STOCK PURCHASE AND CROSS-RELEASE AGREEMENT
THIS AGREEMENT, made as of this ____ day of November, 1999, by and between
EUROTECH, LTD., a District of Columbia corporation, the principal place of
business of which is 0000 00xx Xxxxxx, XX, Xxxxx 000, Xxxxxxxxxx, X.X. 00000
("Eurotech") and KURCHATOV RESEARCH HOLDINGS, LTD., a Delaware corporation, the
principal place of business of which is Xxxxxxxxxxx Xxxxxx, 00X, XX-00000
Xxxxxx, Xxxxxxx ("Kurchatov")
W I T N E S S E T H:
WHEREAS, Eurotech is the exclusive world-wide licensee except for the
territory comprised of Russian Federation of the family of technologies
evidenced by United States patent 5,886,060, issued March 23, 1999; and Russian
patent number 2111982 received May 27, 1998; and applications numbers:
PCT/RU98/00009, application date January 1998; PCT/RU98/000073, application date
March 12, 1998, PTC/RU98/000429, application date December 23, 1998 and
subsequent developments, collectively known as EKOR (such technologies
hereinafter collectively, EKOR); and
WHEREAS, pursuant to a letter agreement, dated January 28, 1997, between
Eurotech and Kurchatov, Kurchatov is entitled to receive from Eurotech one-half
(1/2) of the net operating profits derived by Eurotech from the operation,
licensing, sale or other exploitation by Eurotech of EKOR and whereas Kurchatov
paid for certain EKOR equipment (hereinafter, the EKOR Operating Interests); and
WHEREAS, Eurotech has provided Kurchatov a complete description of the
commercial applications of EKOR as known to Eurotech; and
WHEREAS, Eurotech is the owner, of record and beneficially, of six million
seven hundred ninety-five thousand (6,795,000) shares of the common stock of
Kurchatov (the "Kurchatov Shares"); and
WHEREAS, Kurchatov acquired from Eurotech that certain technology of the
resealable can evidenced by German patent numbers (i) Behaelter sowie
Verschluiss fuer einen solchen Behaelter" sasnle Registreation 296 16 133.0 and
(ii) patent registration 196 46 437.4 and Wiederverschliessbare
Weicvhverpackung, die unter anderem fuer geeignet is (reclosing
soft-material packaging suited, e.g., for TetraPak) application-number for
patent registration 197 21 408.2 dated 5-21-1997m plus amendment number 197 29
194.5 dated 7-8-1997(such technology hereinafter, the "Resealable Can") pursuant
to which acquisition transaction Kurchatov owes Eurotech a six percent (6%)
royalty interest with respect to Kurchatov's commercial exploitation of the
Resealable Can; and
1
WHEREAS, Kurchatov is indebted in the principal amount of Seven Hundred
Fifty Thousand Dollars ($750,000.00) in addition to accrued interest, penalties
and conveyances of common stock, to Spinneret Financial Systems, Inc.
("Spinneret"); and
WHEREAS, it is in the best interests of both Eurotech and Kurchatov to
simplify their business relationship in the manner hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
conveyances and promises set forth hereinafter and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
1. Purchase of Stock.
Subject to the terms and conditions of this Agreement, Kurchatov
hereby agrees to purchase and purchases from Eurotech, and Eurotech hereby
agrees to sell and sells to Kurchatov, two million (2,000,000) authorized and
unissued shares of the common stock, par value $0.00025 per share ("Common
Stock") of Eurotech (the "Eurotech Shares") Eurotech is delivering to Kurchatov
herewith a certificate or certificates representing the Eurotech Shares sold
pursuant to this Section 1 to Kurchatov.
2. Consideration.
In full consideration for the Eurotech Shares and subject to the
terms and conditions of this Agreement, Eurotech is paying concurrently herewith
the amount of five million Dollars ($5,000,000.00), which amount is deemed by
the parties hereto to be comprised in and constituted by part, but not all, of
the fair value to Eurotech of the release by Kurchatov of the EKOR Operating
Interest as hereinafter set forth.
3. Representations, Warranties and Agreements of Eurotech.
Eurotech hereby represents and warrants to Kurchatov as follows:
3.1 Status of Eurotech. Eurotech is a corporation duly organized,
validly existing and in good standing under the laws of the District of
Columbia, and has all requisite corporate power and authority to own its
properties and to conduct its business as presently conducted, and is duly
qualified to do business as either a foreign or domestic corporation in each
state in which it is deemed to transact business under applicable law.
