Exhibit 10(xvi)
STRATEGIC ALLIANCE AGREEMENT
DATED AS OF JANUARY25, 2001
BY AND AMONG
U.S. FILTER/XXXXXXX & XXXXXXX, INC.,
SERVICE SYSTEMS INTERNATIONAL, LTD.,
AND
UV SYSTEMS TECHNOLOGY, INC.
TABLE OF CONTENTS
Page
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RECITALS..........................................................................................................1
AGREEMENT.........................................................................................................2
1. DEFINITIONS..............................................................................................2
2. COMMENCEMENT DATE AND TERM...............................................................................7
3. EXCLUSIVITY AND RIGHT OF FIRST OFFER....................................................................11
4. INTELLECTUAL PROPERTY...................................................................................13
5. OVERSIGHT...............................................................................................13
6. MANUFACTURE AND PURCHASE OF SYSTEMS.....................................................................14
7. SUPPORT SERVICES TO BE PROVIDED BY THE SSI COMPANIES....................................................17
8. SUPPORT SERVICES TO BE PROVIDED BY WT...................................................................17
9. PROVISIONS RELATING TO SSI COMMON STOCK.................................................................19
10. REPRESENTATIONS OF SSI..................................................................................20
11. REPRESENTATIONS OF WT...................................................................................22
12. INDEMNIFICATION.........................................................................................23
13. DISPUTE RESOLUTION......................................................................................25
14. AUDIT...................................................................................................26
15. MISCELLANEOUS...........................................................................................26
EXHIBITS
A. Form of Security Agreement
B. Form of License Agreement
C. Form of Stock Purchase Warrant
D. Form of Registration Rights Agreement
E. Form of Shareholder Offer Agreements (E-1 and E-2)
SCHEDULES
10. Disclosure Schedules: SSI
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STRATEGIC ALLIANCE AGREEMENT
This Strategic Alliance Agreement (the "AGREEMENT") dated as of January
25, 2001 is entered into by and among U.S. Filter/Xxxxxxx & Xxxxxxx, Inc., a
Delaware corporation ("WT"), Service Systems International, Ltd., a Nevada
corporation ("SSI"), and UV Systems Technology, Inc. a British Columbia
corporation ("UVST").
RECITALS
A. WT, in conjunction with United States Filter Corporation, a Delaware
corporation ("USF"), of which WT is an indirect wholly-owned subsidiary, is a
leader in the business of designing, engineering, manufacturing, supplying,
installing, maintaining and operating proprietary and non-proprietary water and
wastewater treatment systems that make use of a range of technologies for
industrial and municipal applications. WT, in conjunction with USF, has
established and maintains a worldwide sales network and distribution system in
support of its business and possesses extensive knowledge regarding customer
expectations and the relative performance characteristics and acceptability of
such treatment systems in different applications.
B. SSI and UVST, offer treatment technology that makes use of a patented
flow reaction chamber incorporating a unique lamp design enclosed in a quartz
sleeve and a patented flow control xxxx to expose water and wastewater to
ultraviolet radiation. SSI and its subsidiaries (being hereinafter collectively
referred to as the "SSI Companies," although it is acknowledged that at the date
of this Agreement, UVST is SSI's only subsidiary) are engaged in the business of
manufacturing and installing Ultra Guard(R) systems that incorporate this
technology in an "open channel" configuration ("OPEN SYSTEM") and are conducting
pilot testing of a system in a "closed chamber" configuration ("CLOSED SYSTEM")
(such Open Systems and Closed Systems being hereinafter collectively referred to
as the "SYSTEMS").
C. WT wishes to market, offer and sell Systems, including aftermarket
components and spare parts, on an exclusive basis throughout North America,
Central America (including the Caribbean zone) and South America (the
"TERRITORY"). WT also wishes to provide the SSI Companies with customer feedback
regarding Systems with differing performance characteristics and other
consultative services, if requested, to enhance the SSI Companies' manufacturing
processes and ongoing research and development efforts.
D. SSI and UVST wish to have WT market, offer and sell Systems, including
aftermarket components and spare parts, on an exclusive basis throughout the
Territory. SSI and UVST also wish to support WT's marketing and sales efforts
and to have the benefit of access to WT's sales network and distribution system
and manufacturing.
E. In furtherance of WT's investment of marketing and sales resources and
WT's other efforts in support of the strategic alliance contemplated by this
Agreement and in order to induce WT to participate herein, SSI also wishes to
xxxxx XX an exclusive license throughout the Territory for its patents,
trademarks and other intellectual property relating to Systems and to provide WT
with an opportunity to share in SSI's future success by issuing to WT warrants
to purchase shares of SSI's common stock, $.001 par value ("COMMON STOCK"), on
the terms hereinafter set forth.
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NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth herein and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the Parties agree as follows:
AGREEMENT
1. DEFINITIONS
The following terms as used in this Agreement shall have the meanings
set forth below:
1.1 "Adverse Consequences" shall mean all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, penalties, fines, costs, amounts paid in
settlement, liabilities (including any liability, obligation
or commitment, whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due
or to become due), taxes, liens, losses, expenses and fees,
including court costs and reasonable attorneys' fees and
expenses.
1.2 "Affiliate" shall mean, with respect to a Person, any other
Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common
control with such Person.
1.3 "Agreement" shall have the meaning set forth in the Preamble
above.
1.4 "Change of Control" shall mean:
(a) SSI is merged or consolidated or amalgamated or
reorganized into or with another corporation or other
Person (an "Acquiror") and as a result of such
merger, consolidation, amalgamation or reorganization
less than 80% of the outstanding voting securities or
other capital interests of the surviving, resulting
or acquiring corporation or other Person are owned in
the aggregate by Persons who are stockholders of SSI,
directly or indirectly, immediately prior to such
merger, consolidation, amalgamation or
reorganization, other than by the Acquiror or any
corporation or other Person controlling, controlled
by or under common control with the Acquiror;
(b) SSI sells all or substantially all of its business
and/or assets to an Acquiror of which less than 80%
of the outstanding voting securities or other capital
interests are owned in the aggregate by Persons who
are stockholders of SSI, directly or indirectly,
immediately prior to such sale, other than by any
corporation or other Person controlling, controlled
by or under common control with the Acquiror;
(c) After the date of this Agreement, there is a report
filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule form or report), each as
promulgated pursuant to the Exchange Act, disclosing
that any person or
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group (as the terms "person" and "group" are used
in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act and the rules and regulations
promulgated thereunder) other than a present
stockholder or WT has become the beneficial owner
(as the term "beneficial owner" is defined under
Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 20% or more
of the issued and outstanding shares of voting
securities of SSI; or
(d) During any period of two consecutive years,
individuals who at the beginning of any such period
constitute the directors of SSI cease for any reason
to constitute a majority thereof unless the election,
or the nomination for election by SSI's stockholders,
of each new director of SSI was approved by a vote of
at least two-thirds of such directors of SSI then
still in office who were directors of SSI at the
beginning of any such period.
1.5 "Chem-Feed Group Companies" shall mean WT, Stranco, Inc.,
Chemfeed Limited, Xxxxxxx & Xxxxxxx Canada, Inc., Xxxxxxx &
Xxxxxxx GmbH and Electrocatalytic Limited and their respective
subsidiaries and successors (but only for so long as such
corporations are owned beneficially by Vivendi Environnement,
S.A., a corporation incorporated under the laws of the
Republic of France, or any successor thereto or Affiliate
thereof).
1.6 "Closed System" shall have the meaning set forth in the
Recitals above.
1.7 "Commencement Date" shall have the meaning set forth in
Section 2.1 of this Agreement.
1.8 "Commissioning and First Beneficial Use" shall mean the
successful completion of all requisite start-up and
performance tests as shall have been agreed upon by WT and its
customer with respect to a System and the customer's first use
of such System in production.
1.9 "Common Stock" shall have the meaning set forth in the
Recitals above.
1.10 "Confidential Information" shall mean any written or other
tangibly reduced information or oral information that is
proprietary to a Party and is disclosed or made available by a
Party to another Party during the negotiations or due
diligence that preceded the execution of, or during the term
of, this Agreement. Confidential Information shall include,
without limitation, all trade secrets, know-how; processes,
formulae, techniques, and methodologies; inventories; products
or processes under development, product plans, strategies, and
forecasts; all personal data regarding the Parties' employees
or other individual agents and clients; any other confidential
information of, about, or concerning the current or future
business of the Parties; and other information clearly marked
with a "confidential", "proprietary", or similar legend.
Notwithstanding any other
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provision of this Agreement, Confidential Information shall
not include any information which:
(a) was in the public domain at the time it was disclosed
or made available to the Receiving Party by the
Disclosing Party; or
(b) was known to the Receiving Party prior to the time it
was disclosed or made available to the Receiving
Party by the Disclosing Party, as shown by written
evidence in the Receiving Party's possession at the
time of disclosure; or
(c) becomes part of the public domain through no fault of
the Receiving Party, its employees, agents,
independent contractors or other representatives; or
(d) becomes available to the Receiving Party on a
non-confidential basis subsequent to its disclosure
to the Receiving Party by the Disclosing Party, but
only if Receiving Party believes in good faith that
the source of such information is not in violation of
confidentiality, contractual, legal, fiduciary, or
other obligations; or
(e) is explicitly approved for release by written
authorization of the Disclosing Party.
1.11 "Disclosing Party" shall have the meaning set forth in Section
15.2 below.
1.12 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.13 "Fair Market Value" shall mean the average of the closing
prices of a share of the Common Stock on the New York Stock
Exchange Composite Tape or the NASDAQ National Market,
whichever is applicable (as reported in the Wall Street
Journal) on each of the 10 trading days immediately preceding
the date of determination; or if the Common Stock is not
traded on such exchange or national market system, the average
of the closing prices for a share of the Common Stock on the
NASDAQ Small Cap Market, or if not then traded on such market,
the OTC Bulletin Board, on each of such 10 trading days; or if
the Common Stock is not then traded on any such market, the
fair market value per share as determined in good faith by the
Board of Directors of SSI.
1.14 "Initial Warrant" shall have the meaning set forth in Section
9.1 of this Agreement.
1.15 "Insolvency" shall mean any of the following events or
occurrences:
(a) A receiver, interim receiver, conservator, custodian,
liquidator or trustee of a Person or of all or any of
the property of
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a Person is appointed by court order; or an order
for relief is entered under the bankruptcy laws of
any jurisdiction with respect to a Person; or any
of the material property of a Person is
sequestered by court order; or a petition is filed
against a party under the bankruptcy,
reorganization, arrangement, insolvency,
readjustment or compromise of debt, dissolution or
liquidation law of any jurisdiction, whether now
or hereafter in effect, and is not dismissed
within 90 days after such filing;
(b) A Person files a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment
or compromise of debt, dissolution or liquidation law
of any jurisdiction, whether now or hereafter in
effect, or consents to the filing of any petition
against it under any such law; or
(c) A Person makes an assignment for the benefit of its
creditors, or admits in writing its inability to pay
its debts generally as they become due, or consents
to the appointment of a receiver, interim receiver,
conservator, custodian, liquidator or trustee of the
Person, or of all or any part of its property.
1.16 "Key Executives" shall mean Xxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxx
and Xxxxx Xxxxx.
1.17 "License Agreement" shall have the meaning set forth in
Section 4.1 of this Agreement.
1.18 "Market Discount" shall have the meaning set forth in Section
6.4 of this Agreement.
1.19 "Open System" shall have the meaning set forth in the Recitals
above.
1.20 "Party" shall mean WT, SSI or UVST.
1.21 "Person" shall mean an individual, a partnership, a
corporation, an association, a trust, a joint venture, or any
other incorporated or unincorporated organization or entity.
1.22 "Receiving Party" shall have the meaning set forth in Section
15.2 below.
1.23 "Registration Rights Agreement" shall have the meaning set
forth in Section 9.3 of this Agreement.
1.24 "Representative(s)" shall have the meaning set forth in
Section 5.1 of this Agreement.
1.25 "Restricted Information" shall have the meaning set forth in
Section 14 of this Agreement.
1.26 "Royalty" shall have the meaning set forth in Section 5.1 of
the License Agreement.
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1.27 "SEC Reports" shall mean all periodic reports and statements
filed by SSI with the Securities and Exchange Commission
pursuant to Section 13 or 15 of the Exchange Act.
1.28 "Secured Obligations" shall have the meaning set forth in
Section 2.7 of this Agreement.
1.29 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.30 "Security Agreement" shall mean the Security Agreement
attached as Exhibit A hereto.
1.31 "Shareholder" shall mean each of Xxxxxxx X. Xxxxxxxx and Xxxx
X. Xxxxx.
1.32 "Shareholder Offer Agreement" shall have the meaning set forth
in Section 9.5 of this Agreement.
1.33 "Specified Event of Default" shall mean a default by the SSI
Companies in the payment of any portion of the Secured
Obligations when due.
1.34 "SSI" shall have the meaning set forth in the Preamble above.
1.35 "SSI Companies" shall have the meaning set forth in the
Recitals above.
1.36 "SSI List Price" shall mean, with respect to any System or
component thereof offered by the SSI Companies, the sum of the
list prices, as independently determined by the SSI Companies,
FOB Vancouver, B.C. for the different types of standard
designs, on a modular basis, comprising the particular System,
without start-up or installation, and excluding all charges
for engineering services and drawings supplied by the SSI
Companies and all taxes, and fees and commissions payable to
sales representatives or agents.
1.37 "SSI Selling Price" shall mean, with respect to any System or
component thereof sold by the SSI Companies, the SSI
Companies' net sales price FOB Vancouver, B.C. for that
System, without start-up or installation, and excluding all
charges for engineering services and drawings by the SSI
Companies and all taxes, and fees and commissions payable to
sales representatives or agents.
1.38 "Standard Discount" shall have the meaning set forth in
Section 6.4 of this Agreement.
1.39 "Standard Terms" shall have the meaning set forth in Section
6.1 of this Agreement.
1.40 "Subsequent Warrant" shall have the meaning set forth in
Section 9.2 of this Agreement.
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1.41 "Subsidiary" shall mean any corporation with respect to which
a specified Person (or a Subsidiary thereof) owns a majority
of the common stock or has the power to vote or direct the
voting of sufficient securities to elect a majority of the
directors.
1.42 "Systems" shall have the meaning set forth in the Recitals
above.
1.43 "Term" shall have the meaning set forth in Section 2.1 of this
Agreement.
1.44 "Termination for Convenience" shall have the meaning set forth
in Section 2.3 of this Agreement.
1.45 "Territory" shall have the meaning set forth in the Recitals
above.
1.46 "USF" shall have the meaning set forth in the Recitals above.
1.47 "UVST" shall have the meaning set forth in the Recitals above.
1.48 "Warrants" shall have the meaning set forth in Section 9.2 of
this Agreement.
1.49 "WT" shall have the meaning set forth in the Preamble above.
1.50 "WT Selling Price" shall mean, with respect to any System or
component thereof sold by WT, WT's net sales price (exclusive
of transportation or shipping charges) for that System,
without start-up or installation, and excluding all charges
for engineering services and drawings supplied by WT and all
taxes, and fees and commissions payable to sales
representatives or agents.
2. COMMENCEMENT DATE AND TERM.
2.1 This Agreement shall commence on January [___], 2001 or as
soon thereafter after the conditions set forth in Section 2.2
of this Agreement have been satisfied (the "COMMENCEMENT
DATE"), and shall continue for a period of 10 years from and
after the Commencement Date, unless earlier terminated as
provided below (the "TERM"); provided, that THE TERM SHALL
AUTOMATICALLY RENEW THEREAFTER FROM YEAR TO YEAR (OR FOR SUCH
OTHER LONGER OR SHORTER PERIODS AS THE PARTIES MAY MUTUALLY
AGREE UPON), UNLESS ANY PARTY GIVES WRITTEN NOTICE OF
TERMINATION TO THE OTHER PARTIES IN WRITING NOT LESS THAN SIX
MONTHS PRIOR TO THE END OF THE TERM OR ANY RENEWAL TERM.
2.2 The obligations of the Parties to perform under this Agreement
shall be subject to the satisfaction on or before the
Commencement Date of the following conditions, to the extent
provided in this Section 2.2:
2.2.1 In the case of the obligations of WT:
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(a) The representations and warranties set forth
in Section 10 of this Agreement and in
Section 12.1 of the License Agreement shall
be true and correct in all material respects
at and as of the Commencement Date;
(b) No action, suit or proceeding shall be
pending or threatened before any court or
quasi-judicial or administrative agency of
any federal, state, local or foreign
jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment,
order, decree, ruling or charge would
prevent consummation of any of the
transactions contemplated by this Agreement;
(c) Such of the SSI Companies as are parties
thereto shall have executed and delivered to
WT the License Agreement and the Trust
Agreement referred to therein, the Security
Agreement, each of the Initial Warrants and
the Registration Rights Agreement;
(d) Each of the Shareholders shall have executed
and delivered to WT a Shareholder Offer
Agreement; and
(e) All actions to be taken by the SSI Companies
in connection with consummation of the
transactions contemplated hereby and all
certificates, opinions, instruments and
other documents required to effect the
transactions contemplated hereby shall be
reasonably satisfactory in form and
substance to WT.
2.2.2 In the case of the obligations of the SSI Companies:
(a) The representations and warranties set forth
in Section 11 of this Agreement shall be
true and correct in all material respects at
and as of the Commencement Date;
(b) No action, suit or proceeding shall be
pending or threatened before any court or
quasi-judicial or administrative agency of
any federal, state, local, or foreign
jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment,
order, decree, ruling or charge would
prevent consummation of any of the
transactions contemplated by this Agreement;
(c) WT shall have executed and delivered to SSI
the License Agreement and the Trust
Agreement referred to therein and the
Registration Rights Agreement;
(d) WT shall have executed and delivered to each
of the Shareholders a Shareholder Offer
Agreement; and
(e) All actions to be taken by WT in connection
with consummation of the transactions
contemplated hereby and all certificates,
opinions,
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instruments and other documents required
to effect the transactions contemplated
hereby shall be reasonably satisfactory in
form and substance to SSI.
2.3 This Agreement may be terminated prior to the end of the Term
as follows:
2.3.1 By mutual agreement of the Parties; or
2.3.2 By any Party for convenience (a "TERMINATION FOR
CONVENIENCE") after the third anniversary of the
Commencement Date, upon 120 days prior written notice
and the payment of the amount set forth in Section
2.4.1(a) or 2.4.2 of this Agreement, as the case may
be; or
2.3.3 By any Party (a) if annual sales targets for any year
are not established by mutual agreement of the
parties three (3) months before the beginning of that
year, or (b) if annual sales targets for any year
other than the first year are not met on or before
the last day of that year. The annual sales targets
for the first three years shall be as set forth in a
side letter to be delivered concurrently with the
execution of this Agreement. For the purpose of
annual sales targets, the first year will commence on
the Commencement Date, and succeeding years will be
calendar years; or
2.3.4 By SSI or UVST, on one hand, or by WT, on the other
hand, in the event of a default in performance of a
covenant or obligation of WT or of SSI and UVST,
respectively, under this Agreement (other than any
failure to achieve sales targets as referred to in
Section 2.3.3 above, which shall be governed
thereby), under the License Agreement or under the
Registration Rights Agreement, which default remains
uncured after 90 days written notice by the Party
seeking to terminate this Agreement pursuant to this
Section 2.3.4, unless, within such 90 day period, the
other Party takes action reasonably calculated to
remedy the default, and thereafter continuously
pursues such action until the default is remedied.;
or
2.3.5 By any Party in the event of the termination of the
License Agreement pursuant to the termination
provisions thereof contained in Article X of the
License Agreement; or
2.3.6 By SSI or UVST in the event of the Insolvency of WT;
or
2.3.7 By WT in the event of the Insolvency of any of the
SSI Companies; or
2.3.8 By WT in the event of a Change of Control of SSI; or
2.3.9 By WT on or before the third anniversary of the
Commencement Date in the event that any Key Executive
has ceased for any reason to be employed in an
executive capacity by SSI or UVST and his replacement
is unacceptable to WT in its sole discretion; or
2.3.10 By WT after the third anniversary of the Commencement
Date in the event that any two or more Key Executives
have ceased for any reason to be employed in an
executive capacity by SSI or UVST, and their
responsibilities are not assumed within a reasonable
period by individuals reasonably qualified to satisfy
such responsibilities; or
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2.3.11 By SSI or UVST if any entity within the Chem-Feed
Group Companies ceases to be owned beneficially by
Vivendi Environnement, S.A. or any successor thereto
or otherwise ceases to be bound by this Agreement.
2.4 The Parties acknowledge that in the event of a Termination for
Convenience bySSI or UVST, on one hand, or by WT, on the other
hand, the losses suffered by WT or by SSI and UVST,
respectively, will be difficult to determine. The Parties
therefore wish to provide for the payment of the following
liquidated amounts in the event of a Termination for
Convenience, which payments are not intended to and shall not
be considered as a penalty:
2.4.1 In the event of a Termination for Convenience by SSI
or UVST, the SSI Companies shall make all of the
following payments in cash to WT:
(a) US $100,000, on or before the date of the
Termination for Convenience set forth in the
notice given pursuant to Section 2.3.2 of
this Agreement;
(b) An amount equal to ten percent (10%) of the
SSI Selling Price for each order for a
System to be installed within the Territory
and booked during the first year (or, if
sooner, the effective date as of which WT
establishes another exclusive alliance with
a supplier of ultraviolet treatment systems)
following the date of the Termination for
Convenience, such amount to be paid within
10 business days after the SSI Companies
receive each payment in respect of such an
order, regardless of when payment is
received (in other words, by paying ten
percent (10%) of each such payment
received);
(c) An amount equal to five percent (5%) of the
SSI Selling Price for each order for a
System to be installed within the Territory
and booked during the second year (or, if
sooner, the effective date as of which WT
establishes another exclusive alliance with
a supplier of ultraviolet treatment systems)
following the date of the Termination for
Convenience, such amount to be paid within
10 business days after the SSI Companies
receive each payment in respect of such an
order, regardless of when payment is
received (in other words, by paying five
percent (5%) of each such payment received);
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provided, however, that the SSI Companies
shall not be liable to WT for the amount
specified in this Section 2.4.1(b) or (c) to
the extent that the sale of a booked System
is never completed or, if completed, that
SSI or UVST reflects the account receivable
arising from such sale in its books and
records as uncollectible.
2.4.2 In the event of a Termination for Convenience by WT,
WT shall pay SSI (for the benefit of the SSI
Companies) in cash US$100,000, on or before the date
of the Termination for Convenience set forth in the
notice given pursuant to Section 2.3.2 of this
Agreement.
2.5 In the event (a) SSI or UVST (or a receiver, interim receiver,
conservator, custodian, liquidator or trustee of such Party),
terminates, rejects, disclaims or repudiates the License
Agreement by reason or as a consequence of or in connection
with the Insolvency of either SSI or UVST and (b) by reason or
as a consequence of or in connection with such termination,
rejection, disclaimer or repudiation, the other of SSI or UVST
is unable to satisfy the obligations of both SSI and UVST
hereunder and WT is unable to realize its intended benefits
under the License Agreement, then the SSI Companies shall make
the same payments as are provided for in Section 2.4.1 above,
substituting the date of such termination, rejection,
disclaimer or repudiation for the date of the Termination for
Convenience referred to in Section 2.4.1;
2.6 Each payment provided for in Section 2.4 of this Agreement in
connection with a Termination for Convenience or in Section
2.5 of this Agreement shall be made by wire transfer of same
day funds to such account as may be designated in writing by
the Party to whom the payment is to be made. Notwithstanding
anything herein to the contrary, in no event shall payments be
required under both Section 2.4.1 and 2.5.
2.7 In order to provide security for their obligation to pay the
amount of US$100,000 provided for in and pursuant to Section
2.4.1(a) of this Agreement and the corresponding amount
provided for in and pursuant to Section 2.5 of this Agreement
( the "Secured Obligations"), SSI and UVST shall xxxxx XX a
security interest in certain of their assets and properties,
as more specifically described in the Security Agreement, and
hereby agree to execute and deliver the Security Agreement to
WT.
2.8 Notwithstanding the earlier termination of this Agreement for
any reason, the Parties shall continue to have and perform all
of their respective obligations pursuant to this Agreement and
the License Agreement with respect to and until each order
booked by WT prior to termination has been finally accepted by
the end user thereof. In addition, the provisions of Sections
2.4.1, 2.4.2, 2.5,12, 13, 14 and 15.2 of this Agreement shall
survive its termination.
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3. EXCLUSIVITY AND RIGHT OF FIRST OFFER
3.1 Subject to the terms and conditions contained in this
Agreement, SSI and UVST (for themselves and on behalf of the
SSI Companies) hereby appoint WT as the exclusive Person for
marketing, sales and distribution of Systems, including
aftermarket components and spare parts, for all municipal
(excluding aquatics) and industrial water and wastewater
treatment applications in the Territory. In furtherance of
this appointment, during the Term, the following provisions
shall be in effect:
3.1.1 Without the prior written consent of WT, SSI and UVST
shall not, and shall cause the SSI Companies not to,
directly or indirectly, whether as a partner,
investor, contractor, consultant or otherwise,
market, sell, manufacture, supply or distribute any
Systems to be installed in the Territory (except for
aquatics applications), except in accordance with the
terms of this Agreement, and
3.1.2 Without the prior written consent of SSI , WT shall
not, and shall cause the other Chem-Feed Group
Companies not to, directly or indirectly, whether as
a partner, investor, consultant or otherwise, market,
sell, manufacture, supply or distribute any open
channel or closed chamber ultraviolet treatment
systems to be installed in the Territory, other than
the Systems in accordance with this Agreement (except
for aquatics applications);
provided, that the appointment set forth in this
Section 3.1 and the foregoing restrictions shall
apply only to open channel ultraviolet treatment
systems unless the SSI Companies offer commercial
closed chamber systems for sale to WT not later than
12 months after the Commencement Date.
3.2 The Parties acknowledge that this Agreement shall not prevent
any Affiliates of WT (other than the Chem-Feed Group
Companies) from engaging in marketing, sales, manufacture,
supply or distribution of any and all types of open channel or
closed chamber ultraviolet treatment systems anywhere in the
world (including the Territory).
3.3 The Parties acknowledge that they may from time to time
mutually agree that WT may, on a non-exclusive basis, market,
sell and distribute Systems, including aftermarket components
and spare parts, for certain applications or in certain areas
outside the Territory. In addition, during the Term, in the
event that the SSI Companies propose to appoint or replace an
exclusive sales representative or distributor for Systems in
one or more areas outside the Territory, SSI shall, and shall
cause the SSI Companies to, offer each such opportunity first
to WT and such of its Affiliates as are reasonably acceptable
to SSI (whether or not part of the Chem-Feed Group Companies)
prior to offering the opportunity to any other Person. In each
such event, SSI shall notify WT in writing, setting forth the
terms and conditions upon which any of the SSI Companies
proposes to appoint an exclusive sales representative or
distributor for Systems. Not later than 30 days following WT's
receipt of such notice, WT shall notify SSI of the terms and
conditions upon which WT or any of its Affiliates wishes to
enter into such a
12
sales representative or distributorship agreement, or that
neither WT nor any its Affiliates wishes to do so. In the
former case, WT shall identify any Affiliate who wishes to
enter into such agreement and provide such information
regarding such Affiliate as SSI may reasonably require. SSI
shall then reasonably determine whether any proposed
Affiliate is acceptable. WT and any Affiliate accepted by
SSI and the SSI Companies shall negotiate in good faith
with one another with respect to the terms and conditions
of such an agreement for a period of up to 30 days
following the receipt of WT's notice. In the event that the
parties to the negotiation fail to enter into an agreement
prior to the end of such 30 day period, the SSI Companies
shall be free for a period of 180 days thereafter to offer
the opportunity to any other Person on no less favorable
terms than were offered to WT and its Affiliates, whereupon
the opportunity shall once again be governed by the
procedure set forth in this Section 3.3.
3.4 The Parties shall confer from time to time for the purpose of
considering whether to modify the scope of the appointment and
the restrictions set forth in Section 3.1 to include aquatics
applications of ultraviolet treatment systems.
4. INTELLECTUAL PROPERTY
4.1 To induce WT to enter into this Agreement, SSI and UVST agree
to execute and deliver to WT, and to cause the other SSI
Companies as required to execute and deliver to WT, in
accordance with their respective interests therein, the
License Agreement attached as EXHIBIT B hereto (the "LICENSE
AGREEMENT") , pursuant to which the SSI Companies xxxxx XX
certain rights in their patents, trademarks, trade secrets,
copyrights, software and know-how related to Systems, with the
intention of affording WT the benefits of Section 365(n) of
the United States Bankruptcy Code.
4.2 The SSI Companies shall conduct their research and development
efforts independently for the purpose of continuously
designing and improving Systems. Notwithstanding the
foregoing, SSI and UVST agree that during the first six months
of the Term, the SSI Companies will not proceed beyond pilot
testing of the closed chamber design within the Territory in
order to focus on implementing the strategic alliance
contemplated by this Agreement.
4.3 Nothing in this Agreement, the License Agreement, or the Trust
Agreement entered into pursuant to the License Agreement shall
be deemed to effect or authorize a transfer of any ownership
rights that the SSI Companies may have in any of the patents,
trademarks or other intellectual property that are the subject
of this Agreement or the License Agreement, except insofar as
the Security Agreement may be deemed to authorize such a
transfer under the conditions and subject to the limitations
stated therein.
13
5. OVERSIGHT
5.1 Promptly after the Commencement Date, SSI and UVST, on the one
hand, and WT, on the other hand, shall each designate one
representative (each a "REPRESENTATIVE" and collectively, the
"REPRESENTATIVES") who will be primarily responsible for
conferring with the other in order to do the following:
5.1.1 To the extent not already established, review and
mutually agree upon annual targets for sales lead
generation, prospect development and bookings,
defining the extent of participation and support
services of the type specified in Sections 7 and 8 of
this Agreement required from each Party;
5.1.2 Review monthly the status of all open sales
prospects;
5.1.3 Monitor and report at least quarterly on the overall
sales and marketing results of the strategic alliance
contemplated by this Agreement;
5.1.4 Monitor the modification or termination of existing
agreements that the Chem-Feed Group Companies or the
SSI Companies may have with sales representatives
and/or distributors, in order to effect the
objectives of this Agreement in a lawful manner; and
5.1.5 Mutually agree upon such other matters as they may
deem necessary and appropriate to accomplish the
lawful objectives of the strategic alliance
contemplated by this Agreement.
5.2 The Representatives shall confer in whatever manner and as
frequently as they deem desirable to discharge their
responsibilities hereunder and shall promptly document their
decisions in writing and notify the Parties thereof.
