EXCHANGE AGREEMENT
by and among
EUROTECH, LTD.
XXXXXX.XXX, INC.
XXXXXXXX TECHNOLOGIES, INC.
SECURITY TECHNOLOGY, INC.
and, solely with respect to ARTICLE V AND ARTICLE XI hereof
IPPARTNERS, INC.
and, solely with respect to ARTICLE VI and ARTICLE XI hereof
XXXXXXXX LLC
AND
XXXXX LLC
December 9, 2002
Table of Contents
ARTICLE I. Closing; The Exchange; The Exchange Procedures_____________________1
ARTICLE II. Exchange of Certificates__________________________________________2
ARTICLE III. Representations and Warranties of the Company and Crypto_________2
ARTICLE IV. Representations and Warranties of Xxxxxxxx and STI________________7
ARTICLE V. Representations and Warranties of the Company and ipPartners_______10
ARTICLE VI. Representations and Warranties of the Xxxxxxxx Shareholders_______11
ARTICLE VII. Covenants________________________________________________________12
ARTICLE VIII. Conditions______________________________________________________15
ARTICLE IX. Termination_______________________________________________________17
ARTICLE X. Indemnification and Survival_______________________________________18
ARTICLE XI. Patriot Act and Other Representations of the Parties______________20
ARTICLE XII. Miscellaneous and General________________________________________21
Transferred Property__________________________________________________________ i
Exchange Agreement
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "Agreement"), dated as of December 9,
2002 (the "Agreement Date"), is by and among Eurotech, Ltd., a District of
Columbia corporation (the "Company"), Xxxxxx.xxx, Inc., a Delaware corporation
("Crypto"), Xxxxxxxx Technologies, Inc., a Florida corporation ("Xxxxxxxx"),
Security Technology, Inc., a Delaware corporation, a wholly owned subsidiary of
Xxxxxxxx ("STI"), and, solely with respect to ARTICLE V and ARTICLE XI hereof,
ipPartners, Inc., a Rhode Island corporation ("ipPartners"), and, solely with
respect to ARTICLE VI and ARTICLE XI hereof, Xxxxxxxx LLC, a Cayman Island
limited liability company, and, solely with respect to ARTICLE VI and ARTICLE XI
hereof, Xxxxx LLC, a Cayman Island limited liability company (Xxxxxxxx LLC and
Xxxxx LLC, together being the "Xxxxxxxx Shareholders").
RECITALS
WHEREAS, the Company desires to acquire from Xxxxxxxx and Xxxxxxxx
agrees to issue two hundred thirty-nine million nine hundred twenty-seven
thousand three hundred forty four (239,927,344) shares of common stock of
Xxxxxxxx, $0.0001 par value per share (the "Xxxxxxxx Common Stock"),
representing eighty percent (80%) of the issued and outstanding shares of
Xxxxxxxx Common Stock (such shares, the "Exchange Shares"), upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the Company desires to exchange, and shall cause its majority
owned Subsidiary Crypto to exchange, all right, title and interest held by each
of the Company and Crypto, respectively, in the intellectual property and other
associated assets, as further described in Exhibit A attached hereto (the
"Transferred Property"), to STI as consideration for the Exchange Shares, upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Xxxxxxxx agrees to issue twenty-nine million nine hundred
ninety thousand nine hundred seventeen (29,990,917) shares of Xxxxxxxx Common
Stock, that when issued will represent ten percent (10%) of the issued and
outstanding shares of Xxxxxxxx Common Stock ("ipPartners Shares"), upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of all of the parties
hereto have approved this Agreement and the Exchange upon the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, as soon as practicable following the consummation of the
Exchange (as defined below), the Company, as majority shareholder of Xxxxxxxx,
shall approve and effect a 1-for-20 reverse split of the Xxxxxxxx Common Stock;
and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties hereto, the parties agree as
follows:
1
ARTICLE I.
Closing; The Exchange; The Exchange Procedures
1.1 Closing. The closing of the Exchange and the other transactions contemplated
hereby (the "Closing") shall be made at such time and place as the parties may
mutually agree, on or before December 15, 2002 (the "Closing Date").
1.2 The Exchange and the Exchange Procedures. At the Closing, Xxxxxxxx shall
issue to the Company and to ipPartners, respectively, 239,927,344 shares and
29,990,917 shares of Xxxxxxxx Common Stock representing, respectively, the
Exchange Shares and the ipPartners Shares, and simultaneously therewith, and
conditioned thereupon, the Company shall transfer and deliver, and shall cause
Crypto to transfer and deliver, the Transferred Property to STI in exchange for
the Exchange Shares. In consideration of its receipt of the ipPartners Shares,
ipPartners shall forgive and discharge certain obligations owed to ipPartners
with respect to the Transferred Property. At the Closing, the Transferred
Property shall be transferred to STI pursuant to an assignment and assumption
agreement to be entered into between the Company, Crypto, Xxxxxxxx and STI,
which assignment and assumption agreement shall be in the form attached hereto
as Exhibit B. The exchange of the Exchange Shares and the Transferred Property
as contemplated herein as referred to herein as the "Exchange."
ARTICLE II.
Exchange of Certificates
2.1 Lost, Stolen or Destroyed Certificates. In the event any share certificate
representing the Exchange Shares of the ipPartners Shares (each a "Certificate)
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the party claiming such Certificate to be lost, stolen or destroyed
and the posting by such party of a bond in the form customarily required by
Xxxxxxxx as indemnity against any claim that may be made against it with respect
to such Certificate, Xxxxxxxx will issue a replacement certificate in respect
thereof in exchange for such lost, stolen or destroyed Certificate pursuant to
Section 1.2.
ARTICLE III.
Representations and Warranties of the Company and Crypto
The Company and Crypto hereby represent and warrant to Xxxxxxxx that:
3.1 Organization, Good Standing. Each of the Company and Crypto is a corporation
duly organized, validly existing and in good standing under the laws of the
District of Columbia and the State of Delaware, respectively, and has all
requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its properties or conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing is not, when taken together with all other such
failures, reasonably likely to have a Material Adverse Effect (as defined below)
on it.
2
As used in this Agreement, the term "Material Adverse Effect" means,
with respect to any Person, a material adverse effect on the financial
condition, assets or liabilities or business of such Person and its Subsidiaries
(as defined below), taken as a whole; provided, however, that Material Adverse
Effect shall exclude any effect resulting from or related to changes or
developments involving (1) a prospective change arising out of any proposed or
adopted legislation, or any other proposal or enactment by any governmental,
regulatory or administrative authority, (2) general conditions applicable to the
economy of the United States, including changes in interest rates, (3)
conditions or effects resulting from the announcement of the existence or terms
of this Agreement or (4) conditions affecting the technology industry, in each
case taken as a whole.