3.2 The Eurotech Shares. The authorized capital stock of Eurotech
consists of fifty million (50,000,000) shares of Common stock, of which the
Eurotech Shares constitute four per cent, (4%) of all such shares which are
issued, outstanding and
2
obligated after giving effect to such issuance. All of the Eurotech Shares are
validly issued, fully paid and non-assessable. There are outstanding
subscriptions, options, warrants, convertible securities or other agreements or
commitments obligating Eurotech to issue or to transfer from its treasury
additional shares of its capital stock to bring the total of issued shares,
fifty million (50,000,000). No Capital Event (as defined in Section 6 hereof)
shall occur prior to the expiration date (as defined in Section 5.1 hereof)
unless authorized by a duly called and held meeting of the shareholders of
Eurotech.
3.3 Good Title Transferred. Upon delivery to Kurchatov of the stock
certificate or certificates referred to in Section 1 above, Kurchatov will
receive good and marketable title to four per cent. (4%) of all of the issued,
obligated and outstanding common stock of Eurotech in addition to such common
stock as Kurchatov has already acquired prior to the date hereof, all of which
such securities acquired by Kurchatov pursuant to this Agreement shall be
received by Kurchatov as validly issued, fully paid and non-assessable, free and
clear of all liens, encumbrances, security interests, equities, options, claims,
charges, limitations on voting rights or rights to receive dividends, or other
restrictions of any kind (other than any generally imposed by federal or state
securities laws).
3.4 Subsidiaries. Eurotech does not own, directly or indirectly, any
interest or investment, whether debt or equity, in any corporation, partnership,
business trust or other entity, except securities listed on a national
securities exchange or traded in the over-the-counter market not exceeding in
market value for any issue five per cent. (5%) of the total outstanding market
value of such issue listed or traded.
3.5 Liabilities. Eurotech has no debt, liability or obligation or
any nature, whether accrued, absolute, contingent or otherwise, and whether due
or to become due, that is not reflected or reserved against in Eurotech
financial statements previously furnished to Kurchatov or set forth in
Eurotech's most recent periodic filing on Form 8-K, 10-Q or 10-K with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended, except for those previously disclosed to
Kurchatov (i) that may have been incurred since the date of the most recent
balance sheet included therein or (ii) that are not required by generally
accepted accounting principles to be included in a balance sheet. All debts,
liabilities and obligations incurred after such date were incurred in the
ordinary course of business, and are usual and normal in amount both
individually and in the aggregate.
3.6 Taxes. Within the times and in the manner prescribed by law,
Eurotech has filed all federal, state and local tax returns required by law and
has paid all taxes, assessments and penalties due and payable. The provisions
for taxes reflected in Eurotech's most recent balance sheet furnished to
Kurchatov are
3
adequate for any and all federal, state, county and local taxes for the period
ending on such date and for all prior periods, whether or not disputed. There
are no present disputes as to taxes of any nature payable by Eurotech.
3.7 Authority to Consummate Transactions. The execution and delivery
of this Agreement and the consummation of the transactions contemplated herein
are within the corporate powers of Eurotech and have been duly authorized by all
necessary corporate proceedings. No approval or material consent of any person
or entity (other than Kurchatov) must be obtained by Eurotech prior to
consummating the within transactions, or such approval or material consent has
been or will be obtained.
3.8 Compliance with Other Instruments, etc. Neither the execution of
this Agreement nor the consummation of the transactions contemplated herein will
(i) require Eurotech to obtain the consent of any governmental agency not
already obtained; (ii) result in any violation or breach of any term or
provision of the articles of incorporation or by-laws of Eurotech; (iii)
constitute a material default under any indenture, mortgage, deed of trust or
other contract or agreement to which Eurotech is a party or to which it or any
of its properties may be subject; or (iv) cause the creation or imposition of
any lien, charge or encumbrance on any of the assets or the business of
Eurotech.
3.9 Binding Obligation. This Agreement, when executed and delivered,
will constitute the valid and binding obligation of Eurotech, assuming due
authorization, execution and delivery by Kurchatov.
3.10 Brokerage and Finder's Fee. Neither Eurotech nor any officer,
director or agent of Eurotech has incurred any liability to any broker, finder
or agent for any brokerage fees, finder's fees or commissions with respect to
the transactions contemplated by this Agreement.
3.11 Business Assets. Except as previously disclosed to Kurchatov ,
Eurotech has good and marketable title to all of its assets, including, but not
limited to, EKOR.
3.12 Compliance with Law. Except as previously disclosed to
Kurchatov, the business of Eurotech is not in violation of any applicable
federal, state or local statutes, laws or regulations (including, without
limitation, building, health, nuisance, zoning and other laws, ordinances and
regulations).