5.3 Notwithstanding anything in this Agreement or the License
Agreement to the contrary, the Parties acknowledge that the
SSI Companies have entered into agreements with numerous sales
representatives and agents which are not immediately
terminable. SSI and UVST shall take such action as may be
reasonable and lawful to terminate those agreements as soon as
possible, but in no case later than 120 days after the
Commencement Date. Subject to compliance with the preceding
sentence, the existence of those agreements, and any rights of
the sales representatives and agents thereunder, shall not
constitute a breach or violation of this Agreement by the SSI
Companies.
6. MANUFACTURE AND PURCHASE OF SYSTEMS
6.1 Subject to Section 8.2 of this Agreement, whenever WT requires
a System, components, parts or spares (including, without
limitation, lamps and replacement parts) for a System, WT
shall issue a purchase order to the SSI Companies therefor,
subject to WT's standard terms of purchase as of the date of
this Agreement, a copy of which has been furnished to SSI by
WT (the "Standard Terms") and which may be modified insofar as
they apply to transactions pursuant to this Agreement from
time to time only upon the mutual consent of the
14
Parties. Except as otherwise specifically provided in this
Agreement, in the event of a conflict between this
Agreement and the terms and conditions set forth in WT's
purchase order issued to the SSI Companies pursuant to this
Section 6.1, the terms and conditions of this Agreement
shall prevail, unless SSI specifically and expressly
otherwise agree that the conflicting term or condition in
WT's purchase order shall prevail. Subject to the Standard
Terms and Sections 6.4 and 6.5, WT shall pay to the SSI
Companies for each System, component, part or spare
required by WT's purchase order (other than one
manufactured and supplied by WT pursuant to Section 8.2) an
amount equal to the SSI List Price, together with any
sales, use, gross receipts or like tax which may arise in
connection with any such sale. Subject to the License
Agreement, WT also shall pay to the SSI Companies a royalty
payment for each System, component, part or spare, whether
manufactured or supplied by or through the SSI Companies or
WT or any other Person.
6.2 Unless otherwise agreed in writing, notwithstanding the
Standard Terms, in the case of any purchase order for a System
in an amount that is less than US$500,000, WT shall pay for
the System in accordance with the following schedule of
progress payments, it being understood that progress payments
will be negotiated and mutually agreed between the Parties for
all other purchase orders: 15% on customer approval and
release of drawings for fabrication (terms: net 60); 20% on
receipt by SSI Companies of components of major fabrications
(structural and glass) (terms: net 45); 50% on shipment of the
equipment comprising the System (terms: net 30); 10% on
Commissioning and First Beneficial Use of the System (terms:
net 30); and the balance on final acceptance of the System by
the customer (terms: net 30); provided, however, that if the
payment terms afforded to WT by its customer for a job are
more advantageous than the foregoing, WT will afford the same
payment terms to the SSI Companies for that job.
6.3 SSI shall establish and at all times maintain SSI List Prices
that are competitive with other commercially available
ultraviolet treatment systems, taking into account differences
between the System and other systems. WT shall have the right
from time to time to request that SSI modify one or more SSI
List Prices in light of such competition.
6.4 SSI shall sell, and shall cause the other SSI Companies to
sell, Systems, lamps and replacement parts to WT at a Standard
Discount from the SSI List Price. The Standard Discount shall
initially be in the amount set forth in that letter delivered
contemporaneously with the execution of this Agreement and
executed by the parties The Standard Discount applicable to
Systems shall be subject to renegotiation at the instance of
either Party after the first 15 months of the Term for the
purpose of evaluating its appropriateness in light of the
Parties' warranty claims experience with respect to Systems
sold to WT pursuant to this Agreement. In addition, the SSI
Companies shall consider requests from WT on particular jobs
for a specified discount greater than the Standard Discount,
in order to be competitive (a "Market Discount"). If during
any period of three consecutive months, the SSI Companies have
declined WT requests for a Market
15
Discount on more than 40% of the total number of jobs
quoted by WT during such three month period, then
commencing on the first day of the next month the SSI List
Prices shall be reduced automatically by 5% with respect to
any System, component or part included in a majority of the
jobs for which a Market Discount was declined . As an
example, if 10 jobs were quoted by WT during December,
January and February, and if Market Discounts were
requested on six of those jobs and granted once (or, in
other words, denied five times out of 10 jobs in total),
SSI List Prices would be reduced by 5% effective on the
immediately following March 1.
6.5 WT shall be free to determine the WT Selling Price for each
System. In the event that the WT Selling Price for a System is
greater or less than the SSI List Price for that System, WT
and the SSI Companies shall share equally in any excess or
shortfall, respectively. Such sharing shall be reflected in
the price for the System to be paid by WT and shall be
documented in the purchase order (or an amendment thereto)
issued by WT in accordance with Section 6.1 of this Agreement.
6.6 Except as provided above in Section 6.4 with respect to
automatic reductions in SSI List Prices, without the prior
written consent of WT, (a) no change in any SSI List Price
shall be effective until 60 days after written notice thereof
to WT, and (b) no SSI List Price may be adjusted more than one
time in any period of 12 consecutive months during the Term.
6.7 The SSI Companies shall provide a commercially reasonable
supply warranty in a form to be agreed upon in writing by the
Parties with respect to the performance of each System
manufactured or supplied by the SSI Companies and sold to WT
pursuant to this Agreement, and shall be solely responsible
for claims arising thereunder.
6.8 WT shall be solely responsible for providing customers with
start-up assistance, ongoing service and components, parts and
spares installation support services in respect of Systems
purchased pursuant to this Agreement, and shall be entitled to
retain all revenue from the provision of such assistance and
services: revenues from Systems, components, parts or spares
shall be distributed as otherwise provided in this Agreement.
WT shall install, start up, and service the Systems,
components, parts and spares in a manner consistent with any
instructions provided by the SSI Companies. WT shall provide a
commercially reasonable warranty to WT's customer with respect
to the installation, start up, servicing and spares support to
be provided by WT, and shall be solely responsible for claims
arising thereunder to the extent such claims arise out of a
breach of such warranty.
6.9 Subject to the terms and conditions set forth in the License
Agreement (and provided that WT has continuing rights to use
the SSI Parties' trademarks), the Systems, components and
parts that are sold by WT pursuant to this Agreement shall be
co-branded as US Filter(R) Ultra Guard(R) products.
16
7. SUPPORT SERVICES TO BE PROVIDED BY THE SSI COMPANIES
7.1 As requested by WT, SSI shall, and shall cause the other SSI
Companies to:
7.1.1 Participate in joint promotion activities with WT,
including trade show presentations, and otherwise
support sales and marketing efforts;
7.1.2 Provide initial and ongoing training (for application
engineers, sales managers, sales representatives, and
service technicians), technical support and technical
assistance services, and product performance
problem-solving assistance necessary to market, sell
and start-up Systems, it being the intent of the
foregoing that the SSI Companies provide training to
permit WT in the future to conduct these activities
independently of the SSI Companies;
7.1.3 Lead product design (including any required product
adaptation) utilizing such third party consulting
services as may be needed in the reasonable judgment
of the SSI Companies;
7.1.4 Support standard project engineering and prepare
standard manufacturing drawings, standard layout
drawings and drawing standards;
7.1.5 Support standard application engineering to offer the
lowest cost functional System meeting customer
requirements;
7.1.6 Conduct factory witness tests and inspections and
produce certification reports as may be necessary to
fulfill job requirements; and
7.1.7 Otherwise support WT in preparing and submitting bid
quotations for standard and special Systems.
7.2 Except in the case of the Insolvency of the SSI Companies, or
any of them, in the event that WT manufactures and supplies
Systems pursuant to Section 8.2 of this Agreement, SSI shall,
and shall cause the other SSI Companies to, also provide such
manufacturing gear-up assistance services to WT as WT may
reasonably request.
7.3 The SSI Companies shall bear all of their own costs of
providing the foregoing support services.
8. SUPPORT SERVICES TO BE PROVIDED BY WT
8.1 WT shall:
8.1.1 Conduct all sales and marketing activities with
respect to both new equipment and in the aftermarket
for Systems within the Territory, utilizing WT and
USF sales network and distribution systems;
17
8.1.2 Participate in joint promotion activities with the
SSI Companies, including trade show presentations,
and otherwise support the marketing effort as needed;
8.1.3 Prepare and submit all bid quotations for Systems
within the Territory in WT's name, determine whether
to enter into contracts to furnish Systems, and
negotiate and approve commercial terms applicable
thereto;
8.1.4 Support project engineering as needed, including
preparing training manuals;
8.1.5 Support application engineering as needed to provide
the lowest cost functional System meeting customer
requirements;
8.1.6 Provide customers with start up assistance, ongoing
service and spares support; and
8.1.7 Provide feedback to the SSI Companies regarding
feasibility and market acceptance of Systems to
enhance the product development efforts of the SSI
Companies.
8.2 In addition to the foregoing, WT may (a) manufacture and
supply Systems to its customers and shall not be required to
purchase Systems from the SSI Companies (i) if and to the
extent that SSI requests WT to do so in writing, or (ii) in
the event that, and for so long as, the SSI Companies,
directly or indirectly, are unable on a regular basis to
manufacture and supply Systems sufficient to satisfy the
minimum sales targets referred to in Section 2.3.3 on a timely
basis (it being understood that for purposes of determining
ability to manufacture and supply on a timely basis, that the
longer of 12-14 weeks after release of approved drawings for
fabrication and the commercially reasonable delivery
requirement of the end user will be deemed to be a reasonable
production schedule for shipment, and it being further
understood that the Insolvency of any of the SSI Companies
shall create a rebuttable presumption for purposes of this
Agreement that the SSI Companies are unable on a regular basis
to manufacture and supply Systems on a timely basis), and (b)
supply customers with spares purchased by WT directly from the
SSI Companies' suppliers in the event that and for so long as
the SSI Companies, for reasons within their control, are
unable on a regular basis to ship spares within one week of an
order by WT therefor (and to implement this provision as
necessary the SSI Companies shall advise WT of the names,
locations and contact information for all such component
suppliers). Notwithstanding the foregoing, any rights WT may
have under clause (a)(ii) or (b) of the preceding sentence
shall terminate when the SSI Companies, or either of them, has
established or reestablished the ability to manufacture and
supply Systems or to supply spares within the time periods
specified above.
8.3 WT shall provide a commercially reasonable supply warranty
with respect to the performance of each System, component,
part or spare manufactured or supplied
18
by WT pursuant to Section 8.2,and shall be solely
responsible for claims arising thereunder.
8.4 WT shall bear all of its own costs of providing the foregoing
support services.
9. PROVISIONS RELATING TO SSI COMMON STOCK
9.1 Concurrently with entering into this Agreement, SSI shall
issue and deliver to WT warrants (each an "INITIAL WARRANT")
to purchase an aggregate of 3,000,000 shares of Common Stock
on the terms set forth in this Section 9.1 and in the form of
Warrant attached as EXHIBIT C hereto. The date of issuance of
each of the Initial Warrants shall be October 3, 2000, the
date immediately prior to the date on which the Parties
entered into a letter of intent with respect to the formation
of the strategic alliance contemplated by this Agreement. The
Initial Warrants shall entitle the holder to purchase,
respectively, 1,000,000 shares at an exercise price equal to
the lower of US $.97 per share or the Fair Market Value of the
Common Stock determined as of the date ninety (90) days after
the Commencement Date, 1,000,000 shares at an exercise price
equal to US $1.00 per share, and 1,000,000 shares at an
exercise price equal to US $2.00 per share.
9.2 On each anniversary of the Commencement Date during the Term
(and on the date of termination of this Agreement), SSI shall
issue to WT an additional warrant (each a "SUBSEQUENT
WARRANT") to purchase shares of Common Stock on the terms set
forth in this Section 9.2 and in the form of Warrant attached
as Exhibit C hereto (the Initial Warrants and Subsequent
Warrants being hereinafter collectively referred to as the
"WARRANTS"). The date of issuance of each Subsequent Warrant
shall be the anniversary of the Commencement Date immediately
preceding the determination that such Subsequent Warrant is
required to be issued pursuant to this Section 9.2 (or, in the
case of a termination of this Agreement, the date of issuance
shall be the date of such termination). The exercise price per
share reflected in each Subsequent Warrant shall be the Fair
Market Value determined as of the date of its issuance. The
exercise price of the Subsequent Warrants shall not be taken
into account when determining any adjustment to the exercise
price of the Initial Warrants.
9.2.1 The number of shares of Common Stock for which SSI
shall issue a Subsequent Warrant on any anniversary
of the Commencement Date pursuant to Section 9.2 of
this Agreement shall be the sum of (a) 50,000 shares,
provided that WT booked or otherwise significantly
influenced at least US$1,000,000 of orders for
Systems during the 12 month period ending immediately
prior to such anniversary date, plus (b) 500 shares
for each US$10,000 of orders for Systems (rounded to
the nearest US$10,000) that WT booked or otherwise
significantly influenced in excess of US$1,000,000
during such 12 month period. No Subsequent Warrant
shall be issued by SSI on an anniversary date
pursuant to Section 9.2 of this Agreement in the
event that orders for Systems that WT booked or
otherwise significantly influenced during the 12
month period ended
19
immediately prior to such anniversary date
totalled less than US$1,000,000. In the case of a
Subsequent Warrant issued as of the date of
termination of this Agreement, the number of
shares and dollar thresholds stated in this
Section 9.2.1 shall be reduced proportionately to
reflect the actual number of calendar days in the
period since the most recent anniversary of the
Commencement Date, rounded to the nearest whole
numbers.
9.3 The cumulative number of shares for which Warrants may be
granted pursuant to Sections 9.1 and 9.2 shall not exceed, in
the aggregate, 20% of the number of issued and outstanding
shares of Common Stock at the date of grant.
9.4 SSI agrees to execute and deliver a Registration Rights
Agreement in the form attached as EXHIBIT D hereto providing
registration rights under the Securities Act with respect to
the shares of Common Stock issuable upon exercise of the
Warrants.
9.5 To induce WT to enter into this Agreement, SSI shall cause
each of the Shareholders to execute and deliver to WT a
Shareholder Offer Agreement in the forms attached as EXHIBIT
E-1 AND E-2 hereto, respectively (each a "SHAREHOLDER OFFER
AGREEMENT"), providing WT with certain offer rights with
respect to the shares of Common Stock owned from time to time
by such Shareholder.
10. REPRESENTATIONS OF SSI AND UVST
SSI and UVST, jointly and severally, represent and warrant to WT that
the statements contained in this Section 10 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Commencement
Date, except to extent set forth in the Disclosure Schedules identified below.
10.1 SSI and each Subsidiary of SSI is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. SCHEDULE 10.1
to this Agreement sets forth for SSI and each Subsidiary of
SSI (a) its name and jurisdiction of incorporation, (b) the
number of authorized shares of each class of its capital
stock, (c) the number of issued and outstanding shares of each
class of its capital stock, the name of each holder of five
percent or more thereof, and the number of shares held by each
such holder, (d) the number of shares of its capital stock
held in treasury, and (e) its directors and officers.
10.2 SSI and each Subsidiary of SSI is duly authorized to conduct
business and is in good standing under the laws of each
jurisdiction where such qualification is required. SSI and
each Subsidiary of SSI has full power and authority and all
material licenses, permits, and authorizations necessary to
carry on the business in which it is engaged and in which it
presently proposes to engage and to own and use the properties
owned and used by it. SSI has delivered to WT correct and
complete copies of the charter and bylaws of SSI and each
Subsidiary of SSI (as
20
amended to date). Neither SSI nor any Subsidiary of SSI is in
default under or in violation of any provision of its charter
or bylaws.
10.3 All of the issued and outstanding shares of capital stock of
each Subsidiary of SSI have been duly authorized and are
validly issued, fully paid, and nonassessable. SSI holds of
record and owns beneficially all of the outstanding shares of
each Subsidiary of SSI, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and
state and Canadian federal and provincial securities laws),
taxes, security interests, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. Except
as expressly set forth in SCHEDULE 10.3 to this Agreement,
there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could
require SSI or any Subsidiary of SSI to sell, transfer, or
otherwise dispose of any of its capital stock or that could
require SSI or any Subsidiary of SSI to issue, sell, or
otherwise cause to become outstanding any of its own capital
stock (other than this Agreement). Neither SSI nor any
Subsidiary of SSI controls directly or indirectly, or has any
direct or indirect equity participation in, any corporation,
partnership, trust or other business association which is not
a Subsidiary of SSI.
10.4 SSI and UVST have full power and authority to execute and
deliver this Agreement, the Security Agreement, the License
Agreement and the Registration Rights Agreement and to perform
their obligations hereunder and thereunder. Without limiting
the generality of the foregoing, the Board of Directors of SSI
has duly authorized the execution, delivery and performance of
this Agreement, the Security Agreement, the License Agreement
and the Registration Rights Agreement by SSI. This Agreement
and, when executed and delivered by the parties thereto, the
Security Agreement, the License Agreement and the Registration
Rights Agreement, constitute the valid and legally binding
obligations of SSI and UVST, enforceable in accordance with
their terms and conditions.
10.5 Neither the execution and the delivery of this Agreement, the
Security Agreement, the License Agreement or the Registration
Rights Agreement nor the consummation of the transactions
contemplated hereby and thereby, will (a) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which SSI or any
Subsidiary of SSI is subject or any provision of the charter
or bylaws of SSI or any Subsidiary of SSI, or (b) conflict
with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right
to accelerate, terminate, modify or cancel, or require any
notice under any agreement, contract, lease, license,
instrument or other arrangement to which SSI or any Subsidiary
of SSI is a party or by which it is bound or to which any of
its assets is subject (or result in the imposition of any
security interest upon any of its assets). Neither SSI nor any
Subsidiary of SSI needs to give any notice to, make any filing
with or obtain any authorization, consent or approval of any
government or governmental agency in order for the
21
Parties to consummate the transactions contemplated by this
Agreement, the Security Agreement, the License Agreement and
the Registration Rights Agreement, except for such filings
after the date hereof as may be specifically contemplated by
any of such agreements.
10.6 The SEC Reports filed by SSI do not contain any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements and information
contained therein not misleading. For the purpose of this
Section 10.6, the materiality of a fact shall be determined by
reference to the business or operations of SSI and UVST taken
as a whole.
11. REPRESENTATIONS OF WT
WT represents and warrants to SSI that the statements contained in this
Section 11 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Commencement Date.
11.1 WT is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation.
11.2 WT is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such
qualification is required. WT has full power and authority and
all licenses, permits and authorizations necessary to carry on
the business in which it is engaged and in which it presently
proposes to engage and to own and use the properties owned and
used by it.
11.3 WT has full power and authority to execute and deliver this
Agreement, the Security Agreement, the License Agreement and
the Registration Rights Agreement and to perform its
obligations hereunder and thereunder. Without limiting the
generality of the foregoing, the Board of Directors of WT has
duly authorized the execution, delivery and performance of
this Agreement, the Security Agreement, the License Agreement
and the Registration Rights Agreement by WT. This Agreement
and, when executed and delivered by the parties thereto, the
Security Agreement, the License Agreement and the Registration
Rights Agreement, constitute the valid and legally binding
obligation of WT, enforceable in accordance with their
respective terms and conditions.
11.4 Neither the execution and the delivery of this Agreement, the
Security Agreement, the License Agreement or the Registration
Rights Agreement, nor the consummation of the transactions
contemplated hereby and thereby, will (a) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which WT is
subject or any provision of its charter or bylaws, or (b)
conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel or require
any notice under any agreement, contract, lease, license,
instrument or other arrangement to which WT is a party or by
which it is bound or
22
to which any of its assets is subject (or result in the
imposition of any security interest upon any of its
assets). WT does not need to give any notice to, make any
filing with or obtain any authorization, consent or
approval of any government or governmental agency in order
for the Parties to consummate the transaction contemplated
by this Agreement, the Security Agreement, the License
Agreement and the Registration Rights Agreement.
11.5 WT is acquiring the Warrants and the Shares of Common Stock
issuable by SSI upon exercise of the Warrants for investment
and not with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act.
12. INDEMNIFICATION
12.1 In addition to its indemnification obligations, if any, with
respect to any System or component manufactured or supplied by
the SSI Companies that may be set forth in its supply
warranty, SSI and UVST, for themselves and on behalf of any
other SSI Companies, agree to indemnify WT and the officers,
directors, employees and Affiliates of WT from and against the
entirety of any Adverse Consequences any of the foregoing may
suffer resulting from, arising out of, relating to, in the
nature of, or caused by (a) any breach or alleged breach of
any of SSI's or UVST's representations, warranties or
covenants contained in this Agreement, or (b) any negligent
act or omission or willful misconduct by the SSI Companies in
connection with the performance of this Agreement.
12.2 In addition to its indemnification obligations, if any, with
respect to any System or component manufactured or supplied by
WT that may be set forth in its supply warranty, WT agrees to
indemnify SSI and UVST and the officers, directors, employees
and Affiliates of SSI and UVST from and against the entirety
of any Adverse Consequences any of the foregoing may suffer
resulting from, arising out of, relating to, in the nature of,
or caused by (a) any breach or alleged breach of any of WT's
representations, warranties or covenants contained in this
Agreement, or (b) any negligent act or omission or willful
misconduct by WT in connection with the performance of this
Agreement.
12.3 Matters Involving Third Parties
12.3.1 If any third party shall notify any Party (the
"INDEMNIFIED PARTY") with respect to any matter (a
"THIRD PARTY CLAIM") which may give rise to a claim
for indemnification against any other Party (the
"INDEMNIFYING PARTY") under this Section 12, then the
Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, that
no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
23
12.3.2 Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim
with counsel of its choice reasonably satisfactory to
the Indemnified Party so long as (a) the Indemnifying
Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given
notice of the Third Party Claim that the Indemnifying
Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by
the Third Party Claim, (b) the Indemnifying Party
provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that
the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder,
(c) the Third Party Claim involves only money damages
and does not seek an injunction or other equitable
relief, (d) in the good faith judgment of the
Indemnified Party, the Indemnifying Party's defense
of the Third Party claim does not involve a material
conflict of interest between the Indemnifying Party
and the Indemnified Party, and also that settlement
of, or an adverse judgment with respect to, the Third
Party Claim is not likely to establish a precedential
custom or practice materially adverse to the
continuing business interests of the Indemnified
Party, and (e) the Indemnifying Party conducts the
defense of the Third Party Claim actively and
diligently.
12.3.3 So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with
Section 12.3.2 above, (a) the Indemnified Party may
retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third
Party Claim, (b) the Indemnified Party will not
consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably), and (c) the
Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with
respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be
withheld unreasonably). In the event any of the
conditions in Section 12.3.2 above is or becomes
unsatisfied, however, (a) the Indemnified Party may
defend against, and consent to the entry of any
judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably
may deem appropriate (and the Indemnified Party need
not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (b) the
Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the costs of
defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (c) the
Indemnifying Party will remain responsible for any
Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 12.
24
13. DISPUTE RESOLUTION
13.1 The procedures specified in this Section 13 shall be the sole
and exclusive procedures for the resolution of disputes
between the Parties arising out of or relating to this
Agreement; provided, however, that a Party, without prejudice
to these procedures, may seek a preliminary injunction or
other provisional relief if, in its sole judgment, such action
is deemed necessary to avoid irreparable damage or to preserve
the status quo. During such action, the Parties will continue
to participate in good faith in the procedures specified in
this Section 13.
13.2 The Parties will attempt in good faith to resolve any claim or
controversy arising out of or relating to the execution,
interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained
in this Section 13) promptly by good faith negotiations
between the General Manager of the Chem-Feed Group Companies,
in the case of WT, and the Chief Executive Officer of SSI, or
officials having like authority.
13.3 In the event that any such claim or controversy has not been
resolved after good faith negotiation pursuant to Section
13.2, the Parties agree to submit to non-binding mediation,
each at its own expense, upon the request of the other Party
prior to the commencement of arbitration pursuant to Section
13.4.
13.4 In the event that any such claim or controversy has not been
resolved after good faith negotiation pursuant to Section 13.2
or mediation pursuant to Section 13.3, the dispute shall upon
written notice by either Party to the other, be finally
settled by arbitration under the applicable rules of the
American Arbitration Association (AAA), or other rules if
agreed, and the provisions of the United States Federal
Arbitration Act, as modified below:
13.4.1 The arbitration shall be heard by a single
independent and impartial arbitrator, who shall be
selected by two other arbitrators, one of whom shall
be selected by WT and one of whom shall be selected
by SSI, provided that all such arbitrators shall be
selected from a list of neutral arbitrators supplied
by the AAA.
13.4.2 The arbitration proceedings shall be conducted in
Chicago, Illinois.
13.4.3 Any party may seek interim or provisional remedies
under the Federal Rules of Civil Procedure and the
United States Federal Arbitration Act as necessary to
protect the rights or property of the party pending
the decision of the arbitrators.
13.4.4 The parties shall allow and participate in limited
discovery for the production of documents and taking
of depositions. All discovery shall be completed
within 60 days following the filing of the answer or
other responsive pleading. Unresolved discovery
disputes shall be brought to the attention of the
arbitrator and may be disposed of by him.
25
13.4.5 Each party shall have up to 50 hours to present
evidence and argument in a hearing before the
arbitrator, provided that he may establish such
longer terms for presentations as he deems
appropriate.
13.4.6 The arbitration decision shall be rendered by the
arbitrator within 15 business days after conclusion
of the hearing of the matter, shall be in writing and
shall specify the factual and legal basis for the
decision. Judgment thereof may be entered in any
court having jurisdiction thereof.
13.4.7 The arbitrator is empowered to order money damages in
compensation for a party's actual damages, specific
performance or other appropriate relief to cure a
breach; provided, however, that the arbitrator will
have no authority to award special, punitive or
exemplary damages, or other money damages that are
not measured by the prevailing party's actual
damages.
13.5 Each party shall continue to perform its obligations under
this Agreement pending final resolution of any dispute arising
out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the
circumstances.
14. AUDIT
Either Party may audit the books and records of the other for the
purpose of determining compliance with the terms of this Agreement during the
Term and for a period of three years thereafter; provided that with respect to
any audit by WT of the books and records of SSI or UVST, the parties acknowledge
and agree that such audit may only occur in the event of and after a Termination
of Convenience by SSI or UVST. The auditing Party may use independent outside
auditors (who may participate fully in such audit). In the event that an audit
is proposed with respect to information which the Party to be audited wishes not
to disclose to the auditing Party ("Restricted Information"), then on the
written demand of the Party to be audited the individuals conducting the audit
with respect to the Restricted Information will be limited to the auditing
Party's independent auditors. In such event, the Party to be audited shall pay
the costs of the independent auditors concerning such audit, but only with
respect to that portion of the audit relating to the Restricted Information.
Such independent auditors shall enter into an agreement with the Parties hereto,
on terms that are agreeable to both Parties hereto, under which such independent
auditors shall agree to maintain the confidentiality of the information obtained
during the course of such audit and establishing what information such auditors
will be permitted to disclose in reporting the results of any audit of
Restricted Information. Any such audit shall be conducted during regular
business hours in a manner that does not interfere unreasonably with the
operations of the Party to be audited. The audits conducted by any Party under
the provisions of this Agreement shall not be conducted more than once in any 12
month period unless the next preceding Audit disclosed a failure to conform to
the terms of the Agreement. Subject to the foregoing limitations, any such audit
shall be conducted when requested by notice given not less than 30 days prior to
the commencement of the audit.
26
15. MISCELLANEOUS
15.1 EXCLUSIVITY. SSI and UVST, for themselves and on behalf of the
other SSI Companies, agree not to (a) solicit, initiate or
encourage the submission of any proposal or offer from any
Person relating to a business arrangement in the Territory
similar to, or designed to accomplish similar objectives to,
the strategic alliance contemplated by this Agreement, or (b)
participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate
in, or facilitate in any other manner any effort or attempt by
any Person to do or seek any of the foregoing. SSI and UVST
shall, and shall cause the other SSI Companies to, notify WT
immediately if it becomes aware that any Person has made any
proposal, offer, inquiry or contact with respect to any of the
foregoing.
15.2 CONFIDENTIAL INFORMATION. Pursuant to this Agreement, the
Parties may provide Confidential Information to each other.
Unless otherwise previously authorized in writing by the Party
having the proprietary interest in the Confidential
Information (hereinafter called the "Disclosing Party"), the
Party receiving the Confidential Information (hereinafter
called the "Receiving Party") agrees to retain the
Confidential Information in confidence, not to disclose the
Confidential Information to any third party, except as
provided below, and not to use the Confidential Information
other than in accordance with this Agreement. With respect to
the Disclosing Party's Confidential Information, the Receiving
Party shall use the same degree or care that it uses to
protect its own Confidential Information, but in no case less
than a reasonable degree of care under the circumstances, to
limit dissemination of the Confidential Information to such of
its employees, agents, independent contractors or other
representatives who have a need to know in furtherance of this
Agreement, and who have been informed of, and have agreed to
abide by the confidentiality obligations stated in this
Section. The Receiving Party agrees to use commercially
reasonable efforts to take such action as may be necessary to
cause its employees, agents, independent contractors and other
representatives to comply with the terms of this Agreement.
Notwithstanding any other provision of this Agreement, the
Receiving Party (a) shall not be restricted from disclosing
Confidential Information of the Disclosing Party if legally
required to do so, provided that the Receiving Party shall
have given reasonably prompt notice to the Disclosing Party of
any judicial, administrative or other legal process purporting
to require disclosure and shall have reasonably cooperated
with the Disclosing Party to attempt to afford the Disclosing
Party an opportunity to participate (at the Disclosing Party's
own expense) in such process for the purpose of preventing or
limiting such disclosure, and (b) shall have the right to use
Confidential Information of the Disclosing Party in the manner
and to the extent necessary to perform the obligations of the
Receiving Party under this Agreement. Upon termination of this
Agreement, the Receiving Party agrees to return to the
Disclosing Party or destroy all writings or other materials
containing, referring to, or summarizing Confidential
Information referred to in this Section.
15.3 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Neither SSI nor WT
shall issue, nor permit any of its Affiliates to issue, any
press release or make any public
27
announcement relating to this Agreement without the prior
written approval of the other Party; provided, that either
SSI or WT may make any public disclosure it believes in
good faith is required by applicable law (in which case the
disclosing Party will use its reasonable best efforts to
advise the other Party prior to making the disclosure).
15.4 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns. If this
Agreement purports to impose an obligation on the SSI
Companies (other than SSI or UVST), SSI and UVST shall cause
the appropriate SSI Company to perform such obligation upon
the terms set forth in this Agreement.
