EXHIBIT 10.13
TECHNOLOGY PURCHASE AGREEMENT
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This Agreement is dated this 19th-day of March, 2003 by and between ASI
Technology Corporation ("ASI"), a Nevada corporation, having a principal place
of business located 000 Xxxxxxxx Xxxxxxx Xxxxx, Xx. 000, Xxxxxxxxx, Xxxxxx 00000
and Xxxxxxxx Technologies, Inc., a Florida Corporation ("Xxxxxxxx"), having a
principal place of business located at 00 Xxxxxxx Xxxx Xxxxx #000 Xxxxxxxxxx, XX
00000.
RECITALS
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WHEREAS, ASI has acquired, developed and patented certain gas plasma
antenna ("GPA") technology that utilizes ionized gas in a vessel as an antenna
to both receive and transmit radio frequency signals and as a
reflector/shield/filter for radio frequency signals. As a result of ASI's
inventions it was awarded, by assignment and/or has pending the patents and
patent applications listed on Exhibit A.
WHEREAS, this GPA technology is believed to have commercial viability
in both commercial and Department of Defense applications but will require
further development, additional capital and research.
WHEREAS, ASI desires to pursue other business ventures and desires to
sell and otherwise assign all of its right, title, interest and benefit in and
to its GPA technology, including the related patents, patent applications,
current contracts and contract proposals and backlog and related technology,
equipment and all other intellectual property rights related thereto, as defined
in paragraph 1 a) hereof, to Xxxxxxxx according to the terms and conditions set
forth below in order to allow further development of this technology to be
completed.
WHEREAS, ASI and Xxxxxxxx desire to cooperate as provided herein with
respect to existing government contracts.
WHEREAS, Xxxxxxxx is a company looking for new technology to purchase
and exploit and Xxxxxxxx desires to purchase ASI's GPA issued and pending
patents and related technology, current contracts and contract proposals and
backlog and equipment according to the terms and conditions below.
TERMS
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Now, therefore, in consideration of the mutual promises described below
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereby agree to be legally bound as follows:
1. DEFINITIONS. For purposes of this Agreement, the following definitions apply:
a) "Technology" shall be defined as all right, title, interest, and
benefit of ASI and all powers and privileges of ASI (including to make, have
made, use, or sell under patent law; to copy, adapt, distribute, display, and
perform under copyright law; and to use and disclose under trade secret law) in
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and to all proprietary rights embodied in or comprising the GPA technology as of
the Closing ("Proprietary Rights"), defined as follows:
(1) All United States and foreign patents and patent
applications, including, without limitation, the issued patents and patent
applications listed on EXHIBIT A hereto, patent license rights and patentable
inventions, any continuation or continuation-in-part of, division of, or
substitution for any such applications, any United States patent issued thereon,
any reissue or reexamination application filed on any such United States patent,
any reissue patent or reexamined patent issuing thereon, and any extension of
any such United States patent or reissue patent and any and all applications for
patent in any country foreign to the United States on any invention disclosed in
any of said patents or patent applications described above and any patents
granted thereon;
(2) All trade secrets, know-how, confidential or proprietary
information, including, without limitation, the confidential and proprietary
information identified in EXHIBIT B hereto, shop rights, technical data,
technology licenses, concepts, drawings, schematics, prototypes, improvements,
enhancements, upgrades, materials, works of authorship, derivative, and
derivative works, mask works, engineering files, system documentation, flow
charts, computer software code and design specifications acquired or developed
by ASI or any of its affiliates that are embodied or incorporated in or derived
from the Proprietary Rights or in connection with the development of the
programming, inventions, processes, and apparati entailed by the Proprietary
Rights;
(3) The equipment identified in EXHIBIT C hereto;
(4) All trademarks, service marks and trade names, including
without limitation, the trademark and trade name identified in EXHIBIT D hereto
(including, in the case of trademarks, service marks and trade names, all
goodwill appertaining thereto), moral rights (defined as any right to claim
authorship of a work, any right to object to any distortion or other
modification of a work, and any similar right, existing under the law of any
country in the world, or under any treaty), and copyrights;
(5) All market research and information, contact lists,
marketing materials, business plans, notes, documents and records pertaining in
any way to any of the Proprietary Rights and any existing or future products
incorporating any of the Proprietary Rights or any item described in any of the
foregoing paragraphs and any agreements with any other parties to contribute to
the further development of any of the Proprietary Rights; and
(6) All other intellectual property rights and legal
protections in every and all countries and jurisdictions owned or claimed by ASI
or any of its affiliates and embodied in or comprising any of the Proprietary
Rights; provided, however, that the Technology and Proprietary Rights shall not
include any of ASI's rights, titles or interests in and to any of the contracts
and contract proposals listed in Exhibit E hereto, the assignment of which from
ASI to Xxxxxxxx shall be as provided in Section 5 hereof.
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b) "Gross Revenues from Contracts" shall include all amounts actually
received by ASI from the government contracts relating to the Technology
existing at the Closing as listed on Exhibit E hereto or awarded to ASI prior to
the Closing other than amounts received by ASI in payment of invoices issued or
effective on or before the Closing.
c) "Securities" shall be the shares of Xxxxxxxx common stock issued to
ASI as part of the Technology Purchase Price.
d) "Market Price" on any trading day shall be the volume weighted
average price per share of Xxxxxxxx'x common stock from the hours of 9:30 AM to
4:00 PM (Eastern) as reported by Bloomberg Financial using the AQR function. The
average Market Price per share for a period shall be the average of each trading
day's Market Price during such period.
2. ASSIGNMENTS; TECHNOLOGY PURCHASE PRICE.
a) ASI hereby agrees to sell, assign and transfer, and at the Closing
shall sell, assign and transfer, to Xxxxxxxx in perpetuity (or for the longest
period of time otherwise permitted by law), and Xxxxxxxx hereby agrees to
purchase and accept, all of ASI's right, title, interest and benefit in and to
the Technology and Proprietary Rights. As payment for such sale, assignment and
transfer, Xxxxxxxx agrees to pay ASI in cash an amount equal to One Hundred
Fifty Thousand Dollars ($150,000) (the "Cash Payment"), payable as hereinafter
provided, and to issue to ASI and its designees, in the aggregate, a number of
shares of the Securities having an aggregate value of Eight Hundred Fifty
Thousand Dollars ($850,000) computed as described below (collectively the
"Technology Purchase Price") which the parties agree equals or exceeds the fair
market value of the Technology and Proprietary Rights determined on the basis of
arms-length negotiations.
b) The Cash Payment shall be paid as follows:
(1) A nonrefundable amount equal to Ten Thousand Dollars
($10,000) shall be paid upon execution and delivery of this Agreement.
(2) A nonrefundable amount equal to Ten Thousand Dollars
($10,000) shall be paid every thirty (30) days following the execution and
delivery of this Agreement and the balance of the Cash Payment shall be paid at
Closing.