3.13 Litigation and Other Proceedings. Except as previously
disclosed to Kurchatov, there is no known suit, action, arbitration or legal,
administrative or other proceeding or governmental investigation pending,
threatened or likely to be asserted against or affecting the business of
Eurotech. Eurotech is not in default with respect to any order, writ, injunction
or
4
decree of any federal, state, local or foreign court, department, agency or
instrumentality affecting such business. Eurotech will assume responsibility and
liability for all suits, actions, arbitrations or other proceedings so disclosed
to Kurchatov to the extent it would be liable under Section 9.1.
3.14 EKOR Technologies. The information provided by Eurotech to
Kurchatov concerning the commercial applications of EKOR is complete and
accurate in all material respects as of the date of this Agreement.
3.15 Adverse Changes. Except as previously disclosed to Kurchatov,
there has not been any material adverse change affecting Eurotech's business,
financial condition or prospects since the date of its financial statements
referred to in Section 3.5, including, but not limited to, any of the following:
(a) any transaction by Eurotech not in the ordinary course of
business as conducted on such date;
(b) any capital expenditure by Eurotech exceeding $25,000.00;
(c) the destruction, damage to or loss of any assets of
Eurotech (whether or not covered by insurance) that materially and adversely
affects the financial condition, business or prospects of Eurotech;
(d) labor trouble or other event or condition of any character
materially and adversely affecting the financial condition, business, assets or
prospects of Eurotech;
(e) any change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) by Eurotech;
(f) any revaluation by Eurotech of any of its assets;
(g) any declaration, setting aside or payment of any dividend
or other distribution in respect of the capital stock of Eurotech, or any other
direct or indirect redemption, purchase or other acquisition by Eurotech of any
of its shares of capital stock;
(h) any increase in the salary or the compensation payable or
to become payable by Eurotech to any of its officers, directors or employees; or
the declaration of, payment of or commitment to pay by Eurotech of any bonus or
other additional salary or compensation to any such person;
(i) the sale or transfer of any assets of Eurotech, except
sales of inventories in the ordinary course of
5
business;
(j) the amendment or termination of any contract, agreement or
license to which Eurotech is or was a party, except in the ordinary course of
business;
(k) any loan by Eurotech to any person or entity (other than
normal extensions of trade credit to customers), or guarantee by Eurotech of any
loan;
(l) any mortgage, pledge or other encumbrance of any asset of
Eurotech;
(m) the waiver or release of any right or claim of Eurotech,
except in the ordinary course of business;
(n) any other event or condition of any character that has or
might reasonably have a material or adverse effect on the financial condition,
business, assets or prospects of Eurotech;
(o) the issuance or sale by Eurotech (except as contemplated
by this Agreement and the agreement for sale of shares to Horizon Capital of
America) of any shares of its capital stock of any class, or of any other of its
securities; or
(p) the agreement by Eurotech to do any of the things
described in the preceding clauses (a) through (o).
4. Representations, Warranties And Agreements of Kurchatov.
Kurchatov hereby represents and warrants to Eurotech as follows:
4.1 Status of Kurchatov. Kurchatov is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own its properties and to
conduct its business as presently conducted.
4.2 Kurchatov's Authority to Consummate Transactions. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein are within the corporate powers of Kurchatov and have been
duly authorized by all necessary corporate proceedings. No approval or material
consent of any person or entity (other than Eurotech) must be obtained by
Kurchatov prior to consummating the within transactions, or such approval or
material consent has been or will be obtained.
4.3 Compliance with Other Instruments, etc. Neither the execution of
this Agreement nor the consummation of the transactions contemplated herein and
therein will (i) require Kurchatov to obtain the consent of any governmental
agency not
6
already obtained; (ii) result in any violation or breach of any term or
provision of Kurchatov's articles of incorporation or by-laws; or (iii) will
constitute a material default under any indenture, mortgage, deed of trust or
other contract or agreement to which Kurchatov is a party or to which it or any
of its properties may be subject.
4.4 Binding Obligations. This Agreement when executed and delivered
will constitute the valid and binding obligation of Kurchatov, assuming due
authorization, execution and delivery by Eurotech.
4.5 Brokerage and Finder's Fees. Neither Kurchatov nor any officer,
director or agent of Kurchatov has incurred any liability to any broker, finder
or agent for any brokerage fees, finder's fees or commissions with respect to
the transactions contemplated by this Agreement.