15.5 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the
Parties and supersedes any prior understandings, agreements or
representations by or among the Parties, written or oral, to
the extent they related in any way to the subject matter
hereof. There is no representation, warranty, collateral
agreement or condition, express or implied, which induced any
Party to enter into this Agreement or on which reliance is
placed by any Party or which affects this Agreement other than
as expressed herein.
15.6 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and
their respective successors and permitted assigns. No Party
may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of the other Parties; provided, that any Party may
(a) assign any or all of its rights and interests hereunder to
one or more of its Affiliates (which, in the case of SSI or
UVST, must be wholly owned directly or indirectly, by SSI),
and (b) delegate to one or more of its Affiliates (which, in
the case of SSI or UVST, must be wholly owned directly or
indirectly by SSI) the performance of its obligations
hereunder (in any or all of which cases the delegatee shall
expressly assume such obligations by written instrument but
the delegating Party nonetheless shall remain responsible for
the performance of all of its obligations hereunder). The
foregoing is not intended to and shall not prevent the SSI
Companies, or any of them, from contracting or subcontracting
with any Person, whether or not an Affiliate, for the
manufacture or supply of any Systems, components or parts, but
no such contract or subcontract shall have the effect of
relieving the SSI Companies from any of their obligations
under this Agreement.
15.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
15.8 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
28
15.9 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice,
request, demand, claim or other communication hereunder shall
be deemed duly given upon first attempted delivery if it is
sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to WT: Copy to:
-------- -------
U.S. Filter/Xxxxxxx & Xxxxxxx, Inc. United States Filter Corporation
0000 Xxxx Xxxxxx Xxxx 000 Xxxxx Xxxx Xxxx
Xxxxxxxx, X.X. 00000 Xxxxxxxxxx, XX 00000
Attn: Executive Vice President Attn: Associate General Counsel
Fax: (000) 000-0000 Fax: (000) 000-0000
If to SSI or UVST: Copy to:
----------------- -------
Service Systems International, Ltd. Xxxxxx X. Xxxxxxx, Esq.
UV Systems Technology, Inc. Schuler, Messersmith, Xxxx &
0000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxx, X.X. 0000 Xxx Xxxxx XX, Xxxxx X000
Xxxxxx X0X 0X0 Xxxxxxxxxxx, XX 00000
Attn: President
Fax: (000) 000-0000 Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the
address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, ordinary mail or electronic mail), but no such
notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is
received by the intended recipient. Any Party may change the
address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
15.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Delaware without giving effect to any choice or conflict of
law provision or rule (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
Each of the Parties agrees that any legal action commenced by
either party to this Agreement shall be brought in either the
United States District Court in and for the District of
Delaware or the Chancery Court in and for New Castle County,
Delaware and consents to the personal jurisdiction of such
courts in any such action over the Parties. If, contrary to
the provisions of this Section 15.9, any Party commences any
legal action involving this Agreement or the transactions
contemplated by this Agreement in any forum other than either
of those specified above, the other
29
Parties shall be entitled to the dismissal of such action
based upon the agreement of the Parties contained in this
Section 15.9.
15.11 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by all of the Parties. No waiver by any Party of
any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.
15.12 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
15.13 EXPENSES. Except as may otherwise be provided herein or, with
respect to any System or component purchased by WT from the
SSI Companies, in the Standard Terms (or as otherwise agreed
upon in writing by the Parties), each of WT, on one hand, and
SSI and UVST, on the other hand, shall bear their own costs
and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions
contemplated hereby.
15.14 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the
Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to
federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. Nothing
in any Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless
the Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the
mere listing (or inclusion of a copy) of a document or other
item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the
document or other item itself). The Parties intend that each
representation, warranty and covenant contained herein shall
have independent significance. If any Party has breached any
representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the
fact that the Party is in breach of the first representation,
warranty or covenant.
30
15.15 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.
15.16 SPECIFIC PERFORMANCE. WT, on one hand, and SSI and UVST, on
the other hand, acknowledge and agree that SSI and UVST or WT,
respectively, would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are
breached. Accordingly, each of the Parties agrees that the
other Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any
court having jurisdiction over the Parties and the matter, in
addition to any other remedy to which it may be entitled, at
law or in equity.
15.17 INDEPENDENT PARTIES. By virtue of this Agreement, no Party
constitutes the other as its agent, partner, joint venturer or
legal representative and no Party has express or implied
authority to bind the other Parties in any manner whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
U.S. FILTER/XXXXXXX SERVICE SYSTEMS INTERNATIONAL,
& XXXXXXX, INC. LTD.
By: /s/ X.X. Xxxxx By: /s/ Xxxx Xxxxx
---------------------------------- -----------------------------
Title: Vice President Title: Secretary
------------------------------- --------------------------
U.S. Filter/Xxxxxxx & Xxxxxxx, Inc.
UV SYSTEMS TECHNOLOGY, INC.
By: /s/ Xxxx Xxxxx
-----------------------------
Title: Secretary
--------------------------
31
SSI DISCLOSURE SCHEDULES
See attached
32
SECURITY AGREEMENT
This Security Agreement (the "Agreement") dated as of January 25, 2001
is entered into by Service Systems International, Ltd., a Nevada corporation
("SSI"), and UV Systems Technology, Inc., a British Columbia corporation
("UVST") (SSI and UVST being collectively referred to herein as the "SSI
Parties"), in favor of U.S. Filter/Xxxxxxx & Xxxxxxx, Inc., a Delaware
corporation ("WT").
WHEREAS, the SSI Parties and WT have entered into a Strategic Alliance
Agreement ("Strategic Alliance Agreement") and a License Agreement ("License
Agreement") of even date herewith (this Agreement, the Strategic Alliance
Agreement and the License Agreement being herein collectively referred to as the
"Transaction Documents"); and
WHEREAS, all Secured Obligations of the SSI Parties under the Strategic
Alliance Agreement will be secured as set forth herein; and
WHEREAS, in order to provide security for the Secured Obligations, the
SSI Parties have agreed to grant to WT a security interest in the Collateral (as
defined below) in the manner set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the SSI Parties,
intending to be legally bound, do hereby covenant and agree as follows:
ARTICLE 1
DEFINED TERMS AND PRINCIPLES OF CONSTRUCTION
1.1 DEFINED TERMS.
(a) Capitalized terms used herein without being defined herein
shall have the meaning ascribed to such terms in the Strategic Alliance
Agreement or the License Agreement, as the case may be, which
definitions are incorporated by reference herein as though set forth
fully herein. Unless otherwise defined herein or in such other
agreements, all terms defined in the Uniform Commercial Code as in
effect from time to time in the State of Delaware ("UCC") which are
used herein shall have the respective meanings given those terms in the
UCC.
(b) The following terms shall have the meanings herein specified:
"Collateral" shall have the meaning specified in Section 2.1(a).
"Contract Rights" shall mean: (i) all (x) rights to payment under or
with respect to any Contract and (y) payments due and to become due under or
with respect to any Contract, in each case whether as contractual obligations,
damages, indemnity payments or otherwise; (ii) all of the SSI Parties' claims,
rights, powers or privileges and remedies under any Contract including, but not
limited to, all of the warranties, representations and guarantees contained in
such Contract; and (iii) all of the SSI Parties' rights under any Contract to
make determinations, to exercise any election (including, but not limited to,
election of remedies) or option or to give or receive any notice, consent,
waiver or approval, together with full power and authority with respect to such
Contract to demand, receive, enforce or collect any of the foregoing rights or
any property the subject of such Contract, to enforce or execute any checks or
other instruments or orders, to file any claims and to take any action which, in
the opinion of WT, may be necessary or advisable in connection with any of the
foregoing.
"Contracts" shall mean all contracts and agreements, other than those
embodied in the Transaction Documents, relating to the use or exploitation of
the Licensed Marks or the Licensed Technology in connection with the sale,
distribution, promotion, marketing or manufacture of UV Treatment Systems for
installation within the Territory to which the SSI Parties or either of them now
is, or hereafter will be, bound, or a party, beneficiary or assignee, including
without limitation, all other instruments, agreements and documents executed and
delivered with respect to such contracts and all revenues, Proceeds and other
sums of money due and to become due from any of the foregoing.
"Default" shall mean (a) receipt by WT of any communication from a
Uniform Commercial Code financing statement filing office or any similar filing
or recording office in any jurisdiction indicating that WT's security interest
granted herein is not prior to all other security interests or other interests
in the Collateral, other than the Patent Assignment or any interests which have
achieved priority because of the failure of WT or other secured party to file a
continuation statement in accordance with the Uniform Commercial Code or other
recordings, filings or instruments required under any relevant applicable law of
the United States or Canada to be filed by the secured party from time to time
to maintain the effectiveness or priority of its security interest, or (b) any
breach of a representation, warranty or covenant of the SSI Parties set forth in
Article 3 hereof.
"Event of Default" shall mean (a) a Specified Event of Default (as
defined in the Strategic Alliance Agreement), or (b) the occurrence of a Default
which.shall have continued for a period of 30 days after notice thereof by WT to
the SSI Parties.
"Financing Statements" shall mean all financing statements, recordings,
filings or other instruments of registration deemed by WT to be necessary or
appropriate to perfect a security interest or Lien by filing in any filing or
recording office in accordance with the Uniform Commercial Code as enacted in
any and all relevant jurisdictions or any other relevant applicable law of the
United States or Canada.
"Licensed Information" shall mean any copyrights, trade secrets and
know-how proprietary to the SSI Parties and related to the UV Treatment Systems,
and any derivative works thereof, or improvements or enhancements thereto.
"Licensed Marks" shall mean the xxxx ULTRA GUARD and U.S. registration
number 2,265,236 and Canadian registration number 489,964 thereof, and the wavy
lines design xxxx and U.S. registration number 2,362,379 and Canadian
registration number 497,075 thereof, and any other marks adopted by the SSI
Parties in connection with the UV Treatment Systems.
"Licensed Patents" shall mean U.S. Patent numbers 5,503,800 and
5,674,029, and any patents issuing from the Licensed Patent Applications, as
defined herein, and any continuations, divisions, reissues, or reexaminations
thereof.
"Licensed Patent Applications" shall mean any patent applications,
domestic or foreign, filed by or on behalf of the SSI Parties, and relating to
the UV Treatment Systems, including, without limitation, International Patent
Application number PCT/CA/0051, if and to the extent having or intended to have
effect within the Territory.
"Licensed Technology" shall mean Licensed Patents, Licensed Patent
Applications, and Licensed Information.
"Lien" shall mean, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or capital lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Patent Assignment" shall mean the Patent Assignment made by Xxxxx
Xxxx, as Assignor, in favor of UV Waterguard Systems, Inc., as Assignee, and
dated December 30, 1994.
"Proceeds" shall mean any "proceeds," as such term is defined in the
UCC or under other applicable law, and, in any event, shall include, but shall
not be limited to, (i) any and all proceeds of, or amounts (in any form
whatsoever, whether cash, securities, property or other assets) received under
or with respect to, any insurance, indemnity, warranty or guaranty payable to
the SSI Parties from time to time, and claims for insurance, indemnity, warranty
or guaranty effected or held for the benefit of the SSI Parties, with respect to
any of the Collateral, and (ii) any and all other amounts (in any form
whatsoever, whether cash, securities, property or other assets) from time to
time paid or payable, in all events, under or in connection with any of the
Collateral (whether or not in connection with the sale, license or other
disposition of the Collateral).
"Secured Obligations" shall have the meaning set forth in Section 2.7
of the Strategic Alliance Agreement.
"Termination Date" shall mean the date on which the Secured Obligations
have been completely performed and indefeasibly paid in full in cash in
accordance with the terms of the Strategic Alliance Agreement.
"UCC" shall have the meaning specified in Section 1.1(a).
ARTICLE 2
GRANT OF SECURITY INTEREST
2.1 ASSIGNMENT AND GRANT OF SECURITY INTEREST. As collateral
security for the prompt and complete payment and performance when due (whether
at stated maturity, by acceleration or otherwise) of all of the Secured
Obligations, whether now existing or hereafter arising and howsoever evidenced,
the SSI Parties, jointly and severally, hereby assign, transfer and grant to WT
and hereby create in favor of WT a continuing Lien on and security interest of
first priority (except to the extent, if at all, the Patent Assignment may have
priority) in all of the right, title and interest of the SSI Parties, to and
under all of the following, whether now existing or hereafter from time to time
acquired or reacquired (collectively, the "Collateral"):
(a) all Licensed Technology, to the extent the same may be used:
(i) to sell, distribute, promote and market the UV Treatment Systems
for installation within the Territory; (ii) in connection with the use
of the UV Treatment Systems within the Territory in furtherance of the
rights referred to in clause (i) of this Section 2.1(a); and (iii) for
so long as the Manufacturing Condition shall exist, to manufacture UV
Treatment Systems for installation within the Territory;
(b) all Licensed Marks within the Territory, together with the
registrations and right toall renewals thereof, to the extent the same
may be used in connection with the rights referred to in Section 2.1(a)
hereof ;
(c) all Contracts;
(d) all Contract Rights; and
(e) any and all additions and accessions to any of the foregoing,
all improvements thereto, all substitutions and replacements therefor
and all Proceeds thereof.
2.2 SECURITY INTEREST ABSOLUTE. All rights of WT and all security
interests created hereunder shall be absolute and unconditional irrespective of
any circumstance or occurrence whatsoever, including, without limitation:
(a) any lack of validity or enforceability of all or any part of
the Secured Obligations or of any security therefor or of any of the
Transaction Documents or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any part of the Secured Obligations, or any
other amendment or waiver of or any consent to
any departure from or exercise or non-exercise of any right under any
of the Transaction Documents or any other agreement or instrument
relating thereto; or
(c) any exchange, release or non-perfection of any other
collateral for, or any release or amendment or waiver of or consent to
any departure from any guaranty for, all or any part of the Secured
Obligations.
2.3 POWER OF ATTORNEY.
(a) Without limiting any other rights or powers granted to WT
hereunder, the SSI Parties, jointly and severally, hereby constitute
and appoint WT, or any Person or agent whom WT may designate, as the
SSI Parties' attorney-in-fact, at the SSI Parties' cost and expense, in
order to effectuate the intent of this Agreement, to exercise all or
any of such powers in accordance with Article 9 of the UCC upon the
occurrence and during the continuance of an Event of Default, which
powers, in either case, being coupled with an interest, shall be
irrevocable until the Termination Date:
(i) to receive, take, endorse, sign, assign and deliver,
all in WT's name or in the name of the SSI Parties or either of them,
any and all checks, notes, drafts and other documents or instruments
relating to the Collateral;
(ii) to prepare, sign and file any Financing Statements in
the name of the SSI Parties as debtor for the purpose of perfecting
Liens;
(iii) to take or cause to be taken all actions necessary to
perform or comply or cause performance or compliance with the covenants
of the SSI Parties contained in this Agreement;
(iv) to defend any suit, action or proceeding brought
against the SSI Parties in respect of the Collateral;
(v) to settle, compromise or adjust any suit, action or
proceeding described in the preceding clause and, in connection
therewith, to give such discharges or releases as WT may deem
appropriate;
(vi) generally, to sell or transfer and make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though WT were the absolute owner thereof for all
purposes, and to do, at WT's option and the SSI Parties' expense, at
any time, or from time to time, all lawful acts and things which XX
xxxxx necessary to protect, preserve or realize upon the Collateral and
the Liens of WT thereon;
(vii) to execute, in connection with any foreclosure, any
endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(viii) to exercise any and all other rights, remedies,
powers and privileges of the SSI Parties with respect to the
Collateral.
(b) The SSI Parties and each of them hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof, in
each case pursuant to the powers granted hereunder. The SSI Parties and
each of them hereby acknowledges and agrees that in acting pursuant to
this power-of-attorney WT shall be acting in its own interest, and the
SSI Parties and each of them acknowledges and agrees that WT shall have
no fiduciary duties to the SSI Parties or either of them and the SSI
Parties and each of them hereby waives any claims to the rights of a
beneficiary of a fiduciary relationship hereunder.
2.4 DUTIES OF THE SSI PARTIES.
(a) Anything herein contained to the contrary notwithstanding, the
SSI Parties shall remain liable to perform all of their respective
obligations under or with respect to the Collateral unless and until
the SSI Parties have been divested of their right, title and interest
in and to the Collateral, and WT shall not have any obligations or
liabilities under or with respect to any Collateral by reason of or
arising out of this Agreement, nor shall WT be required or obligated in
any manner to perform or fulfill any of the respective obligations of
the SSI Parties under or with respect to any Collateral.
(b) If any Collateral is in the possession of a third party, the SSI
Parties shall notify WT of this fact and shall provide in such notice
to WT (a) the name, address and telephone number of such third party
and (b) a description of the Collateral in such third party's
possession. The SSI Parties, jointly and severally, hereby agree to
assist WT in notifying such third party of WT"s security interest in
such Collateral and in obtaining an acknowledgment from such third
party that it is holding such Collateral subject to WT's security
interest.
2.5 EFFECTIVE AS A FINANCING STATEMENT. This Agreement shall also
be effective as a Financing Statement covering any Collateral and may be filed
in any appropriate filing or recording office. A carbon, photographic, facsimile
or other reproduction of this Agreement or of any Financing Statement relating
to this Agreement shall be sufficient as a Financing Statement for any of the
purposes referred to in the preceding sentence.
2.6 OPERATIONS OF SSI PARTIES. Nothing contained in this Article 2
or elsewhere in this Agreement to the contrary shall prevent the SSI Parties
from undertaking their operations in the ordinary course of business in
accordance with the terms of the Transaction Documents prior to the exercise by
WT of any of its rights under this Agreement.
ARTICLE 3
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The SSI Parties, jointly and severally, hereby make the following
representations, warranties and covenants to WT, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
3.1 NECESSARY FILINGS. All filings, registrations and recordings
necessary or appropriate to create, preserve, protect and perfect the security
interest granted by the SSI Parties to WT hereby in respect of the Collateral
will be accomplished contemporaneously with the execution of the Transaction
Documents and the security interest granted to WT pursuant to this Agreement in
and to the Collateral constitutes a valid and enforceable perfected security
interest therein superior and prior to the rights of all Persons therein other
than prior rights, if any, arising under the Patent Assignment and, in each
case, subject to no other Liens, sales, assignments, conveyances, settings over
or transfers. The SSI Parties authorize WT to take any action to accomplish the
foregoing including, but not limited to, filing Financing Statements describing
WT as the "Secured Party" and the SSI Parties as the "Debtor" and indicating
thereon the Collateral.
3.2 NO LIENS. The SSI Parties have-s rights in, are the owner of,
or have the power to transfer all of the Collateral as herein provided and such
rights in, such ownership of, or such power to transfer the Collateral, are free
from any Lien or other right, title or interest of any Person other than the
prior rights, if any, arising under the Patent Assignment. The SSI Parties shall
defend such Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to WT, including without
limitation the claims and demands of any Persons claiming under the Patent
Assignment. Without limiting the generality of the foregoing, the SSI Parties
shall not assign, charge, convey, sell, set over, transfer, lease, license or
grant any security interest in the Collateral other than pursuant or subject to
this Agreement and the other Transaction Documents.
3.3 OTHER FINANCING STATEMENTS. Except for the Patent Assignment,
there is no financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) executed by the SSI Parties or,
to the knowledge of the SSI Parties, by any other Person covering or purporting
to cover any interest of any kind in the Collateral and until the Termination
Date the SSI Parties will not execute or authorize to be filed in any public
office any Financing Statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except Financing Statements (or continuations thereof) filed or to
be filed in respect of and covering the security interests granted hereby by the
SSI Parties, or security interests which are subordinate to those granted
hereby.
3.4 CHIEF EXECUTIVE OFFICE; RECORDS. The exact legal name, state
of organization and current chief executive office location of the SSI Parties
are set forth in Appendix A hereto. The chief executive office location of the
SSI Parties is expected to be moved in February 2001. The new location also is
set forth in Appendix A. The SSI Parties shall not change its exact legal name
or state of organization or, except for the contemplated move from the current
to the new location, move its chief executive office unless it has complied with
the requirements of the last sentence of
this Section 3.4. The originals of all documents evidencing all Collateral of
the SSI Parties, and the original books of accounts and records concerning
the Collateral are, and will continue to be, kept at, and controlled and
directed (including, without limitation, for general accounting purposes)
from, the SSI Parties's chief executive office, or at such new location for
its chief executive office as the SSI Parties may establish in accordance
with the last sentence of this Section 3.4. The SSI Parties shall not change
their exact legal name, state of organization or, except for the contemplated
move from the current to the new location, chief executive office location
until (i) they have given to WT not less than thirty (30) days' prior written
notice of their intention so to do, clearly describing such new legal name,
state of organization or chief executive office location and providing such
other information in connection therewith as WT may reasonably request, and
(ii) with respect to such new legal name, state of organization or chief
executive office location, they shall have taken all action, satisfactory to
WT, to maintain the security interest of WT in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.
3.5 MAINTENANCE OF RECORDS. The SSI Parties shall keep and
maintain or cause to be kept and maintained, at their own cost and expense,
records of the Collateral, including, but not limited to, records of all
payments received and all credits granted thereon (subject to customary record
retention policies for similar companies located in Canada), and the SSI Parties
shall make the same available to WT for inspection at the SSI Parties' chief
executive office, at WT's expense if no Event of Default exists, or at the SSI
Parties' expense if an Event of Default exists, at any and all reasonable times
upon request by WT if no Event of Default exists or, if an Event of Default
exists, at any time upon demand by WT. The SSI Parties shall, at their own cost
and expense, deliver all tangible evidence that WT may reasonably request of the
Collateral to WT or to its representatives (copies of which evidence may be
retained by the SSI Parties) at any reasonable time upon WT's demand. If an
Event of Default occurs and continues, and if WT, in accordance with Article 9
of the UCC so directs, the SSI Parties shall affix a legend in form and
substance satisfactory to WT, to the Collateral, as well as books, records and
documents of the SSI Parties evidencing or pertaining to the Collateral, with an
appropriate reference to the fact that the Collateral has been assigned to WT
and that WT has a security interest therein.
ARTICLE 4
SPECIAL PROVISIONS CONCERNING CONTRACTS
4.1 SECURITY INTEREST IN CONTRACT RIGHTS. The SSI Parties' grant,
pursuant to Section 2.1, to WT of a security interest in all of its right, title
and interest in and to each of the Contracts and the Contract Rights, includes,
but is not limited to:
(a) all (i) rights to payment under or with respect to any
Contract and (ii) payments due and to become due under or with respect
to any Contract, in each case whether as contractual obligations,
damages, indemnity payments or otherwise;
(b) all of the SSI Parties's claims, rights, powers or privileges
and remedies under any Contract including, but not limited to, all of
the warranties, representations and guarantees contained in such
Contract; and
(c) all of the SSI Parties's rights under any Contract to make
determinations, to exercise any election (including, but not limited
to, election of remedies) or option or to give or receive any notice,
consent, waiver or approval, together with full power and authority
with respect to such Contract to demand, receive, enforce or collect
any of the foregoing rights or any property the subject of such
Contract, to enforce or execute any checks or other instruments or
orders, to file any claims and to take any action which, in the opinion
of WT, may be necessary or advisable in connection with any of the
foregoing; provided, however, that until the occurrence and after the
cessation of an Event of Default, notwithstanding anything else herein
to the contrary, the SSI Parties may exercise all of their rights,
powers, privileges and remedies under the Contracts and Contract Rights
in accordance with the Transaction Documents; provided, further, that
if an Event of Default has occurred and is continuing, WT shall be
entitled to perform (including, without limitation, by satisfying any
payment obligation), or cause the performance of, any Contract in
accordance with Article 9 of the UCC .
4.2 FURTHER PROTECTION. The SSI Parties, jointly and severally,
warrant and forever shall defend the title to the Contract Rights against the
claims and demands of any Person, and hereby xxxxx XX full power and authority,
upon the occurrence and during the continuance of an Event of Default, to take
all actions in accordance with Article 9 of the UCC as XX xxxxx necessary or
advisable to effectuate the provisions set forth in this sentence.
4.3 PAYMENTS UNDER CONTRACTS.
(a) The SSI Parties hereby agree to be bound by any collection,
compromise, forgiveness, extension or other action taken by WT pursuant
to the terms of this Agreement with respect to the Contracts.
(b) If the SSI Parties or either of them shall receive directly
from any party to any of the Contracts any payments under such
agreements after the occurrence and during the continuance of an Event
of Default, the SSI Parties shall receive such payments in a
constructive trust in the name of WT for the benefit of WT, shall
segregate such payments from the SSI Parties' other funds and shall
forthwith transmit and deliver such payments to WT in the same form as
so received (with any necessary endorsement).
4.4 SSI PARTIES REMAIN LIABLE UNDER CONTRACTS. Anything herein to
the contrary notwithstanding (including, without limitation, the grant of any
rights to WT), the SSI Parties shall remain liable under each of the Contracts
to observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of such Contract
unless and until the SSI Parties have been divested of their right, title and
interest in and to such Contract. WT shall not have any obligation or liability
under any Contract by reason of or arising out of this Agreement or the receipt
by WT of any payment relating to such Contract pursuant hereto, nor shall WT be
obligated in any manner to perform any of the obligations of the SSI Parties
under or pursuant to any Contract, to make any payment, to make any inquiry as
to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Contract, to present or
file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
4.5 COLLECTION. Upon the occurrence of any Event of Default and
during the continuance thereof, the SSI Parties shall use reasonable efforts to
cause to be collected from the obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures),
any and all amounts owing under or on account of such Contract, and apply
forthwith upon receipt thereof by WT all such amounts as are so collected to the
outstanding balance under such Contract.
4.6 REMEDIES. Upon the occurrence of any Event of Default and
during the continuance thereof, WT shall have the rights set forth in Article 9
of the UCC and shall be entitled to (i) enforce all remedies, rights, powers and
privileges of the SSI Parties under any or all of the Contracts and/or (ii) to
the extent permitted by the terms of such Contracts, substitute itself or any
nominee or trustee of WT in lieu of the SSI Parties as party to any of the
Contracts and notify the obligor of any Contract Right (the SSI Parties hereby
agreeing to deliver any such notice at the request of WT) that all payments and
performance under the relevant Contract shall be made or rendered to WT or such
other Person as WT may designate.
4.7 SSI PARTIES' PERMITTED ACTIONS. Nothing contained in this
Article 4 shall prevent the SSI Parties, prior to the exercise by WT of its
rights under this Agreement following the occurrence of an Event of Default,
from undertaking the SSI Parties' operations in the ordinary course of business,
from giving and receiving all notices under the Contracts, from administering
and performing the Contracts and from taking all actions the SSI Parties are
permitted to take under the Transaction Documents.
ARTICLE 5
PROVISIONS CONCERNING ALL COLLATERAL
5.1 PROTECTION OF WT'S INTERESTS. The SSI Parties will do nothing
to impair the rights of WT in the Collateral. The SSI Parties assume all
liability and responsibility in connection with the Collateral except if and to
the extent directly resulting from the negligence or willful misconduct of WT,
and the liability of the SSI Parties with respect to the Secured Obligations
shall in no way be affected or diminished by reason of the fact that any
Collateral may be impaired or for any reason whatsoever unavailable to the SSI
Parties.
5.2 FURTHER ACTIONS. The SSI Parties will, at their own expense,
make, execute, endorse, acknowledge, file and/or deliver to WT from time to time
such assignments, conveyances, Financing Statements, endorsements, powers of
attorney, certificates, reports and other assurances or instruments, and take
such further steps relating to the Collateral which WT reasonably deems
appropriate or advisable to perfect, preserve or protect its ownership and
security interests in the Collateral.
5.3 FINANCING STATEMENTS. The SSI Parties and each of them agrees
to sign and deliver to WT such Financing Statements (or similar statements or
instruments of registration under the law of any jurisdiction), in form
acceptable to WT, as WT may from time to time request or as are necessary or
desirable in the opinion of WT to establish and maintain the security interests
contemplated hereunder as valid, enforceable, first priority (except to the
extent, if at all, the Patent Assignment may have priority) security interests
as provided herein and the other rights and security contemplated herein, all in
accordance with the Uniform Commercial Code as enacted in any and all relevant
jurisdictions or any other applicable law. The SSI Parties, jointly and
severally, hereby agree to pay any applicable filing fees and reasonable related
expenses. The SSI Parties and each of them hereby authorizes WT to file any such
Financing Statements without the signature of the SSI Parties.
ARTICLE 6
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
6.1 EVENTS OF DEFAULT; OBTAINING THE COLLATERAL UPON AN EVENT OF
DEFAULT. If an Event of Default has occurred and is continuing, WT, in addition
to its other rights and remedies hereunder and under the Transaction Documents,
shall be entitled to do any one or more of the following:
(a) exercise any rights or remedies granted to a secured party
under the Uniform Commercial Code as in effect in any relevant
jurisdiction or under any other relevant law to enforce this Agreement
and the security interests contained herein;
(b) proceed to protect and enforce the rights vested in it by this
Agreement, including, but not limited to, the right to substitute
itself or any of its nominees or trustees in lieu of the SSI Parties,
to cause all revenues hereby pledged as security and all other moneys
pledged hereunder to be paid directly to it, and to enforce its rights
hereunder to such payments and all other rights hereunder by such
appropriate judicial proceedings as it shall deem most effective to
protect and enforce any of such rights, either at law or in equity or
otherwise, whether for specific enforcement of any covenant or
agreement contained in any of the Contracts, or in aid of the exercise
of any power therein or herein granted, or for any foreclosure
hereunder and sale under a judgment or decree in any judicial
proceeding, or to enforce any other legal or equitable right vested in
it by this Agreement or by law whether in the SSI Parties' name, in
WT's name or in the name of WT's designees;
(c) cause any action at law or suit in equity or other proceeding
to be instituted and prosecuted to collect or enforce any of the
Secured Obligations or any rights hereunder or included in the
Collateral, or enforce or to foreclose any other agreement or other
instrument by or under or pursuant to which such Secured Obligations
are issued or secured, subject in each case to the provisions and
requirements thereof;
(d) sell, assign or otherwise liquidate any or all of the
Collateral or cause the Collateral to be sold or otherwise disposed of
and take possession of the proceeds of any such sale or liquidation;
(e) incur reasonable expenses, including reasonable attorneys'
fees, consultants' fees and other costs appropriate to the exercise of
any right or power under this Agreement;
(f) perform any obligation of the SSI Parties hereunder, and make
payments, purchase, contest or compromise any encumbrance, charge or
Lien, and pay taxes and expenses, without, however, any obligation so
to do;
(g) take possession of the Collateral and render it usable, and
repair and renovate the same, without, however, any obligation so to
do, and enter upon any location where the same may be located, control,
manage, operate, rent or lease the Collateral, collect all rents and
income from the Collateral and apply the same to reimburse WT for any
cost or expenses incurred hereunder or under any of the Transaction
Documents and to the payment or performance of the SSI Parties'
obligations hereunder or under any of the Transaction Documents and
apply the balance to the Secured Obligations;
(h) secure the appointment of a receiver of the Collateral or any
part thereof; or
(i) take possession of the Collateral or any part thereof by
directing the SSI Parties in writing to turn over the Collateral to WT
at any reasonable place or places designated by WT, in which event the
SSI Parties shall at their own expense
(i) forthwith cause the same to be moved to the place or
places so designated by WT and there delivered to WT,
(ii) store and keep any Collateral so delivered to WT at
such place or places pending further action by WT, and
(iii) while Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be reasonably necessary
to protect the same and to preserve and maintain them in good
condition.