3.2 Corporate Authority and Approval. Each of the Company and Crypto has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement. This Agreement has been duly executed and delivered by each of the
Company and Crypto and is a valid and binding agreement of each of them and
enforceable against each of them in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (the "Bankruptcy and Equity Exception"). The
Board of Directors of each of the Company and Crypto has unanimously approved
this Agreement and the other transactions contemplated by this Agreement.
3.3 Government Filings; No Violations.
(a) Except for filings required pursuant to the Securities Exchange Act of
1934, as amended, or the rules and regulations promulgated thereunder
(collectively, the "Exchange Act") or any other federal or state securities laws
or any stock exchange or other self regulatory organization, no notices, reports
or other filings are required to be made by either the Company or Crypto with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by either the Company or Crypto from, any governmental
or regulatory authority, court, agency, commission, body or other governmental
entity ("Governmental Entity"), in connection with the execution and delivery of
this Agreement by the Company and Crypto and the consummation of the
transactions contemplated by this Agreement, except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect on any of the Company, Crypto or the Transferred
Property, nor prevent, materially delay or materially impair the ability of the
Company or Crypto to consummate the transactions contemplated by this Agreement.
3
(b) The execution, delivery and performance of this Agreement by each of the
Company or Crypto does not, and the consummation of the other transactions
contemplated by this Agreement will not, constitute or result in (A) a breach or
violation of, or a default under, the certificate of incorporation or bylaws of
each of the Company or Crypto, (B) a breach or violation of, or a default under,
the acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of each of the Company or Crypto
(with or without notice, lapse of time or both) pursuant to, any agreement,
lease, contract, note, mortgage, indenture, arrangement or other obligation
("Contracts") binding upon them or any law, statute, ordinance, regulation,
judgment, order, decree, injunction, arbitration award, license, authorization,
opinion, agency requirement or permit of any Governmental Entity or common law
(each, a "Law" and collectively, "Laws") to which they are subject or (C) any
change in the rights or obligations of any party under any Contracts to which
either the Company or Crypto is a party, except, in the case of clauses (B) or
(C) above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on the Company and Crypto, or the Transferred Property
or prevent, materially delay or materially impair the ability of the Company and
Crypto to consummate the transactions contemplated by this Agreement. Schedule
3.3(b) ("Prior Contracts") sets forth a correct and complete list of Contracts
of the Company and Crypto pursuant to which consents or waivers are or may be
required prior to consummation of the transactions contemplated by this
Agreement other than those where the failure to obtain such consents or waivers
is not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on the Company or Crypto or prevent or materially impair their
ability to consummate the transactions contemplated by this Agreement.
3.4 Reports; Financial Statements. The Company is a reporting company under
the Exchange Act and the shares of the Company's common stock are registered
under Section 12(g) of the Exchange Act. The Company has made available to
Xxxxxxxx, through electronic filings on XXXXX, each registration statement,
report, proxy statement or information statement prepared by it since December
31, 2000, including its Annual Report on Form 10-KSB for the year ended December
31, 2001 and its Quarterly Reports on Form 10-QSB for the quarters ended since
December 31, 2000, in the form (including exhibits, annexes and any amendments
thereto) filed with the Securities and Exchange Commission (the "SEC")
(collectively, including any such registration statements, reports, proxy
statements or information statements filed subsequent to the Agreement Date, its
"Reports"). Since June 30, 2000, the Company has made all filings required to be
made by the Securities Act of 1933, or any successor law, and the rules and
regulations issued pursuant thereto (the "Securities Act"), and the Exchange
Act. As of their respective dates, the Company's Reports complied as to form
with all applicable requirements and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading. The financial statements and any
supporting schedules of the Company and its Subsidiaries included or
incorporated by reference in the Company's Reports present fairly the
consolidated financial position of the Company and its Subsidiaries as of the
dates indicated and the consolidated results of their operations for the periods
specified (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with generally accepted accounting principles of the
United States consistently applied ("GAAP") during the periods involved, except
as may be noted therein.
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3.5 Litigation and Liabilities. Except as disclosed in the Company's Reports
filed prior to the Closing Date or on Schedule 3.5, there are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the actual knowledge of its executive officers,
threatened against the Company or any of its Affiliates with respect to the
Transferred Property or (ii) obligations or liabilities, whether or not accrued,
contingent or otherwise and whether or not required to be disclosed with respect
to the Transferred Property, or any other facts or circumstances, in either such
case, of which its executive officers have actual knowledge and that are
reasonably likely to result in any claims against or obligations or liabilities
of the Company or any of its Affiliates, except for those that are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on the Company or Crypto, or prevent, materially delay or materially
impair its ability to consummate the transactions contemplated by this
Agreement.
For purposes of this Agreement, the term "Affiliate" means, with
respect to any person or entity, any person or entity that, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
3.6 Compliance with Laws. Except as disclosed in the Company's Reports filed
prior to the Closing Date or on Schedule 3.6, the businesses of the Company and
Crypto with respect to the Transferred Property have not been, and are not
being, conducted in violation of Law, except for violations or possible
violations that are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect on the Transferred Property or prevent,
materially delay or materially impair its ability to consummate the transactions
contemplated by this Agreement. Except as disclosed on Schedule 3.6, no
investigation or review by any Governmental Entity with respect to the Company
or Crypto is pending or, to the actual knowledge of its executive officers,
threatened, nor has any Governmental Entity indicated an intention to conduct
the same, except for those the outcome of which are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it or prevent,
materially delay or materially impair their ability to consummate the
transactions contemplated by this Agreement. To the actual knowledge of its
executive officers, no material change is required in the Company's or Crypto's
processes, properties or procedures in connection with any such Laws, and it has
not received any notice or communication of any material noncompliance with any
such Laws that has not been cured as of the Closing Date, except for such
changes and noncompliance that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on them or prevent,
materially delay or materially impair their ability to consummate the
transactions contemplated by this Agreement.
3.7 Brokers and Finders. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Exchange or the other transactions contemplated in this Agreement.
5
3.8 Tangible Personal Property. Schedule 3.8 is a complete and accurate
schedule describing, and specifying the location of, all material machinery,
equipment, furniture, supplies, tools, drawings and all other tangible personal
property and all motor vehicles owned by, in the possession of, or used by the
Company and Crypto in connection with their business with respect to the
Transferred Property. The property listed in Schedule 3.8 constitutes all such
material tangible personal property used or necessary for the conduct by the
Company and Crypto of its business as now conducted with respect to the
Transferred Property. Except as stated in Schedule 3.8 or otherwise disclosed in
this Agreement, no personal property used by either the Company or Crypto in
connection with each of its businesses with respect to the Transferred Property
is held under or subject to any lease, security agreement, conditional sales
contract or other title retention or security arrangement or is located other
than in the possession of either the Company or Crypto.