4.6 Restricted Securities. Kurchatov understands and hereby
acknowledges that the Eurotech Shares will be issued pursuant to an exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "Act") and the Rules and Regulations of the Commission promulgated
thereunder; that the Eurotech Shares will be "Restricted Securities" as defined
in Rule 144(a)(3) promulgated under the Act; and that the stock certificate or
certificates to be issued to Kurchatov in respect of such securities may bear a
legend of a form satisfactory to counsel for Eurotech reflecting the status of
such Eurotech Shares as "Restricted Securities" under Rule 144(a)(3) promulgated
under the Act. Kurchatov further acknowledges that the transfer agent or
registrar for Eurotech may be instructed to restrict the transfer of such
securities in accordance with the legend mentioned herein and any other
applicable restrictions, and Kurchatov hereby agrees not to sell, transfer,
hypothecate, pledge, assign or otherwise dispose of any of the Eurotech Shares
except pursuant to a registration statement filed under the Act, a favorable
no-action or interpretative letter received from the Commission or an opinion of
counsel satisfactory to Eurotech that such sale, transfer, hypothecation,
pledge, assignment or other disposition is exempt from the registration
requirements of the Act.
5. Registration Rights.
5.1 Piggy-Back Registration Rights. If at any time on or before the
fifth (5th) anniversary of the execution and delivery of this Agreement (the
"Expiration Date") Eurotech shall file a registration statement on Form S-1 or
any form substituted therefore, with respect to any shares of its Common Stock
under the Act, or files a post-effective amendment to any registration statement
on Form S-1 or any form substituted therefore, which post-effective amendment
contains a prospectus complying with Section 10(a) of the Act, Eurotech will
give to Kurchatov timely notice of its intention to file such registration
statement or
7
post-effective amendment, as the case may be, and promptly after receipt of a
written request made by Kurchatov within fifteen (15) days after the giving of
such notice, Eurotech will register under the Act all Eurotech Shares held by
Kurchatov and covered by any such request, and will maintain the prospectus
included in any registration statement which may be so filed current for a
period of ninety (90) days subsequent to the effective date of such registration
statement; provided, however, that Eurotech's obligations to register shares of
Common Stock and to maintain prospectuses hereunder shall be subject to the
approval of any underwriters engaged by Eurotech in connection with any such
registration, which approval by any such underwriters may be unreasonably
withheld, in such underwriters' absolute discretion. The obligations of Eurotech
under this Section 5.1 shall be fully satisfied upon the effective date of the
first such registration statement or post-effective amendment to which this
Section 5.1 is applicable, and notwithstanding a delay in Kurchatov's ability to
sell such shares by reason of applicable securities regulations; provided,
however, that in the event of any such delay, Kurchatov shall be entitled to
offer such shares for sale within a reasonable time not exceeding nine (9)
months after the said effective date; and provided, further, in the event any
underwriters engaged by Eurotech in connection with such registration statement
or post-effective amendment withhold approval pursuant to the preceding sentence
of this Section 5.1, the obligations of Eurotech under this Section 5.1 shall
continue in full force and effect.
5.2 Demand Registration Rights. Upon receipt by Eurotech, at any
time during the period from the date of the execution and delivery of this
Agreement by each of the parties to and including the Expiration Date, of a
written request by Kurchatov to register the Eurotech Shares under the Act,
Eurotech will, as promptly as practicable, at Kurchatov's sole cost and expense
(including, but not limited to, printing, legal and accounting fees), (i)
prepare and file under the Act a registration statement relating to such
Eurotech Shares (the term "registration statement") as used in this Section 5.2
being deemed to include any form which may be used to register a distribution of
securities to the public for cash or a post-effective amendment to a
registration statement); (ii) prepare and file with the appropriate state
securities regulatory ("Blue Sky") authorities the necessary documents to
register or qualify such Eurotech Shares; provided, however, that Eurotech shall
not be required to qualify as a foreign corporation in any jurisdiction or to
give a general consent to service of process in any jurisdiction except in
connection with matters arising from the sale of Common Stock in such
jurisdiction; and (iii) use its best efforts to cause such registration
statement to become effective and to keep such registration statement and Blue
Sky filings current and effective until such time as an amendment is required to
be filed pursuant to the provisions of Section 10(a)(3) of the Act. Eurotech
shall not be obligated to prepare and file more than two (2) registration
statements under this Section 5.2 during the effectiveness of this
8
Agreement and not more than one (1) in any year, and, in any year in which a
request for registration is made pursuant to this Section 5.2, Eurotech may
postpone the preparation and filing of such registration statement, if
necessary, until its year-end financial statements required for use in such
registration statements become available.
