulfillment on, or before, the Closing Date of each of the following
conditions, any of which may be waived in writing by Xxxxxxxx:
(1) ASI shall have duly executed and delivered to Xxxxxxxx the
Sublicense Agreement substantially in the form attached hereto as Exhibit F (the
"Sublicense Agreement") and such other instruments of transfer as may be
reasonably requested by Xxxxxxxx to transfer the Technology and the Proprietary
Rights to Xxxxxxxx, all in a form reasonably satisfactory to Xxxxxxxx;
(2) No preliminary or permanent injunction or other binding
order, decree or ruling issued by a court or governmental agency shall be in
effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement;
(3) ASI shall have performed and complied with all covenants,
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing; and
(4) The representations and warranties of ASI contained in
this Agreement and any exhibits and schedules attached or referenced thereto
shall be true and correct on and as of the Closing Date.
b) Xxxxxxxx'x Closing Deliveries and Conditions of ASI's Obligations.
The obligations of ASI to consummate the transactions set forth in this
Agreement are subject to the fulfillment on, or before, the Closing Date of each
of the following conditions, any of which may be waived in writing by ASI:
(1) Xxxxxxxx shall have paid all amounts of the Cash Payment
due and payable prior to Closing and shall pay the unpaid balance of the Cash
Payment at Closing;
(2) Xxxxxxxx shall have duly executed and delivered to ASI the
Registration Rights Agreement substantially in the form attached hereto as
Exhibit G (the "Registration Rights Agreement");
(3) Xxxxxxxx shall have duly executed and delivered to ASI
share certificates registered in the names of ASI and Patriot evidencing, in the
aggregate, the Securities;
(4) No preliminary or permanent injunction or other binding
order, decree or ruling issued by a court or governmental agency shall be in
effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement;
(5) Xxxxxxxx shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing; and
(6) The representations and warranties of Xxxxxxxx contained
in this Agreement and any exhibits and schedules attached or referenced thereto
shall be true and correct on and as of the Closing Date.
5. Purchase Price Adjustment on Reverse Split.
a) In the event the outstanding shares of Xxxxxxxx common stock shall
be combined or consolidated, by reclassification, reverse stock split or
otherwise, into a lesser number of shares of Xxxxxxxx Common Stock (a "Reverse
Split") at any time during the period from
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Closing and ending eighteen (18) months after Closing (the "Adjustment Period"),
then for each such Reverse Split, there shall be computed an adjustment in the
number of shares of Xxxxxxxx common stock and if such adjustment is positive
then the computed number of additional shares of Xxxxxxxx common stock shall be
issued to ASI in accordance with this Section 5. The adjustment shall be
computed as follows:
(1) Definitions.
(i) "Number of Post Split Common Shares Previously Issued"
shall mean the number of shares of Xxxxxxxx common stock issued to ASI at
Closing plus any additional shares of Xxxxxxxx common stock issued to ASI
pursuant to the Registration Rights Agreement as adjusted by the Reverse Split.
(ii) "Number of Readjusted Shares" shall mean the number
of shares of Xxxxxxxx common stock equal to the quotient obtained by dividing
(i) $850,000 by (ii) 85% of the average Market Price per share of Xxxxxxxx
common stock during the thirty (30) trading days immediately following the
effective date of the Reverse Split. The Number of Readjusted Shares so computed
shall be increased by 15% if such an adjustment was made pursuant to the
Registration Rights Agreement in computation of the Number of Post Split Common
Shares Previously Issued.
(2) If the Number of Readjusted Shares is greater than the
Number of Post Split Common Shares Previously Issued then Xxxxxxxx shall
promptly, but in no event later than five (5) business days following the end of
such thirty (30) day period, issue to ASI a number of additional shares of
Xxxxxxxx common stock equal to such difference. If the Number of Readjusted
Shares is less than the Number of Post Split Common Shares Previously Issued
then no adjustment shall be made.
As an example, if 5,000,000 shares of Xxxxxxxx common stock are issued at
Closing, Xxxxxxxx subsequently effects a one-for-ten (1-for-10) Reverse Split
during the Adjustment Period, and the average Market Price for the thirty (30)
trading days after the Reverse Split is $1.00, then the additional shares would
be computed as follows (assuming no adjustment is made pursuant to the
Registration Rights Agreement):
A. Number of Post Split Common Shares Previously Issued = 5,000,000 divided
by 10 or 500,000.