3.9 Trademarks, Tradenames, etc. Schedule 3.9 to this Agreement is a
schedule of all trade names, trademarks, service marks, and copyrights and their
registrations, owned by either the Company or Crypto, or in which each of them
has any rights or licenses, together with a brief description of each, with
respect to the Transferred Property. To the knowledge of the Company and except
as disclosed on Schedule 3.9, neither the Company nor Crypto has infringed, or
is now infringing on any trade name, trademark, service xxxx or copyright
belonging to any other person, firm, or corporation with respect to the
Transferred Property. Each of the Company and Crypto owns, or holds adequate
licenses or other rights to use, all trademarks, service marks, trade names and
copyrights necessary for the business as now conducted by each of them with
respect to the Transferred Property and are not subject to any liens,
encumbrances, taxes, maintenance fees, royalty fees, license fees or other
obligations for payment that may become due subsequent to the Closing Date
(including without limitation those listed in Schedule 3.9), and their use in
such business does not, and will not, conflict with, infringe on, or otherwise
violate any rights of others.
3.10 Patents, etc. Schedule 3.10 to this Agreement is a complete schedule of
all patents, inventions, industrial models, processes, designs and applications
for patents owned by the Company or Crypto, or in which they have any rights,
licenses, or immunities with respect to the Transferred Property. To the
Company's knowledge, the patents and applications for patents listed in Schedule
3.10 are valid and in full force and effect and are not subject to any liens,
encumbrances, taxes, maintenance fees, royalty fees, license fees or other
obligations for payment that may become due subsequent to the Closing Date.
Except as set forth in Schedule 3.10, there have not been any interference
actions or other judicial, arbitration, or other adversary proceedings
concerning the patents or applications for patents listed in Schedule 3.10. Each
patent application is awaiting action by its respective patent office except as
otherwise indicated in Schedule 3.10. To the Company's knowledge, the
manufacture, use, or sale of the inventions, models, designs, and systems
covered by the patents and applications for patents listed in Schedule 3.10 do
not violate or infringe on any patent or any proprietary or personal right of
any person, firm, or corporation. To the Company's knowledge, the neither the
Company nor Crypto has infringed, nor is now infringing on any patent or other
right belonging to any person, firm, or corporation. To the Company's knowledge,
each of the Company and Crypto has the right and authority to use the
inventions, trade secrets, processes, models, designs, and formulas listed on
Schedule 3.10 and their use in such business does not, and will not, conflict
with, infringe on, or violate any patent or other rights of others.
6
3.11 Trade Secrets. To the Company's knowledge, each of the Company and
Crytpo is the sole owner of each of its trade secrets with respect to the
Transferred Property, free and clear of any liens, encumbrances, restrictions,
or legal or equitable claims of others, taxes, maintenance fees, royalty fees,
license fees or other obligations for payment that may become due subsequent to
the Closing Date except as specifically stated in Schedule 3.11. Each of the
Company and Crytpo has taken reasonable security measures to protect the
secrecy, confidentiality and value of its trade secrets; any of its employees
and any other persons who, either alone or in concert with others, developed,
invented, discovered, derived, programmed or designed these secrets, or who have
knowledge of or access to information relating to them, have been put on notice
and if appropriate, have entered into agreements that these secrets are
proprietary to the Company or Crypto, respectively, and not to be divulged or
misused.
ARTICLE IV.
Representations and Warranties of Xxxxxxxx and STI
Xxxxxxxx and STI hereby represent and warrant to the Company and ipPartners
that:
4.1 Organization, Good Standing and Qualification. Xxxxxxxx and its wholly
owned subsidiary STI each is a corporation duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of organization
and has all requisite corporate or similar power and authority and is qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction where the ownership or operation of its properties or conduct of
its business requires such qualification, except where the failure to be so
qualified or in good standing is not, when taken together with all other such
failures, reasonably likely to have a Material Adverse Effect on it. Xxxxxxxx
has made available to the Company a complete and correct copy of its certificate
of incorporation and bylaws, each as amended to date. Such certificates of
incorporation and bylaws are in full force and effect.
4.2 Capital Structure. The authorized capital stock of Xxxxxxxx consists of
500,000,000 shares of Xxxxxxxx Common Stock, of which 299,909,179 shares shall
be issued and outstanding as of the Closing Date, inclusive of the Exchange
Shares and the ipPartners Shares. All of the outstanding shares of Xxxxxxxx
Common Stock, including the Exchange Shares and the ipPartners Shares when
issued at the Closing pursuant to this Agreement, have been or will be duly
authorized, validly issued, fully paid and nonassessable. Except as disclosed in
this Section 4.2 or on Schedule 4.2, as of the Closing Date, there are no
additional issued and outstanding shares of Xxxxxxxx Common Stock. All of the
outstanding shares of capital stock of STI are duly authorized, validly issued,
fully paid and nonassessable, and owned by Xxxxxxxx, free and clear of any lien,
pledge, security interest, claim or other encumbrance.
4.3 Corporate Authority and Approval. Xxxxxxxx and its wholly owned
subsidiary STI each has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and perform
its obligations under this Agreement. This Agreement has been duly executed and
delivered by Xxxxxxxx and is a valid and binding agreement of Xxxxxxxx,
enforceable against Xxxxxxxx in accordance with its terms, subject to the
Bankruptcy and Equity Exception. The Board of Directors of Xxxxxxxx has
unanimously approved this Agreement.
7
4.4 Government Filings; No Violations.
(a) Except for filings required pursuant to the Exchange Act, no notices,
reports or other filings are required to be made by Xxxxxxxx with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by Xxxxxxxx from, any Governmental Entity, in connection with the
execution and delivery of this Agreement by it and the other transactions
contemplated by this Agreement, except those that the failure to make or obtain
are not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on Xxxxxxxx or prevent, materially delay or materially impair its
ability to consummate the transactions contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement by Xxxxxxxx
does not, and the consummation by it of the Exchange and the other transactions
contemplated by this Agreement will not, constitute or result in (A) a breach or
violation of, or a default under, its certificate of incorporation or bylaws or
the comparable governing instruments of any of its Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on its assets
or the assets of any of its Subsidiaries (with or without notice, lapse of time
or both) pursuant to, any Contract binding upon it or any of its Subsidiaries or
any Law to which it or any of its Subsidiaries is subject or (C) any change in
the rights or obligations of any party under any Contracts to which it or its
Subsidiaries are a party, except, in the case of clauses (B) or (C) above, for
any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on it or prevent, materially delay or materially impair its
ability to consummate the transactions contemplated by this Agreement.