5.3 Amendments. If at any time within nine (9) months after a
post-effective amendment or a new registration statement covering the Eurotech
Shares as provided in Section 5.1 or 5.2 hereof shall have become effective, to
the knowledge of Eurotech any event occurs as a result of which a prospectus
included therein relating to the Eurotech Shares as then amended or supplemented
would include any untrue statement of a material fact, or would not state a
material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, Eurotech will promptly notify
Kurchatov and, if such event occurs within ninety (90) days (excluding any
period during which a stop order suspending the effectiveness of the
registration statement or post-effective amendment to a registration statement
of which such prospectus forms a part), Eurotech will at its own cost and
expense amend or supplement such prospectus in order to correct such statement
or omission in order that the prospectus as so amended or supplemented will
comply with the requirements of Section 10(a) of the Act. In case Kurchatov is
required to deliver a prospectus after such 90-day period, Eurotech will, at
Kurchatov's expense, prepare promptly such prospectus or prospectuses and
thereafter amend or supplement the same as may be necessary to permit compliance
with Section 10(a) of the Act.
5.4 Compliance. In connection with any registration statement or
post-effective amendment pursuant to Section 5.1 or 5.2:
(a) Eurotech will comply with all applicable rules and
regulations of the Commission or any similar Federal commission and will make
available to its security holders, as soon as practicable, an earnings statement
(which need not be audited) covering a period of at least twelve (12) months,
but no more than eighteen (18) months, beginning with the first month after the
effective date of the registration statement or post-effective amendment, as the
case may be, which earnings statement will satisfy the provisions of Section
11(a) of the Securities Act;
(b) Each holder of the shares of Common Stock covered by such
post-effective amendment or registration statement, as the case may be, shall
furnish in writing to Eurotech such information regarding such holder and its
proposed plan of distribution of such shares as Eurotech shall request in order
to have such post-effective amendment or registration statement declared
effective;
(c) Eurotech agrees to furnish to Kurchatov a
9
prospectus (in such reasonable quantities as Kurchatov shall request) containing
certified financial statements and other information meeting the requirements of
the Act and the rules and regulations thereunder and relating to the Eurotech
Shares. The furnishing of such prospectus shall be at the expense of the party
or parties bearing the cost and expense of the registration statement or
post-effective amendment, as the case may be, of which such prospectus is a part
as provided for in Section 5.1 or 5.2 above, as the case may be; and
(d) Eurotech will use its best efforts to qualify the shares
of Common Stock covered by any registration statement or post-effective
amendment for public offering or sale on the effectiveness thereof in such
jurisdictions as the holders offering the same shall reasonably request;
provided, however, that Eurotech shall not be required to qualify as a foreign
corporation in any jurisdiction or to give a general consent to service of
process in any jurisdiction except in connection with matters arising from the
sale of shares of Common Stock in such jurisdiction. The filing fees and
reasonable fees and expenses of counsel in connection with such qualification
shall be paid for by the party or parties bearing the cost and expense of the
registration statement or post-effective amendment, as the case may be, covering
the shares being qualified as provided for in Section 5.1 or 5.2 above, as the
case may be.
5.5 Indemnification. In the event of any such registration of any
Eurotech Shares, Eurotech will indemnify and hold harmless each holder of shares
of Common Stock being offered and each person, if any, who may be deemed to
control such holder within the meaning of Section 15 of the Act against any
losses, claims, damages or liabilities, joint or several, to which any of them
may become subject under the Act, or otherwise, in so far as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement or
post-effective amendment under which such shares of Common Stock were registered
under the Act, any preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each of them for any legal or any other expenses reasonably
incurred by them in connection with investigating, defending or settling any
such loss, claim, damage, liability or action; provided, however, that Eurotech
will not be liable in any such case to any of them to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon any
untrue statement of any material fact contained, on the effective date thereof,
in such registration statement or post-effective amendment, such preliminary
prospectus or such final prospectus or any such amendment or supplement in
reliance upon and in conformity
10
with information furnished in writing by such persons to Eurotech expressly for
use in the preparation thereof, or arises out of or is based upon any omission
or alleged omission to state a material fact in connection with such written
information required to be stated in such registration statement, such