B. Number of Readjusted Shares = $850,000 divided by ($1.00 less 15% or
$.85) or 1,000,000 shares.
C. Since the Number of Readjusted Shares exceeds the Number of Post
Rollback Common Shares Previously Issued then Xxxxxxxx would issue
500,000 additional shares of Xxxxxxxx common stock.
The above adjustment shall occur for each Reverse Split effected during the
Adjustment Period.
6. Government Contract Revenues, Costs and Personnel.
ASI is responsible for the completion and performance of the government
contracts listed in Exhibit E (the "Contracts") until completion of assignment
to Xxxxxxxx. The parties shall use their commercially reasonable efforts to
assign or transfer all Contracts from ASI to Xxxxxxxx as soon as practical after
execution of this Agreement, each party paying their own costs of such efforts.
Xxxxxxxx shall from April 1, 2003 use its best efforts to manage and administer
such services being performed under each Contract and prepare all reports
thereto in a manner consistent with normal practice and that employed by
Xxxxxxxx under contracts it performs for the government.
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ASI shall pay Xxxxxxxx a fee equal to 100% of all Gross Revenues from Contracts
billed for the periods after April 1, 2003 when and as received by ASI. Xxxxxxxx
shall pay directly or reimburse ASI for all personnel, subcontract and other
costs of performing the Contracts and plasma antenna research, development,
marketing and services from and after April 1, 2003. Personnel transfers shall
be handled based on the effective transfer of the Contracts and as agreed upon
in writing between such personnel and the parties hereto. Xxxxxxxx has made its
own investigation into ASI consultants and ASI makes no representations
regarding the continued availability of consultants and personnel.
ASI shall be paid a fee of $2,500.00 per calendar month by Xxxxxxxx for
supporting administration of the contracts until all Contracts have been
assigned or transferred to Xxxxxxxx. The fee shall be due and payable in cash at
the end of each calendar month.
Xxxxxxxx understands the contracts can be terminated by the government pursuant
to the terms of the respective contracts. Notwithstanding any provision herein
to the contrary, express or implied, ASI shall in no event be liable to Xxxxxxxx
if any Contract is terminated either prior to, upon or after such Contract is
assigned or transferred to Xxxxxxxx.
Xxxxxxxx acknowledges and agrees that the STTR Contract in Exhibit E relates to
patented technology not included in the Technology or the Proprietary Rights but
is the subject of the license under the Sublicense Agreement.
7. Termination.
(a) This Agreement may be terminated and abandoned prior to the Closing
Date:
(i) By written mutual consent of ASI and Xxxxxxxx; or
(ii) By ASI or Xxxxxxxx if any court or governmental
agency of competent jurisdiction shall have issued an order, decree or ruling or
taken any other action which prevents, restrains, enjoins or otherwise prohibits
the transactions contemplated hereby; or
(iii) By ASI by delivery of written notice to Xxxxxxxx
if:(1) ASI discovers any material error, mistake, misstatement or omission in
the representations and warranties of Xxxxxxxx in this Agreement, (2) Xxxxxxxx
has breached or violated this Agreement in any material respect and, if such
breach or violation is curable, has failed to cure such violations within ten
(10) days of receiving written notice thereof; or (3) the Closing has not
occurred by the date that is ninety (90) days from the date of this Agreement;
or
(iv) By Xxxxxxxx by delivery of written notice to ASI if:
(1) Xxxxxxxx discovers any material error, mistake, misstatement or omission in
the representations and warranties of ASI in this Agreement, (2) ASI has
breached or violated this Agreement in any material respect and, if such breach
or violation is curable, has failed to cure such violations within ten (10) days
of receiving written notice thereof; or (2) the Closing has not occurred by the
date that is ninety (90) days from the date of this Agreement.
(b) In the event that this Agreement is terminated as provided in this
Section 7 (a "Termination"), all further obligations of the parties under this
Agreement shall terminate without further liability of any party to any other
party or to the stockholders, directors or officers of any party; provided,
however, that (i) a Termination shall not relieve any party of any liability for
any breach of this Agreement or for any intentional misrepresentation or
intentional failure to comply with any agreement or covenant hereunder, and any
such Termination shall not be deemed to be a waiver of any available remedy for
any such breach, intentional misrepresentation or intentional failure to comply
with any such agreement or covenant and (ii)
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Xxxxxxxx shall execute and delivery all documents and agreements and perform all
acts necessary to reassign to ASI all Contracts that have been assigned to
Xxxxxxxx.