The parties hereto hereby agree that the SSI Parties' obligation to
deliver the Collateral as set forth above is of the essence of this Agreement
and that, accordingly, upon application to a court of equity having
jurisdiction, WT shall be entitled to a decree requiring specific performance by
the SSI Parties of such obligation.
6.2 REMEDIES; DISPOSITION OF THE COLLATERAL.
(a) If an Event of Default has occurred and is continuing, any
Collateral, whether or not repossessed by WT pursuant to Section 6.1,
may be sold, leased or otherwise disposed of under one or more
contracts or as an entirety, and without the necessity of gathering at
the place of sale the property to be sold, and in general in such
manner, at such time or times, at such place or places and on such
terms as WT may, in compliance with any mandatory requirements of any
applicable Law, determine to be commercially reasonable, as fully and
completely as though WT were the absolute owner thereof.
(b) Subject to subsection (a) of this Section 6.2, any Collateral
may, upon the occurrence and during the continuance of an Event of
Default, be sold, licensed or otherwise disposed of. Any such
disposition shall be made upon not less than 10 business days' written
notice to the SSI Parties specifying the time such disposition is to be
made and, if such disposition shall be a public sale, specifying the
place of such sale. Any such sale may be adjourned by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. The
SSI Parties hereby waive any claims against WT arising by reason of the
fact that the price at which Collateral may have been sold at a private
sale was less than the price that might have been obtained at a public
sale or was less than the aggregate amount of the Secured Obligations,
even if WT accepts the first offer received or does not offer the
Collateral to more than one offeree. All fees of WT and all expenses
(including court costs and reasonable attorneys' fees, expenses and
disbursements) of, or incident to, the enforcement of any of the
provisions hereof shall be recoverable from the proceeds of the sale or
other disposition of the Collateral.
(c) WT may dispose of the Collateral under subsection (b) of this
Section 6.2 without giving any warranties as to the Collateral. WT may
disclaim warranties relating to title, possession, quiet enjoyment, and
the like. Such a disclaimer will not affect the commercial
reasonableness of such disposition.
(d) WT will comply with any applicable state or federal law
requirements in connection with the disposition of the Collateral under
subsection (b) of this Section 6.2. Such a compliance will not affect
the commercial reasonableness of such disposition.
6.3 PURCHASE OF THE COLLATERAL. WT may be a purchaser of the
Collateral or any part thereof or any right or interest therein at any sale
thereof, whether pursuant to foreclosure, power of sale or otherwise hereunder
and WT may apply the purchase price to the payment of the Secured Obligations.
Any purchaser of all or any part of the Collateral shall, upon any such
purchase, acquire good title to the Collateral so purchased, free of the
security interests created by this Agreement.
6.4 WAIVER.
(a) EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE
SSI PARTIES HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NOTICE OR JUDICIAL HEARING IN CONNECTION WITH WT'S TAKING POSSESSION OR
WT'S DISPOSITION OF ANY OF THE COLLATERAL PURSUANT TO THE TERMS OF THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH
THE SSI PARTIES WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY
STATUTE OF THE UNITED STATES OR CANADA OF ANY STATE OR PROVINCE OR
UNDER ANY OTHER RELEVANT LAW AND THE SSI PARTIES HEREBY FURTHER WAIVE:
(i) all damages occasioned by such taking of
possession except any damages which are finally judicially determined
to have been the direct result of WT's negligence or willful
misconduct;
(ii) all other requirements as to the time, place
and terms of sale or other requirements with respect to the enforcement
of WT's rights hereunder;
(iii) all rights of redemption, appraisement,
valuation, stay, extension or moratorium now or hereafter in force
under any applicable law in order to prevent or delay the enforcement
of this Agreement or the absolute sale of the Collateral or any portion
thereof pursuant to the terms of this Agreement, and the SSI Parties,
for themselves and all who may claim under them, insofar as they may
now or hereafter lawfully do so, hereby waive the benefit of such laws;
and
(iv) all rights the SSI Parties may have to
require WT to pursue any other Person for any of the Secured
Obligations.
(b) Without limiting the generality of the foregoing, the SSI
Parties hereby waive and release any and all rights to require WT to
collect any of the Secured Obligations from any specific item or items
of Collateral or from any other party liable as guarantor or in any
other manner in respect of any of the Secured Obligations or from any
collateral (other than the Collateral) for any of the Secured
Obligations.
(c) Any sale of, or the grant of options to purchase, or any other
realization upon, any Collateral pursuant to the terms of this
Agreement shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the SSI Parties therein and
thereto, and shall be a perpetual bar both at law and in equity against
the SSI Parties and against any and all Persons claiming or attempting
to claim the Collateral so sold, optioned or realized upon, or any part
thereof, from, through and under the SSI Parties.
6.5 DISCONTINUANCE OF PROCEEDINGS. In case WT shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason, then, in every such case,
the SSI Parties, WT and each holder of any of the Secured Obligations shall be
restored to their former positions and rights hereunder with respect to the
Collateral, subject to the security interest created under this Agreement, and
all rights, remedies and powers of WT shall continue as if no such proceeding
had been instituted.
6.6 LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
WT's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, shall be to deal with it in
the same manner as WT deals with similar property for its own account. In any
event, (i) WT shall have no obligation hereunder to take any steps to preserve
rights against prior parties to any Collateral and (ii) WT, any Secured Party
and any of their respective directors, officers, employees or agents shall not
be liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the SSI Parties or
otherwise.
6.7 APPLICATION OF PROCEEDS. For the avoidance of doubt, it is
understood that the SSI Parties shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and the
aggregate amount of the Secured Obligations. If the SSI Parties are entitled to
any portion of the proceeds and if WT disposed of the Collateral on credit, the
SSI Parties will only be credited with the payments (a) actually made by the
purchaser of such Collateral, (b) received by WT and (c) applied to the
indebtedness of such purchaser. If such purchaser fails to pay, WT may resell
the Collateral and the SSI Parties shall be credited with the proceeds of the
resale. If the SSI Parties are entitled to any portion of the proceeds and WT
disposed of the Collateral for non-cash consideration, the SSI Parties will only
be credited with payments received as cash proceeds of non-cash consideration.
ARTICLE 7
MISCELLANEOUS
7.1 NOTICES.
All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given upon first attempted delivery
on a business day in the jurisdiction where delivery is to be made if it is sent
by registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to WT: Copy to:
--------- --------
U.S. Filter/Xxxxxxx & Xxxxxxx, Inc. United States Filter Corporation
0000 Xxxx Xxxxxx Xxxx 000 Xxxxx Xxxx Xxxx
Xxxxxxxx, X.X. 00000 Xxxxxxxxxx, XX 00000
Attn: Executive Vice President Attn: Associate General Counsel
Fax: (000) 000-0000 Fax: (000) 000-0000
If to SSI or UVST: Copy to:
------------------ --------
Service Systems International, Ltd. Xxxxxx X. Xxxxxxx, Esq.
UV Systems Technology, Inc. Schuler, Messersmith, Xxxx & Lansdowne
0000 Xxxxxxxx Xxxxxx 0000 Xxx Xxxxx XX, Xxxxx X000
Xxxxxxx, X.X. Xxxxxxxxxxx, XX 00000
Xxxxxx X0X 0X0
Attn: President
Fax: (000) 000-0000 Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address
to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other Parties notice in the
manner herein set forth.
7.2 CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing Lien in the Collateral until the release thereof pursuant to Section
7.3.
7.3 RELEASE. Upon the Termination Date, WT, upon the request, and
at the expense, of the SSI Parties, shall execute and deliver all such
documentation necessary to release the Liens created pursuant to this Agreement.
7.4 REINSTATEMENT. This Agreement shall continue to be effective
or be reinstated, as the case may be, if at any time any amount received by WT
or any Secured Party hereunder or pursuant hereto is rescinded or must otherwise
be restored or returned by WT or such Secured Party, as the case may be, upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of SSI
Parties or upon the appointment of any intervener or conservator of, or trustee
or similar official for, the SSI Parties or any substantial part of the SSI
Parties' assets, or upon the entry of an order by any court avoiding the payment
of such amount, or otherwise, all as though such payments had not been made.
7.5 INDEPENDENT SECURITY. The security provided for in this
Agreement shall be in addition to and shall be independent of every other
security which WT may at any time hold for any of the Secured Obligations hereby
secured. WT shall be at liberty to accept further security from the SSI Parties
or from any third party and/or release such security without notifying the SSI
Parties and without affecting in any way the obligations of the SSI Parties
under the other Transaction Documents.
7.6 AMENDMENTS. No waiver, amendment, modification or termination
of any provision of this Agreement, or consent to any departure by the SSI
Parties therefrom, shall in any event be effective without the prior written
consent of WT and none of the Collateral shall be released without the prior
written consent of WT. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
7.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the SSI Parties and each of them and their respective successors and assigns and
shall inure to the benefit of WT and its successors and assigns. Neither of the
SSI Parties may assign or otherwise transfer any of its rights or obligations
under this Agreement without the prior written consent of WT.
7.8 SURVIVAL. All agreements, statements, representations and
warranties made by the SSI Parties herein or in any certificate or other
instrument delivered by the SSI Parties or on its behalf under this Agreement
shall be considered to have been relied upon by WT and shall survive the
execution and delivery of this Agreement and the other Transaction Documents
until termination thereof or indefeasible payment in full in cash or cash
equivalents of all of the Secured Obligations regardless of any investigation
made by WT or made on its behalf.
7.9 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of WT in exercising any right, power or privilege hereunder and no course
of dealing between the SSI Parties and WT shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. All
rights and remedies herein expressly provided are cumulative and not
exclusive of any rights or remedies which WT would otherwise have.
7.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
7.11 HEADINGS DESCRIPTIVE. The headings of the several Sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
7.12 SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
7.13 GOVERNING LAW; SUBMISSION TO JURISDICTION AND VENUE; WAIVER OF
JURY TRIAL.
(a) APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW PROVISIONS THAT
MIGHT CAUSE THIS AGREEMENT TO BE GOVERNED BY OR CONSTRUED OR ENFORCED
IN ACCORDANCE WITH THE LAWS OF ANY OTHER JURISDICTION.
(b) CONSENT TO JURISDICTION. THE SSI PARTIES HEREBY CONSENT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF
DELAWARE AND IRREVOCABLY AGREE THATALL ACTIONS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS
SHALL BE LITIGATED IN SUCH COURTS. THE SSI PARTIES EXPRESSLY SUBMIT AND
CONSENT TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY
DEFENSE OF FORUM NON CONVENIENS. THE SSI PARTIES HEREBY WAIVE PERSONAL
SERVICE OF ANY AND ALL PROCESS AND AGREE THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE UPON THE SSI PARTIES BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED AND POSTAGE PREPAID, ADDRESSED TO THE
SSI PARTIES, AT THE ADDRESS SET FORTH IN THE STRATEGIC ALLIANCE
AGREEMENT FOR THE SSI PARTIES AND SERVICE SO MADE SHALL BE COMPLETE ON
THE DATE OF FIRST ATTEMPTED DELIVERY ON A BUSINESS DAY IN THE
JURISDICTION WHERE DELIVERY IS TO BE MADE.
(c) WAIVER OF JURY TRIAL. THE SSI PARTIES AND WT HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SSI
PARTIES AND WT ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR
RELATED FUTURE DEALINGS. THE SSI PARTIES AND WT WARRANT AND
REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY
WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS.
7.14 ENTIRE AGREEMENT. This Agreement, together with any other
agreement executed in connection herewith, including the Transaction Documents
and the other documents referred to herein and therein, is intended by the
parties as a final expression of their agreement as to the matters covered
hereby and is intended as a complete and exclusive statement of the terms and
conditions thereof. No oral representations have been made nor relied upon by
any party to this agreement.
7.15 RECOURSE. There shall be full recourse to the SSI Parties and
all of their assets and properties for the liabilities of the SSI Parties under
this Agreement and the other Transaction Documents.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the SSI Parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the day and year
first above written.
SERVICE SYSTEMS INTERNATIONAL, LTD.
By: ________________________________
Name: ________________________________
Title: ________________________________
UV SYSTEMS TECHNOLOGY, INC.
By: ________________________________
Name: ________________________________
Title: ________________________________
APPENDIX A
TO
SECURITY AGREEMENT
LEGAL NAME, STATE OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE LOCATION
SSI
Name: Service Systems International, Ltd.
State of Organization: Nevada, USA
Current Chief Executive Office Location:
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX, XXXXXX X0X0X0
New Chief Executive Xxxxxx Xxxxxxxx
000-00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX, XXXXXX X0X0X0
UVST
Name: UV Systems Technology, Inc.
Province of Organization: British Columbia, CANADA
Current Chief Executive Office Location:
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX, XXXXXX X0X0X0
New Chief Executive Xxxxxx Xxxxxxxx
000-00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX, XXXXXX X0X0X0
EXHIBIT B
LICENSE AGREEMENT
This License Agreement (the "Agreement"), is made as of this 25th day
of January 2001 (the "Effective Date"), between Service Systems International,
Ltd., a corporation organized under the laws of the State of Nevada, United
States of America ("SSI"), and its wholly owned subsidiary, UV Systems
Technology, Inc., a corporation organized under the laws of the Province of
British Columbia, Canada ("UVST") (collectively, the "Licensor"), and U.S.
Filter/Xxxxxxx and Xxxxxxx, Inc., a corporation organized under the laws of the
State of Delaware, United States of America (the "Licensee").
WITNESSETH:
WHEREAS, Licensee and Licensor have entered into a Strategic Alliance
Agreement of even date herewith (the "Strategic Alliance Agreement");
WHEREAS, Licensor desires to license certain intellectual property,
including certain patents, trademarks, trade secrets, copyrights, software and
know how related to the UV Treatment Systems (as defined below) to Licensee in
furtherance of the Strategic Alliance Agreement; and
WHEREAS, Licensee desires to obtain from Licensor a license under such
intellectual property and other proprietary rights of Licensor related to UV
Treatment Systems in furtherance of the Strategic Alliance Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained the parties hereby agree as follows:
Article I
DEFINITIONS
1.1 "Affiliate" shall mean, as to a party to this Agreement, any
corporation or other entity directly or indirectly controlling,
controlled by, or under common control with such party.
1.2 "Commissioning and First Beneficial Use" shall mean the successful
completion of all requisite performance tests as shall have been agreed
upon by Licensee and its customer with respect to a UV Treatment System
and the customer's first use of such UV Treatment System in production.
1.3 "Indemnified Party" shall have the meaning set forth in Article XIII.
1.4 "Indemnifying Party" shall have the meaning set forth in Article XIII.
1.5 "Insolvency" shall mean any of the following events or occurrences:
(a) A receiver, interim receiver, conservator, custodian,
liquidator or trustee of a party or of all or any of the property of a
party is appointed by court order; or an order for
relief is entered under the bankruptcy laws of any jurisdiction with
respect to a party;or any of the party's material property is
sequestered by court order; or a petition is filed against a party
under the bankruptcy, reorganization, arrangement, insolvency,
readjustment or compromise of debt, dissolution or liquidation law
of any jurisdiction, whether now or hereafter in effect, and is not
dismissed within ninety (90) days after such filing;
(b) A party files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment or compromise of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any petition against
it under any such law; or
(c) A party makes an assignment for the benefit of its creditors,
or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, interim
receiver, conservator, custodian, liquidator or trustee of the party,
or of all or any part of its property.
1.6 "Licensed Information" shall mean any copyrights, trade secrets and
know-how proprietary to Licensor and related to the UV Treatment
Systems, and any derivative works thereof, or improvements or
enhancements thereto.
1.7 "Licensed Marks" shall mean the xxxx ULTRA GUARD and U.S. registration
number 2,265,236 and Canadian registration number 489,964 thereof, and
the wavy lines design xxxx and U.S. registration number 2,362,379 and
Canadian registration number 497,075 thereof, and any other marks
adopted by Licensor in connection with the UV Treatment Systems, as
defined herein.
1.8 "Licensed Patents" shall mean (a) U.S. Patent numbers 5,503,800 and
5,674,029, (b) any patents issuing from the Licensed Patent
Applications, as defined herein, and (c) any continuations, divisions,
reissues, or reexaminations thereof.
1.9 "Licensed Patent Applications" shall mean any patent applications,
domestic or foreign, filed by or on behalf of Licensor, and relating to
the UV Treatment Systems, as defined herein, including, without
limitation, International Patent Application number PCT/CA/0051, if and
to the extent having or intended to have effect within the Territory.
1.10 "Licensed Technology" shall mean Licensed Patents, Licensed Patent
Applications, and Licensed Information.
1.11 "Licensee Selling Price" shall mean, with respect to any UV Treatment
System sold by Licensee, Licensee's net sales price (exclusive of
transportation or shipping charges) for that UV Treatment System,
without installation, and excluding all charges for engineering
services and drawings supplied by Licensee and all taxes, and fees and
commissions payable to sales representatives or agents.
1.12 "Manufacturing Condition" shall mean that Licensor, directly or
indirectly, is unable on a regular basis to (a) manufacture and supply
UV Treatment Systems sufficient to satisfy the minimum sales targets
referred to in Section 2.3.3 of the Strategic Alliance
2
Agreement on a timely basis (it being understood that for purposes of
determining ability to manufacture and supply on a timely basis, that
he longer of 12-14 weeks after release of approved drawings for
fabrication and the commercially reasonable delivery requirement of
the end user will be deemed to be a reasonable production schedule for
shipment, and it being further understood that the Insolvency of the
Licensor shall create a rebuttable presumption for purposes of this
Agreement that the Licensor is unable on a regular basis to
manufacture and supply UV Treatment Systems on a timely basis), or
(b) for reasons within its control, to ship spares within one week of
an order by Licensee therefor. Notwithstanding the foregoing, the
Manufacturing Condition shall terminate when the Licensor has
established or reestablished the ability to manufacture and supply
UV Treatment Systems or to supply spares within the time periods
specified above.
1.13 "Manufacturing Instructions" shall mean the documentation setting out
in comprehensive form the entire process for manufacturing the UV
Treatment Systems which shall provide sufficient instruction for a
person reasonably skilled in the industry to manufacture the UV
Treatment Systems.
1.14 "Pilot System" shall mean any equipment (including but not limited to a
standard single lamp reactor (SLR) module) and its associated tankage,
controls, and electronics, that is provided to a prospective customer
for the purpose of testing the feasibility of a full-scale UV Treatment
System for the customer's application.
1.15 "Software" shall mean the sizing software known as "Generic System
Sizing" used to specify the combination and size of UV Treatment
Systems needed to meet the requirements of customers, including each
modification or revision to such software which (a) corrects errors,
problems, or defects caused by or resulting from an incorrect
functioning of the software or (b) provides other updates.
1.16 "Territory" shall mean North America, Central America (including the
Caribbean zone) and South America.
1.17 "Third Party Claim" shall have the meaning set forth in Article XIII
1.18 "UV Treatment Systems" shall mean systems (or components, parts, spares
or portions thereof) which use ultraviolet rays, alone or in
combination with other agents, to disinfect industrial or municipal
potable water, sewage, sewage effluent, combined sewer overflow, waste
water, liquids, or other fluids.
Article II
GRANT OF LICENSE
2.1 LICENSED TECHNOLOGY. Licensor hereby grants to Licensee an exclusive
license under the Licensed Technology to sell, distribute, promote and
market the UV Treatment Systems for installation within the Territory
in accordance with the conditions set out in this Agreement and a
non-exclusive license under the Licensed Technology to use the UV
Treatment Systems within the Territory in furtherance of the other
rights granted herein.
2.2 LICENSED TECHNOLOGY - RIGHT TO MANUFACTURE. In the event that, and for
so long as, the Manufacturing Condition shall exist, Licensor hereby
grants to Licensee an exclusive
3
license under the Licensed Technology to manufacture the UV Treatment
Systems for installation within the Territory in accordance with the
conditions set out in this Agreement, provided however that the
Licensor shall retain the right to establish or reestablish the
ability to manufacture UV Treatment Systems for installation within
the Territory so as to terminate the Manufacturing Condition.
2.3 LICENSED MARKS. Licensor hereby grants to Licensee an exclusive license
to use the Licensed Marks in connection with selling, distributing,
promoting and marketing the UV Treatment Systems for installation
within the Territory, or using the UV Treatment Systems, in accordance
with the terms set out in Section 2.1 above, and a license to use the
Licensed Marks in connection with any manufacturing of UV Treatment
Systems for installation within the Territory to the extent permitted
and subject to the terms set forth in Section 2.2 above. Licensee
agrees to use the Licensed Marks solely in the form provided to it by
Licensor in accordance with Licensor's then-current trademark use
policies. Licensee recognizes and acknowledges that the Licensed Marks
represent valuable goodwill and must be used only in connection with
products and services of the requisite quality. Licensee agrees, with
regard to its use of the Licensed Marks, that it shall not act in any
manner which would be reasonably expected to impair or reduce the value
of any of the Licensed Marks or use the Licensed Marks in connection
with any products or services which are or could reasonably be expected
to be inconsistent with the image and goodwill represented by the
Licensed Marks.
2.4 SOFTWARE.
Subject to the terms set forth in Section 2.2 above, Licensor hereby
grants Licensee an exclusive fully paid license to use, copy, revise,
and recompile the Software in connection with the manufacture of UV
Treatment Systems, under the same conditions as Licensee's right to
manufacture the UV Treatment Systems for installation within the
Territory. Licensee's right to use, copy, revise, and recompile the
Software under this license also shall be in accordance with the terms
of the Trust Agreement attached hereto as Exhibit A, which Trust
Agreement shall be supplementary (within the meaning of section 365(n)
of the Bankruptcy Code) to this Agreement.
2.5 MANUFACTURING INSTRUCTIONS.
Licensor shall compile and prepare the Manufacturing Instructions for
use by Licensee in furtherance of the provisions of Section 2.2.
Subject to the terms set forth in Section 2.2 above and payment of
royalties pursuant to Article V of this Agreement, Licensor hereby
grants Licensee an exclusive fully paid license to use, copy, and
revise the Manufacturing Instructions in connection with the
manufacture of UV Treatment Systems, under the same conditions as
Licensee's right to manufacture the UV Treatment Systems for
installation within the Territory. Licensee's right to use the
Manufacturing Instructions under this license also shall be in
accordance with the terms of the Trust Agreement attached hereto as
Exhibit A.
2.6 RESERVATION OF RIGHTS. Subject to the foregoing, Licensor reserves and
shall have the right to use, copy, revise, and recompile the Licensed
Technology, the Licensed Marks, Manufacturing Instructions and the
Software and to manufacture and supply the UV
4
Treatment Systems within the Territory. Nothing in this
License Agreement is intended to, nor shall it, limit or impair
Licensor's rights with respect to the UV Treatment Systems,
Licensed Technology, Licensed Marks, Manufacturing Instructions or
Software anywhere outside the Territory. Without limiting the
foregoing, nothing in this License Agreement is intended to, nor
shall it, limit or impair the Licensor's rights to use or act
within the Territory with respect to the UV Treatment Systems,
Licensed Technology, Licensed Marks, Manufacturing Instructions or
Software, to the extent such use or act has effect exclusively
outside the Territory.
Article III
TERRITORY
The licenses granted under this License Agreement shall be limited to
the Territory, unless otherwise agreed in writing by the parties.
Article IV
SUBLICENSE
4.1 BY LICENSEE. Licensee shall be permitted to sublicense the rights
granted to it herein in connection with the Licensed Marks, the
Software, the Manufacturing Instructions and the Licensed Technology to
any member of the Chem-Feed Group Companies, and, with the consent of
the Licensor, which consent may be withheld by Licensor for any or no
reason, to a third party. Any grant of a sub-license shall be in
accordance with the terms of this Agreement. No grant of a sublicense
shall be effective unless and until any sublicensee by written
instrument reasonably acceptable to Licensor expressly assumes all of
Licensee's obligations under this Agreement and agrees to be bound by
all of the restrictions and limitations imposed upon Licensee under
this Agreement. No grant of a sublicense pursuant to this Section 4.1
shall relieve Licensee of responsibility for the satisfaction of its
obligations hereunder. Licensee shall promptly deliver to Licensor a
true and correct copy of each and every sublicense entered into by
Licensee and shall promptly advise Licensor of any modifications or
termination of each sublicense. Each and every sublicense shall
expressly provide that it shall terminate coincidentally with
termination of this Agreement for any reason, whereupon it shall revert
to Licensor.
4.2 BY LICENSOR. Licensor shall be permitted to license any of the rights
reserved by it herein to any Person. SSI and UVST shall be permitted to
transfer the Licensed Technology and Licensed Marks from one to the
other, provided that any such transfers shall be subject to the rights
of Licensee under this License Agreement.
Article V
ROYALTIES
5.1 ROYALTY. Licensee hereby agrees to pay to Licensor a royalty for the
Licensed Technology equal to five percent (5%) of the Licensee Selling
Price with respect to any UV Treatment System manufactured or supplied
by or through Licensor (it being understood that the license granted
herein to use the Licensed Marks shall be royalty-free). In the event
that any UV Treatment System is instead manufactured or supplied by or
through Licensee, Licensee shall pay to Licensor a royalty for the
Licensed
5
Technology based on the aggregate sales of UV Treatment Systems
manufactured or supplied by or through Licensee during the term of
this License Agreement, as set forth below:
Aggregate Sales during term of Agreement Percentage of
where manufacture or supply is Licensee Selling Price
by or through Licensee
$0 to and including $7,500,000 5.0 %
$7,500,001 to and including $15,000,000 7.5 %
Over $15,000,000 10.0 %
5.2 ACCRUAL AND PAYMENT OF ROYALTIES. The royalty described in this Article
shall accrue when a UV Treatment System (other than a Pilot System) is
sold or leased by Licensee or its sublicensee. No royalties shall be
remitted to Licensor by Licensee for a Pilot System. A UV Treatment
System is sold or leased upon Commissioning and First Beneficial Use of
the UV Treatment System. Licensee shall remit royalties due to Licensor
hereunder within thirty (30) calendar days of Commissioning and First
Beneficial Use. All royalties due hereunder shall be paid in United
States Dollars . All royalty payments shall be sent to SSI at the
address specified in or pursuant to Article XIV. Licensor shall be
responsible for apportionment of royalties between SSI and UVST.
5.3 ACCOUNTING. Licensee shall keep complete, true, and correct books of
account containing a current record of leases, sales, and other data in
sufficient detail to enable the royalties payable under this Agreement
to be computed and verified. Licensee further agrees to permit an
independent certified public accountant, reasonably acceptable to
Licensee, at Licensor's sole cost, to have access to such books for
inspection. Such inspection shall occur not more than twice per year
during a period commencing with the Effective Date of this Agreement
and ending one year after all orders booked by WT prior to termination
have been finally accepted by the end user thereof, and shall take
place during normal business hours on Licensee's premises or wherever
relevant records are found, on a date selected by Licensor and approved
by Licensee (which approval shall not be unreasonably withheld).
5.4 TECHNOLOGY AND KNOW HOW LICENSE. This Agreement is, in part, a license
of copyrights, trade secrets, and know how incorporated into the
Licensed Technology. Except to the extent prohibited by law, Licensee
agrees that it will not question or challenge, directly or indirectly,
the validity of the Licensed Patents or assist any person in doing so.
6
Article VI
CONFIDENTIALITY
Pursuant to this Agreement, the parties may provide Confidential
Information to each other. All Confidential Information shall be treated in
accordance with this Article.
6.1 DEFINITION. "Confidential Information" is defined as any written or
other tangibly reduced information or oral information that is
proprietary to a party and is disclosed or made available by a party to
another party during the negotiations or due diligence that preceded
the execution of, or during the term of, this Agreement. Confidential
Information shall include, without limitation, all proprietary
information contained in the Licensed Technology, Licensed Marks,
Software or Manufacturing Instructions, including trade secrets, and
know-how, and any flow-charts, logic diagrams, or manuals related to
the Licensed Technology, Licensed Marks, Software or Manufacturing
Instructions; a party's other patents, trade secrets, and know-how;
processes, formulae, techniques, and methodologies; inventories;
products or processes under development, product plans, strategies, and
forecasts; all personal data regarding the parties' employees or other
individual agents and clients; any other confidential information of,
about, or concerning the current or future business of the parties; and
other information clearly marked with a "confidential", "proprietary",
or similar legend.
6.2 NON-DISCLOSURE. Unless otherwise previously authorized in writing by
the party having the proprietary interest in the Confidential
Information (hereinafter called the "Disclosing Party"), the party
receiving the Confidential Information (hereinafter called the
"Receiving Party") agrees to retain the Confidential Information in
confidence, not to disclose the Confidential Information to any third
party, except as provided below, and not to use the Confidential
Information other than in accordance with this Agreement or the
Strategic Alliance Agreement. Notwithstanding any other provision of
this Agreement, the Receiving Party shall not be restricted from
disclosing Confidential Information of the Disclosing Party if legally
required to do so, provided that the Receiving Party shall have given
reasonably prompt notice to the Disclosing Party of any judicial,
administrative or other legal process purporting to require disclosure
and shall have reasonably cooperated with the Disclosing Party to
attempt to afford the Disclosing Party an opportunity to participate,
at the Disclosing Party's own expense, in such process for the purpose
of preventing or limiting the disclosure.
6.3 STANDARD OF CARE. With respect to the Disclosing Party's Confidential
Information, the Receiving Party shall use the same degree or care that
it uses to protect its own Confidential Information, but in no case
less than a reasonable degree of care under the circumstances, to limit
dissemination of the Confidential Information to such of its employees,
agents, independent contractors or other representatives who have a
need to know in furtherance of this Agreement, and who have been
informed of, and have agreed to abide by the confidentiality
obligations stated in this Article. The Receiving Party agrees to use
commercially reasonable efforts to take such action as may be necessary
to cause its employees, agents, independent contractors and other
representatives to comply with the terms of this Agreement.