post-effective amendment, such preliminary prospectus or such final prospectus
or any such amendment or supplement, or necessary to make such information when
used in such registration statement or post-effective amendment, such
preliminary prospectus or such final prospectus or any such amendment or
supplement, in the light of the circumstances under which it is used, not
misleading. For purposes of this Section 5.5, "information furnished in writing
by such persons" shall include such post-effective amendment, such preliminary
prospectus or such final prospectus or any such amendment or supplement which
has been expressly identified and approved in writing in a letter signed by the
person or persons involved. Each such person shall promptly give notice to
Eurotech after such person has actual knowledge of any such claim as to which
indemnity may be sought hereunder, or of the commencement of any legal
proceedings against such person as to such claim, whichever shall first occur,
and shall permit Eurotech to assume the defense of any such claim or any
litigation resulting from such claim; provided, however, that (i) counsel
satisfactory to Eurotech and each such person involved shall act as counsel for
Eurotech and shall conduct the defense of such claim or litigation, and (ii)
each such person may participate in such defense at the expense of such person;
and provided, further, that the omission by any such person to give notice to
Eurotech as provided in this sentence or the failure to permit Eurotech to
conduct such defense shall relieve Eurotech of its obligations to conduct such
defense under this Section 5.5, but shall not relieve Eurotech of its
obligations otherwise than under this Section 5.5. Eurotech shall notify each
such person involved within fifteen (15) days after Eurotech shall have received
such notice. If Eurotech shall elect to defend such claim or litigation
resulting therefrom, the obligation of Eurotech under this Section 5.5 shall be
limited to taking all steps necessary in holding the person involved harmless
from and against any losses, damages or liabilities caused by or arising out of
any settlement approved by Eurotech or from any judgment on such claim or
litigation arising therefrom; provided, however, that in defending such claim or
litigation resulting therefrom, Eurotech shall not consent to entry of any
judgment except with the consent of each such person involved or enter into any
settlement (except with the consent of each such person involved) which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such person of a release from all liability in respect of such claim or
litigation.
6. Changes in Capital Structure.
In the event that prior to the Expiration Date there is any change
in the Common Stock by reason of a stock dividend issued with respect to the
Common Stock, or a recapitalization,
11
reclassification, stock split or combination of shares with respect to the
Common Stock, or if the outstanding Common Stock should, by reason of a merger,
consolidation, acquisition of stock or property, reorganization or liquidation,
be exchanged for other shares of capital stock of Eurotech or of another
corporation which is a party to such transaction, (each of foregoing hereinafter
"Capital Events") the Eurotech Shares to be issued and delivered to Kurchatov
under this Agreement shall not be affected differently than any other Common
Stock shares.
7. Cross-Releases.
7.1 Release of the EKOR Operating Interest. In consideration of the
issuance to Kurchatov of the Eurotech Shares to the extent of the consideration
set forth in Section 2 hereof, as well as further set forth herein, Kurchatov
hereby releases, except to the extent hereinafter specified, all interest,
ownership or title it has in the EKOR Operating Interest.
7.2 Surrender of Kurchatov Shares. In further consideration of
Kurchatov's release of the EKOR Operating Interest, Eurotech hereby surrenders
to Kurchatov all of its certificates evidencing the Kurchatov Shares, which
certificates are duly endorsed by Eurotech for transfer or accompanied by stock
powers duly endorsed in blank by Eurotech, with signatures guaranteed by a
member of the New York Stock Exchange or by a bank or trust company.
Consideration in the amount of Four million eight-hundred-forty-one thousand,
four-hundred-thirty-eight dollars ($4,841,438) is deemed by the parties to be
allocated to the Kurchatov Shares out of and comprised in the release by
Kurchatov of the EKOR Operating Interest.
7.3 Release of Resealable Can Obligations. In further consideration
of Kurchatov's release of the EKOR Operating Interest, Eurotech hereby
surrenders its six per cent. (6%) royalty interest therein. Consideration in the
amount of one million dollars ($1,000,000) is deemed by the parties to be
allocated to Eurotech's release of Kurchatov's obligations with respect to the
Resealable Can out of and comprised in the release by Kurchatov of the EKOR
Operating Interest.
7.4 Assumption of the Spinneret Debt. In further consideration of
Kurchatov's release of the EKOR Operating Interest, Eurotech hereby assumes and
agrees to pay and perform on a timely basis all of Kurchatov's obligations to
Spinneret. Consideration in the amount of two million five hundred thousand
dollars ($2,500,000.00) is deemed by the parties to be allocated to Eurotech's
assumption of the Spinneret debt out of and comprised in the release by
Kurchatov of the EKOR Operating Interest, with approving concurrence of
Spinneret.