C) The Securities constituting a portion of the Technology Purchase
Price shall be issued to ASI at Closing. The number of shares of the Securities
shall be equal to the quotient obtained by dividing (i) $850,000 by (ii) 85% of
the average Market Price per share of Xxxxxxxx common stock during the twenty
(20) trading days immediately preceding the date of Closing. For example: If
Xxxxxxxx common stock average Market Price for the twenty (20) trading days
immediately preceding the date of Closing is $.20/share, the number of shares of
Securities issued to ASI shall be equal to $850,000 divided by $.17 (85% of
$.20), resulting in 5,000,000 shares of Xxxxxxxx common stock. Xxxxxxxx
acknowledges and agrees that a number of Securities equal to five percent (5%)
of the number of Securities issuable to ASI hereunder shall be issued by
Xxxxxxxx to Patriot Scientific Corporation ("Patriot") pursuant to that certain
Purchase Agreement between ASI and Patriot dated as of August 20, 1999 (the
"Patriot Agreement")
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3. THE CLOSING AND CLOSING DATE. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Technology and the Proprietary Rights as
provided for in this Agreement shall be consummated at a closing (the "Closing")
to be held at the offices of ASI Technology Corporation, 000 Xxxxxxxx Xxxxxxx
Xxxxx, Xx. 000, Xxxxxxxxx, Xxxxxx 00000 at 10:00 a.m. on the earlier of (i) the
date on which the last of the contracts listed in Exhibit E hereto has been
assigned to Xxxxxxxx and (ii) the date that is ninety (90) days from the date of
this Agreement, or at such other place, time and date as ASI and Xxxxxxxx may
mutually agree in writing. The date on which the Closing shall actually take
place is herein referred to as the "Closing Date".
4. CLOSING DELIVERIES AND CONDITIONS.
a) ASI'S CLOSING DELIVERIES AND CONDITIONS OF XXXXXXXX'X OBLIGATION .
The obligations of Xxxxxxxx to consummate the transactions set forth in this
Agreement are subject to the fulfillment on, or before, the Closing Date of each
of the following conditions, any of which may be waived in writing by Xxxxxxxx:
(1) ASI shall have duly executed and delivered to Xxxxxxxx the
Sublicense Agreement substantially in the form attached hereto as Exhibit F (the
"Sublicense Agreement") and such other instruments of transfer as may be
reasonably requested by Xxxxxxxx to transfer the Technology and the Proprietary
Rights to Xxxxxxxx, all in a form reasonably satisfactory to Xxxxxxxx;
(2) No preliminary or permanent injunction or other binding
order, decree or ruling issued by a court or governmental agency shall be in
effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement;
(3) ASI shall have performed and complied with all covenants,
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing; and
(4) The representations and warranties of ASI contained in
this Agreement and any exhibits and schedules attached or referenced thereto
shall be true and correct on and as of the Closing Date.
b) XXXXXXXX'X CLOSING DELIVERIES AND CONDITIONS OF ASI'S OBLIGATION S.
The obligations of ASI to consummate the transactions set forth in this
Agreement are subject to the fulfillment on, or before, the Closing Date of each
of the following conditions, any of which may be waived in writing by ASI:
(1) Xxxxxxxx shall have paid all amounts of the Cash Payment
due and payable prior to Closing and shall pay the unpaid balance of the Cash
Payment at Closing;
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(2) Xxxxxxxx shall have duly executed and delivered to ASI the
Registration Rights Agreement substantially in the form attached hereto as
Exhibit G (the "Registration Rights Agreement");
(3) Xxxxxxxx shall have duly executed and delivered to ASI
share certificates registered in the names of ASI and Patriot evidencing, in the
aggregate, the Securities;
(4) No preliminary or permanent injunction or other binding
order, decree or ruling issued by a court or governmental agency shall be in
effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement;
(5) Xxxxxxxx shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing; and
(6) The representations and warranties of Xxxxxxxx contained
in this Agreement and any exhibits and schedules attached or referenced thereto
shall be true and correct on and as of the Closing Date.
5. PURCHASE PRICE ADJUSTMENT ON REVERSE SPLIT.
a) In the event the outstanding shares of Xxxxxxxx common stock shall
be combined or consolidated, by reclassification, reverse stock split or
otherwise, into a lesser number of shares of Xxxxxxxx Common Stock (a "Reverse
Split") at any time during the period from Closing and ending eighteen (18)
months after Closing (the "Adjustment Period"), then for each such Reverse
Split, there shall be computed an adjustment in the number of shares of Xxxxxxxx
common stock and if such adjustment is positive then the computed number of
additional shares of Xxxxxxxx common stock shall be issued to ASI in accordance
with this Section 5. The adjustment shall be computed as follows:
(1) DEFINITIONS.
(i) "Number of Post Split Common Shares Previously
Issued" shall mean the number of shares of Xxxxxxxx common stock issued to ASI
at Closing plus any additional shares of Xxxxxxxx common stock issued to ASI
pursuant to the Registration Rights Agreement as adjusted by the Reverse Split.
(ii) "Number of Readjusted Shares" shall mean the
number of shares of Xxxxxxxx common stock equal to the quotient obtained by
dividing (i) $850,000 by (ii) 85% of the average Market Price per share of
Xxxxxxxx common stock during the thirty (30) trading days immediately following
the effective date of the Reverse Split. The Number of Readjusted Shares so
computed shall be increased by 15% if such an adjustment was made pursuant to
the Registration Rights Agreement in computation of the Number of Post Split
Common Shares Previously Issued.
(2) If the Number of Readjusted Shares is greater than the
Number of Post Split Common Shares Previously Issued then Xxxxxxxx shall
promptly, but in no event later than five (5) business days following the end of
such thirty (30) day period, issue to ASI a number of additional shares of
Xxxxxxxx common stock equal to such difference. If the Number of Readjusted
Shares is less than the Number of Post Split Common Shares Previously Issued
then no adjustment shall be made.
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As an example, if 5,000,000 shares of Xxxxxxxx common stock are issued at
Closing, Xxxxxxxx subsequently effects a one-for-ten (1-for-10) Reverse Split
during the Adjustment Period, and the average Market Price for the thirty (30)
trading days after the Reverse Split is $1.00, then the additional shares would
be computed as follows (assuming no adjustment is made pursuant to the
Registration Rights Agreement):
A. Number of Post Split Common Shares Previously Issued =
5,000,000 divided by 10 or 500,000.
B. Number of Readjusted Shares = $850,000 divided by ($1.00 less
15% or $.85) or 1,000,000 shares.
C. Since the Number of Readjusted Shares exceeds the Number of
Post Rollback Common Shares Previously Issued then Xxxxxxxx
would issue 500,000 additional shares of Xxxxxxxx common
stock.