Once Xxxxxxxx has fully paid the Technology Purchase Price at Closing as
provided in Section 2, ASI agrees that it will have no claim against Xxxxxxxx
for the return of the Technology or the Proprietary Rights or any improvements
thereto or in voiding or rescinding this Agreement and the related assignments,
provided, however, that ASI reserves all other rights and remedies it may have
arising out of the breach or nonperformance of this Agreement by Xxxxxxxx.
8. Representations, Warranties and Covenants.
a) ASI hereby represents and warrants to, and covenants with Xxxxxxxx
as follows:
(1) No Consents. No consents (other than necessary filings in
patent offices wherein Proprietary Rights have been registered or applications
therefor have been filed) of any other parties are necessary or appropriate
under any agreements concerning any of the Technology or the Proprietary Rights
in order for the transfer and assignment of any of the Technology and
Proprietary Rights under this Agreement to be legally effective.
(2) Marketable Title. To the best of ASI's knowledge, (i)
immediately prior to the Closing of this Agreement, ASI shall have good and
marketable title to the Technology and the Proprietary Rights, free and clear of
any and all liens, mortgages, encumbrances, pledges, security interests, or
charges of any nature whatsoever (collectively, "Liens") and, (ii) upon the
Closing, Xxxxxxxx shall receive good and marketable title to the Technology and
the Proprietary Rights, free and clear of any and all Liens.
(3) Technology and Proprietary Rights. To the best of ASI's
knowledge, (i) ASI is the sole owner of the entire right, title and interest in
and to the Technology and the Proprietary Rights subject to a royalty payable to
Patriot under the Patriot Agreement upon sale of the Technology and Proprietary
Rights in the form of five percent (5%) of the Securities issuable to ASI
hereunder and five percent (5%) of the Cash Payment payable to ASI hereunder,
which, with respect to such portion of the Cash Payment, will be the sole
obligation of ASI (the "Patriot Royalty") and (ii) the Technology and the
Proprietary Rights are free of all licenses, sublicenses, royalty or similar
payment obligations, liens, mortgages, encumbrances, pledges, or security
interests, of any nature whatsoever, other than the Patriot Royalty, and are not
subject to any outstanding injunction, judgement, order, decree, ruling, or
charge. ASI has the right and authority to enter into this Agreement and to
grant the rights granted herein. No facts have come to ASI's attention that
would form a basis for the belief that the Technology or the Proprietary Rights
or any rights thereunder owned by ASI are unenforceable or invalid and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or, to the best of ASI's knowledge, is threatened against ASI
that challenges the legality, validity, enforceability, use, or ownership of
such items. ASI has not agreed to indemnify any person for or against any
interference, infringement, misappropriation, or other conflict with respect to
such items. All material information affecting the patentability of the claims
of the Technology, the Proprietary Rights and patent rights thereunder known to
ASI has been disclosed to the United States Patent and Trademark Office and any
other governing entity as relate to such rights. There have been no transfers,
sales, assignments, licenses or other conveyance of any rights, title or
interest in or to such items and none are pending or contemplated except as
otherwise provided herein. The Technology and Proprietary Rights represent all
of the patents, patent applications, rights or inventions created or owned by
ASI that relate to the GPA technology. To the best of ASI's knowledge, the
Technology and the Proprietary Rights and the processes represented by them will
perform the functions as set forth in the patents and patent applications listed
in Exhibit A hereto and disclosed by ASI to Xxxxxxxx, and ASI does not have
knowledge of any
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matter that would prevent such performance. To the best of ASI's knowledge, ASI
has not, by any of its acts or acts of its agents, put any of those rights into
jeopardy.
(4) Contract Work. All prior government work has been
completed and there are no obligations for further work, development, reporting
or delivery of any items or work product except as disclosed in Exhibit E and
the Contracts related thereto.