8. Overriding Royalty Interest.
12
8.1 Retention of Overriding Royalty Interest by Kurchatov. So long
as the patents, or any of them, listed in the first recital to this Agreement
shall remain valid, enforceable and unexpired, Eurotech shall pay to Kurchatov
an overriding royalty interest (the "XXX") of two per cent. (2%) of gross sales
(hereinafter, "Gross Sales"), defined as the gross selling price as received by
Eurotech of all products or services arising out of the commercial exploitation
of EKOR established in bona fide, arm's length transactions between Eurotech and
an individual or entity (a "Purchaser") not related to Eurotech by reason of
material stock ownership or direct or indirect participation in Eurotech's
management, f.o.b. factory, after deducting any quantity, quality and customary
trade discounts (other than cash) or rebates, whether indicated on the invoice
or compiled for a given period, such as a calendar quarter, but not deducting
packing, freight, insurance, customs duties and federal, state and local taxes
and fees (such as sales taxes) directly applied to such price, unless separately
itemized on the invoice and charged directly to the Purchaser; provided,
however, that freight and insurance may be deducted for c.i.f. sales and f.o.b.
customer sales although not separately stated.
8.2 Payment. Payment of the XXX shall be converted into U.S. dollars
at the rate of exchange applicable to the currency in which the Gross Sales are
made as established by the trustee New York City bank as Kurchatov may from time
to time designate (the "Trustee"). All payments of the XXX shall be made in U.S.
dollars to be deposited to Kurchatov's credit at the Trustee. Such payments
shall be paid to Kurchatov within thirty (30) days after the end of each
calendar quarter, accompanied by a written royalty report, certified as accurate
by Eurotech's Chief Financial Officer, setting forth in as much detail as
possible the basis of calculation of the amount of XXX paid with respect to the
calendar quarter just ended.
8.3 Monetary Controls. In the event that the United States shall
impose any law, rule or regulation prohibiting or limiting Eurotech's right to
comply with Sections 8.1 and 8.2, Eurotech shall be deemed to fulfill its
obligations under those sections if it pays the royalty due into the Trustee,
or, if that shall not then be permissible, in the name of a nominee for and on
behalf of Kurchatov.
8.4 Compliance With U.S. Regulation. Eurotech shall be responsible
for compliance with applicable United States regulations concerning payments and
for the preparation, filing and securing, where required, of approval of all
applications, reports and other documents and services which may be required by
the United States of America in connection with this Agreement and remittances
to be made under this Agreement.
8.5 Records. Eurotech shall keep true and accurate books of account
and shall keep and maintain all records, documents
13
and other instruments relating to Gross Sales in such detail as shall enable
Kurchatov to ascertain the XXX due under this Agreement and compliance with
payment. Kurchatov shall have the right to designate a firm of certified public
accountants, reasonably acceptable to Eurotech, to inspect Eurotech's books of
accounts, records, documents and instruments and to make copies thereof, at any
time during Eurotech's regular business hours, but not more than one (1) time
annually, during the term of this Agreement and for a period of one hundred
eighty (180) days immediately after its termination, to ascertain the accuracy
of such report. The expense of such audit shall be Kurchatov's unless the audit
shall demonstrate a discrepancy (in Eurotech's favor) greater than five per
cent. (5%) between the amount of XXX reported and paid by Eurotech and that
which was actually due, in which event the audit expenses shall be borne by
Eurotech.
9. Indemnification.
9.1 Indemnity by Eurotech. Eurotech agrees to defend, indemnify and
hold harmless Kurchatov against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies (including reasonable attorney's fees), arising, resulting from or
relating to any misrepresentation by Eurotech made or contained in this
Agreement or Eurotech's breach of any warranty, covenant or agreement made or
contained in this Agreement.
9.2 Indemnity by Kurchatov. Kurchatov agrees to defend, indemnify
and hold harmless Eurotech against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages, recoveries
and deficiencies (including reasonable attorney's fees), arising, resulting from
or relating to any misrepresentation by Kurchatov made or contained in this
Agreement or Kurchatov's breach of any warranty, covenant or agreement made or
contained in this Agreement.
9.3 Survival of Representations and Warranties. The representations
and warranties made in this Agreement shall survive the date of this Agreement
for a period of five (5) years thereafter.
9.4 Defense of Claims. Kurchatov, on the one hand, and Eurotech, on
the other hand, will give each other prompt notice of any claims for which the
other may be liable under this Section 9, and each will permit the other at its
sole expense the opportunity to assist in the defense of any such claims.
9.5 Construction. It is understood and agreed that in the event of a
conflict between the terms and provisions of this Section 9 and those of Section
5.5 should such latter provision be applicable, Section 5.5 shall control. It is
further understood and agreed that nothing in this Section 9 shall be construed
as a limitation or waiver of any right of indemnification, subrogation
14
or similar right accruing to any party independent of this Agreement under any
applicable statute, rule, code or common law principle.