4.5 Reports; Financial Statements. Xxxxxxxx is a reporting company under the
Exchange Act and the shares of Xxxxxxxx Common Stock are registered under
Section 12(g) of the Exchange Act. Xxxxxxxx has made available to the Company,
through electronic filings on XXXXX, each registration statement, report, proxy
statement or information statement prepared by it since June 30, 2000, including
its Annual Report on Form 10-KSB for the years ended June 30, 2001 and June 30,
2002 and its Quarterly Reports on Form 10-QSB for the quarters ended since June
30, 2000, in the form (including exhibits, annexes and any amendments thereto)
filed with the SEC (collectively, including any such registration statements,
reports, proxy statements or information statements filed subsequent to the
Agreement Date, its "Reports"). Since June 30, 2000, Xxxxxxxx has made all
filings required to be made by the Securities Act and the Exchange Act. As of
their respective dates, the Xxxxxxxx Reports complied as to form with all
applicable requirements and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances in which they
were made, not misleading. The financial statements and any supporting schedules
of Xxxxxxxx and its Subsidiaries included or incorporated by reference in the
Xxxxxxxx Reports present fairly the consolidated financial position of Xxxxxxxx
and its Subsidiaries as of the dates indicated and the consolidated results of
their operations for the periods specified (subject, in the case of unaudited
statements, to notes and normal year-end audit adjustments that will not be
material in amount or effect), in each case in accordance with GAAP consistently
applied during the periods involved, except as may be noted therein. To the
knowledge of the directors, officers, employees and legal and accounting
representatives of Xxxxxxxx, except as disclosed on Schedule 4.5, as of the
Closing Date, no Person or group beneficially owns 10% or more of the
outstanding voting securities of the Company. As used in this Section 4.5, the
terms "beneficially owns" and "group" shall have the meanings ascribed to such
terms under Rule 13d-3 and Rule 13d-5 under the Exchange Act.
8
4.6 Litigation and Liabilities. Except as disclosed in Xxxxxxxx'x Reports
filed prior to the Closing Date, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the actual knowledge of its executive officers, threatened
against Xxxxxxxx or any of its Affiliates or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise and whether or not required to
be disclosed, including those relating to matters involving any Environmental
Law, or any other facts or circumstances, in either such case, of which its
executive officers have actual knowledge and that are reasonably likely to
result in any claims against or obligations or liabilities of Xxxxxxxx or any of
its Affiliates, except for those that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on Xxxxxxxx or prevent,
materially delay or materially impair its ability to consummate the transactions
contemplated by this Agreement.
4.7 Compliance with Laws.Xxxxxxxx currently conducts no business operations.
Except as disclosed in Xxxxxxxx'x Reports filed prior to the Closing Date, the
businesses of Xxxxxxxx and its Subsidiaries have not been conducted in violation
of any Laws. Except as disclosed in the Xxxxxxxx'x Reports filed prior to the
Closing Date, no investigation or review by any Governmental Entity with respect
to the Xxxxxxxx or any of its Subsidiaries is pending or, to the actual
knowledge of its executive officers, threatened, nor has any Governmental Entity
indicated an intention to conduct the same, except for those the outcome of
which are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on it or prevent, materially delay or materially impair
its ability to consummate the transactions contemplated by this Agreement.
4.8 Insurance. Schedule 4.8 to this Agreement is a complete list accurately
describing all insurance policies held by Xxxxxxxx concerning its businesses and
properties and any officer or director of Xxxxxxxx. All such policies are in the
respective principal amounts set forth in Schedule 4.8 and are in full force and
effect as of the Closing Date. Xxxxxxxx has not received written notice of any
pending or threatened termination or retroactive premium increase with respect
such policies, and Xxxxxxxx is in compliance in all material respects with all
conditions contained therein. There are no pending claims against such insurance
by Xxxxxxxx or any individual or entity covered under such policies as to which
insurers have denied liability and no defenses provided by insurers under
reservations of rights. Xxxxxxxx does not self insure any risk under any such
policies other than applicable deductibles. None of the policies listed on
Schedule 4.8 shall terminate or be terminable pursuant to their terms as a
result of the consummation of the transactions contemplated hereby.
9
4.9 Brokers and Finders. Neither Xxxxxxxx nor any of its officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the Exchange or
the other transactions contemplated in this Agreement.
ARTICLE V.
Representations and Warranties of the Company and ipPartners
Each of the Company and ipPartners (for these purposes, each, a
"Stockholder") severally (and not jointly) represents and warrants to Xxxxxxxx,
solely with respect to each as a Stockholder, that:
5.1 Accredited Investor. The Stockholder is an "accredited investor" (as such
term is defined in Rule 501 of Regulation D promulgated under the Securities
Act), and has such knowledge and experience in financial business matters that
the Stockholder is capable of evaluating the merits and risks of the Exchange.
The Stockholder's residence or, if other than a natural person, its principal
office, is located in the jurisdiction indicated in the address of such
Stockholder opposite its name on the signature page hereof.
5.2 Review of SEC Filings. The Stockholder has had the opportunity to review the
Xxxxxxxx'x Reports.
5.3 Opportunity for Investigation. Xxxxxxxx has given the Stockholder the
opportunity to meet with Xxxxxxxx'x directors and executive officers for the
purpose of asking questions and receiving answers concerning the terms and
conditions of the Exchange, and to obtain any additional information that
Xxxxxxxx may possess or can acquire without unreasonable effort or expense that
is necessary to verify the accuracy of any information that Xxxxxxxx has
furnished the Stockholder in connection with the Exchange.
5.4 Restricted Securities. The Stockholder understands and acknowledges that the
Exchange Shares and the ipPartners Shares being issued to the respective
Stockholders in the Exchange are "restricted securities," (as such terms is
defined in Securities and Exchange Commission ("SEC") Rule 144(a)(3)) that the
certificate or certificates evidencing those shares will bear a legend,
substantially in the form set forth below, indicating that those shares are
restricted securities, and that those shares may not be transferred except
pursuant to an effective registration statement under the Securities Act or an
available exemption from such registration.
The legend referred to above will be substantially as follows:
"These securities have been issued pursuant to an exemption under the
Securities Act of 1933 and are restricted securities, and neither such
securities nor any interest therein may be offered, sold, pledged,
hypothecated, made the subject of a gift or otherwise transferred, for
value or otherwise, without the written approval of counsel for the
issuer making specific reference to this certificate. The transfer
agents of the issuer have been instructed to register transfers of the
shares evidenced by this certificate only in accordance with the
foregoing instructions."
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5.5 Stockholder's Intent. The Stockholder is acquiring the Exchange Shares and
the ipPartners Shares, respectively, and such acquisition is for the
Stockholder's own account, for investment purposes, and not with a view towards
their distribution.
5.6 Enforceability. This Agreement is the Stockholder's valid and binding
obligation, enforceable against the Stockholder in accordance with it terms.
ARTICLE VI.
Representations and Warranties of the Xxxxxxxx Shareholders
Each of the Xxxxxxxx Shareholders severally (and not jointly) hereby
represents and warrants to the Company and ipPartners, solely with respect to
each as a shareholder of Xxxxxxxx that:
6.1 Corporate Authority and Approval. Each of the Xxxxxxxx Shareholders has all
requisite corporate power and authority in order to surrender 269,918,261 shares
of Xxxxxxxx Common Stock, in aggregate, to Xxxxxxxx for retirement by Xxxxxxxx
to treasury stock on or prior to the Exchange (the "Share Surrender"). This
Agreement has been duly executed and delivered by each of the Xxxxxxxx
Shareholders and is a valid and binding agreement of, enforceable against each
of the Xxxxxxxx Shareholders in accordance with its terms, subject to the
Bankruptcy and Equity Exception.