(5) Use of Technology After Closing. ASI acknowledges that
after the Closing, Xxxxxxxx shall be free to develop, abandon, transfer, sell,
license or otherwise deal with the Technology without consent or claim by ASI
other than as otherwise provided in this Agreement.
b) Xxxxxxxx acknowledges and agrees that it is buying the Technology
and the Proprietary Rights "AS IS", with no warranty or representation of any
kind except as expressly provided herein and with no assurance of future
revenues relating from the Technology or the Proprietary Rights. ASI DISCLAIMS
ANY AND ALL OTHER WARRANTIES, EITHER EXPRESS, IMPLIED OR STATUTORY, OR ARISING
BY COURSE OF CONDUCT OR PERFORMANCE, CUSTOM OR USAGE IN THE TRADE INCLUDING, BUT
NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
c) Xxxxxxxx hereby represents and warrants to, and covenants with, ASI
as follows:
(1) Organization, Good Standing and Qualification. Xxxxxxxx is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida. Xxxxxxxx has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and to issue and sell the Securities, as hereinafter defined, and
to carry out the provisions of this Agreement and to carry on its business as
presently conducted and as presently proposed to be conducted. Xxxxxxxx is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of its activities and of
its properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so would not have a
material adverse effect on Xxxxxxxx or its business.
(2) Capitalization; Voting Rights. The authorized capital
stock of Xxxxxxxx consists of 500,000,000 shares of Common Stock, par value
$.0001 per share ("Common Stock"), and 5,000,000 shares of preferred stock, par
value $.0001 per share ("Preferred Stock"). As of March 14, 2003 Xxxxxxxx had
8,000 shares of Series C preferred stock designated with 5,225 shares
outstanding and 306,709,209 shares of Common Stock outstanding. A total of
73,130,267 shares of common stock are reserved for conversion under the Series C
Preferred Stock (such preferred convertible into 36,565,134 common shares at
March 14, 2003) and an additional 7,161,660 shares of common stock are intended
for future issuance to employees and consultants. There are no stock option
grants, warrants or other convertible instruments outstanding.
All issued and outstanding shares of Xxxxxxxx common stock (a) have
been duly authorized and validly issued, and (b) are fully paid and
nonassessable. The Securities issued to ASI are, and any additional shares of
Xxxxxxxx common stock issued pursuant hereto or the Registration Rights
Agreement will be, validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances; provided, however, that the Securities may be
subject to restrictions on transfer under state and/or federal securities laws
as set forth herein or as otherwise required by such laws at the time a transfer
is proposed.
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(3) Authorization; Binding Obligations. All corporate action
on the part of Xxxxxxxx, its officers, directors and stockholders necessary for
the authorization of this Agreement, the Registration Rights Agreement, the
Sublicense Agreement (collectively, the "Transaction Documents") and the
performance of all obligations of Xxxxxxxx hereunder and thereunder and the
authorization, sale, issuance and delivery of the Securities pursuant hereto has
been taken prior to the Closing.
(4) Title to Properties and Assets; Liens, etc. Xxxxxxxx has
good and marketable title to its properties and assets, including the properties
and assets reflected in the most recent balance sheet, and good title to its
leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than (a) those resulting from taxes which have not
yet become delinquent, (b) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or materially impair the
operations of Xxxxxxxx, and (c) those that have otherwise arisen in the ordinary
course of business. All facilities, machinery, equipment, fixtures, vehicles and
other properties owned, leased or used by Xxxxxxxx are in good operating
condition and repair and are reasonably fit and usable for the purposes for
which they are being used.
(5) Compliance with Other Instruments. Xxxxxxxx is not in
violation or default of any term of its Certificate of Incorporation or Bylaws,
or of any provision of any mortgage, indenture, contract, agreement, instrument
or contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge, any statute, rule or regulation
applicable to Xxxxxxxx which would materially and adversely affect the business,
assets, liabilities, financial condition or operations of Xxxxxxxx. The
execution, delivery, and performance of and compliance with the Transaction
Documents, the issuance of the Securities and any additional shares of Xxxxxxxx
common stock pursuant hereto, will not, with or without the passage of time or
giving of notice, result in any such material violation, or be in conflict with
or constitute a default under any such term, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of Xxxxxxxx or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit license, authorization or approval applicable to
Xxxxxxxx, its business or operations or any of its assets or properties.
(6) Litigation. There is no action, suit, proceeding or
investigation pending or to Xxxxxxxx'x knowledge currently threatened in writing
against Xxxxxxxx that questions the validity of any of the Transaction Documents
or the right of Xxxxxxxx to enter into any of such agreement, or to consummate
the transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any material adverse change in the assets,
condition or affairs of Xxxxxxxx, financially or otherwise, or any change in the
current equity ownership of Xxxxxxxx, nor is Xxxxxxxx aware that there is any
basis for the foregoing.