The above adjustment shall occur for each Reverse Split effected during the
Adjustment Period.
6. GOVERNMENT CONTRACT REVENUES, COSTS AND PERSONNEL.
ASI is responsible for the completion and performance of the government
contracts listed in Exhibit E (the "Contracts") until completion of assignment
to Xxxxxxxx. The parties shall use their commercially reasonable efforts to
assign or transfer all Contracts from ASI to Xxxxxxxx as soon as practical after
execution of this Agreement, each party paying their own costs of such efforts.
Xxxxxxxx shall from April 1, 2002 use its best efforts to manage and administer
such services being performed under each Contract and prepare all reports
thereto in a manner consistent with normal practice and that employed by
Xxxxxxxx under contracts it performs for the government. ASI shall pay Xxxxxxxx
a fee equal to 100% of all Gross Revenues from Contracts billed for the periods
after April 1, 2002 when and as received by ASI. Xxxxxxxx shall pay directly or
reimburse ASI for all personnel, subcontract and other costs of performing the
Contracts and plasma antenna research, development, marketing and services from
and after April 1, 2002. Personnel transfers shall be handled based on the
effective transfer of the Contracts and as agreed upon in writing between such
personnel and the parties hereto. Xxxxxxxx has made its own investigation into
ASI consultants and ASI makes no representations regarding the continued
availability of consultants and personnel.
ASI shall be paid a fee of $2,500.00 per calendar month by Xxxxxxxx for
supporting administration of the contracts until all Contracts have been
assigned or transferred to Xxxxxxxx. The fee shall be due and payable in cash at
the end of each calendar month.
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Xxxxxxxx understands the contracts can be terminated by the government pursuant
to the terms of the respective contracts. Notwithstanding any provision herein
to the contrary, express or implied, ASI shall in no event be liable to Xxxxxxxx
if any Contract is terminated either prior to, upon or after such Contract is
assigned or transferred to Xxxxxxxx.
Xxxxxxxx acknowledges and agrees that the STTR Contract in Exhibit E relates to
patented technology not included in the Technology or the Proprietary Rights but
is the subject of the license under the Sublicense Agreement.
7. TERMINATION.
(a) This Agreement may be terminated and abandoned prior to the Closing
Date:
(i) By written mutual consent of ASI and Xxxxxxxx; or
(ii) By ASI or Xxxxxxxx if any court or governmental agency of
competent jurisdiction shall have issued an order, decree or ruling or taken any
other action which prevents, restrains, enjoins or otherwise prohibits the
transactions contemplated hereby; or
(iii) By ASI by delivery of written notice to Xxxxxxxx if.-(1)
ASI discovers any material error, mistake, misstatement or omission in the
representations and warranties of Xxxxxxxx in this Agreement, (2) Xxxxxxxx has
breached or violated this Agreement in any material respect and, if such breach
or violation is curable, has failed to cure such violations within ten (10) days
of receiving written notice thereof; or (3) the Closing has not occurred by the
date that is ninety (90) days from the date of this Agreement; or
(iv) By Xxxxxxxx by delivery of written notice to ASI if: (1)
Xxxxxxxx discovers any material error, mistake, misstatement or omission in the
representations and warranties of ASI in this Agreement, (2) ASI has breached or
violated this Agreement in any material respect and, if such breach or violation
is curable, has failed to cure such violations within ten (10) days of receiving
written notice thereof; or (2) the Closing has not occurred by the date that is
ninety (90) days from the date of this Agreement.
(b) In the event that this Agreement is terminated as provided in this
Section 7 (a "Termination"), all further obligations of the parties under this
Agreement shall terminate without further liability of any party to any other
party or to the stockholders, directors or officers of any party; PROVIDED,
HOWEVER, that (i) a Termination shall not relieve any party of any liability for
any breach of this Agreement or for any intentional misrepresentation or
intentional failure to comply with any agreement or covenant hereunder, and any
such Termination shall not be deemed to be a waiver of any available remedy for
any such breach, intentional misrepresentation or intentional failure to comply
with any such agreement or covenant and (ii) Xxxxxxxx shall execute and delivery
all documents and agreements and perform all acts necessary to reassign to ASI
all Contracts that have been assigned to Xxxxxxxx.
Once Xxxxxxxx has fully paid the Technology Purchase Price at Closing as
provided in Section 2, ASI agrees that it will have no claim against Xxxxxxxx
for the return of the Technology or the Proprietary Rights or any improvements
thereto or in voiding or rescinding this Agreement and the related assignments,
provided, however, that ASI reserves all other rights and remedies it may have
arising out of the breach or nonperformance of this Agreement by Xxxxxxxx.
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8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
a) ASI hereby represents and warrants to, and covenants with Xxxxxxxx
as follows:
(1) NO CONSENTS. No consents (other than necessary filings in
patent offices wherein Proprietary Rights have been registered or applications
therefor have been filed) of any other parties are necessary or appropriate
under any agreements concerning any of the Technology or the Proprietary Rights
in order for the transfer and assignment of any of the Technology and
Proprietary Rights under this Agreement to be legally effective.
(2) MARKETABLE TITLE. To the best of ASI's knowledge, (i)
immediately prior to the Closing of this Agreement, ASI shall have good and
marketable title to the Technology and the Proprietary Rights, free and clear of
any and all liens, mortgages, encumbrances, pledges, security interests, or
charges of any nature whatsoever (collectively, "Liens") and, (ii) upon the
Closing, Xxxxxxxx shall receive good and marketable title to the Technology and
the Proprietary Rights, free and clear of any and all Liens.
(3) TECHNOLOGY AND PROPRIETARY RIGHTS. To the best of ASI's
knowledge, (i) ASI is the sole owner of the entire right, title and interest in
and to the Technology and the Proprietary Rights subject to a royalty payable to
Patriot under the Patriot Agreement upon sale of the Technology and Proprietary
Rights in the form of five percent (5%) of the Securities issuable to ASI
hereunder and five percent (5%) of the Cash Payment payable to ASI hereunder,
which, with respect to such portion of the Cash Payment, will be the sole
obligation of ASI (the "Patriot Royalty") and (ii) the Technology and the
Proprietary Rights are free of all licenses, sublicenses, royalty or similar
payment obligations, liens, mortgages, encumbrances, pledges, or security
interests, of any nature whatsoever, other than the Patriot Royalty, and are not
subject to any outstanding injunction, judgement, order, decree, ruling, or
charge. ASI has the right and authority to enter into this Agreement and to
grant the rights granted herein. No facts have come to ASI's attention that
would form a basis for the belief that the Technology or the Proprietary Rights
or any rights thereunder owned by ASI are unenforceable or invalid and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or, to the best of ASI's knowledge, is threatened against ASI
that challenges the legality, validity, enforceability, use, or ownership of
such items. ASI has not agreed to indemnify any person for or against any
interference, infringement, misappropriation, or other conflict with respect to
such items. All material information affecting the patentability of the claims
of the Technology, the Proprietary Rights and patent rights thereunder known to
ASI has been disclosed to the United States Patent and Trademark Office and any
other governing entity as relate to such rights. There have been no transfers,
sales, assignments, licenses or other conveyance of any rights, title or
interest in or to such items and none are pending or contemplated except as
otherwise provided herein. The Technology and Proprietary Rights represent all
of the patents, patent applications, rights or inventions created or owned by
ASI that relate to the GPA technology. To the best of ASI's knowledge, the
Technology and the Proprietary Rights and the processes represented by them will
perform the functions as set forth in the patents and patent applications
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listed in EXHIBIT A hereto and disclosed by ASI to Xxxxxxxx, and ASI does not
have knowledge of any matter that would prevent such performance. To the best of
ASI's knowledge, ASI has not, by any of its acts or acts of its agents, put any
of those rights into jeopardy.