6.2 Government Filings; No Violations.
(a) Except for filings required pursuant to the Exchange Act or any other
federal or state securities laws or any stock exchange or other self regulatory
organization, no notices, reports or other filings are required to be made by
either the Xxxxxxxx Shareholders with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by the Xxxxxxxx
Shareholders from, any Governmental Entity, in connection with the Share
Surrender, except those that the failure to make or obtain are not, individually
or in the aggregate, reasonably likely to have a Material Adverse Effect on the
Exchange Shares or the ipPartners Shares.
(b) The Share Surrender by the Xxxxxxxx Shareholders does not, and the
consummation of the other transactions contemplated by this Agreement will not,
constitute or result in (A) a breach or violation of, or a default under, the
governing documents of either Xxxxxxxx Shareholder, (B) a breach or violation
of, or a default under, the acceleration of any obligations or the creation of a
lien, pledge, security interest or other encumbrance on the shares to be retired
in connection with the Share Surrender, (with or without notice, lapse of time
or both) pursuant to any Contract binding upon them or any Law to which they are
subject or (C) any change in the rights or obligations of any party under any
Contracts to which either Xxxxxxxx Shareholder is a party, except, in the case
of clauses (B) or (C) above, for any breach, violation, default, acceleration,
creation or change that, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect on, or prevent, materially delay or
materially impair the ability of the Xxxxxxxx Shareholders to consummate the
Share Surrender.
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6.3 Litigation and Liabilities. There are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the actual knowledge of its executive officers, threatened
against the Xxxxxxxx Shareholders or any of their respective Affiliates with
respect to the shares to be retired in connection with the Share Surrender or
(ii) obligations or liabilities, whether or not accrued, contingent or otherwise
and whether or not required to be disclosed with respect to the shares to be
retired in connection with the Share Surrender, or any other facts or
circumstances, in either such case, of which the executive officers of the
Xxxxxxxx Shareholders have actual knowledge and that are reasonably likely to
result in any claims against or obligations or liabilities of the Xxxxxxxx
Shareholders or any of their respective Affiliates, except for those that are
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on the shares to be retired in connection with the Share
Surrender, or prevent, materially delay or materially impair the ability of the
Xxxxxxxx Shareholders to consummate the Share Surrender.
6.4 Brokers and Finders. Neither of the Xxxxxxxx Shareholders, nor any of its
respective officers, directors or employees, has employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the Exchange or the other transactions contemplated in this
Agreement.
ARTICLE VII.
Covenants
Post-Closing Covenants
7.1 Financial Statements.
(a) The parties shall cooperate in preparing and/or causing to be
prepared the information and financial statements required by Form 8-K under the
Exchange Act. As soon as practicable after the Closing Date, but in no event
later than forty-five (45) days after the Closing Date, Xxxxxxxx shall deliver
its audited financial statements as of and for the year ended June 30, 2002, and
such audit shall have been conducted by such accounting firm mutually acceptable
to the parties.
7.2 Access; Consultation.
(a) Upon reasonable notice, and except as may be prohibited by applicable
Law, Xxxxxxxx and Company each shall (and shall cause their Subsidiaries to)
afford to the other and the employees, agents and representatives (including any
attorney or accountant retained by either party) of either party, as the case
may be, reasonable access, during normal business hours throughout the period
prior to the Closing Date, to its properties, books, Contracts and records and,
during such period, each shall (and shall cause their Subsidiaries to) furnish
promptly to the other all information concerning its business, properties and
personnel as may reasonably be requested, provided that no investigation
pursuant to this Section 7.2 shall affect or be deemed to modify any
representation or warranty under this Agreement, and provided, further, that the
foregoing shall not require Xxxxxxxx or the Company to permit any inspection, or
to disclose any information, that in the reasonable judgment of Xxxxxxxx or the
Company, as the case may be, would result in the disclosure of any trade secrets
of third parties or violate any of its obligations with respect to
confidentiality if Xxxxxxxx or the Company, as the case may be, shall have used
all reasonable efforts to obtain the consent of such third party to such
inspection or disclosure. All requests for information made pursuant to this
Section 7.2 shall be directed to an executive officer of Xxxxxxxx or the
Company, as the case may be, or such Person as may be designated by any such
executive officer, as the case may be.
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(b) Subject to applicable Laws relating to the exchange of information,
from the Agreement Date to the Closing Date, the Company and Xxxxxxxx agree to
consult with each other on a regular basis on a schedule to be agreed with
regard to their respective operations.
7.3 Other Actions; Notification.
(a) The Company and Xxxxxxxx shall cooperate with each other and use
(and shall cause their respective Subsidiaries to use) their respective
reasonable best efforts (i) to take or cause to be taken all actions, and do or
cause to be done all things, necessary, proper or advisable on its part under
this Agreement and the applicable Laws to consummate and make effective the
Exchange and the other transactions contemplated by this Agreement as soon as
practicable, including (A) obtaining opinions of their respective accountants,
if required, (B) preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions, filings
and other documents, and (C) instituting court actions or other proceedings
necessary to obtain the approvals required to consummate the Exchange or the
other transactions contemplated by this Agreement or defending or otherwise
opposing all court actions or other proceedings instituted by a Governmental
Entity or other Person for purposes of preventing the consummation of the
Exchange and the other transactions contemplated by this Agreement and (ii) to
obtain as promptly as practicable all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Exchange or any
of the other transactions contemplated by this Agreement; provided, however,
that nothing in this Section 7.3(a) shall require either party to agree to any
divestitures or hold separate or similar arrangements in order to obtain
approval of the transactions contemplated by this Agreement if such divestitures
or arrangements would reasonably be expected to have a Material Adverse Effect
on the Company or Xxxxxxxx, or a Material Adverse Effect on the expected
benefits of the Exchange to the Company or Xxxxxxxx. Subject to applicable Laws
relating to the exchange of information, the Company and Xxxxxxxx shall have the
right to review in advance, and to the extent practicable each will consult the
other on, all the information relating to the Company or Xxxxxxxx, as the case
may be, and any of their respective Subsidiaries, that appear in any filing made
with, or written materials submitted to, any third party and/or any Governmental
Entity in connection with the Exchange and the other transactions contemplated
by this Agreement. In exercising the foregoing right, each of the Company and
Xxxxxxxx shall act reasonably and as promptly as practicable.
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(b) The Company and Xxxxxxxx each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with any Registration Statement or filing
with the SEC made by Xxxxxxxx or the Company in connection with the Exchange and
the transactions contemplated by this Agreement.