(7) Compliance with Laws; Permits. To its knowledge, Xxxxxxxx
is not in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which violation would materially and adversely affect the business,
assets, liabilities, financial condition or operations of Xxxxxxxx. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of any of the Transaction
Documents and the issuance of the Securities and any additional shares of
Xxxxxxxx common stock, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing, as
will be filed in a timely manner. Xxxxxxxx has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects or financial condition of Xxxxxxxx and believes
it can
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obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted.
(8) SEC Filings; Financial Statements of Xxxxxxxx.
(i) Xxxxxxxx has timely filed all forms, reports,
statements and documents required to be filed by it with the Securities and
Exchange Commission (the "SEC") since January 1, 2003 (collectively together
with any such forms, reports, statements and documents Xxxxxxxx may file
subsequent to the date hereof until the Closing, the "Xxxxxxxx Reports"). Each
Xxxxxxxx Report was prepared in accordance with the requirements of the
Securities Act of 1933, as amend, or the Securities Exchange Act of 1934, as
amended, as the case may be, and did not at the time it was filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. No
subsidiary of Xxxxxxxx is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with the SEC
any stock exchange or any other comparable governmental entity.
(ii) Except as is provided in the Xxxxxxxx Reports, each
of the consolidated financial statements (including, in each case, any notes
thereto) contained in the Xxxxxxxx Reports was prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each presented fairly, in all material respects, the consolidated
financial position of Xxxxxxxx and the consolidated subsidiaries of Xxxxxxxx as
at the respective dates thereof and for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of unaudited
statements, to normal recurring immaterial year-end adjustments and the absence
of notes).
(iii) Except as and to the extent set forth or reserved
against on the consolidated balance sheet of Xxxxxxxx and the subsidiaries of
Xxxxxxxx as reported in the Xxxxxxxx Reports, including the notes thereto, none
of Xxxxxxxx or any subsidiary of Xxxxxxxx has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet or in notes thereto prepared in
accordance with GAAP, except for liabilities or obligations incurred in the
ordinary course of business consistent with past practice since the date of the
most recent Xxxxxxxx Report that have not had and could not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the condition (financial or otherwise), properties, assets (including intangible
assets), liabilities, business, operations or results of operations of Xxxxxxxx
9. Indemnification.
a) ASI Indemnification. ASI shall indemnify, defend, and hold harmless
Xxxxxxxx against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including interest, penalties, and reasonable attorneys' fees, that Xxxxxxxx
shall incur or suffer, that arise, result from, or relate to any breach of, or
failure by ASI to perform, any of its representations, warranties, covenants, or
agreements in this Agreement or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by ASI under this Agreement.
Notwithstanding the foregoing, the indemnification obligations of ASI with
respect to matters described in clause (i) above shall be limited in dollar
amount to the amount of the Technology Purchase Price and any additional amounts
paid in cash by Xxxxxxxx to ASI pursuant to this Agreement.
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b) Xxxxxxxx Indemnification. Xxxxxxxx shall indemnify, defend, and hold
harmless ASI against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties, and reasonable attorneys' fees,
that ASI shall incur or suffer, that arise, result from, or relate to any (i)
claim that any modifications, improvements or other changes to the Technology or
the Proprietary Rights made by Xxxxxxxx after Closing or any other technologies
or inventions originating with Xxxxxxxx after the Closing infringes or
misappropriates the intellectual property rights of any third party or (ii) any
breach of, or failure by Xxxxxxxx to perform, any of its representations,
warranties, covenants, or agreements in this Agreement or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished by
Xxxxxxxx under this Agreement.
c) A party entitled to indemnification hereunder (an "Indemnified
Party") shall promptly notify the other party hereto (the "Indemnifying Party")
of the existence of any claim, demand, or other matter to which the Indemnifying
Party's indemnification obligations would apply, and shall give it a reasonable
opportunity to defend the same at its own expense and with counsel of its own
selection; provided that the Indemnified Party shall at all times also have the
right to fully participate in the defense at its own expense. If the
Indemnifying Party shall, within a reasonable time after this notice, fail to
defend, the Indemnified Party shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle (exercising reasonable
business judgment), the claim or other matter on behalf, for the account, and at
the risk, of the Indemnifying Party. If the claim is one that cannot by its
nature be defended solely by the Indemnifying Party (including, without
limitation, any federal or state tax proceeding), then the Indemnified Party
shall make available all information and assistance that the Indemnifying Party
may reasonably request.