(4) CONTRACT WORK. All prior government work has been
completed and there are no obligations for further work, development, reporting
or delivery of any items or work product except as disclosed in Exhibit E and
the Contracts related thereto.
(5) USE OF TECHNOLOGY AFTER CLOSING. ASI acknowledges that
after the Closing, Xxxxxxxx shall be free to develop, abandon, transfer, sell,
license or otherwise deal with the Technology without consent or claim by ASI
other than as otherwise provided in this Agreement.
b) Xxxxxxxx acknowledges and agrees that it is buying the Technology
and the Proprietary Rights "AS IS", with no warranty or representation of any
kind except as expressly provided herein and with no assurance of future
revenues relating from the Technology or the Proprietary Rights. ASI DISCLAIMS
ANY AND ALL OTHER WARRANTIES, EITHER EXPRESS, IMPLIED OR STATUTORY, OR ARISING
BY COURSE OF CONDUCT OR PERFORMANCE, CUSTOM OR USAGE IN THE TRADE INCLUDING, BUT
NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
c) Xxxxxxxx hereby represents and warrants to, and covenants with, ASI
as follows:
(1) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Xxxxxxxx is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida. Xxxxxxxx has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and to issue and sell the Securities, as hereinafter defined, and
to carry out the provisions of this Agreement and to carry on its business as
presently conducted and as presently proposed to be conducted. Xxxxxxxx is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of its activities and of
its properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so would not have a
material adverse effect on Xxxxxxxx or its business.
(2) CAPITALIZATION; VOTING RIGHTS. The authorized capital
stock of Xxxxxxxx consists of 500,000,000 shares of Common Stock, par value
$.0001 per share ("Common Stock"), and 5,000,000 shares of preferred stock, par
value $.0001 per share ("Preferred Stock"). As of March 14, 2003 Xxxxxxxx had
8,000 shares of Series C preferred stock designated with 5,225 shares
outstanding and 306,709,209 shares of Common Stock outstanding. A total of
73,130,267 shares of common stock are reserved for conversion under the Series C
Preferred Stock (such preferred convertible into 36,565,134 common shares at
March 14, 2003) and an additional 7,161,660 shares of common stock are intended
for future issuance to employees and consultants. There are no stock option
grants, warrants or other convertible instruments outstanding.
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All issued and outstanding shares of Xxxxxxxx common stock (a) have
been duly authorized and validly issued, and (b) are fully paid and
nonassessable. The Securities issued to ASI are, and any additional shares of
Xxxxxxxx common stock issued pursuant hereto or the Registration Rights
Agreement will be, validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances; provided, however, that the Securities may be
subject to restrictions on transfer under state and/or federal securities laws
as set forth herein or as otherwise required by such laws at the time a transfer
is proposed.
(3) AUTHORIZATION; BINDING OBLIGATIONS. All corporate action
on the part of Xxxxxxxx, its officers, directors and stockholders necessary for
the authorization of this Agreement, the Registration Rights Agreement, the
Sublicense Agreement (collectively, the "Transaction Documents") and the
performance of all obligations of Xxxxxxxx hereunder and thereunder and the
authorization, sale, issuance and delivery of the Securities pursuant hereto has
been taken prior to the Closing.
(4) TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Xxxxxxxx has
good and marketable title to its properties and assets, including the properties
and assets reflected in the most recent balance sheet, and good title to its
leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than (a) those resulting from taxes which have not
yet become delinquent, (b) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or materially impair the
operations of Xxxxxxxx, and (c) those that have otherwise arisen in the ordinary
course of business. All facilities, machinery, equipment, fixtures, vehicles and
other properties owned, leased or used by Xxxxxxxx are in good operating
condition and repair and are reasonably fit and usable for the purposes for
which they are being used.
(5) COMPLIANCE WITH OTHER INSTRUMENTS. Xxxxxxxx is not in
violation or default of any term of its Certificate of Incorporation or Bylaws,
or of any provision of any mortgage, indenture, contract, agreement, instrument
or contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge, any statute, rule or regulation
applicable to Xxxxxxxx which would materially and adversely affect the business,
assets, liabilities, financial condition or operations of Xxxxxxxx. The
execution, delivery, and performance of and compliance with the Transaction
Documents, the issuance of the Securities and any additional shares of Xxxxxxxx
common stock pursuant hereto, will not, with or without the passage of time or
giving of notice, result in any such material violation, or be in conflict with
or constitute a default under any such term, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of Xxxxxxxx or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit license, authorization or approval applicable to
Xxxxxxxx, its business or operations or any of its assets or properties.
(6) LITIGATION. There is no action, suit, proceeding or
investigation pending or to Xxxxxxxx'x knowledge currently threatened in writing
against Xxxxxxxx that questions the validity of any of the Transaction Documents
or the right of Xxxxxxxx to enter into any of such agreement, or to consummate
the transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any material adverse change in the assets,
condition or affairs of Xxxxxxxx, financially or otherwise, or any change in the
current equity ownership of Xxxxxxxx, nor is Xxxxxxxx aware that there is any
basis for the foregoing.
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(7) COMPLIANCE WITH LAWS; PERMITS. To its knowledge, Xxxxxxxx
is not in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which violation would materially and adversely affect the business,
assets, liabilities, financial condition or operations of Xxxxxxxx. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of any of the Transaction
Documents and the issuance of the Securities and any additional shares of
Xxxxxxxx common stock, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing, as
will be filed in a timely manner. Xxxxxxxx has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects or financial condition of Xxxxxxxx and believes
it can obtain, without undue burden or expense, any similar authority for the
conduct of its business as planned to be conducted.
(8) SEC FILINGS; FINANCIAL STATEMENTS OF XXXXXXXX.