(c) The Company and Xxxxxxxx each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated by
this Agreement, including promptly furnishing the other with copies of notice or
other communications received by the Company or Xxxxxxxx, as the case may be, or
any of its Subsidiaries or, from any third party and/or any Governmental Entity
with respect to the Exchange and the other transactions contemplated by this
Agreement. Each of the Company and Xxxxxxxx shall give prompt notice to the
other of any change that is reasonably likely to result in a Material Adverse
Effect on it or of any failure of any conditions to the other party's
obligations to affect the Exchange.
7.4 Publicity. The initial press release with respect to the Exchange shall be a
joint, mutually agreed press release. Thereafter, Xxxxxxxx and the Company shall
consult with each other prior to issuing any press releases or otherwise making
public announcements with respect to the Exchange and the other transactions
contemplated by this Agreement and prior to making any filings with any third
party and/or any Governmental Entity (including any securities exchange) with
respect thereto, except as may be required by Law or by obligations pursuant to
any listing agreement with or rules of any securities exchange.
7.5 Indemnification of Officers and Directors. The Company agrees that all
rights to indemnification existing in favor of any of the present or former
officers or directors of Xxxxxxxx (the "Managers") as provided in Xxxxxxxx'x
Certificate of Incorporation or Bylaws as in effect as of the Closing Date, and
in any agreement between Xxxxxxxx and any Manager with respect to matters
occurring prior to the Closing Date, shall survive the Exchange in accordance
with the terms of the applicable agreements or instruments. The Company further
covenants not to amend or repeal any provisions of the Certificate of
Incorporation or Bylaws of Xxxxxxxx in any manner which would adversely affect
the indemnification or exculpatory provisions contained therein as they pertain
to acts occurring prior to the Closing. The provisions of this Section 7.5 are
intended to be for the benefit of, and shall be enforceable by, each indemnified
party and his or her heirs and representatives.
7.6 Post-Exchange Indemnification. If the Company or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to such Person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Company shall
assume all of the obligations set forth in Section 7.5.
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7.7 Reverse Split. As soon as practicable following to the Closing Date, the
Company, as majority shareholder of Xxxxxxxx, shall take all actions required by
it to implement a 1-for-20 reverse split of Xxxxxxxx'x issued and outstanding
shares of Xxxxxxxx Common Stock in accordance with the provisions of Florida
General Corporation Law.
7.8 Restricted Cash; No Up-Streaming. Any and all cash and other current
(liquid) assets at any time held by Xxxxxxxx or its Subsidiaries shall be for
the exclusive use of Xxxxxxxx and such Subsidiaries, respectively, for working
capital or investment purposes; the Company shall not, and shall not permit the
Company's Subsidiaries to, directly or indirectly divert or upstream cash or
other current assets from either Xxxxxxxx or such Subsidiaries, whether in the
form of a loan, contract for services, declaration of dividend, or other
arrangement in contravention of such restriction.
7.9 Registration Rights. The Exchange Shares and the ipPartners Shares shall
have piggy-back and demand rights with respect to registration on a registration
statement filed by Xxxxxxxx subsequent to the Closing, either on Form S-1 or
other applicable form, for the resale of the Common Stock of the Xxxxxxxx.
Subsequent to the Closing, Xxxxxxxx and, respectively, the Company and
ipPartners shall enter into separate piggy-back and demand registration rights
agreements for the registration, in a commercially reasonable manner and
timeframe, of the Exchange Shares and the ipPartners Shares.
ARTICLE VIII.
Conditions
8.1 Conditions to Each Party's Obligation to Effect the Exchange. The respective
obligation of each party to effect the Exchange is subject to the satisfaction
or waiver, if applicable, at or prior to the Closing Date, of each of the
following conditions:
(a) Exhibits and Schedules. The Exhibits and Schedules shall have
been delivered and accepted by the Company and Xxxxxxxx (such acceptance to
be in each party's sole and absolute discretion);
(b) Each of the Company and Xxxxxxxx shall have completed its respective
continuing business, legal and accounting due diligence review, shall be
satisfied with the results of such review in each's sole and absolute
discretion, and shall have notified the other that it has completed such review;
and
(c) Laws and Orders. No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law (whether
temporary, preliminary or permanent) that is in effect and restrains, enjoins or
otherwise prohibits consummation of the Exchange or the other transactions
contemplated by this Agreement (collectively, an "Order"), and no Governmental
Entity shall have instituted any proceeding or threatened to institute any
proceeding seeking any such Order.
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8.2 Condition to Obligations of the Company. The obligations of the Company to
effect the Exchange are also subject to the satisfaction or waiver by the
Company at or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Xxxxxxxx and Xxxxxxxx Shareholders set forth in this Agreement (i) to the extent
qualified by Material Adverse Effect shall be true and correct and (ii) to the
extent not qualified by Material Adverse Effect shall be true and correct
(except that this clause (ii) shall be deemed satisfied so long as any failures
of such representations and warranties to be true and correct, taken together,
would not reasonably be expected to have a Material Adverse Effect on Xxxxxxxx
and would not reasonably be expected to have a material adverse effect on the
expected benefits of the Exchange to the Company), in the case of each of (i)
and (ii), as of the Agreement Date and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date;
(b) Performance of Obligations of Xxxxxxxx. Xxxxxxxx shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, including the issuance
of the Exchange Shares to the Company;
(c) Consents Under Agreements.Xxxxxxxx shall have obtained the consent or
approval of each Person whose consent or approval shall be required in order to
consummate the transactions contemplated by this Agreement under any Contract to
which Xxxxxxxx is a party, except those for which the failure to obtain such
consent or approval, individually or in the aggregate, is not reasonably likely
to have a Material Adverse Effect on Xxxxxxxx or a material adverse effect on
the expected benefits of the Exchange to Company;
(d) Exchange of Outstanding Convertible Securities. Certain outstanding
promissory notes convertible into Xxxxxxxx Common Stock shall be exchanged for
shares of a new series of Series C convertible preferred stock of Xxxxxxxx,
prior to or simultaneously with the Exchange in accordance with that certain
Exchange Agreement to be entered into between Xxxxxxxx the holders of such
promissory notes;
(e) Retirement of Xxxxxxxx Common Stock. The Xxxxxxxx Shareholders shall
have effected the Share Surrender; and
(f) Retirement Pledge and Security Agreement. Xxxxxxxx LLC shall have
entered into that certain Retirement, Pledge and Security Agreement to be
entered into between the Company and Xxxxxxxx LLC.