7
6.4 NON-INCLUSION. Notwithstanding any other provision of this Agreement,
the Disclosing Party acknowledges that Confidential Information shall
not include any information which:
i. was in the public domain at the time it was disclosed
or made available to the Receiving Party by the
Disclosing Party;
ii. was known to the Receiving Party prior to the time it
was disclosed or made available to the Receiving
Party by the Disclosing Party, as shown by written
evidence in the Receiving Party's possession at the
time of disclosure;
iii. becomes part of the public domain through no fault of
the Receiving Party, its employees, agents,
independent contractors or other representatives;
iv. becomes available to the Receiving Party on a
non-confidential basis subsequent to its disclosure
to the Receiving Party by the Disclosing Party, but
only if Receiving Party believes in good faith that
the source of such information is not in violation of
confidentiality, contractual, legal, fiduciary, or
other obligations; or
v. is explicitly approved for release by written
authorization of the Disclosing Party.
6.5 RETURN. The Receiving Party agrees to return to the Disclosing Party
upon termination of this Agreement all writings or other materials
containing, referring to, or summarizing Confidential Information
referred to in Section 6.1.
6.6 NO LICENSE. No license in the Confidential Information, other than as
expressly provided in this Agreement, is granted to the Receiving
Party, except that the Receiving Party shall have the right to use
Confidential Information in the manner and to the extent necessary to
perform the obligations of the Receiving Party under this Agreement and
the Strategic Alliance Agreement.
6.7 SURVIVAL. This Article VI shall survive termination of this Agreement.
Article VII
PROTECTION OF INTELLECTUAL AND INDUSTRIAL PROPERTY
7.1 RESPONSE TO INFRINGEMENT BY THIRD PARTIES. The parties shall have the
following obligations with respect to infringement of the Licensed
Marks or the rights contained in the Licensed Technology:
7.1.1 NOTICE. If during the term of this Agreement, either party
becomes aware of any third party alleged infringement,
infringement, threatened infringement, or misappropriation of
any Licensed Xxxx or any proprietary right in the Licensed
Technology in the Territory (an "Infringement"), the party
having such
8
knowledge shall promptly give the other party written notice
with all available details.
7.1.2 LICENSOR RIGHT. At its option, Licensor may, but shall not be
obligated to, bring suit in its name or in the name of
Licensee, if necessary, to restrain such Infringement (an
"Infringement Action") and to recover lost profits and
damages, at its own expense. Licensee agrees to be joined, as
is necessary, as a party plaintiff to any such Infringement
Action, represented by counsel of its own choice. All of
Licensee's costs associated with any such Infringement Action
that Licensee has joined as of necessity shall be reimbursed
by Licensor. Regardless of whether the joining of Licensee as
a co-plaintiff is necessary, License shall have the right to
be joined as a co-plaintiff in any such Infringement Action.
All of Licensee's costs associated with any such Infringement
Action that Licensee has joined as of right and not as of
necessity shall be borne by Licensee. Licensee also agrees to
co-operate, in ways other than as a party plaintiff, in the
prosecution of such Infringement Action as is reasonably
necessary. All reasonable costs associated with any such
co-operation shall be borne by Licensee. If Licensor maintains
an Infringement Action, Licensor shall have the right to
control prosecution and to settle and compromise the
Infringement Action, with the consent of the Licensee, which
consent shall not be unreasonably withheld.
7.1.3 RECOVERY. In the event that any monetary recovery is obtained
in connection with such Infringement Action maintained in
accordance with Section 7.1.2 above, such recovery shall be
applied in the following priority:
(1) to reimburse Licensor and Licensee (to the extent not
already reimbursed or paid for by Licensor) in
proportion to and up to the extent of their
out-of-pocket expenses (including attorneys' fees) in
prosecuting such an Infringement Action;
(2) to be shared by Licensor and Licensee in proportion
to and up to the extent of any damages established,
including but not limited to Licensee's lost profits
and Licensor's lost royalties; and
(3) the balance, if any, shall be shared equally by
Licensor and Licensee.
7.1.4 LICENSEE RIGHT. If Licensor is unsuccessful in causing the
infringing party to terminate the Infringement or fails to
institute an Infringement Action, or if Licensor notifies
Licensee of its intention not to bring such an Infringement
Action within ninety (90) days of receiving notice of the
Infringement, then Licensee shall have the right, but shall
not be obligated, to take legal action (in its own or in
Licensor's name), at its own expense. In any such action,
Licensor shall cooperate with Licensee at Licensor's expense
and Licensor may, at its own expense, be represented by
counsel of its own choice. Licensee shall have the right to
settle or compromise any such claims with the consent of
Licensor which consent shall not be unreasonably withheld; and
any recovery obtained in such action shall be applied in the
priority specified in Section 7.1.2.
9
7.2 DEFENSE OF CLAIMS. The parties shall have the following obligations
with respect to defense of claims for infringement in respect of the
Licensed Marks or the rights contained in the Licensed Technology
brought by third parties:
7.2.1 NOTICE TO LICENSOR. If any patent, trademark, trade secret or
other infringement action is brought or threatened in a
country in the Territory ("Action") against Licensee or any
sub-licensee or assignee of Licensee, to which sub-licensee or
assignee rights in the Licensed Marks and the Licensed
Technology have been granted by Licensee in accordance with
this Agreement, because of actual or anticipated use, sale, or
manufacture of the UV Treatment Systems or because of actual
or anticipated use of the Licensed Marks, Licensee shall
promptly notify Licensor and send Licensor copies of all
papers that have been served.
7.2.2 LICENSOR OBLIGATION. Once notified of any Action whether by
Licensee or otherwise, Licensor shall promptly defend against
any such Action, or if Action is a threatened action, respond
accordingly under the circumstances. Licensee shall co-operate
with Licensor during the pendency of any Action and any
appeals. Licensor shall bear all costs related to its
obligations under this Section and shall also be responsible
for payment of Licensee's actual expenses in co-operating with
Licensor in defense of or response to any Action.
7.2.3 JUDGMENT. If as a result of an Action by a third party,
Licensee is required to make changes in the UV Treatment
Systems or the Licensed Marks, or is required to make payment
to any third parties, Licensee shall be entitled to offset
against royalty payments due to Licensor under this Agreement,
any and all such costs and expenses incurred by Licensee.
7.2.4 LICENSEE RIGHT. If Licensor fails to fulfill its obligation
under Section 7.2.2 above, to respond to or defend against an
Action, Licensee shall have the right but not the obligation
to respond to or defend the Action itself. Licensor shall
cooperate with Licensee in any such response or defense at
Licensor's sole expense. Licensee shall have the exclusive
right to settle or compromise any such claims without the
consent of Licensor. Licensor shall promptly reimburse
Licensee for all costs and expenses incurred by Licensee in
responding to or defending an Action.
7.3 APPLICATION TO LICENSEE'S TRADEMARK. The provisions of Section 7.2
shall apply with respect to defense of claims for infringement brought
by third parties in respect of the "USFilter-Registered Trademark-"
trademark with which the UV Treatment Systems are co-branded pursuant
to Section 6.9 of the Strategic Alliance Agreement or the Licensee's
trademark as referred to in Section 8.1 of this Agreement, provided
that for such purposes, references to the Licensed Marks shall be
interpreted as if they are references to the "USFilter-Registered
Trademark-" xxxx, references to the Licensor shall be interpreted as if
they are references to the Licensee, and references to the Licensee
shall be interpreted as if are references to the Licensor.
7.4 SURVIVAL. This Article VII shall survive termination of this Agreement.
10
Article VIII
TRADEMARK AND MARKING
8.1 TRADEMARKS. The parties agree that with respect to the UV Treatment
Systems sold or leased for installation within the Territory pursuant
to this Agreement, all such UV Treatment Systems shall have the
Licensed Marks (to the extent that Licensee has continuing rights to
use the Licensed Marks) and Licensee's "USFilter-Registered Trademark-"
trademark affixed to them and their packaging. Licensor acknowledges
that Licensee shall own all of Licensee's trademarks, and that Licensor
shall not receive any rights of ownership in or any licenses with
respect to Licensee's trademarks by virtue of this Agreement.
8.2 MARKING. The party manufacturing or supplying the UV Treatment Systems
covenants and agrees to affix to each UV Treatment System manufactured
or supplied by it, where appropriate, a legible notice indicating
Licensor's patent rights and any patent numbers utilized in
manufacturing the UV Treatment Systems in accordance with, and such
other notice as may be legally required under the applicable laws of
the Territory.
Article IX
MAINTENANCE OF RIGHTS
9.1 MAINTENANCE. Licensor shall, at its own expense, use its best efforts
to maintain the Licensed Patents and Licensed Marks. Where, in the
reasonable judgment of Licensor, there are sufficient sales or
potential sales within any country in the Territory to justify doing
so, Licensor shall at its own expense (a) use commercially reasonable
efforts to (i) obtain patents from the Licensed Patent Applications,
and (ii) ensure that any rights granted by any third parties to
Licensor in the Licensed Marks and the Licensed Patents are properly
recorded with the appropriate recording body within that country, and
(b) cause Licensee to be listed within that country as a registered
user of the Licensed Technology or component thereof, and of the
Licensed Marks.
9.2 COOPERATION. Licensee shall cooperate fully with the efforts of
Licensor under Section 9.1 above, which efforts shall be made at the
Licensor's expense.
9.3 FAILURE. In the event that Licensor fails to perform its obligations
under this Article 9, Licensee shall have the right, in addition to any
other remedies for such breach(es), but not the obligation, to perform
such obligations on Licensor's behalf, at Licensor's expense, and, as
may be required by applicable law, in Licensor's name. In the event
that Licensee performs any of such obligations on Licensor's behalf,
Licensor shall promptly reimburse Licensee for all and any expenses it
incurs in performing such obligations. Licensor hereby grants to
Licensee such irrevocable powers-of-attorney as may be necessary or
convenient during the term of this Agreement for Licensee to perform
any of such obligations in any country in the Territory.
Article X
TERM AND TERMINATION
10.1 TERM. Unless otherwise earlier terminated in accordance with this
Article 10 pursuant to this Agreement, this Agreement and the licenses
granted hereunder shall continue to be in force for a period of (10)
years from the Effective Date of this Agreement. UNLESS
11
EITHER PARTY GIVES SIX (6) MONTHS NOTICE OF NON-RENEWAL, this
Agreement shall be renewed automatically for SUCCESSIVE (1) one
year periods OR FOR SUCH LONGER PERIODS AS ARE MUTUALLY AGREED BY
THE PARTIES IN WRITING.
10.2 MUTUAL AGREEMENT. The parties may agree by mutual consent to terminate
this Agreement and the rights granted hereunder at any time, with such
termination to be effective on the date mutually agreed in writing by
the parties.
10.3 BREACH OR DEFAULT. Either party may terminate this Agreement upon (30)
thirty days written notice to the other party upon the occurrence of
(1) a material breach of any representation or warranty made by the
other party in this Agreement or (2) any default in the performance of
the other party's obligations under this Agreement which default
remains uncured for ninety (90) days after notice of such default given
to the other party.
10.4 TERMINATION OF STRATEGIC ALLIANCE AGREEMENT. Either party may terminate
this Agreement in the event of the termination of the Strategic
Alliance Agreement in accordance with the terms of the Strategic
Alliance Agreement; provided, however, that notwithstanding anything
contained in this Agreement, if the Strategic Alliance Agreement is
terminated by reason or as a consequence of or in connection with the
Insolvency of either UVST or SSI, or is terminated wrongfully for any
reason by either UVST or SSI, this Agreement shall remain in effect
until termination of this Agreement in accordance with the terms
hereof.
10.5 INSOLVENCY, BANKRUPTCY, ETC. The Agreement also may be terminated in
accordance with the following:
10.5.1 BY LICENSEE. In the event that either UVST or SSI undergoes
Insolvency, or in the event of the bankruptcy trustee's
rejection of this Agreement under section 365(n) of the
Bankruptcy Code, Licensee shall have the right to terminate
this Agreement. Licensor agrees that Licensor shall not have
the right to terminate this Agreement upon the occurrence of
the Insolvency of either SSI or UVST.
10.5.2 BY LICENSOR. In the event that Licensee undergoes Insolvency,
Licensor shall have the right to terminate this Agreement.
10.6 EFFECTIVE DATE OF TERMINATION. Notwithstanding the foregoing, any
termination of this Agreement shall not be effective with respect to
any order booked by Licensee and until each order booked by Licensee
has been finally accepted by the end user thereof.
Article XI
BANKRUPTCY
All rights and licenses granted in Licensed Technology under or
pursuant to this Agreement by Licensor to Licensee are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code,
licenses of rights to "intellectual property" as defined under Section 101(56)
of the U.S. Bankruptcy Code. The parties agree that Licensee, as a licensee of
such rights and licenses in the Licensed Technology, shall retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code. The
parties further agree
12
that, in the event that any proceeding shall be instituted by or against
Licensor seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization, or relief of debtors, or seeking an
entry of an order for relief or the appointment of a receiver, interim
receiver, trustee or other similar official for it or any substantial part of
its property or Licensor shall take any action to authorize any of the
foregoing actions, Licensee shall have the right to retain and enforce its
rights under this Agreement, including but not limited to the right to
continue to use the Licensed Technology and all versions, improvements, and
derivatives thereof, in accordance with the terms and conditions of this
Agreement.
Article XII
REPRESENTATIONS AND WARRANTIES
12.1 BY LICENSOR. Licensor hereby makes the following representations and
warranties to Licensee:
12.1.1 AUTHORITY AND NO VIOLATION. UVST is a corporation duly
organized, validly existing and in good standing under the
laws of the Province of British Columbia, Canada, SSI is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, United States
of America, and both have the full right, power and authority
to enter into and perform this Agreement and to grant all of
the rights, powers and authorities granted herein. The
execution, delivery, and performance of this Agreement do not
conflict with, violate, or breach any agreement to which
Licensor is a party or Licensor's incorporating documents or
by-laws.
12.1.2 NON-INFRINGEMENT AND VALIDITY. Licensor is the sole and
exclusive owner of, or that if otherwise has the right to
grant all of the licenses granted herein to Licensee in, the
Licensed Marks and all the rights in the Licensed Technology,
Software, and Manufacturing Instructions, all of which are and
shall be unencumbered by any liens, security interests, or
other rights or claims by any third party that would have a
material adverse effect on or would materially interfere with
the Licensee's rights granted hereunder in and to the Licensed
Technology, Software and Manufacturing Instructions. The
Licensed Marks and all the rights in the Licensed Technology,
Software, and Manufacturing Instructions are valid and
enforceable, have not been and, to the best of Licensor's
knowledge, are not being, infringed by any third party in the
Territory, and that using the Licensed Marks and the Licensed
Technology, Software, and Manufacturing Instructions, or
using, making, selling, or promoting the UV Treatment Systems
or any parts thereof within the Territory are not and shall
not be an infringement of any patent, trademark, trade secret
or any other proprietary right of any third party.
12.2 BY LICENSEE. Licensee hereby makes the following representations and
warranties to Licensor: Licensee is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, United States of America, with the full right, power and
authority to enter into and perform this Agreement. The execution,
delivery,
13
and performance of this Agreement do not conflict with, violate, or
breach any agreement to which Licensee is a party or Licensee's
incorporating documents or by-laws.
12.3 SURVIVAL. This Article XII shall survive termination of this Agreement.
Article XIII
INDEMNIFICATION
13.1 BY LICENSOR. Licensor shall at all times during and after the term of
this Agreement be responsible for, and shall defend, indemnify, and
hold Licensee, its employees, officers and directors, and their
respective Affiliates, harmless from and against any and all losses,
claims, suits, proceeding, expenses, recoveries, and damages, including
all legal expenses and costs including attorneys' fees, arising out of
any claim by a third party relating to the Licensed Technology,
Software, Manufacturing Instructions, the UV Treatment Systems, or the
Licensed Marks, or any aspect of the performance of this Agreement, to
the extent such liability results (1) from a claim of infringement by
the Licensed Technology, Software, Manufacturing Instructions, UV
Treatment Systems or Licensed Marks, or any of them, as created or
modified by the Licensor of a patent, trademark, or other proprietary
right, (2) from a product liability claim, to the extent the defect
giving rise to such claim is attributable either to (i) defects in the
Licensed Technology, Licensed Marks, Software, Manufacturing
Instructions or UV Treatment System unmodified by Licensee or its
sublicensees or assigns; (ii) defects in the manufacturing or
workmanship of a UV Treatment System, component or part manufactured or
supplied by Licensor; (3) from any negligent act or omission or willful
misconduct of Licensor or any of its sublicenses or assigns, or (4)
from any breach of a representation or warranty made herein by
Licensor.
13.2 BY LICENSEE. Licensee shall at all times during and after the term of
this Agreement be responsible for, and shall defend, indemnify and hold
Licensor, its employees, officers and directors, and their respective
Affiliates, harmless from and against any and all losses, claims,
suits, proceedings, expenses, recoveries, and damages, including all
legal expenses and costs including attorneys' fees, arising out of any
claim by a third party relating to the Licensed Technology, Software,
Manufacturing Instructions, the UV Treatment Systems, or the Licensed
Marks, or the Licensee's trademarks or any aspect of the performance of
this Agreement, to the extent such liability results (1) from any
modification by Licensee or any of its sublicensees or assigns of
Licensed Technology, Software, Manufacturing Instructions, the UV
Treatment Systems, or the Licensed Marks; (2) from the Licensee's
trademarks, or any of them; (3) from a product liability claim to the
extent the defect giving rise to such claim is attributable either to
(i) modifications in the Licensed Technology, Licensed Marks, Software,
Manufacturing Instructions or UV Treatment Systems made by Licensee or
any of its sublicensees or assigns; (ii) defects in the manufacturing
or workmanship of a UV Treatment System, component or part manufactured
or supplied by Licensee or any of its sublicensees or assigns, or any
UV Treatment System, component or part manufactured or supplied by
Licensee or any of its sublicensees or assigns; (4) from any negligent
act or omission or willful misconduct of Licensee or any of its
sublicensees or assigns; or (5) from any breach of a representation or
warranty made herein by Licensee.
14
13.3 LIMITATIONS ON DAMAGES. Notwithstanding any other provision hereof,
neither Licensor nor Licensee shall be liable under this Article XIII
for any special, indirect, consequential or punitive damages.
13.4 MATTERS INVOLVING THIRD PARTIES.
13.4.1 If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any
other Party (the "Indemnifying Party") under this Article
XIII, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, that no delay
on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
13.4.2 Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party
so long as (a) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party
has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from
and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party
Claim, (b) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill
its indemnification obligations hereunder, (c) the Third Party
Claim involves only money damages and does not seek an
injunction or other equitable relief, (d) in the good faith
judgment of the Indemnified Party, the Indemnifying Party's
defense of the Third Party claim does not involve a material
conflict of interest between the Indemnifying Party and the
Indemnified Party, and also that settlement of, or an adverse
judgment with respect to, the Third Party Claim is not likely
to establish a precedential custom or practice materially
adverse to the continuing business interests of the
Indemnified Party, and (e) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
13.4.3 So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 13.4.2 above,
(a) the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of
the Third Party Claim, (b) the Indemnified Party will not
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be
withheld unreasonably), and (c) the Indemnifying Party will
not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be
withheld unreasonably). In the event any of the conditions in
Section 13.4.2 above is or becomes unsatisfied, however, (a)
the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with
respect
15
to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, any Indemnifying Party in connection
therewith), (b) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable
attorneys' fees and expenses), and (c) the Indemnifying Party will
remain responsible for any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Article XIII.
13.5 CONFLICT. To the extent that any provision of this Article conflicts
with the provisions of Article VII of this Agreement, the provisions of
Article VII shall govern.
13.6 SURVIVAL. This Article XIII shall survive termination of this
Agreement.
Article XIV
NOTICES
All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given if (and then upon the date of
first attempted delivery on a business day in the jurisdiction where delivery is
attempted ) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Licensee: Copy to:
--------------- --------
U.S. Filter/Xxxxxxx & Xxxxxxx, Inc. United States Filter Corporation
0000 Xxxx Xxxxxx Xxxx 000 Xxxxx Xxxx Xxxx
Xxxxxxxx, X.X. 00000 Xxxxxxxxxx, XX 00000
Attn: Executive Vice President Attn: Associate General Counsel
Fax: (000) 000-0000 Fax: (000) 000-0000
If to SSI: Copy to:
---------- --------
Service Systems International, Ltd. Schuler, Messersmith, Xxxx & Lansdowne
0000 Xxxxxxxx Xxxxxx 0000 Xxx Xxxxx, XX, Xxxxx X000
Xxxxxxx, X.X. Albuquerque, NM 87110
Canada V5C 6G7
Attn: President Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000 Fax: (000) 000-0000
If to UVST Copy to:
---------- --------
UV Systems Technology, Inc. Xxxxxx X. Xxxxxxx, Esq.
0000 Xxxxxxxx Xxxxxx Schuler, Messersmith, Xxxx & Lansdowne
Burnaby, B.C. 0000 Xxx Xxxxx, XX, Xxxxx X000
Xxxxxx X0X 0X0 Xxxxxxxxxxx, XX 00000
Attn: President
Fax: (000) 000-0000 Fax: (000) 000-0000
16
Any party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
Article XV
ARBITRATION AND ALTERNATIVE DISPUTE RESOLUTION
15.1 DISPUTE RESOLUTION. The procedures specified in this Article 15 shall
be the sole and exclusive procedures for the resolution of disputes
between the parties (a) arising out of or relating to this Agreement or
(b) arising out of questions pertaining to the enforceability and
validity of the License Agreement; provided, however, that a party,
without prejudice to these procedures, may seek a preliminary
injunction or other provisional relief if, in its sole judgment, such
action is deemed necessary to avoid irreparable damage or to preserve
the status quo. During such action, the parties will continue to
participate in good faith in the procedures specified in this Article
15.
15.2 GOOD FAITH. The Parties will attempt in good faith to resolve any claim
or controversy arising out of or relating to the execution,
interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this
Article 15) promptly by good faith negotiations between senior
management officials of the Parties.
15.3 NO RESOLUTION. In the event that any such claim or controversy has not
been resolved after good faith negotiation pursuant to Section 15.1,
the parties agree to submit to non-binding mediation, each at its own
expense, upon the request of the other party prior to the commencement
of arbitration pursuant to Section 15.4.
15.4 ARBITRATION. In the event that any such claim or controversy has not
been resolved after good faith negotiation pursuant to Section 15.2 or
mediation pursuant to Section 15.3, the dispute shall upon written
notice by either Party to the other, be finally settled by arbitration
under the applicable rules of the American Arbitration Association
(AAA), or other rules if agreed, and the provisions of the United
States Federal Arbitration Act, as modified below:
(a) The arbitration shall be heard by a single independent and
impartial arbitrator, who shall be selected by two other arbitrators,
one of whom shall be selected by Licensee and one of whom shall be
selected by Licensor, provided that all such arbitrators shall be
selected from a list of neutral arbitrators, supplied by the AAA.
(b) The arbitration proceedings shall be conducted in Chicago,
Illinois.
17
(c) Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal
Arbitration Act as necessary to protect the rights or property of the
party pending the decision of the arbitrators.
(d) The parties shall allow and participate in limited discovery
for the production of documents and taking of depositions. All
discovery shall be completed within sixty (60) days following the
filing of the answer or other responsive pleading. Unresolved discovery
disputes shall be brought to the attention of the arbitrator and may be
disposed of by him.
(e) Each party shall have up to 50 hours to present evidence and
argument in a hearing before the arbitrator, provided that he may
establish such longer terms for presentations as he deems appropriate.
(f) The arbitrator shall apply, and Licensor and Licensee
expressly agree and acknowledge that the arbitrator shall apply,
Section 365(n) of the U.S. Bankruptcy Code to all questions pertaining
to the enforceability and validity of the License Agreement in case of
a rejection, disaffirmation, breach, or a termination of the License
Agreement upon the Insolvency of UVST or SSI.
(g) The arbitration decision shall be rendered by the arbitrators
within fifteen (15) business days after conclusion of the hearing of
the matter, shall be in writing and shall specify the factual and legal
basis for the decision. Judgment thereof may be entered in any court
having jurisdiction thereof.
(h) The arbitrator is empowered to order money damages in
compensation for a party's actual damages, specific performance or
other appropriate relief to cure a breach; provided, however, that the
arbitrators will have no authority to award special, punitive or
exemplary damages, or other money damages that are not measured by the
prevailing party's actual damages.
15.5 CONTINUING PERFORMANCE. Each party shall continue to perform its
obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so
would be commercially impossible or impractical under the
circumstances.
Article XVI
MISCELLANEOUS
16.1 ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
among the parties hereto with respect to the subject matter hereof, and
this Agreement may not be modified, amended or otherwise changed in any
manner except by a written instrument executed by the parties.
16.2 SEVERABILITY. In the event any one or more provisions of this Agreement
shall for any reason be held to be invalid, illegal or unenforceable,
the remaining provisions of this Agreement shall remain valid and
unenforceable, and each invalid, illegal or unenforceable provision
shall be replaced by a mutually acceptable provision, which, being
valid, legal and enforceable, comes closest to reasonably complying
with the
18
intentions of the parties hereto in agreeing to such invalid, illegal
or unenforceable provision.
16.3 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, legal
representatives and assigns.
16.4 NO RELATIONSHIP. This Agreement does not create any partnership or
agency between the parties hereto and nothing in this Agreement may be
construed as evidence of any partnership or agency.
16.5 JOINT AND SEVERAL LIABILITY. SSI and UVST shall be jointly and
severally liable to Licensee for the accuracy of each representation
and warranty made by Licensor and for the performance of each covenant
and obligation of Licensor herein.
16.6 CHOICE OF LAW AND FORUM. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware
without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than
the State of Delaware. Each of the parties agrees that any legal action
commenced by any party to this Agreement shall be brought in either the
United States District Court in and for the District of Delaware or the
Chancery Court in and for New Castle County, Delaware and consents to
the personal jurisdiction of such courts in any such action over the
parties. If, contrary to the provisions of this Section 16.6, any party
commences any legal action involving this Agreement or the transactions
contemplated by this Agreement in any forum other than either of those
specified above, each other party shall be entitled to the dismissal of
such action based upon the agreement of the parties contained in this
Section 16.6.
16.7 WAIVER. A waiver by any party to this Agreement of any of its terms or
conditions, or a default, misrepresentation, or breach of warranty or
covenant in any one instance shall not be deemed or construed to be a
general waiver of such terms or conditions or a waiver of any prior
subsequent default, misrepresentation, or breach of warranty or
covenant.
16.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which shall together constitute one and the same instrument, provided,
however, that the several counterparts in the aggregate shall have been
signed by all of the parties hereto.
16.9 INCORPORATION. Exhibit A is hereby incorporated into and made a part of
this Agreement.
* * *
19
IN WITNESS WHEREOF, the parties have caused this License Agreement to
be executed by their duly authorized representatives on the dates indicated
below.
SERVICE SYSTEMS INTERNATIONAL, LTD.
By:
--------------------------------
Name:
------------------------------
Title:
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Date:
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UV SYSTEMS TECHNOLOGY, INC.
By:
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Name:
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Title:
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Date:
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U.S. FILTER/XXXXXXX AND XXXXXXX, INC.
By:
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Name:
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Title:
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Date:
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20
EXHIBIT A TO LICENCE AGREEMENT
TRUST AGREEMENT
21
EXHIBIT A TO LICENSE AGREEMENT
TRUST AGREEMENT
This Trust Agreement (the "Agreement"), is made as of this 25th day of
January 2001 (the "Effective Date"), by and between Service Systems
International, Ltd., a corporation organized under the laws of the State of
Nevada, United States of America ("SSI") and its wholly owned subsidiary, UV
Systems Technology, Inc., a corporation organized under the laws of the Province
of British Columbia, Canada ("UVST") (collectively, the "Licensor"), Fort Xxxx
Escrow Services, Inc., a corporation organized under the laws of the State of
Georgia, United States of America, ("Fort Xxxx"), and U.S. Filter/Xxxxxxx and
Xxxxxxx, Inc., a corporation organized under the laws of the State of Delaware,
United States of America (the "Licensee").
WHEREAS, Licensee and SSI have entered into a Strategic Alliance
Agreement of even date herewith (the "Strategic Alliance Agreement");
WHEREAS, Licensor and Licensee have entered into a license agreement of
even date herewith for the license to Licensee of certain intellectual property,
including software and manufacturing instructions related to the UV Treatment
Systems in furtherance of the Strategic Alliance Agreement (the "License
Agreement"); and
WHEREAS, Licensor is the owner of certain computer software and
proprietary manufacturing instructions; and
WHEREAS, pursuant to and in furtherance of the License Agreement,
Licensor desires Fort Xxxx to hold a copy of the computer software and
proprietary manufacturing instructions in trust for the benefit of Licensee,
and, upon certain events, to transfer legal title to, and possession of, the
copy of the computer software and the proprietary manufacturing instructions to
Licensee, in accordance with the terms hereof;
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. DEFINITIONS.
1.1 "Deposited Materials" shall mean a sealed package or sealed
packages containing one copy of each of (a) the Software and
(b) the Manufacturing Instructions, as defined herein and as
identified in Exhibit B hereto.
1.2 "Insolvency" shall mean any of the following events or
occurrences:
(a) A receiver, interim receiver, conservator, custodian,
liquidator or trustee of a party or of all or any of the
property of a party is appointed by court order; or an
order for relief is entered under the bankruptcy laws of any
jurisdiction with respect to a party; or any of the party's
material property is sequestered by court order; or a petition
is filed against a party under the bankruptcy, reorganization,
arrangement, insolvency, readjustment or compromise of debt,
dissolution or liquidation law of any jurisdiction, whether
now or hereafter in effect, and is not dismissed within ninety
(90) days after such filing;
(b) A party files a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment or
compromise of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents
to the filing of any petition against it under any such law;
or
(c) A party makes an assignment for the benefit of its
creditors, or admits in writing its inability to pay its debts
generally as they become due, or consents to the appointment
of a receiver, interim receiver, conservator, custodian,
liquidator or trustee of the party, or of all or any part of
its property.
1.3 "Manufacturing Instructions" shall mean the documentation
setting out in comprehensive form the entire process for
manufacturing the UV Treatment Systems, as defined in the
License Agreement, which documentation shall provide
sufficient instruction for a person reasonably skilled in the
industry to manufacture the UV Treatment Systems, including
all Updates, as defined herein.
1.4 "Software" shall mean the sizing software known as "Generic
System Sizing" used to specify the combination and size of UV
Treatment Systems needed to meet the requirements of
customers, and/or the software used to operate UV Treatment
Systems, as the context requires, on magnetic tapes, disks,
disk packs, CDs, DVDs, or other forms of media, in machine
readable form, as well as the source code, if any, of such
software and the written documentation prepared in connection
therewith, and any Updates, as defined herein.