(i) Xxxxxxxx has timely filed all forms, reports,
statements and documents required to be filed by it with the Securities and
Exchange Commission (the "SEC") since January 1, 2002 (collectively together
with any such forms, reports, statements and documents Xxxxxxxx may file
subsequent to the date hereof until the Closing, the "XXXXXXXX REPORT s"). Each
Xxxxxxxx Report was prepared in accordance with the requirements of the
Securities Act of 1933, as amend, or the Securities Exchange Act of 1934, as
amended, as the case may be, and did not at the time it was filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. No
subsidiary of Xxxxxxxx is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with the SEC
any stock exchange or any other comparable governmental entity.
(ii) Except as is provided in the Xxxxxxxx Reports,
each of the consolidated financial statements (including, in each case, any
notes thereto) contained in the Xxxxxxxx Reports was prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each presented fairly, in all material respects, the consolidated
financial position of Xxxxxxxx and the consolidated subsidiaries of Xxxxxxxx as
at the respective dates thereof and for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of unaudited
statements, to normal recurring immaterial year-end adjustments and the absence
of notes).
(iii) Except as and to the extent set forth or
reserved against on the consolidated balance sheet of Xxxxxxxx and the
subsidiaries of Xxxxxxxx as reported in the Xxxxxxxx Reports, including the
notes thereto, none of Xxxxxxxx or any subsidiary of Xxxxxxxx has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on a balance sheet or in
notes thereto prepared in accordance with GAAP, except for liabilities or
obligations incurred in the ordinary course of business consistent with past
practice since the date of the most recent Xxxxxxxx Report that have not had and
could not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the condition (financial or otherwise), properties,
assets (including intangible assets), liabilities, business, operations or
results of operations of Xxxxxxxx
11
9. INDEMNIFICATION.
a) ASI INDEMNIFICATION. ASI shall indemnify, defend, and hold harmless
Xxxxxxxx against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including interest, penalties, and reasonable attorneys' fees, that Xxxxxxxx
shall incur or suffer, that arise, result from, or relate to any breach of, or
failure by ASI to perform, any of its representations, warranties, covenants, or
agreements in this Agreement or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by ASI under this Agreement.
Notwithstanding the foregoing, the indemnification obligations of ASI with
respect to matters described in clause (i) above shall be limited in dollar
amount to the amount of the Technology Purchase Price and any additional amounts
paid in cash by Xxxxxxxx to ASI pursuant to this Agreement.
b) XXXXXXXX INDEMNIFICATION. Xxxxxxxx shall indemnify, defend, and hold
harmless ASI against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties, and reasonable attorneys' fees,
that ASI shall incur or suffer, that arise, result from, or relate to any (i)
claim that any modifications, improvements or other changes to the Technology or
the Proprietary Rights made by Xxxxxxxx after Closing or any other technologies
or inventions originating with Xxxxxxxx after the Closing infringes or
misappropriates the intellectual property rights of any third party or (ii) any
breach of, or failure by Xxxxxxxx to perform, any of its representations,
warranties, covenants, or agreements in this Agreement or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished by
Xxxxxxxx under this Agreement.
c) A party entitled to indemnification hereunder (an "Indemnified
Party") shall promptly notify the other party hereto (the "Indemnifying Party")
of the existence of any claim, demand, or other matter to which the Indemnifying
Party's indemnification obligations would apply, and shall give it a reasonable
opportunity to defend the same at its own expense and with counsel of its own
selection; provided that the Indemnified Party shall at all times also have the
right to fully participate in the defense at its own expense. If the
Indemnifying Party shall, within a reasonable time after this notice, fail to
defend, the Indemnified Party shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle (exercising reasonable
business judgment), the claim or other matter on behalf, for the account, and at
the risk, of the Indemnifying Party. If the claim is one that cannot by its
nature be defended solely by the Indemnifying Party (including, without
limitation, any federal or state tax proceeding), then the Indemnified Party
shall make available all information and assistance that the Indemnifying Party
may reasonably request.
12
10. MISCELLANEOUS TERMS.
a) Each party shall execute and deliver, from time to time at or after
the date of the Closing upon the request of the other party, such further
conveyance instruments, and take such further actions, as may be necessary or
desirable to evidence more fully the conveyance of interest in and to all the
Technology and Proprietary Rights and the assignment of the Contracts to
Xxxxxxxx, on the part of the Xxxxxxxx, to the fullest extent reasonably
possible. Each party therefore agrees to:
(1) Execute, acknowledge, and deliver any affidavits or
documents of assignment and conveyance regarding the Technology or the
Proprietary Rights;
(2) Provide testimony in connection with any proceeding
affecting the right, title, interest, or benefit of the Xxxxxxxx and to the
Technology or the Proprietary Rights; and
(3) Perform any other acts reasonably necessary to carry out
the intent of this Agreement.
b) In furtherance of, but subject to the terms and conditions of, this
Agreement, ASI hereby acknowledges that, from and after the Closing, Xxxxxxxx
will have acquired all of ASI's right, title, and standing to:
(1) Receive all rights and benefits pertaining to the
Technology and the Proprietary Rights as the sole owner thereof;
(2) Institute and prosecute all suits and proceedings and take
all actions that Xxxxxxxx, in its sole discretion, may deem necessary or proper
to collect, assert, or enforce any claim, right or title of any kind in and to
any and all of the Technology and Proprietary Rights;
(3) Defend and compromise any and all such actions, suits, or
proceedings relating to such transferred and assigned rights, title, interest,
and benefits, and do all other such acts and things in relation thereto as the
Xxxxxxxx, in its sole discretion, deems advisable; and
(4) To sell, assign, transfer, modify, further develop and
license such rights and receive royalties and other payment for such rights.
C) The parties agree that ASI shall pay all costs and fees (legal and
otherwise) necessary to maintain or prosecute the patents identified in Exhibit
A through the date of the Closing. After the Closing, the parties agree that
Xxxxxxxx shall pay all such costs and fees thereafter.
d) ASI agrees that Xxxxxxxx may retain the services of the law firm of
Xxxxxx, North &Western, including specifically Xxxxxx North, to act as
Xxxxxxxx'x patent counsel subsequent to the Closing of this Agreement and as
such ASI hereby waives any potential conflict of interest that may exist now or
in the future.