8.3 Conditions to Obligation of Xxxxxxxx. The obligation of Xxxxxxxx to effect
the Exchange is also subject to the satisfaction or waiver by Xxxxxxxx at or
prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Company, Crypto and ipPartners set forth in this Agreement (i) to the extent
qualified by Material Adverse Effect shall be true and correct, and (ii) to the
extent not qualified by Material Adverse Effect shall be true and correct
(except that this clause (ii) shall be deemed satisfied so long as any failures
of such representations and warranties to be true and correct, taken together,
would not reasonably be expected to have a Material Adverse Effect on the
Company and would not reasonably be expected to have a material adverse effect
on the expected benefits of the Exchange to Xxxxxxxx), in the case of each of
(i) and (ii), as of the Agreement Date and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date;
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(b) Performance of Obligations of the Company. The Company shall have
performed and have caused Crypto to perform in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date including the transfer of the Transferred Property to STI; and
(c) Consents Under Agreements. The Company shall have obtained, and have
caused Crypto to obtain, the consent or approval of each Person whose consent or
approval shall be required in order to consummate the transactions contemplated
by this Agreement under any Contract to which the Company or Crypto is a party,
except those for which the failure to obtain such consent or approval,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on the Company or Crypto, or a material adverse effect on the
expected benefits of the Exchange to Xxxxxxxx.
ARTICLE IX.
Termination
9.1 Termination by Mutual Consent. This Agreement may be terminated and the
Exchange may be abandoned at any time prior to the Closing Date by mutual
written consent of Xxxxxxxx and the Company, through action of their respective
Boards of Directors.
9.2 Termination by Either Company or Xxxxxxxx. This Agreement may be terminated
and the Exchange may be abandoned at any time prior to the Closing Date by
action of the Board of Directors of either Company or Xxxxxxxx if (i) the
Exchange shall not have been consummated by December 15, 2002 (the "Termination
Date"), or (ii) any Order permanently restraining, enjoining or otherwise
prohibiting consummation of the Exchange shall become final and non-appealable
(whether before or after the adoption or approval by the Stockholders);
provided, that the right to terminate this Agreement pursuant to clause (i)
above shall not be available to any party that has breached in any material
respect its obligations under this Agreement in any manner that shall have
approximately contributed to the failure of the Exchange to be consummated.
9.3 Effect of Termination and Abandonment. In the event of termination of this
Agreement and the abandonment of the Exchange in accordance with the provisions
of this Article, this Agreement shall become void and of no effect with no
liability on the part of any party to this Agreement or of any of its directors,
officers, employees, agents, legal or financial advisors or other
representatives; provided, however, no such termination shall relieve any party
to this Agreement from any liability for damages resulting from any breach of
this Agreement.
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ARTICLE X.
Indemnification and Survival
10.1 Survival; Right to Indemnification Not Affected by Knowledge. All
representations, warranties, covenants and obligations in this Agreement, and
any certificate or document delivered pursuant to this Agreement, shall survive
the closing until the second anniversary of the Closing Date. The right to
indemnification and payment of damages for third party claims based on such
representations, warranties, covenants and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty, covenant
or obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
damages for third party claims based on such representations, warranties,
covenants and obligations.
10.2 Indemnification and Payment of Damages by Xxxxxxxx. Xxxxxxxx will indemnify
and hold harmless the Company and will pay to the Company the amount of any
damages arising, directly or indirectly, from or in connection with third party
claims with respect to (a) any material breach of any representation or warranty
made by Xxxxxxxx in this Agreement or any other certificate or document
delivered by Xxxxxxxx pursuant to this Agreement, or (b) any material breach by
Xxxxxxxx of any agreement, covenant or obligation of Xxxxxxxx in this Agreement.
Any indemnity pursuant to this Section 10.2 shall only be available to the
extent that such damages pursuant to (a) or (b) above exceed $25,000 in
aggregate.
10.3 Indemnification and Payment of Damages by the Company. The Company will
indemnify and hold harmless Xxxxxxxx, and will pay to Xxxxxxxx the amount of any
damages arising, directly or indirectly, from or in connection with third party
claims with respect to (a) any material breach of any representation or warranty
made by the Company in this Agreement or in any certificate delivered by the
Company pursuant to this Agreement or (b) any material breach by the Company of
any agreement, covenant or obligation of the Company in this Agreement. Any
indemnity pursuant to this Section 10.3 shall only be available to the extent
that such damages pursuant to (a) or (b) above exceed $25,000 in aggregate.
10.4 Procedure for Indemnification - Third Party Claims.
(a) Promptly after receipt by an indemnified party under Section 10.2 or
10.3 of notice of the commencement of any proceeding against it (a
"Proceeding"), such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
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(b) If any Proceeding referred to in Section 10.4(a) is brought against
an indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this ARTICLE X for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of a Law or any violation of the rights of any Person
and no effect on any other claims that may be made against the indemnified
party, and (B) the sole relief provided is monetary damages that are paid in
full by the indemnifying party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such claims effected
without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
business days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines in good
faith that there is a reasonable probability that a Proceeding may adversely
affect it or its Affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the indemnifying party will
not be bound by any determination of a Proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld).
(d) Notwithstanding Section 12.4 hereof, each of the Company and Xxxxxxxx hereby
consents to the non-exclusive jurisdiction of any court in which a Proceeding is
brought against any indemnified party for purposes of any claim that an
indemnified party may have under this Agreement with respect to such Proceeding
or the matters alleged therein.
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ARTICLE XI.
Patriot Act and Other Representations of the Parties
11.1 Patriot Act and Other Representations. Xxxxxxxx and the Xxxxxxxx
Shareholders (one the one hand) and the Company and Crypto and ipPartners (on
the other hand) hereby represent and warrant to each other that such parties (i)
are not included on any Government List (as defined below), (ii) are not persons
who has been determined by a Governmental Entity to be subject to the
prohibitions contained in Executive Order No. 13224 (Sept. 23, 2001) or any
other similar prohibitions contained in the rules and regulations of Office of
Foreign Assets Control ("OFAC") and/or in any enabling legislation or other
Executive Orders in respect thereof, (iii) to the actual knowledge of the
parties, based upon reasonable investigation, are not owned or controlled by, or
acts for or on behalf of, any person on any Government List or any other person
who has been determined by a Governmental Entity to be subject to the
prohibitions contained in Executive Order No. 13224 (Sept. 23, 2001) or similar
prohibitions contained in the rules and regulations of OFAC or any enabling
legislation or other Executive Orders in respect thereof, (iv) are in compliance
with Executive Order No. 13224 (September 23, 2001), the rules and regulations
of the OFAC, Department of Treasury or other Executive Orders in respect thereof
to which such parties have actual knowledge or should have known based upon
reasonable investigation, (v) have not been (and are not currently being)
investigated by any Governmental Authority for, or indicted for, any Patriot Act
Offense (as defined below) and/or (vi) are not under investigation by any
Governmental Entity for alleged criminal behavior.
11.2 Certain Definitions. For purposes of this Agreement:
(a) The term "Government List" means (i) the Specially Designated
Nationals and Blocked Persons List maintained by the Office of Foreign Assets
Control, U.S. Department of the Treasury or (ii) any other list of terrorists,
terrorist organizations or narcotics traffickers maintained pursuant to any of
the rules and regulations of Office of Foreign Assets Control, U.S. Department
of the Treasury, or (iii) any similar list maintained by the U.S. Department of
State, the U.S. Department of Commerce or pursuant to any Executive Order of the
President of the United States.
