Exhibit No. 10.2
Agreement dated March 5, 1997 between Mason Hanger National, Inc. and
Electronic Control Security Inc. relating to the purchase of certain assets
relating to the FOIDS Product Line
AGREEMENT
This agreement is made and entered info this 5th day of March, 1997 by and
among Xxxxx & Illanger National, Inc., a Delaware corporation with offices at
000 Xxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 (MHN) and ECSI-FOIDS, Inc. a New Jersey
corporation with offices at 00 Xxxx Xxxx, Xxxxxxxxx, XX 00000 (ECSI) and Xxxxxx
Xxxxx whose address is 00 Xxxx Xxxx Xxxxxxxxx, XX 00000 (Birch).
Recitals
The shareholders and Board of Directors of MHN have authorized the closure
and wind up of MHN;
ECSI, a sales representative of MHN, desires to continue the manufacture
of MHN's FOIDs product line and has offered to purchase certain of MHN's
inventory and secure the necessary licenses from MHN and its licenser Lucent;
MHN Is willing to sell certain of its inventory, license its patents and
agree to other related matters on the following terms and conditions;
For and in consideration of the promises set out below, the parties agree
as follows:
1. License. MHN and ECSI agree to enter into the license agreement
attached and made a part hereof as Attachment A. MI-IN also agrees to grant to
ECSI source code, PCB drawings, schematics, and trade secrets as described in
Attachment E. In return for the use of the MHN trade secrets as described in
attachment E, ECSI agrees that any patent that is applied for based upon those
trade secrets will be a patent jointly owned by ECSI and MHN or MHN's successor
in interest. In addition, the source codes provided are considered trade secrets
by MHN. ECSI agrees that if this source code or any code based upon this source
code is copyrighted it will be a copyright jointly owned by ECSI and MHN or
MHN's successor in interest
2. Lucent License. MHN agrees to assist ECSI in securing the necessary
related license from Lucent by responding to reasonable requests related to
Lucents license. Should MHN no longer employ anyone who can respond to the
request at the time ECSI or Lucent makes an inquiry, MHN shall not he obligated
to assist further.
3. Sale of Materials. MHN agrees to sell and ECSI agrees to purchase the
assets described in enclosures 1, 2 and 3 to Attachment B attached and made a
part hereof for a total purchase price of $151,500 in seven lots. The first lot
shall be purchased for $25,000. After the initial purchase of the first lot on
the effective date of this agreement, ECSI shall purchase one lot each thirty
(30) days thereafter for a purchase price of $21,083.33 per lot, with the first
thirty day period beginning thirty days after the effective date of this
Agreement. Fifty percent (50%) of the purchase price for each lot must be paid
by cashier's or certified check delivered at the time of receipt of the lot and
the balance must be paid by cashier's or certified check within 30 days of
receipt of the lot.
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If ECSI does not pay for a lot in full during a thirty (30) day period, MHN
shall have the right to increase the price of said lot by 20%, If the lot is
sold to ECSI within 15 days of lot procurement date. ECSI's obligation to
purchase the lots shall not be contingent on the making of any potential sales
and MHN's identification of the above shall not constitute a representation or
guarantee of future sales. MHN MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND
REGARDING THE ITEMS TRANSFERRED ABOVE (INCLUDING BUT NOT LIMITED TO ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE). THE ITEMS ARE
TRANSFERRED TO ECSI "AS IS."
4. Other Items Purchased by ECSI. MHN agrees to sell and ECSI agrees to
purchase the assets described in enclosures 4 and 5 to Attachment B as
described below and attached and made a part hereof for the consideration set
forth next to each enclosure item, with the consideration to be paid in full at
closing by certified or cashier's check:
a) Enclosure 4 to attachment B - Marketing and Production items -
$9,500; and
b) Enclosure 5 to Attachment B - Research and Development equipment,
tools and files - $16,000
MHN MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE ITEMS
TRANSFERRED ABOVE (INCLUDING BUT NOT LIMITED TO ANY REPRESENTATION OR WARRANTY
OF MERCHANTABILITY OR FITNESS FOR USE). THE ITEMS ARE TRANSFERRED TO ECSI "AS
IS."
5. Sublease. MHN agrees to sublease the portion of its premises located at
000 Xxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 described on Attachment C, attached and
made a part hereof to ECSI for a period of 90 days after the effective date of
this Agreement. ECSI shall pay MHN at the beginning of each 30 day period
$1,400. ECSI shall pay all expenses as described on Attachment C within 10 days
of receiving the xxxx. Prior to taking possession of the designated premises,
ECSI shall provide MHN with evidence of premises liability coverage (naming MHN
as an additional insured). ECSI's possession of the premises shall be subject to
the same terms and conditions as set forth in MHN's lease attached and made a
part hereof as Attachment D except as modified by this paragraph or Attachment
C.