1.5 "Updates" shall mean each modification, update, new release,
or revision to the sizing software and any accompanying
documentation, or to the proprietary manufacturing
instructions, which (a) corrects errors, problems, or defects
caused by or resulting from an incorrect functioning of the
software or (b) provides other updates.
2. DELIVERY AND SETTLEMENT OF TRUST BY LICENSOR.
2.1 DELIVERY AND SETTLEMENT. Licensor hereby transfers to Fort
Xxxx in trust legal title in and to the physical copies of, but not the
proprietary or confidential information or intellectual property embodied or
reflected in, the items comprising the Deposited Materials provided to Fort Xxxx
from time to time in accordance with the terms of this Agreement. Licensor shall
deliver to Fort Xxxx the Deposited Materials as follows: (a) within 15 days
after execution of this Agreement, that portion of the Software known as
"Generic System Sizing" and fabrication drawings for the structural and
mechanical aspects of the UV Treatment Systems; (b) as soon as
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possible, but no later than 90 days after execution of this Agreement, that
portion of the Software used to operate UV Treatment Systems (including,
without limitation new SLR "Ultra Flow" units); and (c) as soon as possible,
but no later than 120 days after execution of this Agreement, the remainder
of the Manufacturing Instructions. Fort Xxxx shall hold the Deposited
Materials in trust for Licensee in accordance with the terms hereof. Fort
Xxxx shall have no obligation to verify the completeness or accuracy of the
Deposited Materials except as stated in the Technical Verification Agreement
(if any) attached hereto as Exhibit C to this Agreement.
2.2 RIGHT TO TRANSFER. Licensor hereby grants Fort Xxxx the right
to transfer the Deposited Materials to Licensee upon the occurrence of a Release
Event, as herein defined, for use by the Licensee in accordance with the License
Agreement.
3. DUPLICATION; UPDATES.
3.1 In order to comply with the terms and provisions of this
Agreement, Fort Xxxx, by notice to Licensor, may require Licensor to promptly
duplicate the Deposited Materials.
3.2 Licensor shall deposit with Fort Xxxx all Updates to the
Deposited Materials within ten (10) days after the Updates are developed by or
on behalf of Licensor. All Updates shall be deemed to be included in the
definition of "Deposited Materials" for all purposes of this Agreement except in
connection with Fort Xxxx'x fees where such Updates will be subject to the
charges set out in Exhibit A attached hereto. Fort Xxxx shall have no obligation
to verify the accuracy or completeness of any Update(s) or to verify the content
of any Update excepted as provided in Exhibit C to this Agreement.
4. NOTIFICATION OF DEPOSITS.
Simultaneous with the delivery to Fort Xxxx of the Deposited Materials,
Licensor shall deliver to Fort Xxxx, with a copy to Licensee, a written
statement specifically identifying all items deposited and stating that the
Deposited Materials so deposited have been inspected by Licensor and are
complete and accurate. Fort Xxxx shall, within ten (10) business days, send
notification to Licensor that it has received from Licensor any version of the
Deposited Materials.
5. DELIVERY BY FORT XXXX.
5.1 RELEASE EVENTS. Fort Xxxx shall deliver the Deposited
Materials, or a copy thereof, to Licensee only in the event that:
(a) Licensor notifies Fort Xxxx to effect such delivery
to Licensee at a specific address, the notification being accompanied
by a check payable to Fort Xxxx in the amount of one hundred dollars
($100.00); or
(b) Fort Xxxx receives from Licensee:
(i) written notification that SSI and UVST,
directly or indirectly (a) are unable on a regular basis to
manufacture and supply Systems sufficient to satisfy
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the minimum sales targets referred to in Section 2.3.3 of the
Strategic Alliance Agreement on a timely basis (it being
understood that for purposes of determining ability to
manufacture and supply on a timely basis, that the longer of
12-14 weeks after release of approved drawings for fabrication
and the commercially reasonable delivery requirement of the
end user will be deemed to be a reasonable production schedule
for shipment, and it being further understood that the
Insolvency of SSI or UVST shall create a rebuttable
presumption for purposes of this Agreement that SSI and UVST
are unable on a regular basis to manufacture and supply
Systems on a timely basis), or (b) for reasons within their
control, are unable on a regular basis to ship spares within
one week of an order by WT therefor (each, a "Release Event");
(ii) a copy of Licensee's notification to the
Licensor of such Release Event in writing;
(iii) a written demand that the Deposited
Materials be released and delivered to Licensee;
(iv) specific instructions from the Licensee for
the delivery of the Deposited Materials; and
(v) a check payable to Fort Xxxx in the amount
of one hundred dollars ($100.00).
5.2 DELIVERY UPON NOTICE FROM LICENSOR.If the provisions of
Article 5.1(a) are satisfied, Fort Xxxx shall, within five (5) business days
after receipt of the notification and check specified in Article 5.1(a), deliver
the Deposited Materials in accordance with the applicable instructions.
5.3 DELIVERY UPON NOTICE FROM LICENSEE.Immediately upon receipt of
a notice referred to in Article 5.1(b)(i) or a demand referred to in Article
5.1(b)(iii), Fort Xxxx shall send to Licensor a legible photostatic copy of such
notice or demand. Within five (5) business days after receipt of any other
documents specified in Article 5.1(b), Fort Xxxx shall send to Licensor a
legible photostatic copy of all such documents. Licensor shall have ten (10)
days from the date on which it receives such documents ("Objection Period") to
notify Fort Xxxx of its objection ("Objection Notice") to the release of the
Deposited Materials to Licensee and to request that the issue of Licensee's
entitlement to a copy of the Deposited Materials be submitted to arbitration in
accordance with Article 7. If Fort Xxxx receives such an Objection Notice, Fort
Xxxx shall continue to store the Deposited Materials without release pending (a)
joint instructions from Licensor and Licensee, or (b) resolution of the dispute
pursuant to this Agreement. If, at the end of the Objection Period, Fort Xxxx
has not received an Objection Notice from Licensor, then Fort Xxxx shall
reasonably promptly deliver the Deposited Materials to Licensee in accordance
with the instructions specified in Article 5.1(b)(iv).
5.4 WITHDRAWAL OF OBJECTION. Licensor may, at any time prior to
the commencement of arbitration proceedings, notify Fort Xxxx that it has
withdrawn its Objection
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Notice. Upon receipt of any such notice, Fort Xxxx shall reasonably promptly
deliver the Deposited Materials to Licensee in accordance with the
instructions specified in Article 5.1(b)(iv).
5.5 TERMINATION UPON DELIVERY.Upon delivery of the Deposited
Materials to Licensee, this Agreement shall terminate, and Fort Xxxx shall have
no other obligation or responsibility to Licensee or Licensor in respect of the
Deposited Materials.
6. RIGHTS OF LICENSEE.
Licensor and Fort Xxxx agree and acknowledge that upon delivery of the
Deposited Materials to Licensee pursuant to this Agreement, Licensee shall have
the right to use the Deposited Materials for the purpose of manufacturing or
supplying the UV Treatment Systems in accordance with the License Agreement,
including the rights to:
(a) make copies of and use the Deposited Materials as required to
manufacture the UV Treatment Systems;
(b) make revisions to the Deposited Materials;
(c) recompile versions of the Software from the Deposited
Materials, which recompiled versions shall be deemed to be extensions of the
Software and subject to the terms of the License Agreement; and
(d) reveal the Deposited Materials, or any part thereof, only to
agents, employees or independent contractors of Licensee as reasonably required
in order to use, maintain, implement, correct and/or update the Software;
PROVIDED THAT the foregoing and any other use of the Deposited Materials shall
be only to the extent, and subject to the limitations and restrictions, set
forth in the License Agreement.
7. ARBITRATION.
7.1 DISPUTE RESOLUTION. The procedures specified in this Article 7
shall be the sole and exclusive procedures for the resolution of disputes
between the parties (a) related to the release of the Deposited Materials to the
Licensee or (b) arising out of questions pertaining to the enforceability,
interpretation, and validity of the Agreement; provided, however, that a party,
without prejudice to these procedures, may seek a preliminary injunction or
other provisional relief if, in its sole judgment, such action is deemed
necessary to avoid irreparable damage or to preserve the status quo. During such
action, the parties will continue to participate in good faith in the procedures
specified in this Article 7.
7.2 GOOD FAITH. The parties will attempt in good faith to resolve
any claim or controversy arising out of or relating to the execution,
interpretation or performance of this Agreement (including the validity, scope
and enforceability of the provisions contained in this Article 7) promptly by
good faith negotiations between senior management officials of the parties.
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7.3 NO RESOLUTION. In the event that any such claim or controversy
has not been resolved after good faith negotiation pursuant to Section 7.2, the
parties agree to submit to non-binding mediation, each at its own expense, upon
the request of the other party or parties prior to the commencement of
arbitration pursuant to Section 7.4.
7.4 ARBITRATION. In the event that any such claim or controversy
has not been resolved after good faith negotiation pursuant to Section 7.2 or
mediation pursuant to Section 7.3, the dispute shall upon written notice by any
party to the other(s), be finally settled by arbitration under the applicable
rules of the American Arbitration Association (AAA), or other rules if agreed,
and the provisions of the United States Federal Arbitration Act, as modified
below:
(a) The arbitration shall be heard by a single
independent and impartial arbitrator, who shall be selected by a number
of other arbitrators equal to the number of parties to the dispute,
each such other arbitrator to be selected by one party to the dispute,
provided that all such arbitrators shall be selected from a list of
neutral arbitrators, supplied by the AAA.
(b) The arbitration proceedings shall be conducted in
Chicago, Illinois.
(c) Any party may seek interim or provisional remedies
under the Federal Rules of Civil Procedure and the United States
Federal Arbitration Act as necessary to protect the rights or property
of the party pending the decision of the arbitrators.
(d) The parties shall allow and participate in limited
discovery for the production of documents and taking of depositions.
All discovery shall be completed within sixty (60) days following the
filing of the answer or other responsive pleading. Unresolved discovery
disputes shall be brought to the attention of the arbitrator and may be
disposed of by him.
(e) Each party shall have up to 50 hours to present
evidence and argument in a hearing before the arbitrator, provided that
the arbitrator may establish such longer terms for presentations as he
deems appropriate.
(f) The arbitrator shall apply, and Licensor, Fort Xxxx,
and Licensee expressly agree and acknowledge that the arbitrator shall
apply, Section 365(n) of the U.S. Bankruptcy Code to all questions
pertaining to the enforceability and validity of this Agreement in case
of a rejection, disaffirmation, breach, or a termination of the License
Agreement or this Agreement upon the Insolvency of UVST or SSI.
(g) The arbitration decision shall be rendered by the
arbitrator within fifteen (15) business days after conclusion of the
hearing of the matter, shall be in writing and shall specify the
factual and legal basis for the decision. Judgment thereof may be
entered in any court having jurisdiction thereof.
(h) The arbitrator is empowered to order money damages in
compensation for a party's actual damages, specific performance or
other appropriate relief to cure a breach; provided, however, that the
arbitrators will have no authority to award special,
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punitive or exemplary damages, or other money damages that are not
measured by the prevailing party's actual damages. If the
arbitration is settled prior to a decision by the arbitrators,
Licensor and Licensee shall each pay fifty percent (50%) of Fort
Xxxx'x costs arising out of the arbitration, unless Fort Xxxx is
determined to have committed fraud, negligence or intentional
misconduct in connection with the performance of its obligations
hereunder.
7.5 CONTINUING PERFORMANCE. Each party shall continue to perform
its obligations under this Agreement pending final resolution of any dispute
arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.
8. DISPUTES AND INTERPLEADER.
8.1 INTERPLEADER. In the event of any dispute between any of Fort
Xxxx, Licensor, or Licensee relating to delivery of the Deposited Materials by
Fort Xxxx or to any other matter arising out of this Agreement except a dispute
subject to arbitration proceedings under Article 7, Fort Xxxx may submit the
matter to any court of competent jurisdiction in an interpleader or similar
action. Any and all costs incurred by Fort Xxxx in connection therewith,
including reasonable legal fees and costs, shall be borne 50% by each of
Licensor and Licensee, unless Fort Xxxx is determined to have committed fraud,
negligence or intentional misconduct in connection with the performance of its
obligations hereunder.
8.2 NO LIABILITY OR OBLIGATION. Fort Xxxx shall perform any acts
ordered by any court of competent jurisdiction, without any liability or
obligation to any party hereunder by reason of such act.
9. INDEMNIFICATION.
Licensor and Licensee shall, jointly and severally, indemnify and hold
harmless Fort Xxxx and each of its directors, officers, agents, employees and
stockholders (collectively, the "Fort Xxxx Indemnitees") absolutely and forever,
from and against any and all claims, actions, damages, suits, liabilities,
obligations, costs, fees, charges, and any other expenses whatsoever, including
reasonable attorneys' fees and costs (collectively referred to as a "Claim"),
that may be asserted against any Fort Xxxx Indemnitee in connection with this
Agreement or the performance of Fort Xxxx or any Fort Xxxx Indemnitee hereunder
except where any such Claim arises out of the fraud, negligence, or intentional
misconduct of a Fort Xxxx Indemnitee.
10. CONFIDENTIALITY.
Upon receipt of the Deposited Materials, the Fort Xxxx and Licensee
herein shall maintain the Deposited Materials in strict confidence and shall use
and disclose any portion only as reasonably appropriate to exercise their
respective rights in the Deposited Materials, and each shall use the same degree
of care it provides for its own confidential information, but in no case less
than a reasonable degree of care, to protect the Deposited Materials as
restricted, proprietary, and confidential. The foregoing is intended, and shall
be interpreted, to supplement and not to
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limit or impair the obligations of confidentiality and non-disclosure which
arise under the terms of the Strategic Alliance Agreement or the License
Agreement.
11. TERM AND RENEWAL.
11.1 TERM. Unless otherwise earlier terminated in accordance with
this Article 11, this Agreement hereunder shall continue to be in force for a
period of (10) years from the Effective Date of this Agreement. UNLESS ANY PARTY
GIVES SIX (6) MONTHS NOTICE OF NON-RENEWAL, this Agreement shall be renewed
automatically for SUCCESSIVE (1) one year periods OR FOR SUCH LONGER PERIODS AS
ARE MUTUALLY AGREED BY THE PARTIES IN WRITING.
11.2 MUTUAL AGREEMENT AND TERMINATION OF STRATEGIC ALLIANCE
AGREEMENT.
(a) The parties may agree by mutual consent to terminate
this Agreement and the rights granted hereunder at any time with such
termination effective on the date mutually agreed in writing by the
parties.
(b) Licensor or Licensee may terminate this Agreement in
the event of the termination of the Strategic Alliance Agreement in
accordance with the terms of the Strategic Alliance Agreement by
providing notice to the other parties; provided, however, that
notwithstanding anything contained in this Agreement, if the Strategic
Alliance Agreement is terminated by reason of the Insolvency of either
USVT or SSI and the License Agreement remains in effect, this Agreement
shall remain in effect until termination of the License Agreement in
accordance with the terms thereof, or until this Agreement is otherwise
terminated in accordance with the terms hereof.
(c) Upon termination of this Agreement in accordance with
terms of this Article 11.2, Fort Xxxx shall release and deliver the
Deposited Materials to Licensor.
11.3 BREACH BY OR INSOLVENCY OF FORT XXXX.
(a) Licensor and Licensee, by joint agreement, may
terminate this Agreement upon fifteen (15) days notice to Fort Xxxx
upon the occurrence of a material breach of this Agreement by Fort Xxxx
which breach remains uncured for fifteen (15) days after notice of such
breach to Fort Xxxx.
(b) Licensor or Licensee shall have the right to
terminate this Agreement upon the Insolvency of Fort Xxxx by notice to
the other parties.
(c) Upon termination of this Agreement in accordance with
terms of this Article 11.3, Fort Xxxx shall release and deliver the
Deposited Materials and transfer all of its interests therein to a
successor escrow agent, as mutually agreed to by Licensor and Licensee.
11.4 TERMINATION OF LICENSE AGREEMENT. This Agreement shall
automatically terminate upon termination of the License Agreement in accordance
with its terms. Upon
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termination of this Agreement in accordance with terms of this Article 10.4,
Fort Xxxx shall release and deliver the Deposited Materials to Licensor.
11.5 NON-PAYMENT TO FORT XXXX. In the event of non-payment of any
fees or charges invoiced by Fort Xxxx in accordance with Article 13 below, Fort
Xxxx shall give notice of non-payment of any fee due and payable hereunder to
the Licensee and, in such an event, the Licensee shall have the right to pay the
unpaid fee within ten (10) days after receipt of notice from Fort Xxxx. If
Licensee fails to pay in full all fees due during such ten (10) day period, Fort
Xxxx shall give notice of non-payment of any fee due and payable hereunder to
Licensor and, in such event, Licensor shall have the right to pay the unpaid fee
within ten (10) days of receipt of such notice from Fort Xxxx. Upon payment of
the unpaid fee by either Licensor or Licensee, this Agreement shall continue in
full force and effect until the end of the applicable term. Failure to pay the
unpaid fee by both Licensor and Licensee shall result in termination of this
Agreement. Upon termination of this Agreement in accordance with terms of this
Article 11.5, Fort Xxxx shall release and deliver the Deposited Materials to
Licensor.
12. FEES.
12.1 PAYMENT. Fort Xxxx shall issue an invoice to Licensor
following execution of this Agreement and Licensor shall be responsible for the
fees and charges for the first year of this Agreement (the "Initial Invoice"),
except for any Fees and Charges arising out of or in connection with the
Technical Verification Agreement. Payment for the Initial Invoice shall be due
upon receipt of the signed contract or Deposited Materials, whichever comes
first. Fort Xxxx shall issue an invoice to Licensee and Licensee shall be
responsible for the fees and charges arising out of or in connection with the
Technical Verification Agreement and for each subsequent year during the term of
this Agreement and in connection with the performance of any additional services
hereunder. Payment shall be due thirty (30) day after receipt of invoices. All
fees and charges are exclusive of, and the party responsible for the fees and
charges shall be responsible for the payment of, all sales, use and like taxes.
12.2 FEES UPON TERMINATION. In the event of termination of this
Agreement in accordance with Articles 11.2 or 11.4 hereof, Licensee shall pay
all fees due Fort Xxxx for services already rendered prior to termination.
13. REPRESENTATIONS AND WARRANTIES OF LICENSOR. Licensor hereby makes the
following representations and warranties to Licensee and Fort Xxxx:
13.1 AUTHORITY. Licensor has the authority to grant to Fort Xxxx
and to Licensee the rights and interests in the Deposited Materials as provided
herein.
13.2 NO LIENS. The Software and Manufacturing Instructions are and
shall be unencumbered by any liens, security interests, or other rights or
claims by any third party.
13.3 NON-INFRINGEMENT. Use of either the Software or the
Manufacturing Instructions, or any parts thereof, shall not be an infringement
of any patent, trademark, trade secret or any other proprietary right of any
third party.
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13.4 SOFTWARE. The Software is and shall be understandable and
useable by a trained computer-programmer who is generally familiar with computer
systems, though not necessarily those incorporating the Software. If the
Software incorporates any proprietary languages or programming components that
such a contractor could not reasonably be expected to understand, the Software
contains sufficient commentary to enable such contractor to understand and use
such languages or components. The Software includes all of the devices,
programming, and documentation necessary for its use by the Licensee upon
release pursuant to this Agreement, except for devices, programming, and
documentation commercially available to the Licensee on reasonable terms through
readily known sources other than the Licensor. The Software is readable and
useable in their current form or, if any portion of the Software is encrypted,
the decryption tools and decryption keys have also been deposited.
13.5 USABILITY OF MANUFACTURING INSTRUCTIONS. The Manufacturing
Instructions are understandable and useable by a person reasonably skilled in
the relevant industry and familiar with manufacturing, though not necessarily
familiar with the manufacture of UV Treatment Systems.
14. BANKRUPTCY.
Licensor and Licensee acknowledge that this Agreement is an "agreement
supplementary to" the License Agreement within the meaning of Section 365(n) of
U.S. Bankruptcy Code. Licensor acknowledges that in the case of Insolvency of
SSI or UVST, if SSI or UVST as a debtor in possession or a trustee in bankruptcy
in a case under the Bankruptcy Code rejects the License Agreement or this
Agreement, Licensee may elect to retain its rights under the License Agreement
and this Agreement as provided in Section 365(n) of the Bankruptcy Code. Upon
written request of Licensee to Licensor or the bankruptcy trustee, Licensor or
such bankruptcy trustee shall not interfere with the rights of Licensee as
provided in the License Agreement and this Agreement, including the right to
obtain the Deposited Materials from Fort Xxxx.
15. AVAILABLE VERIFICATION SERVICES.
If Fort Xxxx and Licensee enter into such Technical Verification
Agreement, Licensor shall reasonably cooperate with Fort Xxxx by providing its
facilities, computer systems, and technical and support personnel for technical
verification whenever reasonably necessary. If requested by Licensee, Licensor
shall permit one employee of Licensee to be present at Licensor's facility
during any such verification of the Deposited Materials.
16. MISCELLANEOUS.
16.1 REMEDIES. Except for negligence or willful misconduct, Fort
Xxxx shall not be liable to Licensor or to Licensee for any act or omission by
Fort Xxxx in connection with this Agreement. Any liability of Fort Xxxx
regardless of the cause shall be limited to $500,000. In no event will Fort Xxxx
be liable for special, indirect, incidental or consequential damages or costs
(including legal fees and expenses) arising under this Agreement, even if Fort
Xxxx has been advised of the possibility of such damages or costs.
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16.2 NATURAL DEGENERATION; UPDATED VERSION. In addition, the
parties acknowledge that as a result of the passage of time alone, the Deposited
Materials are susceptible to loss of quality ("Natural Degeneration"). It is
further acknowledged that Fort Xxxx shall have no liability or responsibility to
any person or entity for any Natural Degeneration. For the purpose of reducing
the risk of Natural Degeneration, Licensor shall deliver to Fort Xxxx a new copy
of the Deposited Materials at least once every three years.
16.3 PERMITTED RELIANCE AND ABSTENTION. Fort Xxxx may rely and
shall be fully protected in acting or refraining from acting upon any notice or
other document believed by Fort Xxxx in good faith to be genuine and to have
been signed or presented by the proper person or entity. Fort Xxxx shall have no
duties or responsibilities except those expressly set forth herein.
16.4 INDEPENDENT CONTRACTORS. The parties hereto are and shall be
independent contractors under this Agreement, and nothing herein shall be
construed to create a partnership, joint venture, or agency relationship between
or among the parties hereto. Without limiting the generality of the foregoing,
Fort Xxxx shall be regarded as an independent custodian of the Deposited
Materials and not as an agent or trustee of Licensor or as an agent of Licensee.
16.5 AMENDMENTS. This Agreement shall not be modified or amended
except by another agreement in writing executed by the parties hereto.
16.6 ENTIRE AGREEMENT. This Agreement, including all exhibits
hereto, supersedes all prior discussions, understandings and agreements between
the parties with respect to the matters contained herein, and constitutes the
entire agreement between the parties with respect to the matters contemplated
herein. All exhibits attached hereto are by this reference made a part of this
Agreement and are incorporated herein.
16.7 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same Agreement.
16.8 JOINT AND SEVERAL LIABILITY. SSI and UVST shall be jointly and
severally liable to Licensee and to Fort Xxxx for the accuracy of each
representation and warranty made by Licensor and for the performance of each
covenant and obligation of Licensor herein.
16.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware. Each of the
parties agrees that any legal action commenced by any party to this Agreement
shall be brought in either the United States District Court in and for the
District of Delaware or the Chancery Court in and for New Castle County,
Delaware and consents to the personal jurisdiction of such courts in any such
action over the parties. If, contrary to the provisions of this Section 16.9,
any party commences any legal action involving this Agreement or the
transactions contemplated by this Agreement in any forum other than either of
those specified
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above, each other party shall be entitled to the dismissal of such action
based upon the agreement of the parties contained in this Section 16.9.
16.10 SEVERABILITY. In the event any one or more provisions of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable,
the remaining provisions of this Agreement shall remain valid and unenforceable,
and each invalid, illegal or unenforceable provision shall be replaced by a
mutually acceptable provision, which, being valid, legal and enforceable, comes
closest to reasonably complying with the intentions of the parties hereto in
agreeing to such invalid, illegal or unenforceable provision.
16.11 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then on the
date of first attempted delivery) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Fort Xxxx Escrow Services:
--------------------------------
Fort Xxxx
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Contacts Administration
Fax: (000) 000-0000
If to Licensee: Copy to:
-------------- -------
U.S. Filter/Xxxxxxx & Xxxxxxx, Inc. United States Filter Corporation
0000 Xxxx Xxxxxx Xxxx 000 Xxxxx Xxxx Xxxx
Xxxxxxxx, X.X. 00000 Xxxxxxxxxx, XX 00000
Attn: Executive Vice President Attn: Associate General Counsel
Fax: (000) 000-0000 Fax: (000) 000-0000
If to SSI: Copy to:
--------- -------
Service Systems International, Ltd. Schuler, Messersmith, Xxxx & Lansdowne
0000 Xxxxxxxx Xxxxxx 0000 Xxx Xxxxx, XX, Xxxxx X000
Xxxxxxx, X.X. Albuquerque, NM 87110
Canada V5C 6G7
Attn: President Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000 Fax: (000) 000-0000
If to UVST: Copy to:
----------- -------
UV Systems Technology, Inc. Schuler, Messersmith, Xxxx & Lansdowne
0000 Xxxxxxxx Xxxxxx 0000 Xxx Xxxxx, XX, Xxxxx X000
Xxxxxxx, X.X. Albuquerque, NM 87110
Canada V5C 6G7
Attn: President Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000 Fax: (000) 000-0000
12
Any party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, ordinary mail or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
16.12 SURVIVAL. Articles 6, 7, 8, 9, 10, 11, 12, 13 and 14 shall
survive termination of this Agreement.
16.13 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court having jurisdiction over the Parties and the matter, in addition to any
other remedy to which it may be entitled, at law or in equity.
16.14 AUDIT. During the term of this Agreement, Licensor and
Licensee shall each have the right to inspect the written records of Fort Xxxx
pertaining to this Agreement. Any inspection shall be made during normal
business hours and following reasonable prior notice.
16.15 NO WAIVER. No failure on the part of any party hereto to
exercise, and no delay in exercising any right, power or single or partial
exercise of any right, power or remedy by any party will preclude any other or
further exercise thereof or the exercise of any other right, power or remedy. No
express waiver or assent by any party hereto to any breach of or default in any
term or condition of this Agreement shall constitute a waiver of or an assent to
any succeeding breach of or default in the same or any other term or condition
hereof.
13
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives on the dates indicated below.
Fort Xxxx Escrow Services, Inc.
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
Date:
--------------------------------------------------------
SERVICE SYSTEMS INTERNATIONAL, LTD.
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
Date:
--------------------------------------------------------
UV SYSTEMS TECHNOLOGY, INC.
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
Date:
--------------------------------------------------------
U.S. FILTER/XXXXXXX AND XXXXXXX, INC.
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
Date:
--------------------------------------------------------
14
EXHIBIT A TO TRUST AGREEMENT
FEE SCHEDULE
FEES TO BE PAID BY LICENSOR SHALL BE AS FOLLOWS:
Initialization fee (one time only) $ 850
($ 765 for current clients)
ANNUAL FEES TO BE PAID BY LICENSEE SHALL BE AS FOLLOWS:
Annual maintenance/storage fee
- includes two Deposited Material updates $ 1000
- includes one cubic foot of storage space
Annual Fee to be paid by Licensor for the first year of the Trust Agreement;
subsequent Annual Fees to be paid by Licensee for the remainder of the term of
the Trust Agreement.
ADDITIONAL SERVICES AVAILABLE:
Additional Updates $ 150/Product
(above two per year)
Additional Storage Space $ 150/Cubic foot
Due Only Upon Licensee's
Request for Release of Deposited Materials $ 100/Deposited Materials per
Licensee for initial 2 hrs. and $ 50/hour
for each additional hour
Fort Xxxx benefits its clients by offering extended services including: software
testing & verification, media conversion, document capture & retrieval, image
processing, high-speed laser printing, data conversion, information software and
IT consultancy.
Fees due in full, in US dollars, upon receipt of signed contract or deposit
material, whichever comes first. Thereafter, fees shall be subject to their
current pricing, provided that such prices shall not increase by more
than 10% per year. The renewal date for this Agreement will occur on the
anniversary of the first invoice. If other currency acceptance is
necessary, please contact your Account Manager to make arrangements.
EXHIBIT B TO TRUST AGREEMENT
DEPOSITED MATERIALS
B1. PRODUCT NAME: _____________________________________________________
Version #: ___________________________________________________________
Prepared/Confirmed by: ____________________________________________
Title: _________________________________________ Date:_____________
Signature: _____________________________________________________
Type of deposit:
____ Initial Deposit
____ Update Deposit to replace current deposits
____ Other (please describe)__________________________________
ITEMS DEPOSITED:
Quantity Media Type Description of Material
A)
----------- --------------------- -----------------------
B)
----------- --------------------- -----------------------
C)
----------- --------------------- -----------------------
B2. PRODUCT NAME: _____________________________________________________
Version #: ___________________________________________________________
Prepared/Confirmed by: ____________________________________________
Title: _________________________________________ Date:_____________
Signature: _____________________________________________________
Type of deposit:
____ Initial Deposit
____ Update Deposit to replace current deposits
____ Other (please describe)__________________________________
ITEMS DEPOSITED:
Quantity Media Type Description of Material
A)
----------- --------------------- -----------------------
B)
----------- --------------------- -----------------------
C)
----------- --------------------- -----------------------
EXHIBIT C TO TRUST AGREEMENT
TECHNICAL VERIFICATION
17
EXHIBIT C
THE SECURITIES REPRESENTED BY THIS INSTRUMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED, OR IN
CONTRAVENTION OF THE TERMS OF THIS INSTRUMENT.
THE TRANSFERABILITY OF THIS WARRANT IS RESTRICTED.
SEE SECTION 5.
SERVICE SYSTEMS INTERNATIONAL, LTD.