(b) The term "Patriot Act Offense" means any violation of the criminal
laws of the United States of America or any of the several states therein, or
that would be a criminal violation if committed within the jurisdiction of the
United States of America or any of the several states therein, relating to
terrorism or the laundering of monetary instruments, including any offense under
(i) the Bank Secrecy Act, as amended, (ii) the Money Laundering Control Act of
1986, as amended, or (iii) the Uniting and Strengthening of America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT)
Act of 2001, Public Law 107-56 (October 26, 2001), in each case as the same may
be amended from time to time, and the rules and regulations promulgated
thereunder and corresponding provisions of future laws.. The term "Patriot Act
Offense" also includes the crimes of conspiracy to commit, or aiding and
abetting another to commit, a Patriot Act Offense.
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ARTICLE XII.
Miscellaneous and General
12.1 Modification or Amendment. Subject to the provisions of the applicable law,
the parties to this Agreement may modify or amend this Agreement by written
agreement executed and delivered by a duly authorized officer of the respective
parties.
12.2 Waiver.
(a) Any provision of this Agreement may be waived prior to the Closing
Date if, and only if, such waiver is in writing and executed and delivered by a
duly authorized officer of the respective parties.
(b) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Except as
otherwise provided in this Agreement, the rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by Law.
12.3 Counterparts. This Agreement may be executed in any number of counterparts,
and by facsimile, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
12.4 Governing Law and Venue; Waiver of Jury Trial.
(a) This Agreement shall be deemed to be made in and in all respects
shall be interpreted, construed and governed by and in accordance with New York
law without regard to the conflict of law principles thereof, except that
matters relating to the corporate governance of Xxxxxxxx shall be governed by
Florida law. The parties hereby irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the courts of the State of New York and
of the United States of America located in the Borough of Manhattan (the "New
York Courts") for any litigation arising out of or relating to this Agreement
and the transactions contemplated by this Agreement (and agree not to commence
any litigation relating thereto except in such New York Courts), waive any
objection to the laying of venue of any such litigation in the New York Courts
and agree not to plead or claim in any New York Court that such litigation
brought therein has been brought in an inconvenient forum.
(b) Each party acknowledges and agrees that any controversy which may
arise under this Agreement is likely to involve complicated and difficult
issues, and therefore each party hereby irrevocably and unconditionally waives
any right such party may have to a trial by jury in respect of any litigation
directly or indirectly arising out of or relating to this Agreement, or the
transactions contemplated by this Agreement. Each party certifies and
acknowledges that (i) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (ii) each such party
understands and has considered the implications of this waiver, (iii) each party
makes this waiver voluntarily, and (iv) each party has been induced to enter
into this Agreement by, among other things, the mutual waivers and
certifications in this Section 12.4.
21
12.5 Notices. Notices, requests, instructions or other documents to be given
under this Agreement shall be in writing and shall be deemed given, (i) three
business days following sending by registered or certified mail, postage
prepaid, (ii) when sent if sent by facsimile, provided that written or other
confirmation of receipt is obtained by the sending party, (iii) when delivered,
if delivered personally to the intended recipient, and (iv) one business day
later, if sent by overnight delivery via a national courier service, and in each
case, addressed to a party at the following address for such party:
If to the Company or Crypto:
Eurotech, Ltd.
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxx, President
Fax: 000-000-0000
with a copy (which shall not constitute notice) to:
Ellenoff, Grossman, Schole & Cyruli, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Fax: 000-000-0000
If to ipPartners:
ipPartners, Inc.
X.X. Xxx 0000
Xxxxxxxx, Xxxxx Xxxxxx 00000
Attn: President
Fax: 000-000-0000
If to Xxxxxxxx:
Xxxxxxxx Technologies, Inc.
#000
00 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, President
Fax: 000-000-0000
22
If to STI:
Security Technology, Inc.
#000
00 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxx Xxxxx
Fax: 000-000-0000
If to the Xxxxxxxx Shareholders:
X.X Xxx 000, Xxxxxx Xxxx
Xxxxxxxx Xxxxxx Xxxxxxxx, Xxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx
Attn: Director
Fax: 000-000-0000
12.6 Entire Agreement. This Agreement (including any schedules or exhibits to
this Agreement) constitute the entire agreement, and supersede all other prior
agreements, understandings, representations and warranties both written and
oral, among the parties, with respect to the subject matter of this Agreement.
Each party to this Agreement agrees that, except for the representations and
warranties contained in this Agreement, neither the Company nor Xxxxxxxx makes
any other representations or warranties, and each hereby disclaims any other
representations or warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Agreement or the transactions
contemplated by this Agreement, notwithstanding the delivery or disclosure to
the other or the other's representatives of any documentation or other
information with respect to any one or more of the foregoing.
12.7 No Third Party Beneficiaries. Except as provided in Section 7.5 and 7.6,
this Agreement is not intended to confer upon any Person other than the parties
to this Agreement any rights or remedies under this Agreement.
12.8 Obligations of the Parent. Whenever this Agreement requires a Subsidiary of
either the Company or Xxxxxxxx to take any action, such requirement shall be
deemed to include an undertaking on the part of the Company, or Xxxxxxxx,
respectively, to cause such Subsidiary to take such action. For purposes of this
Agreement, the term "Subsidiary" shall mean, when used with reference to any
party hereto, any corporation or other entity of which such party or any other
subsidiary of such party directly or indirectly (i) is a general or managing
partner or managing member, (ii) owns (A) a majority of the outstanding voting
securities or interests of which, having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other entity or (B) securities in
such corporation or entity which grant such party or its subsidiary the right to
perform or approve management functions of such corporation or entity or (iii)
owns more than fifty percent (50%) of the value of the outstanding equity
securities or interests (including membership interests) of which are owned
directly or indirectly by such party.
23
12.9 Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability or the other provisions of this Agreement. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefore in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
12.10 Interpretation. The table of contents and headings in this Agreement are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions of this
Agreement. Where a reference in this Agreement is made to a schedule, such
reference shall be to a schedule to this Agreement unless otherwise indicated.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
12.11 Assignment. This Agreement shall not be assignable by operation of law or
otherwise. Any assignment in contravention of the preceding sentence shall be
null and void.
* * * * *
24
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
XXXXXXXX TECHNOLOGIES, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
EUROTECH, LTD.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
XXXXXX.XXX, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
SECURITY TECHNOLOGY, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Solely with respect to ARTICLE V and
ARTICLE XI hereof:
IPPARTNERS, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Solely with respect to ARTICLE VI
and ARTICLE XI hereof:
XXXXXXXX LLC
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Solely with respect to ARTICLE VI
and ARTICLE XI hereof:
XXXXX LLC
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
[End of Signature Pages to Exchange Agreement]
EXHIBIT A
Transferred Property
i