13
e) Xxxxxxxx intends to employ Dr. Xxx Xxxxxxxx upon the Closing and to
retain Xx. Xxxx Xxxxxxx as a part-time consultant.
f) ASI and Xxxxxxxx agree that each party shall be responsible for
their own legal and other fees and costs relating to the preparation of this
Agreement. Each party represents and warrants it has been represented by legal
counsel and that there is no finder or broker involved in this transaction.
g) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof, and shall supersede all previous
communications, representations, understandings and agreements, whether oral or
written. This Agreement may not be changed or modified except by a written
agreement signed by both parties. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada (excluding
conflicts of law principles). Any action or suit related to this Agreement shall
be brought exclusively in the state or federal courts in Nevada. In case any one
or more of the provisions contained in this Agreement or any application thereof
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
other applications thereof shall not in any way be affected or impaired thereby,
and such invalidity shall be construed and limited as narrowly as practicable.
h) All representations, warranties, covenants and agreements of ASI and
Xxxxxxxx in this Agreement shall survive the execution, delivery and performance
of this Agreement and the Closing for a period of one (1) year following the
Closing. All representations and warranties of each party set forth in this
Agreement shall be deemed to have been made again by such party at and as of the
Closing Date.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Xxxxxxxx Technologies, Inc. ASI Technology Corporation
By:_______________________ By:_______________________
Name:_____________________ Name:_____________________
Title:____________________ Title:____________________
14
EXHIBIT A - CONFIDENTIAL
PATENTS AS OF DECEMBER 31, 2002 (SOME FOREIGN PATENTS TO BE ABANDONED)
----------------------------------------------------------------------
The items included on this Exhibit A include:
------------------------------------------------------------------------------------------------------------------------------------
DOCKET NO. TITLE FILE SERIAL NO. ART COUNTRY APPLICANT ISSUE PATENT NO. STATUS
DATE UNIT DATE
------------------------------------------------------------------------------------------------------------------------------------
X0000.XXX.XXX.XX RUGGED GAS TUBE 1/13/98 2318041 CIP Canada Xxxxxx et 5/21/02 2318041 Issued
R.F. CELLULAR al.
ANTENNA
------------------------------------------------------------------------------------------------------------------------------------
X0000.XXX.XXX.XX RUGGED GAS TUBE 1/13/98 57329/98 CIP Australia Xxxxxx et 5/2/02 742917 Issued
R.F. CELLULAR al.
ANTENNA
------------------------------------------------------------------------------------------------------------------------------------
T2038.CIP.PCT RUGGED GAS TUBE 1/13/98 PCT/US98/00271 CIP PCT Xxxxxx et [???]
R.F. CELLULAR al.
ANTENNA
------------------------------------------------------------------------------------------------------------------------------------
T2038.CIP RUGGED GAS TUBE 1/13/97 08/783,368 CIP U.S. Xxxxxx et 11/23/99 5,990,837 Issued
R.F. CELLULAR al.
ANTENNA
------------------------------------------------------------------------------------------------------------------------------------
T2038 GAS TUBE RF 9/7/94 08/302,129 U.S. Xxxxxx et 1/14/97 5,594,456 Issued
ANTENNA al.
------------------------------------------------------------------------------------------------------------------------------------
T2038.CIP.PCT.EP RUGGED GAS TUBE 98901195.2 EPO Xxxxxx et Published
R.F. CELLULAR al.
ANTENNA
------------------------------------------------------------------------------------------------------------------------------------
T8414 RECONFIGURABLE 4/5/00 09/543,031 0000 X.X. Xxxxxx et Notice of
ELECTROMAGNETIC al. Allowance
WAVEGUIDE Received
------------------------------------------------------------------------------------------------------------------------------------
T8414.CIP RECONFIGURABLE 2/21/01 09/790,327 0000 X.X. Xxxxxx et Published
ELECTROMAGNETIC al.
WAVEGUIDE
------------------------------------------------------------------------------------------------------------------------------------
T8414.CIP.PCT RECONFIGURABLE 2/21/02 PCT/US02/05279 PCT Xxxxxx et Filed
ELECTROMAGNETIC al.
WAVEGUIDE
------------------------------------------------------------------------------------------------------------------------------------
T8414.PCT RECONFIGURABLE 4/5/01 PCT/US01/11064 PCT Xxxxxx et Filed
ELECTROMAGNETIC al.
WAVEGUIDE
------------------------------------------------------------------------------------------------------------------------------------
X0000.XXX.XX RECONFIGURABLE 10/4/02 Canada Xxxxxx et Filed
ELECTROMAGNETIC al.
WAVEGUIDE
------------------------------------------------------------------------------------------------------------------------------------
15
------------------------------------------------------------------------------------------------------------------------------------
DOCKET NO. TITLE FILE SERIAL NO. ART COUNTRY APPLICANT ISSUE PATENT NO. STATUS
DATE UNIT DATE
------------------------------------------------------------------------------------------------------------------------------------
X0000.XXX.XX RECONFIGURABLE 00/0/00 Xxxxx Xxxxxx et Closed
ELECTROMAGNETIC al.
WAVEGUIDE
------------------------------------------------------------------------------------------------------------------------------------
X0000.XXX.XX RECONFIGURABLE 4/5/01 0224623.9 United Xxxxxx et Filed
ELECTROMAGNETIC Kingdom al.
WAVEGUIDE
------------------------------------------------------------------------------------------------------------------------------------
T8415 A RECONFIGURABLE 4/5/00 09/543,445 0000 X.X. Xxxxxx et 4/9/02 6,369,763 Issued
PLASMA ANTENNA al.
------------------------------------------------------------------------------------------------------------------------------------
T8415.PCT A RECONFIGURART 4/5/01 PCT/USO1/11063 2821 PCT Xxxxxx et Filed
PLASMA ANTENNA al.
------------------------------------------------------------------------------------------------------------------------------------
X0000.XXX.XX A RECONFIGURART 10/4/02 Canada Xxxxxx et Filed
PLASMA ANTENNA al.
------------------------------------------------------------------------------------------------------------------------------------
X0000.XXX.XX A RECONFIGURABLE Japan Xxxxxx et Closed
PLASMA ANTENNA al.
------------------------------------------------------------------------------------------------------------------------------------
X0000.XXX.XX A RECONFIGURART 10/23/02 0224619.7 United Xxxxxx et Filed
PLASMA ANTENNA Kingdom al.
------------------------------------------------------------------------------------------------------------------------------------
T8614 EXPANDIBLE 1/17/01 09/764,801 2821 U.S. Alexeff et Published/
ANTENNA al. Notice of
Allowance
Received
------------------------------------------------------------------------------------------------------------------------------------
20040 PLASMA FILTER 2/25/02 10/084,259 2821 U.S. Alexeff et Filed
ANTENNA SYSTEM al.
------------------------------------------------------------------------------------------------------------------------------------
21012.PROV EXPANDABLE AND 7/17/02 60/396,641 U.S. Alexeff et Filed
RECONFIGURABLE al.
ANTENNAS
------------------------------------------------------------------------------------------------------------------------------------
21013 ANTENNA ELEMENT 9/30/02 10/263,355 0000 X.X. Xxxxxxxx Filed
HAVING et al.
RECONFIGURABLE
LENGTH
------------------------------------------------------------------------------------------------------------------------------------
16
EXHIBIT B
---------
CONFIDENTIAL AND PROPRIETARY INFORMATION TRANSFERRED
----------------------------------------------------
The items included on this Exhibit B include:
The information in the patent applications and documents included in Exhibit A.