10. Miscellaneous Terms.
a) Each party shall execute and deliver, from time to time at or after
the date of the Closing upon the request of the other party, such further
conveyance instruments, and take such further actions, as may be necessary or
desirable to evidence more fully the conveyance of interest in and to all the
Technology and Proprietary Rights and the assignment of the Contracts to
Xxxxxxxx, on the part of the Xxxxxxxx, to the fullest extent reasonably
possible. Each party therefore agrees to:
(1) Execute, acknowledge, and deliver any affidavits or
documents of assignment and conveyance regarding the Technology or the
Proprietary Rights;
(2) Provide testimony in connection with any proceeding
affecting the right, title, interest, or benefit of the Xxxxxxxx and to the
Technology or the Proprietary Rights; and
(3) Perform any other acts reasonably necessary to carry out
the intent of this Agreement.
b) In furtherance of, but subject to the terms and conditions of, this
Agreement, ASI hereby acknowledges that, from and after the Closing, Xxxxxxxx
will have acquired all of ASI's right, title, and standing to:
(1) Receive all rights and benefits pertaining to the
Technology and the Proprietary Rights as the sole owner thereof;
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(2) Institute and prosecute all suits and proceedings and take
all actions that Xxxxxxxx, in its sole discretion, may deem necessary or proper
to collect, assert, or enforce any claim, right or title of any kind in and to
any and all of the Technology and Proprietary Rights;
(3) Defend and compromise any and all such actions, suits, or
proceedings relating to such transferred and assigned rights, title, interest,
and benefits, and do all other such acts and things in relation thereto as the
Xxxxxxxx, in its sole discretion, deems advisable; and
(4) To sell, assign, transfer, modify, further develop and
license such rights and receive royalties and other payment for such rights.
c) The parties agree that ASI shall pay all costs and fees (legal and
otherwise) necessary to maintain or prosecute the patents identified in Exhibit
A through the date of the Closing. After the Closing, the parties agree that
Xxxxxxxx shall pay all such costs and fees thereafter.
d) ASI agrees that Xxxxxxxx may retain the services of the law firm of
Xxxxxx, North &Western, including specifically Xxxxxx North, to act as
Xxxxxxxx'x patent counsel subsequent to the Closing of this Agreement and as
such ASI hereby waives any potential conflict of interest that may exist now or
in the future.
e) Xxxxxxxx intends to employ Dr. Xxx Xxxxxxxx upon the Closing and to
retain Xx. Xxxx Xxxxxxx as a part-time consultant.
f) ASI and Xxxxxxxx agree that each party shall be responsible for
their own legal and other fees and costs relating to the preparation of this
Agreement. Each party represents and warrants it has been represented by legal
counsel and that there is no finder or broker involved in this transaction.
g) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof, and shall supersede all previous
communications, representations, understandings and agreements, whether oral or
written. This Agreement may not be changed or modified except by a written
agreement signed by both parties. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada (excluding
conflicts of law principles). Any action or suit related to this Agreement shall
be brought exclusively in the state or federal courts in Nevada. In case any one
or more of the provisions contained in this Agreement or any application thereof
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
other applications thereof shall not in any way be affected or impaired thereby,
and such invalidity shall be construed and limited as narrowly as practicable.
h) All representations, warranties, covenants and agreements of ASI and
Xxxxxxxx in this Agreement shall survive the execution, delivery and performance
of this Agreement and the Closing for a period of one (1) year following the
Closing. All representations and warranties of each party set forth in this
Agreement shall be deemed to have been made again by such party at and as of the
Closing Date.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Xxxxxxxx Technologies, Inc. ASI Technology Corporation
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By: /s/ X.X. XXXXXXX By: /s/ XXXXX X. XXXXX
---------------------- -----------------------
Name: X.X. XXXXXXX Name: XXXXX X. XXXXX
---------------- ------------------
Title: CEO Title: PRESIDENT
------ -----------
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EXHIBIT A - PATENTS
(Omitted)
EXHIBIT B
CONFIDENTIAL AND PROPRIETARY INFORMATION TRANSFERRED
(Omitted)
EXHIBIT C
EQUIPMENT TRANSFERRED
(Omitted)
EXHIBIT D
TRADEMARKS AND TRADENAMES TRANSFERRED
(Omitted)
EXHIBIT E
GOVERNMENT CONTRACTS
(Omitted)
EXHIBIT F
SUBLICENSE AGREEMENT
(Omitted)
EXHIBIT G
REGISTRATION RIGHTS AGREEMENT
(Omitted)