10. Miscellaneous.
10.1 Governing Law. This Agreement and the other agreements attached
hereto shall be construed in accordance with, and governed by, the laws of the
State of New York.
10.2 Notices. All communications under this Agreement shall be in
writing, shall be mailed by first class mail, postage prepaid to the addresses
specified in the preamble to this Agreement, or to such other address as any
party hereto may have furnished in writing to the other parties, and shall be
deemed to be given four (4) days after being so mailed.
10.3 Amendment and Waiver. This Agreement may be amended, and
observance of any term of this Agreement may be waived, with (and only with) the
written consent of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed to be or shall constitute a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver.
10.4 Duplicate Originals; Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which shall constitute but one and the same instrument.
10.5 Severability. In the event that any particular provision or
provisions of this Agreement shall for any reason hereafter be determined to be
unenforceable, or in violation of any law, governmental order or regulation,
such unenforceability or violation shall not affect the remaining provisions of
this Agreement, which shall continue in full force and effect and be binding
upon the respective parties hereto.
10.6 Assignment. Unless otherwise provided, the rights and
obligations of Eurotech and Kurchatov under this Agreement shall be binding upon
and inure to the benefit of the parties and their respective representatives,
administrators, heirs, successors and assigns, but may not be assigned by either
party without the prior written consent of the other party.
10.7 Announcements. Eurotech and Kurchatov agree that except in
accordance with applicable laws, neither will make any public announcement
concerning the consummation of the transactions provided herein without first
obtaining the written permission of the other.
10.8 Expenses. Except as otherwise provided herein, Eurotech and
Kurchatov agree that each of the parties hereto shall
15
bear its own expenses incurred in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
10.9 Headings. All headings in this Agreement are for convenience
only and shall not affect the meaning of any provision hereof.
10.10 Entirety of Agreement. This Agreement states the entire
agreement of the parties, merges all prior negotiations, agreements and
understandings, if any, and states in full the representations and warranties
which have induced this Agreement, there being no representations or warranties
other than those herein stated.
10.11 Benefit of Agreement. This Agreement is for the benefit of the
parties hereto only, and there is no intent to create benefits, rights or
remedies in any other persons or entities.
10.12 No Strict Construction. The language of this Agreement shall
be construed as a whole, according to its fair meaning and intendment, and not
strictly for or against either party hereto, regardless of who drafted or was
principally responsible for drafting the Agreement or any specific term or
condition thereof.
10.13 Execution Knowing and Voluntary. In executing this Agreement,
Eurotech and Kurchatov severally acknowledge and represent that each (a) has
fully and carefully read and considered this Agreement, (b) has been or has had
the opportunity to be fully apprised by his, her or its attorneys of the legal
effect and meaning of this document and all terms and conditions hereof, (c) has
been afforded the opportunity to negotiate as to any and all terms hereof and
(d) is executing this Agreement voluntarily, free from any influence, coercion
or duress of any kind.
10.14 Attorneys' Fees. In any action at law or in equity to enforce
or construe any provisions or rights under this Agreement, the unsuccessful
party or parties to such litigation, as determined by a court pursuant to a
final order, judgment or decree, shall pay to the successful party or parties
all costs, expenses and reasonable attorneys' fees incurred by such successful
party or parties (including, without limitation, such costs, expenses and fees
on any appeal), which costs, expenses and attorneys' fees shall be included as
part of any order, judgment or decree.
10.15 Confidential Information. All confidential, financial or
business information (except publicly available or freely usable material
otherwise obtained from another source) respecting the parties hereto will be
used solely by any party in connection with the within transaction, will be
revealed only to
16
employees or contractors of the other parties who are necessary to the conduct
of such transactions, and will be otherwise held in strict confidence. In the
event the transactions contemplated by this Agreement are not consummated, all
confidential information received by any party thereto shall be returned to the
party delivering such confidential information. The terms of this Section 10.15
shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be dully executed by their authorized representatives as of the day and year
first above written.
"EUROTECH"
ATTEST: EUROTECH, LTD.,
a District of Columbia Corporation
By: ___________________________ By: __________________________
Secretary Xxx X. Xxxxxxxxx,
(Seal) President
"KURCHATOV"
ATTEST: KURCHATOV RESEARCH
HOLDINGS, LTD.,
a Delaware Corporation
By: ___________________________ By: __________________________,
Secretary President
(Seal)
"SPINNERET"
ATTEST: SPINNERET FINANCIAL SYSTEMS, INC.,
a Delaware Corporation
By: ___________________________ By: __________________________
Secretary President (Seal)
17