17
EXHIBIT C
---------
EQUIPMENT TRANSFERRED
---------------------
The items included in this Exhibit C include:
Prototype plasma antenna devices
18
EXHIBIT D
---------
TRADEMARKS AND TRADENAMES TRANSFERRED
-------------------------------------
The items included on this Exhibit D include:
1. Any and all trademark/tradename rights that ASI may have in the name "Plasma
Scientific Corporation".
19
EXHIBIT E
---------
GOVERNMENT CONTRACTS
--------------------
CONTRACT SUMMARY
28-Feb-03
UNDER CONTRACT:
Remaining
Contract Contract Contract Billed To Amount Subcontract Sub-
Type Sponsor Date Term Title Amount Date Billed To Pay contractor
---- ------- ---- ---- ----- ------ ---- ------ ------ ----------
Ballistic Missile Tracking and Malibu
SBIR Ph II MDA 4/23/02 24 Months Detection with Plasma Antenna (1) $ 595,609 2/28/03 $312,521 $123,801 Research
Biological Decontamination for Eastern
STTR Air Force 8/1/02 12 Months Forward-Deployed Airbase $ 99,333 1/31/03 $ 49,667 $ 30,000 Virg Med
Using Low Temperature Air Plasmas School
Plasma Phased Array Radar Antenna Malibu
SBIR NAVY 1 /31/03 Six Months Architecture (2) $ 68,587 2/28/03 $ 11,000 $ 13,355 Research
(1) ACRN funded to $300,000 to date. Orally advised this has been awarded.
(2) Plus Phase I Option possible for $29,490.
20
EXHIBIT F
---------
SUBLICENSE AGREEMENT
--------------------
21
EXHIBIT F
SUBLICENSE AGREEMENT
THIS AGREEMENT, effective the 19th day of March 2003, (the "Effective Date") by
and between ASI Technology Corporation, a Nevada corporation ("ASI"), having a
principal place of business located at 000 Xxxxxxxx Xxxxxxx Xxxxx, Xx. 000,
Xxxxxxxxx, Xxxxxx 00000 and Xxxxxxxx Technologies, Inc., a Florida Corporation
("XXXXXXXX"), having a principal place of business located at 00 Xxxxxxx Xxxx
Xxxxx #000, Xxxxxxxxxx, XX 00000.
INTRODUCTION
WHEREAS, XXXXXXXX is involved in the development of military and homeland
security technologies.
WHEREAS, Xxxxxxxxx Xxxx Xxxxxxx ("ALEXEFF") has invented and is assisting ASI in
the development of the following technology: Direct Current Energy Discharge
System for use in the fields of decontamination, sterilization and industrial
processing using plasma generated by methods or apparatuses claimed under U.S.
patent # 6,232,723 (the "Patent"), including but not limited to, sterilization
or decontamination of equipment, facilities or areas, and modification of
chemical properties of such things as areas, surfaces or compounds.
A copy of the Patent has been provided to XXXXXXXX.
WHEREAS, ASI is the exclusive licensor of certain Technology Rights and Patent
Rights as herein defined pursuant to that certain Patent License Agreement
effective as of January 1, 2003 by and between ASI and ALEXEFF (the "Patent
License Agreement") and is willing to xxxxx XXXXXXXX an exclusive sublicense to
make, use and sell products incorporating such Technology Rights and Patent
Rights in the United States and Canada to certain customers as provided herein;
and
WHEREAS, ASI believes it is in its best interest to xxxxx XXXXXXXX this
sublicense as set forth below; and
WHEREAS, XXXXXXXX has evaluated the potential and risks of this sublicense and
wishes to enter into this sublicense:
NOW THEREFORE, in consideration of the premises and mutual covenants set forth
herein, and intending to be legally bound, the parties agree as follows:
1. DEFMITIONS
A. "Affiliate" means a corporation or other entity controlled by,
controlling, or under common control with XXXXXXXX. For the
purpose of this Agreement, "control" or "controlling" mean (a)
the ownership, directly or indirectly, of more than fifty
percent (50%) of the voting stock or analogous interest in
such corporation or other entity; or (b) the existence of any
other relationship between XXXXXXXX and such other corporation
or entity which results in effective managerial control by one
over the other, regardless of whether such control is
continuously exercised.
B. "Licensed Field(s)" means the fields of decontamination,
sterilization and industrial processing using plasma generated
by methods or apparatuses claimed under the
Page 1 of 11
EXHIBIT F
Patent, including but not limited to, sterilization or
decontamination of equipment, facilities or areas, and
modification of chemical properties of such things as areas,
surfaces or compounds.
C. "Licensed Product" means any product, system, device or
apparatus Used or Sold by XXXXXXXX or an Affiliate comprising,
derived from, incorporating or otherwise utilizing Licensed
Subject Matter, or any part thereof, or any other product,
system, device or apparatus Used or Sold by XXXXXXXX or an
Affiliate wherein the manufacture, use, offer for sale, sale
or importation of such product, system, device or apparatus by
XXXXXXXX or an Affiliate would, but for the rights and license
granted herein, constitute an infringement of the Patent or
any of the Patent Rights or Technology Rights.
D. "Licensed Subject Matter" means inventions and discoveries
covered by Patent Rights or Technology Rights within the
Licensed Fields.
E. "Licensed Territory" or "Territory" means the United States of
America and Canada.
F. "Net Sales" means the total gross xxxxxxxx of XXXXXXXX for the
Use or Sale of Licensed Products less sales and/or use taxes
actually paid, import and/or export duties actually paid,
outbound transportation prepaid or allowed, and amounts
allowed or credited due to returns (not to exceed the original
billing or invoice amount).
G. "Patent Rights" means ASI's rights, to the extent and only to
the extent licensed to ASI under the Patent License Agreement,
in information or discoveries claimed by the Patent and
subsequent patent applications based thereon, including all
divisions, continuations, continuations-in-part, reissues,
reexaminations or extensions thereof, and any letters patent
that issue thereon, whether foreign or domestic.
H. "Sale or Sold" means the sale, transfer or other disposition
of a Licensed Product or grant of use of Licensed Subject
Matter for value to a party other than XXXXXXXX. "Sell" has
the corollary meaning ascribed thereto. The terms "Sale,"
"Sold" and "Sell" include without limitation leases and other
transfers and similar transactions.
I. "Technology Rights" means ASI's rights, to the extent and only
to the extent licensed to ASI under the Patent License
Agreement, in technical information, know-how, processes,
procedures, compositions, devices, methods, formulas,
protocols, techniques, software, designs, drawings or data
created by Alexeff or ASI which are not covered by Patent
Rights but which are necessary for practicing the invention(s)
covered by Patent Rights.
J. "Use" or "Used" means the use of a Licensed Product by
XXXXXXXX or an Affiliate in performing services for a
Customer.