STOCK PURCHASE WARRANT
Date Of Issuance: _____________, 200__ Certificate No. _________
FOR VALUE RECEIVED, Service Systems International, Ltd., a Nevada
corporation (the "Company"), hereby grants to U.S. Filter/Xxxxxxx & Xxxxxxx,
Inc., a Delaware corporation ("WT"), or its assigns (WT and/or any Person or
Persons to whom WT or an assignee of WT has assigned this Warrant pursuant to
Section 5 hereof being hereinafter referred to as the "Holder") the right to
purchase from the Company ___________ Warrant Shares at a price per Warrant
Share of US $_______ (as adjusted from time to time hereunder, the "Exercise
Price"). This Warrant is one of the "Warrants" referred to in that certain
Strategic Alliance Agreement dated as of January 25, 2000 by and between WT and
the Company (the "Strategic Alliance Agreement"). Certain capitalized terms used
herein are defined in Section 3 hereof. Other capitalized terms used in this
Warrant but not defined herein shall have the meanings set forth in the
Strategic Alliance Agreement.
The amount and kind of securities obtainable pursuant to the rights
granted hereunder and the purchase price for such securities are subject to
adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. EXERCISE OF WARRANT.
-1-
A. EXERCISE PERIOD. The Holder may exercise, in whole or in part,
the purchase rights represented by this Warrant at any time and from time to
time commencing on the second anniversary of the Date of Issuance up to and
including the tenth anniversary of the Date of Issuance (the "EXERCISE PERIOD");
provided, that solely in the event of a Termination for Convenience of the
Agreement by WT, the Exercise Period shall end on the second anniversary of the
effective date of such Termination for Convenience
B. EXERCISE PROCEDURE.
1. This Warrant shall be deemed to have been exercised
when the Company has received all of the following items (the "EXERCISE
TIME"):
(a) a completed Exercise Agreement, as described
in SECTION C below (an "EXERCISE AGREEMENT"), executed by the
Person exercising all or part of the purchase rights
represented by this Warrant;
(b) this Warrant;
(c) if this Warrant is not registered in the
name of the Holder, an Assignment or Assignments in the form
set forth in EXHIBIT II hereto evidencing the assignment of
this Warrant to the Holder, in which case the Holder shall
have complied with the provisions set forth in SECTION 5
hereof; and
(d) at the option of the Company, either (1) a
certified check drawn on a United States bank payable to the
Company or (2) confirmed receipt of a wire transfer to an
account designated by the Company, in either case in an amount
equal to the product of the Exercise Price multiplied by the
number of Warrant Shares being purchased upon such exercise
(the "AGGREGATE EXERCISE PRICE") .
2. Certificates for Warrant Shares purchased upon
exercise of this Warrant promptly shall be delivered by the Company to
the Holder after the date of the Exercise Time. Unless this Warrant has
expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new Warrant, substantially
identical hereto, representing the rights formerly represented by this
Warrant which have not expired or been exercised and promptly shall
deliver such new Warrant to the Person designated for delivery in the
Exercise Agreement. The certificates for Warrant Shares shall bear a
legend substantially similar to the following:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT OR LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED."
-2-
3. The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Holder at the
Exercise Time, and the Holder shall be deemed for all purposes to have
become the record holder of such Warrant Shares at the Exercise Time.
4. The issuance of Warrant Shares upon exercise of this
Warrant shall be made without charge to the Holder for any issuance tax
in respect thereof or other cost incurred by the Company in connection
with such exercise and the related issuance of Warrant Shares. Each
Warrant Share issuable upon exercise of this Warrant shall, upon
payment of the Exercise Price therefor, be free from all taxes and
liens.
5. The Company shall not close its books against the
transfer of this Warrant or of any Warrant Shares in any manner which
effectively prohibits the timely exercise of this Warrant. The Company
shall from time to time take all such action as may be necessary to
assure that the Warrant Shares acquirable upon exercise of this Warrant
will at all times be duly authorized, and when acquired pursuant to the
terms of this Warrant and upon payment of the Exercise Price, will be
fully paid and non assessable.
6. At Holder's expense, the Company shall assist and
cooperate with any Holder required to make any governmental filings or
obtain any governmental approvals prior to or in connection with any
exercise of this Warrant (provided, however, any filings required to be
made by the Company shall be made at the Company's expense).
7. Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a
Change of Control of the Company, the exercise of any portion of this
Warrant may, at the election of the Holder hereof, be conditioned upon
the consummation of such transaction in which case such exercise shall
not be deemed to be effective until the consummation of such
transaction.
8. The Company shall at all times reserve and keep
available out of its authorized but unissued Shares solely for the
purpose of issuance upon the exercise of the Warrants, such number of
Warrant Shares as are issuable upon the exercise of all outstanding
Warrants. The Company shall take such action as may be within its
control to assure that all such Warrant Shares be so issued in
accordance with the terms of this Agreement and without violation of
any applicable law or governmental regulation or any requirements of
any domestic securities exchange or market system upon which the
Warrant Shares may be listed or traded (except for official notice of
issuance which shall be immediately delivered by the Company upon each
such issuance). The Company shall not take any action which would cause
the number of authorized but unissued Warrant Shares to be less than
the number of such Shares required to be reserved hereunder for
issuance upon exercise of the Warrant.
9. If the Warrant Shares issuable by reason of exercise
of this Warrant are convertible into or exchangeable for any other
Shares or securities of the Company, the Company shall, at the
exercising Holder's option and upon surrender of this Warrant by
-3-
such Holder as provided above together with any notice, statement
or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Holder (or as otherwise specified
by such Holder) a certificate or certificates representing the
Shares or securities or, if uncertificated, other evidence of
ownership of such Shares or securities into which the Warrant
Shares issuable by reason of such conversion are convertible or
exchangeable, registered in such name or names and in such
denomination or denominations as such Holder has specified.
10. Each Warrant Share issuable by reason of the exercise
of this Warrant will be deemed to have been issued in the state of
Nevada.
C. EXERCISE AGREEMENT. Upon any exercise of this
Warrant, the Exercise Agreement shall be substantially in the form set forth in
Exhibit I hereto, except that if the Warrant Shares are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the Warrant Shares are
to be issued, and if the number of Warrant Shares to be issued does not include
all the Warrant Shares purchasable hereunder, it shall also state the name of
the Person to whom a new Warrant for the unexercised portion of the rights
hereunder is to be delivered.
Section 2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. In order
to prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 2,
and the number of Warrant Shares obtainable upon exercise of this Warrant shall
be subject to adjustment from time to time as provided in this Section 2.
A. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON
ISSUANCE OF SHARES.
1. If and whenever on or after the Date of Issuance
first written above the Company issues or sells any Shares for a
consideration per share less than the Exercise Price of the Shares
determined as of the date of such issue or sale, then immediately upon
such issue or sale the Exercise Price shall be adjusted and such
adjusted Exercise Price shall be determined by multiplying the Exercise
Price in effect immediately prior to such issue or sale by a fraction,
the numerator of which shall be the number of Shares outstanding
immediately prior to such issuance or sale plus the number of Shares
which the aggregate net consideration to be received, or deemed to be
received, by the Company for the total number of Shares so issued or
sold would purchase at the Exercise Price then in effect, and the
denominator of which shall be the number of Shares outstanding
immediately prior to such issuance or sale plus the number of Shares so
issued or sold. An example of the adjustment of the Exercise Price
pursuant to this Section 2.A.1 is attached as Schedule 2.A.1.
2. Upon each such adjustment of the Exercise Price
hereunder, the number of Warrant Shares issuable upon exercise of this
Warrant shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares
acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price
resulting from such
-4-
adjustment, provided, in no case, shall the aggregate number of
Warrant Shares issuable upon exercise of this Warrant, when added
to the total number of Warrant Shares issued under all other
Warrants granted under the Strategic Alliance Agreement, exceed
twenty percent (20%) of the issued and outstanding shares of the
Company at the date of exercise.
3. Notwithstanding the foregoing , there shall be no
adjustment to the Exercise Price or the number of Warrant Shares
issuable upon exercise of this Warrant with respect to the following:
(a) the issuance of Shares upon exercise of any of the Warrants granted
under the Strategic Alliance Agreement; (b) the issuance of not to
exceed 7,191,796 Shares in the aggregate (as such number is
proportionately adjusted to reflect any subdivision or combination of
shares) to (i) directors, officers, employees, consultants or advisors
of the Company pursuant to stock option or other equity incentive plans
in effect immediately prior to the date of the Strategic Alliance
Agreement, or (ii) Xxxx Xxxxx under the warrants for 1,487,718 shares
issued to him in exchange for stock options for an equal number of
shares; (c) the issuance of not to exceed 14,726,937 Shares in the
aggregate (as such number is proportionately adjusted to reflect any
subdivision or combination of shares) to (i) the holders of the
Company's warrants outstanding immediately prior to the date of the
Strategic Alliance Agreement, (ii) Xxxx Xxxxx, Xxxxxxx Xxxxxxxx or
Xxxxx Xxxxx (other than pursuant to clause (b) above), or (iii) to
purchasers of units offered by the Company in the private placement
ongoing at the date of the Strategic Alliance Agreement (the "Private
Placement"), upon the purchasers' exercise of warrants acquired as part
of the units offered in the Private Placement; or (d) the issuance of
not to exceed 1,000,000 Shares directly to purchasers of units offered
in the Private Placement, it being understood that the Private
Placement shall not include any subsequent securities offering by the
Company, whether similar or dissimilar to the Private Placement.
4. Calculation of Consideration Received. If any Shares
are issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor shall be deemed to be the net amount
received by the Company therefor. In case any Shares are issued or sold
for a consideration other than cash, the amount of the consideration
other than cash received by the Company shall be the fair market value
of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Company shall be the Market Price thereof as of the date of receipt. In
case any Shares are issued to the owners of the non-surviving entity in
connection with any merger in which the Company is the surviving entity
the amount of consideration therefor shall be deemed to be the fair
market value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Shares, as the case may
be. The fair market value of any consideration other than cash or
securities shall be determined in good faith by the Board of Directors
of the Company.
B. SUBDIVISION OR COMBINATION OF SHARES. If the Company at any
time subdivides (by any split, dividend, recapitalization or otherwise) one or
more classes of its outstanding Shares into a greater number of units, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Shares issuable upon
-5-
exercise of this Warrant shall be proportionately increased. If the Company
at any time combines (by reverse split or otherwise) one or more classes of
its outstanding Shares into a smaller number of Shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately
increased and the number of Warrant Shares issuable upon exercise of this
Warrant shall be proportionately decreased.
C. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. Any recapitalization, reorganization, reclassification, consolidation,
amalgamation, merger, sale of all or substantially all of the Company's assets
or other transaction, which in each case is effected in such a way that the
holders of Shares are entitled to receive (either directly or upon subsequent
liquidation) stock, securities, other equity interests or assets with respect to
or in exchange for Shares, is referred to herein as an "ORGANIC CHANGE." Prior
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each of the Holders shall thereafter have the right to
acquire and receive, in lieu of or addition to (as the case may be) the Warrant
Shares immediately theretofore acquirable and receivable upon the exercise of
such Holder's Warrant, such stock, securities, other equity interests or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Holder's Warrant had such Organic Change not taken place. In any such
case, the Company shall make appropriate provision with respect to such Holder's
rights and interests under the Warrants to ensure that all of the provisions of
the Warrants which remain pertinent in light of the Organic Change shall
thereafter continue to be applicable to such Holders. The Company shall not
effect any such consolidation, amalgamation, merger or sale, unless prior to the
consummation thereof, the successor entity (if other than the Company) resulting
from consolidation, amalgamation or merger or the entity purchasing such assets
expressly assumes by written instrument the obligation to deliver to each such
Holder such stock, securities, equity interests or assets as, in accordance with
the foregoing provisions, such Holder may be entitled to acquire.
D. NO AVOIDANCE. In the event the Company shall enter into any
transaction for the purpose of avoiding the provisions of this Section 2, the
benefits provided by such provisions shall nevertheless apply and be preserved.
E. NOTICES
1. Immediately upon any adjustment of the Exercise
Price, the Company shall give written notice thereof to the Holder,
setting forth in reasonable detail and certifying the calculation of
such adjustment.
2. The Company shall give written notice to the Holder
at least 10 days prior to the date on which the Company closes its
books or fixes a record date (a) with respect to any dividend or
distribution upon the Shares, or (b) for determining rights to vote
with respect to any Organic Change, dissolution or liquidation.
3. The Company shall also give written notice to the
Holder at least 10 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
-6-
Section 3. DEFINITIONS. The following terms have the meanings set
forth below:
"Market Price" means as to any security (other than the Warrants) the
average of the closing prices of a share or unit thereof on the New York Stock
Exchange Composite Tape or the NASDAQ National Market, whichever is applicable
(as reported in the Wall Street Journal) on each of the 10 trading days
immediately preceding the date of determination; or if the security is not
traded on such exchange or national market system, the average of the closing
prices for a share or unit thereof on the NASDAQ Small Cap Market, or if the
security is not then traded on any such market, the OTC Bulletin Board, on each
of such 10 trading days; or if the security is not then traded on any such
market, the fair market value per share or unit as determined in good faith by
the Board of Directors of the Company.
"SECURITIES ACT" means the Securities Act of 1933, or any successor
federal statute, and the rules and regulations of the Securities and Exchange
Commission thereunder, all as the same shall be in effect at the time.
"SECURITIES AND EXCHANGE COMMISSION" or "COMMISSION" refers to the
Securities and Exchange Commission or any other federal agency then
administering the Securities Act.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934 or
any successor federal statute, and the rules and regulations of the Securities
and Exchange Commission thereunder, all as the same shall be in effect at the
time.
"SHARES" means shares of the Company's Common Stock, $.001 par value.
"WARRANT SHARES" means the Shares issuable upon exercise of this
Warrant; provided that if there is a change such that the securities issuable
upon exercise of the Warrants are issued by an entity other than the Company or
there is a change in the type or class of securities so issuable, then each
"Warrant Share" shall mean one share of the security issuable upon exercise of
the Warrants if such security is issuable in shares, or shall mean the smallest
unit in which such security is issuable if such security is not issuable in
shares.
Section 4. NO RIGHTS AS A STOCKHOLDER. Until the exercise of this
Warrant, the Holder shall not have or exercise any rights by virtue hereof as a
stockholder of the Company.
Section 5. WARRANT TRANSFERABLE. Subject to the transfer conditions
referred to in this Section 5, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the Holder, upon surrender
of this Warrant with a properly executed Assignment (in the form of Exhibit II
hereto) at the principal office of the Company; provided, that during the Term
of the Strategic Alliance Agreement, the Holder may transfer this Warrant only
to one or more of its Affiliates.
A. If, at the time of any transfer or exchange (other than a
transfer or exchange not involving a change in the beneficial ownership of this
Warrant or Warrant Shares) of a Warrant or Warrant Shares, such Warrant or
Warrant Shares shall not be registered under the Securities Act, the Company may
require, as a condition of allowing such transfer or exchange, that the
-7-
Holder or transferee of such Warrant or Warrant Shares, as the case may be,
furnish to the Company an opinion of counsel reasonably acceptable to the
Company or a "no action" or similar letter from the Securities and Exchange
Commission to the effect that such transfer or exchange may be made without
registration under the Securities Act. In the case of such transfer or
exchange, the Company may require a written statement that such Warrant or
Warrant Shares, as the case may be, are being acquired for investment and not
with a view to or in connection with the distribution thereof. The
certificates evidencing the Warrant Shares issued on the exercise of the
Warrants shall, if such Warrant Shares are being sold or transferred without
registration under the Securities Act, bear an appropriate legend to the
effect that the Warrant Shares evidenced by such certificates have not been
so registered and their transfer is restricted.
B. The Company shall make and file with the Commission in a
timely manner all reports and other documents as may be required of it under
Section 13(a) or 15(d) of the Exchange Act. The Holder shall make and file with
the Commission in a timely manner all reports and other documents as may be
required of it under Section 13(d) or 16(a) of the Exchange Act.
C. The Company shall furnish to a Holder and/or prospective
purchaser of Warrants or Warrant Shares designated by such Holder, forthwith
upon request, (1) a written statement by the Company as to its compliance with
the reporting requirements of Rule 144 under the Securities Act, and (2) a copy
of the most recent annual or quarterly report of the Company.
Section 6. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Holder at the time
of such surrender. The date the Company initially issues this Warrant shall be
deemed to be the "Date of Issuance" hereof regardless of the number of times new
certificates representing the unexpired and unexercised rights formerly
represented by this Warrant shall be issued. All Warrants representing portions
of the rights hereunder are referred to herein as the "Warrants."
Section 7. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Holder generally shall be
satisfactory, provided in the case of mutilation the mutilated certificate shall
be returned to the Company) of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing this Warrant, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Company, the Company shall (at the Holder's expense) execute
and deliver, in lieu thereof, a new certificate of like kind representing the
same rights represented by such lost, stolen, destroyed or mutilated certificate
and dated the date of such lost, stolen, destroyed or mutilated certificate, and
shall cancel the original certificate.
Section 8. NOTICES. All notices hereunder shall be in writing and shall
be deemed duly given upon the date of first attempted delivery if it is sent by
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient, in the case of the Company, at its
principal executive offices, and in, in the case of the Holder of this Warrant,
-8-
at such Holder's address as it appears in the records of the Company (unless
otherwise indicated by any such Holder). The Company or the Holder of this
Warrant may send any notice hereunder to the intended recipient at the
address referred to above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, ordinary mail or electronic
mail), but no such notice shall be deemed to have been duly given unless and
until it actually is received by the intended recipient.
Section 9. GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the domestic laws of the State of Nevada without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Nevada or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Nevada.
Section 10. SECURITIES LAW. Notwithstanding anything herein to the
contrary, the rights and obligations of the Company and the Holder arising under
or in connection with this Warrant shall be subject to the Securities Act and
other applicable securities law and regulation.
* * * *
-9-
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
SERVICE SYSTEMS INTERNATIONAL, LTD.
By
--------------------------------
Its
--------------------------------
Attest:
--------------------------------
Secretary
-10-
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. _______), hereby agrees to subscribe for the purchase
of the Warrant Shares covered by such Warrant and makes payment herewith in full
therefor at the price per unit provided by such Warrant, and represents and
warrants to the Company that:
A. The undersigned is aware that no United States or
Canadian federal, state or provincial agency has made any finding or
determination as to the fairness for public investment, nor any recommendation
or endorsement, of the Warrant Shares, and the Warrant Shares have not been
registered under the Securities Act of 1933 (the "1933 Act"), or the securities
laws of Canada or any state or province.
B. The undersigned, either alone or with his, her or its
purchaser representative, is able to evaluate the risks involved in any
investment in the Warrant Shares, and has sufficient knowledge and experience in
financial and business matters in general, and investments in particular, to be
fully capable of evaluating the merits and risks of an investment in the Warrant
Shares.
C. The undersigned has had an opportunity to and has
asked questions, received answers and otherwise been fully informed with respect
the Company, the Warrant Shares and the business of the Company, and has
obtained all the information concerning these matters which the undersigned
desires. The financial condition of the undersigned is such that he, she or it
has adequate means of providing for current needs and future contingencies. The
undersigned is under no present or contemplated need to liquidate any portion of
the Warrant Shares to satisfy any existing or contemplated undertaking, need or
indebtedness. The undersigned is able to bear the economic risk of any
investment in the Warrant Shares, including the possible complete loss of the
investment and possible inability to sell or transfer the Warrant Shares for an
indefinite period of time.
D. The undersigned is acquiring the Warrant Shares for
his, her or its own account for investment only and not with a view to, or for
sale in connection with, the distribution thereof, and is not participating
directly or indirectly in a distribution of the Warrant Shares, or in the
underwriting of any such distribution of the Warrant Shares, nor will the
undersigned act in any way that would constitute him, her or it an underwriter,
within the meaning of the 1933 Act, of the Warrant Shares.
E. The undersigned acknowledges that the Warrant Shares
are "restricted securities" as that term is described in Rule 144 of the United
States Securities and Exchange Commission.
-11-
F. The undersigned will not transfer or sell the Warrant
Shares in the absence of registration under the 1933 Act or an exemption
therefrom. In the absence of registration under the 1933 Act, before any
proposed sale, pledge, gift or other transfer, for value or otherwise, of any or
all of the Warrant Shares or any interest or interests therein (a "Transfer"),
the undersigned will give written notice to Company describing the Transfer in
detail, accompanied by an opinion, reasonably satisfactory in form and substance
to Company's counsel, of the undersigned's counsel, to the effect that the
proposed Transfer may be conducted without violation of Section 5 of the 1933
Act or pursuant to an exemption from registration under the 1933 Act, the
availability of which is to be established to the satisfaction of Company. The
undersigned understands that the Company will make, or will advise the transfer
agent of the Shares to make, stop transfer notations on its records relating to
the Warrant Shares and the certificate representing the Warrant Shares, when
issued, will have the following legend imprinted or typed on their face:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED, OR IN CONTRAVENTION OF THE TERMS OF
AN EXERCISE AGREEMENT BETWEEN THE CORPORATION AND THE
PERSON(S) WHOSE NAME(S) APPEAR(S) ON THIS CERTIFICATE
AS REGISTERED HOLDER, A COPY OF WHICH IS ON FILE AT
THE OFFICE OF THE CORPORATION."
Signature
-----------------------------------
Address
-----------------------------------
-12-
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, ___________________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. _____) with respect to the number of Warrant Shares covered
thereby set forth below, unto:
Names of Assignee Address No. of Shares
----------------- ------- -------------
Dated: Signature
---------------------------
---------------------------
Witness
---------------------------
-13-
SCHEDULE 2.A.1
EXAMPLE OF EXERCISE PRICE ADJUSTMENT
ASSUMPTIONS:
Exercise Price = $1.00 per share
Warrant Shares = 1,000,000 shares
Total Shares outstanding = 20,000,000 shares
Additional Shares issued and sold by Company = 1,000,000 shares
Sale price of additional Shares = $0.90 per share
Net consideration received by Company = $900,000
Number of Shares net consideration would purchase at Exercise Price =
$900,000 / $1.00 = 900,000 shares
EXERCISE PRICE ADJUSTMENT:
$1.00 x [(20,000,000 + 900,000) / (20,000,000 + 1,000,000)] = $.9952381
ADJUSTMENT IN NUMBER OF WARRANT SHARES
(1.00 x 1,000,000) / .9952381 = 1,004,785 shares
-14-
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made as of
January 25, 2001 by and between Service Systems International, Ltd., a Nevada
corporation (the "Company"), and U.S. Filter/Xxxxxxx & Xxxxxxx, Inc., a Delaware
corporation ("WT").
Pursuant to a Strategic Alliance Agreement (the "STRATEGIC ALLIANCE
AGREEMENT") dated as of the date hereof by and between the Company and WT, WT
will receive on the date hereof and from time to time hereafter warrants (the
"WARRANTS") to acquire shares of common stock of the Company, $.001 par value
per share ("COMMON STOCK"). In order to induce WT to enter into the Strategic
Alliance Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the effectiveness of the Strategic Alliance Agreement. Capitalized
terms used and not otherwise defined herein shall have the meanings assigned
thereto in the Strategic Alliance Agreement. In consideration of the premises
and the mutual promises herein contained, the parties hereto agree as follows:
1. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. The holders of a majority,
but not less than the Requisite Amount (as defined in SECTION 9), of Registrable
Securities (as defined in SECTION 9) may request registration under the
Securities Act (as defined in SECTION 9) of all or part, but not less than the
Requisite Amount, of their Registrable Securities on Form S-1 or any similar
long-form registration (a "LONG-FORM REGISTRATION") or, if available, on Form
S-3 or any similar short-form registration (a "SHORT-FORM REGISTRATION"). All
registrations of the type that may be requested pursuant to this SECTION l(a)
are referred to herein as "DEMAND REGISTRATIONS." Each request for a Demand
Registration shall specify the approximate number of Registrable Securities
requested to be registered and the anticipated per share price range for such
offering. Within 10 days after receipt of any request for a Demand Registration,
the Company shall give written notice of such requested registration to all
other holders of Registrable Securities and, subject to SECTION l(e) below,
shall include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 15
days after the receipt of the Company's notice by such holders.
(b) UNDERWRITTEN REGISTRATIONS. Registrations may, but
need not, be underwritten.
(c) NUMBER OF LONG-FORM REGISTRATIONS. The Company shall
be obligated to register Registrable Shares pursuant to a Long-Form Registration
on two occasions only; provided that (i) at least the Requisite Amount of
Registrable Securities is to be registered on each occasion; (ii) the Company
shall be obligated to register Registrable Securities pursuant to a Long-Form
Registration no more frequently than once in any period of 12 consecutive
months; and (iii) a registration shall not constitute a Long-Form Registration
unless the holders of Registrable Securities are able to register at least 90%
of the Registrable Securities requested to be included in such registration.
1
(d) SHORT-FORM REGISTRATIONS. Demand Registrations shall
be Short-Form Registrations whenever the Company is permitted to use any
applicable short form. The Company shall use reasonable best efforts to make
Short-Form Registrations available for the sale of Registrable Securities,
PROVIDED, THAT: (i) AT LEAST THE REQUISITE AMOUNT OF REGISTRABLE SECURITIES is
to be registered on each occasion; (ii) the Company shall be obligated to
register Registrable Securities pursuant to a Short-Form Registration no more
frequently than once in any period of 18 consecutive months; (iii) a
registration shall not constitute a Short-Form Registration unless the holders
of Registrable Securities are able to register at least 90% of the Registrable
Securities requested to be included in such registration; and (iv) if a
Short-Form Registration is an underwritten offering and any of the Registrable
Securities requested to be included in such registration are not included by
operation of the provisions of SECTION 1(e), then the next occasion on which
Company shall be obligated to register Registrable Securities pursuant to a
Short-Form Registration may, at the option of the holders of Registrable
Securities, occur as soon as 12 months rather than 18 months thereafter.
(e) PRIORITY ON DEMAND REGISTRATIONS. If a Demand
Registration is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of Registrable
Securities and other securities, if any, requested to be included in such
offering exceeds the number of Registrable Securities and other securities, if
any, which can be sold therein without adversely affecting the marketability of
the offering, the Company shall include in such registration, prior to the
inclusion of any securities which are not Registrable Securities, the number of
Registrable Securities requested to be included which in the opinion of such
underwriters may be sold without adversely affecting the marketability of the
offering, pro rata among the respective holders thereof on the basis of the
number of shares of Registrable Securities that each holder had requested to be
included in such registration.
(f) POSTPONEMENT OF DEMAND REGISTRATIONS. The Company may
postpone once for up to 120 days the filing or the effectiveness of a
registration statement for a Demand Registration if the board of directors of
the Company determines in good faith that such Demand Registration would
reasonably be expected to have a material adverse effect on the Company;
PROVIDED, HOWEVER, that the Company shall notify the holders of the Registrable
Securities of any such postponement within 30 days of the Demand Registration
request and PROVIDED FURTHER, that, in such event, the holders of Registrable
Securities initially requesting such Demand Registration shall be entitled to
withdraw such request by notice given within 30 days of the Company's notice
and, if such request is withdrawn, such Demand Registration shall not constitute
a Demand Registration permitted hereunder.
(g) NON-EXERCISE OF WARRANTS. Notwithstanding anything in
this Agreement to the contrary, if holders of Warrants who have requested a
Demand Registration of the Common Stock issuable upon exercise of those Warrants
fail to exercise those Warrants and, as a result, either (i) the Demand
Registration is abandoned or withdrawn or (ii) 90% of the Registrable Securities
requested to be included in such Demand Registration are not included, then,
either (x) the holders requesting the registration promptly shall reimburse the
Company for all Registration Expenses paid or incurred by the Company, whereupon
the Company shall not be deemed to have effected a Demand Registration, or (y)
the Company shall be deemed to have effected a Demand Registration.
2
2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Subject to Sections 2(b) and
2(c), whenever the Company proposes to register (other than pursuant to (i) a
Demand Registration in the case of a non-underwritten offering requested by
holders of the Company's securities other than holders of Registrable
Securities, or (ii) a registration on Form S-4 or Form S-8 or any successor or
similar forms) any of its securities under the Securities Act, whether or not
for sale for its own account, and the registration form to be used may be used
for the registration of Registrable Securities, the Company shall give written
notice to all holders of Registrable Securities of its intention to effect such
a registration not later than 20 days prior to the filing of the registration
statement therefor pursuant to the Securities Act. The Company shall include in
such registration all Registrable Securities (but only if constituting at least
the Requisite Amount) with respect to which the Company has received written
requests for inclusion therein within 15 days after the receipt of the Company's
notice. All registrations requested pursuant to this SECTION 2(a) are referred
to herein as "PIGGYBACK REGISTRATIONS."
(b) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing (with a copy to each
party hereto requesting registration of Registrable Securities) that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of such offering, the Company shall include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, the Registrable Securities requested to be included in such
registration, pro rata among such holders on the basis of the number of shares
that each holder has requested to be included in such registration and (iii)
third, other securities requested to be included in such registration, pro rata
among such holders on the basis of the number of shares that each holder has
requested to be included in such registration.
(c) PRIORITY ON SECONDARY REGISTRATIONS. Subject to
SECTION 2(b), if a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities other than holders
of Registrable Securities, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company shall
include in such registration (i) first, the securities requested to be included
therein by the holders requesting such registration (other than holders who are
directors or executive officers of the Company or who own beneficially (within
the meaning of Rule 13d-3 under the Securities Exchange Act) more than five
percent of the Company's equity securities]) pro rata among such holders on the
basis of the number of shares that each holder has requested to be included in
such registration, (ii) second, the Registrable Securities requested to be
included in such registration, pro rata among the holders on the basis of the
number of shares that each holder has requested to be included in such
registration, and (iii) third, other securities requested to be included in such
registration, pro rata among the holders of such other securities.
(d) OTHER REGISTRATIONS. If the Company has previously
filed a registration statement with respect to Registrable Securities pursuant
to SECTION 1 or pursuant to this SECTION 2, and if such previous registration
has not been withdrawn or abandoned, the Company shall not
3
file or cause to be effected any other registration of any of its equity
securities, or securities convertible or exchangeable into or exercisable for
its equity securities, under the Securities Act (except on Form S-4 or Form
S-8 or any successor form), whether on its own behalf or at the request of
any holder or holders of such securities, until a period of at least 120 days
has elapsed from the effective date under the Securities Act of such previous
registration.
3. HOLDBACK AGREEMENTS.
(a) Each holder of Registrable Securities agrees not to
effect any public sale or distribution (including sales pursuant to Rule 144) of
equity securities of the Company, or any securities convertible into or
exchangeable into or exercisable for such securities, during the five days prior
to, and during the 180-day period beginning on, the effective date of any
underwritten registration (except, in each case, as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree.