6. Notices. No sooner than the effective date as hereinafter defined, MHN
shall provide ECSI with names and addresses of its customers, sales
representatives distributors, and users and key suppliers for ECSI to prepare a
joint letter advising them of ECSI's license. MHN shall approve the terms of the
letter and ECSI shall bear all costs related to the mailing.
7. Effective Date. This agreement shall not be effective until the
happening of all of the following which must occur by December 6, 1996 for the
obligations of the parties to remain in effect:
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a) ECSI's payment in full of its open account with MHN in the
amount of $18,307.31 (invoices number 1579, 1580, and 1625).
b) ECSI's payment of $25,000 good faith money which shall also be
consideration for the first lot of inventory, as described in
enclosure 1 to Attachment B.
c) ECSI's payment of $25,500 for the items described in
enclosures 4 and 5 of Attachment B.
d) ECSI's payment of the first 30 days rent in the amount of $
1,400.
e) Birch's guarantee of ECSI's performance under this agreement
as evidenced by his signature to this agreement under the
statement, "I fully guarantee the performance of ECSI."
f) ECSI's securing of a necessary license from Lucent and
delivery of evidence of such license to MHN in form
satisfactory to MHN.
g) MHN's securing of its landlord's permission to sublease a
portion of the premises to ECSI.
h) ECSI's delivery of the required evidence of insurance naming
MHN as an additional insured, including product liability
insurance as required in the License included as Attachment A.
i) ECSI's delivery of the required evidence that it has entered
into a nondisclosure agreement with Scientific Approaches
relating to the Graphic Link protocol, in a form satisfactory
to MHN.
j) ECSI's delivery of an executed License Agreement substantially
in the form of Attachment A.
8. Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
a) The failure of ECSI to pay, promptly when due, any payment due
under this Agreement or under any Attachment hereto if such
failure shall continue unremedied for ten (10) days after
receipt of written notice of such failure; or
b) MHN reasonably determines that the books and records of ECSI
or the sales reports required by the License Agreement
attached as Attachment A are not accurate and such inaccuracy
is not cured within ten (10) days of receipt of written notice
of such Inaccuracy.
c) ECSI defaults, breaches or fails to perform, observe or meet
any covenant, statement, agreement, stipulation, term or
condition made in the Agreement or
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any Attachment to the Agreement hereunder, with no prior
demand therefor or notice by MHN necessary except to the
extent, if any, required under the express terms of the
Agreement or Attachment to the Agreement governing such
default; or
d) The happening of any of the following (a) insolvency of ECSI
or the Guarantor, (b) filing of a voluntary petition in
bankruptcy by ECSI or Guarantor, (c) filing of a involuntary
petition in bankruptcy against ECSI or Guarantor, (d)
appointment of a receiver or trustee for ECSI or Guarantor,
(e) execution of an assignment for the benefit of creditor by
ECSI or Guarantor, provided that said petition, appointment,
assignment is not vacated or nullified within fifteen (15)
days of such event; or
e) ECSI fails to maintain and keep in force the insurance
required under this Agreement or any Attachment to the
Agreement, with no prior demand thereof or notice by MHN
necessarily after notice to cure.
9. Remedies upon Default. Notwithstanding any contrary provision or
inference herein or elsewhere:
a) MHN's Right to Declare a Default in its Sole Discretion if any
Event of Default referred to in Article 8 of this Agreement
shall occur or begin to exist, MHN may, declare a default
hereunder in its sole discretion, after any requisite cure
period has expired.
b) Termination and Reversion. Immediately upon a declaration of a
default pursuant to this Agreement, MHN is entitled to become
the sole owner of all of the assets described in paragraph 1
of this Agreement and the License Agreement shall be deemed to
be terminated. MHN may also terminate other provisions of this
Agreement with the Attachments hereto as it sees fit, in its
sole discretion. The Items listed in Attachment E of this
Agreement shall revert back to MHN or MHN's successor in
interest with MHN (or its successor in interest) being the
sole owner. Any patents or copyrights jointly owned by ECSI
and MHN or MHN's successor in interest shall revert to be
owned solely by MHN or MHN's successor in interest; and
c) Rights Cumulative. All of the rights and remedies of MHN upon
occurrence of an Event of Default hereunder shall be
cumulative to the greatest extent permitted by law and shall
be in addition to all those rights and remedies afforded MHN
at law or in equity or bankruptcy.
10. Miscellaneous.
a) Birch shall be the point of contact for ECSI. Xxxxx Xxxxx,
0000 Xxxxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (phone
606-223-2277) shall be the point of contact for MHN.
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ATTACHMENT A
The License agreement between MHN and ECSI is attached.