(b) The Company agrees (i) not to effect any public sale
or distribution of its equity securities, or any securities convertible into or
exchangeable into or exercisable for such securities, during the five days prior
to, and during the 180-day period beginning on, the effective date of any
underwritten registration (except as part of such underwritten registration or
pursuant to registrations on Form S-4 or Form S-8 or any successor form), unless
the underwriters managing the registered public offering otherwise agree, and
(ii) to cause each director and executive officer of the Company, and, to the
extent the Company is able after using its reasonable best efforts, each holder
of its Common Stock whose securities are included in such an underwritten
registration, and, to the extent the Company is able after using its reasonable
best efforts, each holder of its Common Stock or any securities convertible into
or exchangeable into or exercisable for Common Stock, purchased from the Company
at any time after the date of this Agreement (other than in a registered public
offering, or pursuant to the Company's employee stock plans by persons who are
not directors or officers of the Company) to agree not to effect any public sale
or distribution (including sales pursuant to Rule 144) of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
4. REGISTRATION PROCEDURES. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company shall use its best efforts to effect the
registration of such Registrable Securities in accordance with the intended
method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and thereafter use its best efforts to cause such registration statement to
become effective; provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company will furnish to
the counsel selected by the holders of a majority of the Registrable Securities
covered by such registration statement copies of all such documents proposed to
be filed reasonably in advance of the filing thereof, which documents will be
subject to the reasonable and timely review of such counsel;
4
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of either (i) 120 days (subject to
extension pursuant to SECTION 7(b)) or, if such registration statement relates
to an underwritten offering, such longer period as in the opinion of counsel for
the underwriters a prospectus is required by law to be delivered in connection
with sales of Registrable Securities by an underwriter or dealer or (ii) such
shorter period as will terminate when all of the securities covered by such
registration statement have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement (but in any event not before the expiration of any longer
period required under the Securities Act).;
(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions within the United States as any seller reasonably requests;
PROVIDED, HOWEVER, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (ii) subject itself to taxation
in any such jurisdiction, or (iii) consent to general service of process in any
such jurisdiction where it is not then so subject;
(e) notify each seller of such Registrable Securities, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon the discovery of the happening
of any event as a result of which, the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any material
fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and, at the request of any such
seller, the Company shall prepare and furnish to such seller a reasonable number
of copies of a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made;
(f) cause all such Registrable Securities to be listed or
included on each securities exchange or over the counter market on which
securities of the same class issued by the Company are then listed or traded, if
any;
(g) during the time that such registration statement is
being prepared, make reasonably available for inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter, financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants to supply
all information reasonably
5
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement;
(h) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement will satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(i) permit any holder of Registrable Securities which
holder might reasonably be deemed to be an underwriter or a controlling person
of the Company, at its own expense, to participate in the preparation of such
registration statement and to propose the insertion therein of material,
furnished to the Company in writing, which in the reasonable judgment of such
holder and its counsel should be included;
(j) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any Common Stock included in such registration statement for
sale in any jurisdiction, the Company will use its reasonable best efforts
promptly to obtain the withdrawal of such order;
(k) if reasonably available, obtain a comfort letter,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), signed by the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by comfort letters as the holders of a majority of the
Registrable Securities being sold reasonably request; and
(l) provide a legal opinion of the Company's outside
counsel addressed to each holder (in form or substance reasonably satisfactory
to each such holder and its counsel) of Registrable Securities included in such
registration, dated the effective date of such registration statement (and, if
such registration includes an underwritten public offering, dated the date of
the closing under the underwriting agreement), with respect to the registration
statement, each amendment and supplement thereto, the prospectus included
therein (including the preliminary prospectus) and such other documents relating
thereto in customary form and covering such matters of the type customarily
covered by legal opinions of such nature.
5. Registration Expenses.
(a) Except to the extent otherwise specifically provided
herein, all expenses incident to the Company's performance of or compliance with
this Agreement, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants, underwriters
(including underwriting discounts and commissions other than those with respect
to the Registrable Securities) and other persons retained by the Company (all
such expenses being
6
herein referred to as "Registration Expenses"), shall be borne solely by the
Company except for underwriting discounts and commissions with respect to
Registrable Securities which shall be borne by the holders of Registrable
Securities.
(b) In connection with each Long-Form Registration,
Short-Form Registration and each Piggyback Registration, the Company shall
reimburse the holders of Registrable Securities covered by such registration for
the reasonable fees and disbursements of one counsel chosen by the holders of a
majority of the Registrable Securities.
(c) To the extent that Registration Expenses are not
required to be paid by the Company, each holder of securities included in any
registration hereunder shall pay those Registration Expenses allocable to the
registration of such holder's securities so included, and any Registration
Expenses not so allocable shall be borne by all sellers of securities included
in such registration in proportion to the aggregate selling price of the
securities to be so registered.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless, to
the extent permitted by law, each holder of Registrable Securities, its officers
and directors and each person who controls such holder (within the meaning of
the Securities Act) against any and all losses, claims, damages, liabilities,
joint or several, to which such holder or any such director or officer or
controlling person may become subject under the Securities Act or otherwise, to
the extent that such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon (i) any untrue or alleged untrue statement of material fact
contained (A) in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or (B) in any
application or other document or communication (in this SECTION 6 collectively
called an "application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify any securities covered by such registration
statement under the "blue sky" or securities laws thereof, or (ii) any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such holder and each such director, officer and controlling person for
any legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or omission made in such registration statement, any such
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto, or in any application, in reliance upon, and in conformity with a
request made by a holder pursuant to Section 4(i), written information furnished
to the Company by a holder for use therein or by a holder's failure to deliver a
copy of the prospectus or any amendments thereof or supplements thereto after
the Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
7
(b) In connection with any registration statement in
which a holder of Registrable Securities is participating, each such holder
shall furnish to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, will indemnify and
hold harmless the Company, its directors and officers and each other person who
controls the Company (within the meaning of the Securities Act) against any
losses, claims, damages or liabilities to which the Company or any such director
or officer or controlling person may become subject under the Securities Act or
otherwise, to the extent that such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect thereof)
result from (i) any untrue statement of a material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or in any application or (ii) any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is made in such registration statement, any such prospectus or
preliminary prospectus or any amendment thereof or supplement thereto, or in any
application, in reliance upon and in conformity with written information, or
omissions therefrom, furnished to the Company by such holder expressly for use
therein; PROVIDED, HOWEVER, that the obligation to indemnify shall be individual
to each holder and shall be limited to the net amount of proceeds received by
such holder from the sale of Registrable Securities pursuant to such
registration statement.
(c) Any person entitled to indemnification hereunder
shall (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party shall not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
person of such indemnified party and shall survive the transfer of securities.
The indemnifying party shall make such provisions, as are reasonably requested
by any indemnified party, for contribution to such party in the event the
indemnifying party's indemnification is unavailable for any reason.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
(a) No person may participate in any registration
hereunder which is underwritten unless such person (i) agrees to sell such
person's securities on the basis provided in any underwriting arrangements
approved by the person or persons entitled hereunder to
8
approve such arrangements (including, without limitation, pursuant to the
terms of any over-allotment or "green shoe" option requested by the managing
underwriters, except that no holder of Registrable Securities shall be
required to sell more than the number of Registrable Securities that such
holder has requested the Company to include in any registration) and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements; provided that no holder of
Registrable Securities included in any underwritten registration shall be
required to make any representations or warranties to the Company or the
underwriters other than representations and warranties regarding such holder,
such holder's ownership of the Registrable Securities and such holder's
intended method of distribution.
(b) Each person that is participating in any Registration
hereunder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in SECTION 4(e) above, such person
shall forthwith discontinue the disposition of its Registrable Securities
pursuant to the registration statement until such person's receipt of the copies
of a supplemented or amended prospectus as contemplated by such SECTION 4(e). In
the event the Company shall give any such notice, the applicable time period
mentioned in SECTION 4(b) during which a Registration Statement is to remain
effective will be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to this SECTION 7(b) to
and including the date when each seller and underwriter of a Registrable
Security covered by such registration statement has received the copies of the
supplemented or amended prospectus contemplated by SECTION 4(e).
8. CURRENT PUBLIC INFORMATION. The Company will at all times file
all reports required to be filed by it under the Securities Act and the
Securities Exchange Act (as defined in Section 9) and the rules and regulations
adopted by the Securities and Exchange Commission thereunder.
9. DEFINITIONS.
"REGISTRABLE SECURITIES" means (i) any Common Stock issued or issuable
upon the exercise of Warrants that are exercisable within 90 days after a
registration request, and (ii) any Common Stock issued or issuable directly or
indirectly with respect to the securities referred to in clause (i) by way of
stock dividend, stock conversion or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. For purposes of this Agreement, a person shall be deemed to be
the holder of Registrable Securities whenever such person has the right to
acquire directly or indirectly such Registrable Securities (upon conversion or
exercise, in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected. As to any particular
shares constituting Registrable Securities, such shares shall cease to be
Registrable Securities when they have been (x) effectively registered under the
Securities Act, or (y) sold pursuant to Rule 144 (or any similar provision then
in force) under the Securities Act.
"REQUISITE AMOUNT" means, with respect to Registrable Securities, the
lesser of (i) 1,000,000 shares of Common Stock or (ii) the remaining shares of
Common Stock as to which WT or its transferee is the holder.
9
"RULE 144" means Rule 144 adopted by the Securities and Exchange
Commission under the Securities Act, as such rule may be in effect from time to
time.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SHARES" means the $0.001 par value common stock of the Company.
10. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with or violates the rights granted to the holders of Registrable
Securities in this Agreement.
(b) REMEDIES. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party hereto will have the right to
injunctive relief, in addition to all of its other rights and remedies at law or
in equity, to enforce the provisions of this Agreement.
(c) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only upon the
prior written consent of the Company and the holders of a majority of the
Registrable Securities.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns. In addition, and whether or not any
express assignment shall have been made, the provisions of this Agreement which
are for the benefit of the holders of any Registrable Securities as such will be
for the benefit of and enforceable by any subsequent holder of any Registrable
Securities.
(e) SEVERABILITY. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
(f) COUNTERPARTS. This Agreement may be executed in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute one
and the same Agreement.
(g) DESCRIPTIVE HEADINGS. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
(h) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
10
Each of the parties agrees that any legal action commenced by either party to
this Agreement shall be brought in either the United States District Court in
and for the District of Delaware or the Chancery Court in and for New Castle
County, Delaware and consents to the personal jurisdiction of such courts in
any such action over the parties. If, contrary to the provisions of this
Section 10(h), either party commences any legal action involving this
Agreement or the transactions contemplated by this Agreement in any forum
other than either of those specified above, the other party shall be entitled
to the dismissal of such action based upon the agreement of the parties
contained in this Section 10(h).
(i) NOTICES. All notices, requests, demands, claims and
other communications hereunder shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given if (and then
on the date of first attempted delivery) it is sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to WT: Copy to:
--------- --------
U.S. Filter/Xxxxxxx & Xxxxxxx, Inc. United States Filter Corporation
0000 Xxxx Xxxxxx Xxxx 000 Xxxxx Xxxx Xxxx
Xxxxxxxx, X.X. 00000 Xxxxxxxxxx, XX 00000
Attn: Executive Vice President Attn: Associate General Counsel
Fax: (000) 000-0000 Fax: (000) 000-0000
If to the Company: Copy to:
------------------ --------
Service Systems International, Ltd. Xxxxxx X. Xxxxxxx, Esq.
0000 Xxxxxxxx Xxxxxx Schuler, Messersmith, Xxxx
Burnaby, B.C. & Xxxxxxxxx
Xxxxxx X0X 0X0 0000 Xxx Xxxxx, XX
Attn: President Suite B380
Fax: (000) 000-0000 Xxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Either party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Either party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
* * * * *
11
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
SERVICE SYSTEMS INTERNATIONAL, LTD.
By:
--------------------------------------
Its:
--------------------------------------
U.S. FILTER/XXXXXXX & XXXXXXX, INC.
By:
--------------------------------------
Its:
--------------------------------------
12
EXHIBIT E-1
SHAREHOLDER OFFER AGREEMENT
THIS SHAREHOLDER OFFER AGREEMENT (the "AGREEMENT") is made as of
January 25, 2001 by and between Xxxxxxx X. Xxxxxxxx (the "SHAREHOLDER") and U.S.
Filter/Xxxxxxx & Xxxxxxx, Inc., a Delaware corporation ("WT").
In order to induce WT to enter into that certain Strategic Alliance
Agreement dated as of the date hereof (the "STRATEGIC ALLIANCE AGREEMENT") by
and between WT and Service Systems International, Ltd., a Nevada corporation (
the "COMPANY"), the Shareholder has agreed to provide to WT the offer rights set
forth in this Agreement with respect to shares of the Company's Common Stock,
$.001 par value (the "COMMON STOCK"), owned from time to time by the
Shareholder. The execution and delivery of this Agreement is a condition to the
effectiveness of the Strategic Alliance Agreement. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned thereto in the
Strategic Alliance Agreement. The parties hereto agree as follows:
1. RIGHT TO MAKE AN OFFER TO PURCHASE SHAREHOLDER SHARES
(a) In the event that either the Shareholder or an
Affiliate of the Shareholder other than the Company (in any such case, the
"OFFEROR") wishes to sell all or any portion of the shares of Common Stock of
the Company then owned beneficially or of record by the Shareholder (the
"SHAREHOLDER SHARES") to any person or entity other than (i) an Affiliate of the
Shareholder other than the Company, (ii) each other Shareholder of the Company
who has executed and delivered to WT an agreement substantially similar to this
Agreement, or (iii) the Shareholder's spouse or child or a fiduciary for the
benefit of his spouse or child or any of them, the Shareholder shall first, and
prior to soliciting or otherwise seeking indications of interest from any third
parties with respect to the purchase of the Shareholder Shares or offering the
Shareholder Shares for sale through a securities broker, dealer or market maker,
notify WT (the "OFFEREE") in writing (the "NOTICE OF INTENDED SALE") of the
number of Shareholder Shares for sale by the Offeror (the "OFFERED SHARES") and,
if the Offeror has received an unsolicited offer from a third party to buy the
Offered Shares which the Offeror otherwise intends to accept ("Acceptable Third
Party Offer"), the material proposed terms and conditions thereof.
(b) The Offeror shall engage in exclusive discussions
with the Offeree, if the latter so desires, for a period not to exceed 20 days
from the date of receipt by the Offeree of the Notice of Intended Sale, for the
purpose of attempting to determine a price per share for and other terms and
conditions related to a possible purchase and sale of the Offered Shares. Not
later than the end of such 20 day period, the Offeree shall notify the Offeror
in writing either (i) of its offer (the "Offer") to buy the Offered Shares,
which Offer shall state a specified or formula price per share (the "Offeree
Proposed Price"), and other purchase terms and conditions ("Offeree Proposed
Terms") , or (ii) that the Offeree does not wish to purchase any of the Offered
Shares.
(c)
(i) If the Notice of Intended Sale refers to an
Acceptable Third Party Offer and discloses the material terms
and conditions thereof, and the Offer reflects an
unconditional agreement by the Offeree to purchase all of the
Offered Shares for the price and upon such disclosed material
terms and conditions set forth in the Acceptable Third Party
Offer, then the Offeror shall sell and the Offeree shall
purchase the Offered Shares strictly for such price and upon
such terms. If the Notice of Intended Sale does not refer to
an Acceptable Third Party Offer, but does specify an
acceptable price and acceptable terms and conditions, and the
Offer reflects an unconditional agreement by the Offeree to
purchase all of the Offered Shares for the price and upon the
terms and conditions set forth in the Notice of Intended Sale,
then the Offeror shall sell and the Offeree shall purchase the
Offered Shares strictly for such price and upon such terms and
conditions. If the Offeror otherwise wishes in his discretion
to sell the Offered Shares to the Offeree at the Offeree
Proposed Price and upon the Offeree Proposed Terms, then
within 10 days after the receipt by the Offeror of the Offer,
the Offeror shall notify the Offeree of his acceptance
thereof, whereupon the Offeror shall sell and the Offeree
shall purchase the Offered Shares for such price and upon such
terms
(ii) If the Offeror is not obligated to sell
pursuant to Section 1(c)(i), then the Offeror shall be free,
for a period of 90 days after the date of receipt by the
Offeror of the notice required by paragraph 1(b)(i) or
1(b)(ii), to consummate a sale of the Offered Shares to any
Person, provided, however, if the Notice of Intended Sale
referred to in Section 1(a) above specified an acceptable
purchase price and other acceptable purchase terms and
conditions, then such sale shall be at a price equal to or
greater than any acceptable purchase price contained in the
Notice of Intended Sale referred to in Section 1(a) above and
strictly upon such other purchase terms and conditions as set
forth in the Notice of Intended Sale. To the extent that a
sale is not consummated by the Offeror within the periods
contemplated by this subparagraph (ii), without any fault on
the part of the Offeree, the Offered Shares shall thereafter
again be subject to the provisions of this Section 1.
(d) Notwithstanding any provision hereof to the contrary, the
Shareholder shall be free to sell Shareholder Shares pursuant to the provisions
of Rule 144 adopted by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, as such rule may be in effect from time to
time.
2. TERM. This Agreement shall be in effect for a term commencing
on the Commencement Date of the Strategic Alliance Agreement and ending at the
end of the Term of the Strategic Alliance Agreement. Notwithstanding the
foregoing, this Agreement shall remain in effect with respect to any Shareholder
Shares that were the subject (or were required to be the subject) of a Notice of
Intended Sale prior to the termination hereof, until such time as all of the
provisions of Section 1 of this Agreement have been complied with as to such
Shareholder Shares.
3. REPRESENTATIONS OF THE SHAREHOLDER. The Shareholder represents
and warrants to WT that the statements contained in this Section 3 are correct
and complete as of the date of this
2
Agreement and will be correct and complete as of the date of any Notice of
Intended Sale, any notice of an Offeree Proposed Price or any notice of a
Revised Offeree Proposed Price hereunder.
(a) This Agreement constitutes the valid and legally
binding obligation of the Shareholder, enforceable in accordance with its terms
and conditions.
(b) Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which the Shareholder is subject, or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any agreement, contract, instrument or
other arrangement to which the Shareholder is a party, by which the Shareholder
is bound or to which the Shareholder is subject.
4. Representations of WT. WT represents and warrants to the
Shareholder that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the date of any Notice of Intended Sale, any notice of an Offeree Proposed
Price, or any notice of a Revised Offeree Proposed Price hereunder.
(a) WT is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
(b) WT is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required. WT has full power and authority and all licenses, permits and
authorizations necessary to carry on the business in which it is engaged and in
which it presently proposes to engage and to own and use the properties owned
and used by it.
(c) WT has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the Board of Directors of WT has duly
authorized the execution, delivery and performance of this Agreement by WT. This
Agreement constitutes the valid and legally binding obligation of WT,
enforceable in accordance with its terms and conditions.
(d) Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which WT is subject or any provision of its
charter or bylaws, or conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which WT
is a party or by which it is bound or to which any of its assets is subject.
5. MISCELLANEOUS.
3
(a) NO INCONSISTENT AGREEMENTS. The Shareholder will not
hereafter enter into any agreement with respect to the Company's securities
owned by the Shareholder, which is inconsistent with or violates the rights
granted to WT in this Agreement.
(b) REMEDIES. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party hereto will have the right to
injunctive relief, in addition to all of its other rights and remedies at law or
in equity, to enforce the provisions of this Agreement.
(c) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only upon the
prior written consent of the parties hereto.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns.
(e) SEVERABILITY. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
(f) COUNTERPARTS. This Agreement may be executed in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute one
and the same Agreement.
(g) DESCRIPTIVE HEADINGS. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
(h) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware. Each of the parties agrees that any legal action commenced by either
party to this Agreement shall be brought in either the United States District
Court in and for the District of Delaware or the Chancery Court in and for New
Castle County, Delaware and consents to the personal jurisdiction of such courts
in any such action over the parties. If, contrary to the provisions of this
Section 5(h), either party commences any legal action involving this Agreement
or the transactions contemplated by this Agreement in any forum other than
either of those specified above, the other party shall be entitled to the
dismissal of such action based upon the agreement of the parties contained in
this Section 5(h).
(i) NOTICES. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be personally delivered, received by certified mail,
return receipt requested, or sent by guaranteed overnight courier service.
Notices will be deemed to have been given hereunder (i) when delivered
personally or (ii) on the date of first attempted delivery on a business day
within the jurisdiction where delivery is attempted after deposit with a
reputable overnight delivery service.
4
Such notices, demands and other communications will be sent to WT and the
Company at the addresses indicated below:
If to the Shareholder:
----------------------
c/o Service Systems International, Ltd.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, X.X.
Xxxxxx X0X 0X0
Fax: (000) 000-0000
If to WT:
---------
U.S. Filter/Xxxxxxx & Xxxxxxx, Inc.
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxx, X.X. 00000
Attention: Executive Vice President
Fax: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(j) SECURITIES LAW. Notwithstanding anything herein to
the contrary, the rights and obligations of any persons arising under or in
connection with this Agreement shall be subject to the Securities Act of 1933
and other applicable securities law and regulation.
* * * * *
5
IN WITNESS WHEREOF, the parties have executed this Shareholder Offer
Agreement as of the date first written above.
----------------------------------------
----------------------------------------
Printed Name of Shareholder
U.S. FILTER/XXXXXXX & XXXXXXX, INC.
By:
------------------------------------
Its:
------------------------------------
6
EXHIBIT E-2
SHAREHOLDER OFFER AGREEMENT
THIS SHAREHOLDER OFFER AGREEMENT (the "AGREEMENT") is made as of
January 25, 2001 by and between Xxxx X. Xxxxx (the "SHAREHOLDER") and U.S.
Filter/Xxxxxxx & Xxxxxxx, Inc., a Delaware corporation ("WT").
In order to induce WT to enter into that certain Strategic Alliance
Agreement dated as of the date hereof (the "STRATEGIC ALLIANCE AGREEMENT") by
and between WT and Service Systems International, Ltd., a Nevada corporation (
the "COMPANY"), the Shareholder has agreed to provide to WT the offer rights set
forth in this Agreement with respect to shares of the Company's Common Stock,
$.001 par value (the "COMMON STOCK"), owned from time to time by the
Shareholder. The execution and delivery of this Agreement is a condition to the
effectiveness of the Strategic Alliance Agreement. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned thereto in the
Strategic Alliance Agreement. The parties hereto agree as follows:
1. RIGHT TO MAKE AN OFFER TO PURCHASE SHAREHOLDER SHARES
(a) In the event that either the Shareholder or an
Affiliate of the Shareholder other than the Company (in any such case, the
"OFFEROR") wishes to sell all or any portion of the shares of Common Stock of
the Company then owned beneficially or of record by the Shareholder (the
"SHAREHOLDER SHARES") to any person or entity other than (i) an Affiliate of the
Shareholder other than the Company, (ii) each other Shareholder of the Company
who has executed and delivered to WT an agreement substantially similar to this
Agreement, (iii) the Shareholder's spouse or child or a fiduciary for the
benefit of his spouse or child or any of them, or (iv) pursuant to the terms of
that stock pledge dated July 13, 2000 given by Shareholder to LRG Construction
Ltd. by whose terms 300,000 shares of the Common Stock of the Company have been
pledged, the Shareholder shall first, and prior to soliciting or otherwise
seeking indications of interest from any third parties with respect to the
purchase of the Shareholder Shares or offering the Shareholder Shares for sale
through a securities broker, dealer or market maker, notify WT (the "OFFEREE")
in writing (the "NOTICE OF INTENDED SALE") of the number of Shareholder Shares
for sale by the Offeror (the "OFFERED SHARES") and, if the Offeror has received
an unsolicited offer from a third party to buy the Offered Shares which the
Offeror otherwise intends to accept ("Acceptable Third Party Offer"), the
material proposed terms and conditions thereof.
(b) The Offeror shall engage in exclusive discussions
with the Offeree, if the latter so desires, for a period not to exceed 20 days
from the date of receipt by the Offeree of the Notice of Intended Sale, for the
purpose of attempting to determine a price per share for and other terms and
conditions related to a possible purchase and sale of the Offered Shares. Not
later than the end of such 20 day period, the Offeree shall notify the Offeror
in writing either (i) of its offer (the "OFFER") to buy the Offered Shares,
which Offer shall state a specified or formula price per
share (the "Offeree Proposed Price"), and other purchase terms and conditions
("OFFEREE PROPOSED Terms") , or (ii) that the Offeree does not wish to
purchase any of the Offered Shares.
(c)
(i) If the Notice of Intended Sale refers to an
Acceptable Third Party Offer and discloses the material terms and
conditions thereof, and the Offer reflects an unconditional agreement
by the Offeree to purchase all of the Offered Shares for the price and
upon such disclosed material terms and conditions set forth in the
Acceptable Third Party Offer, then the Offeror shall sell and the
Offeree shall purchase the Offered Shares strictly for such price and
upon such terms. If the Notice of Intended Sale does not refer to an
Acceptable Third Party Offer, but does specify an acceptable price and
acceptable terms and conditions, and the Offer reflects an
unconditional agreement by the Offeree to purchase all of the Offered
Shares for the price and upon the terms and conditions set forth in the
Notice of Intended Sale, then the Offeror shall sell and the Offeree
shall purchase the Offered Shares strictly for such price and upon such
terms and conditions. If the Offeror otherwise wishes in his discretion
to sell the Offered Shares to the Offeree at the Offeree Proposed Price
and upon the Offeree Proposed Terms, then within 10 days after the
receipt by the Offeror of the Offer, the Offeror shall notify the
Offeree of his acceptance thereof, whereupon the Offeror shall sell and
the Offeree shall purchase the Offered Shares for such price and upon
such terms
(ii) If the Offeror is not obligated to sell
pursuant to Section 1(c)(i), then the Offeror shall be free, for a
period of 90 days after the date of receipt by the Offeror of the
notice required by paragraph 1(b)(i) or 1(b)(ii), to consummate a sale
of the Offered Shares to any Person, PROVIDED, HOWEVER, if the Notice
of Intended Sale referred to in Section 1(a) above specified an
acceptable purchase price and other acceptable purchase terms and
conditions, then such sale shall be at a price equal to or greater than
any acceptable purchase price contained in the Notice of Intended Sale
referred to in Section 1(a) above and strictly upon such other purchase
terms and conditions as set forth in the Notice of Intended Sale. To
the extent that a sale is not consummated by the Offeror within the
periods contemplated by this subparagraph (ii), without any fault on
the part of the Offeree, the Offered Shares shall thereafter again be
subject to the provisions of this Section 1.
(d) Notwithstanding any provision hereof to the contrary,
the Shareholder shall be free to sell Shareholder Shares pursuant to the
provisions of Rule 144 adopted by the Securities and Exchange Commission under
the Securities Act of 1933, as amended, as such rule may be in effect from time
to time.
2. TERM. This Agreement shall be in effect for a term commencing
on the Commencement Date of the Strategic Alliance Agreement and ending at the
end of the Term of the Strategic Alliance Agreement. Notwithstanding the
foregoing, this Agreement shall remain in effect with respect to any Shareholder
Shares that were the subject (or were required to be the
2
subject) of a Notice of Intended Sale prior to the termination hereof, until
such time as all of the provisions of Section 1 of this Agreement have been
complied with as to such Shareholder Shares.
3. REPRESENTATIONS OF THE SHAREHOLDER. The Shareholder represents
and warrants to WT that the statements contained in this Section 3 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the date of any Notice of Intended Sale, any notice of an Offeree Proposed
Price or any notice of a Revised Offeree Proposed Price hereunder.
(a) This Agreement constitutes the valid and legally
binding obligation of the Shareholder, enforceable in accordance with its terms
and conditions.
(b) Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which the Shareholder is subject, or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any agreement, contract, instrument or
other arrangement to which the Shareholder is a party, by which the Shareholder
is bound or to which the Shareholder is subject.
4. REPRESENTATIONS OF WT. WT represents and warrants to the
Shareholder that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the date of any Notice of Intended Sale, any notice of an Offeree Proposed
Price, or any notice of a Revised Offeree Proposed Price hereunder.
(a) WT is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
(b) WT is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required. WT has full power and authority and all licenses, permits and
authorizations necessary to carry on the business in which it is engaged and in
which it presently proposes to engage and to own and use the properties owned
and used by it.
(c) WT has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the Board of Directors of WT has duly
authorized the execution, delivery and performance of this Agreement by WT. This
Agreement constitutes the valid and legally binding obligation of WT,
enforceable in accordance with its terms and conditions.
(d) Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which WT is subject or any provision of its
charter or bylaws, or conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which WT
is a party or by which it is bound or to which any of its assets is subject.
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5. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Shareholder will not
hereafter enter into any agreement with respect to the Company's securities
owned by the Shareholder, which is inconsistent with or violates the rights
granted to WT in this Agreement.
(b) REMEDIES. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party hereto will have the right to
injunctive relief, in addition to all of its other rights and remedies at law or
in equity, to enforce the provisions of this Agreement.
(c) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only upon the
prior written consent of the parties hereto.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns.
(e) SEVERABILITY. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
(f) COUNTERPARTS. This Agreement may be executed in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute one
and the same Agreement.
(g) DESCRIPTIVE HEADINGS. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
(h) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware. Each of the parties agrees that any legal action commenced by either
party to this Agreement shall be brought in either the United States District
Court in and for the District of Delaware or the Chancery Court in and for New
Castle County, Delaware and consents to the personal jurisdiction of such courts
in any such action over the parties. If, contrary to the provisions of this
Section 5(h), either party commences any legal action involving this Agreement
or the transactions contemplated by this Agreement in any forum other than
either of those specified above, the other party shall be entitled to the
dismissal of such action based upon the agreement of the parties contained in
this Section 5(h).
(i) NOTICES. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be personally delivered, received by certified mail,
return receipt requested, or sent by guaranteed overnight courier service.
Notices will be deemed to have been given hereunder (i) when
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delivered personally or (ii) on the date of first attempted delivery on a
business day within the jurisdiction where delivery is attempted after
deposit with a reputable overnight delivery service. Such notices, demands
and other communications will be sent to WT and the Company at the addresses
indicated below:
If to the Shareholder:
----------------------
c/o Service Systems International, Ltd.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, X.X.
Xxxxxx X0X 0X0
Fax: (000) 000-0000
If to WT:
---------
U.S. Filter/Xxxxxxx & Xxxxxxx, Inc.
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxx, X.X. 00000
Attention: Executive Vice President
Fax: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(j) SECURITIES LAW. Notwithstanding anything herein to
the contrary, the rights and obligations of any persons arising under or in
connection with this Agreement shall be subject to the Securities Act of 1933
and other applicable securities law and regulation.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Shareholder Offer
Agreement as of the date first written above.
-------------------------------------------
-------------------------------------------
Printed Name of Shareholder
U.S. FILTER/XXXXXXX & XXXXXXX, INC.
By:
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Its:
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