K. "Customers" means the customers listed in Attachment A.
L. "Improvements" means all PATENTABLE AND NON-PATENTABLE
inventions, discoveries, findings, additions, modifications,
changes, technology and information of any type whatsoever,
including without limitation, methods, processes, technical
information, knowledge, experience and know-how, which
utilize, incorporate, derive from, or are based on the Patent
Rights, the Technology Rights or the Licensed Subject Matter
or could not be conceived, developed or reduced to practice
but for the use of the Patent Rights, the Technology Rights or
the Licensed Subject Matter.
Page 2 of 11
EXHIBIT F
II. GRANT
Subject to the terms and conditions of this Agreement, ASI hereby grants to
XXXXXXXX and its Affiliates, and XXXXXXXX hereby accepts, an exclusive right and
license under the Licensed Subject Matter to make, have made, use, import, sell
and offer to sell and have sold Licensed Products to Customers in the Territory.
XXXXXXXX shall not have the right to grant sublicenses hereunder or otherwise
assign any of its rights hereunder without the prior written consent of ASI,
which consent may be withheld in ASI's sole and absolute discretion.
III. BEST EFFORTS
XXXXXXXX shall use its best efforts to develop, Use and Sell XXXXXXXX developed
Licensed Products to Customers in the Territory. XXXXXXXX recognizes the
Licensed Subject Matter is in an early stage of development and no products have
yet been developed by ASI or others related thereto. No regulatory approvals
have been obtained for any products and there can be no assurance that any
products meeting the requirements of Customers can be developed.
IV. LICENSE FEES, RUNNING ROYALTIES AND MINIMUM ROYALTIES
XXXXXXXX agrees to pay an initial license fee, running royalties and minimum
royalties (all payable to ASI in United States Dollars) as follows:
A. An initial nonrefundable license fee of $5,000.00 payable upon
execution of this Agreement.
B. Running Royalties equal to Twelve and One Half Percent (12.5%)
of the Net Sales resulting from Sale or Use by XXXXXXXX or any
Affiliate of Licensed Products to the Customers in the
Territory, payable on a monthly basis.
C. Minimum monthly royalty payments for the first 24 months of
this Agreement at the rate of $5,000.00 per month due and
payable on the first day of each calendar month following
execution of this Agreement.
V. PATENT PROSECUTION AND INFRINGEMENT
The filing, prosecution and maintenance of all Patent Rights shall be at the
sole discretion of ASI and it shall be entitled to retain any and all judgements
or other recovery from such enforcement.
In any infringement suit or dispute, XXXXXXXX shall, and shall cause each of its
Affiliates to, cooperate fully with ASI and at the request and expense of ASI,
XXXXXXXX will permit access to all relevant personnel, records, papers,
information, samples, specimens, etc., during regular business hours.
VI. ASSIGNABILITY
XXXXXXXX may not sublicense any of its rights under this Agreement or assign
this Agreement to any person or entity without ASI's prior written consent,
which consent may be withheld in ASI's sole and absolute discretion.
Page 3 of 11
EXHIBIT F
VII. ASI COVENANT
ASI covenants that it will not sublicense to any of the Customers in the
Territory any of the rights under the Patent Rights, Technology Rights or the
Licensed Subject Matter that are sublicensed to XXXXXXXX under this Agreement,
and will not itself exercise any of the rights sublicensed to XXXXXXXX hereunder
to any Customer in the Territory, unless:
A. Authorized by this Agreement, or
X. XXXXXXXX becomes insolvent, or
C. A lien is filed against this Agreement, the Patent Rights, the
Technology . Rights or the Licensed Subject Matter licensed to
XXXXXXXX hereunder, or
X. XXXXXXXX takes any action, or fails to take any action, the
result of which gives a third party the right to acquire a
security interest in this Agreement or the Patent Rights,
Technology Rights or the Licensed Subject Matter licensed to
XXXXXXXX hereunder, or
X. XXXXXXXX files for bankruptcy or a receiver is appointed, or
X. XXXXXXXX ceases to carry on its business as it is presently
conducted, or
X. XXXXXXXX materially breaches this Agreement in a manner that
causes the Agreement to terminate or gives ASI the right to
terminate under Section XI.
If any of the events listed in clauses A through G occurs, ASI shall have the
right at its option to (i) to change the license granted hereunder to a
non-exclusive license, with all other provisions of this Agreement remaining if
full force and effect, or (ii) terminate this Agreement, as provided in Section
XI.
VIII. INDEMNIFICATION; PRODUCT LIABILITY INSURANCE
XXXXXXXX shall, at all times during the term of this Agreement and thereafter,
be solely responsible for, and defend, hold harmless and indemnify ASI, its
officers, employees, agents and other representatives, from and against any
losses, damages, claims and expenses, including legal expenses and reasonable
attorney's fees, arising out of (i) the USE of Sale by XXXXXXXX or any Affiliate
of any Licensed Product, including, without limitation, the death of or injury
to any person or property based upon any Licensed Product or any other products
and/or services produced, provided or developed for, or by XXXXXXXX or any
Affiliate, or commercially exploited by XXXXXXXX or any Affiliate pursuant to
its rights under this Agreement. XXXXXXXX shall obtain and carry in full force
and effect product liability insurance, in amounts customary in the relevant
industry in which XXXXXXXX commercially exploits its products and services which
shall protect ASI, its officers, employees, and agents in regard to the
foregoing events at such time as XXXXXXXX begins to Use or Sell Licensed
Products.
IX. RECORD KEEPING
XXXXXXXX shall keep full, true and accurate books of account containing all
particulars that may be necessary for the purpose of showing the amounts payable
to ASI hereunder. Said books of account shall be kept at XXXXXXXX'x principal
place of business. Said books and the supporting data shall be open at all
Page 4 of 11
EXHIBIT F
reasonable times, with reasonable advanced notice for five (5) years following
the end of the calendar year to which they pertain, to the inspection of ASI or
its agents for the purpose of verifying XXXXXXXX'x royalty statement or
compliance in other respects with this Agreement.
XXXXXXXX within twenty (20) days after each calendar month, shall deliver to ASI
true and accurate reports, giving such particulars of the business conducted by
XXXXXXXX during the month as shall be pertinent to royalty accounting hereunder.
These shall include at least the following:
A. The number or amount of Licensed Products Sold by XXXXXXXX to
Customers, if any,
B. The Net Sales derived by XXXXXXXX from the Use and Sale of
Licensed Products, if any, and the royalties due pursuant to
Section IV.
With each such report submitted, XXXXXXXX shall pay the royalties and any other
consideration due and payable under this Agreement. If no royalties, fees or
other consideration shall be due, XXXXXXXX shall so report.
The payments for royalties, fees or other consideration set forth in this
Agreement shall, if overdue, bear interest until payment at the monthly rate of
one percent (1%). The payment of such interest shall not foreclose ASI from
exercising any other rights it may have as a consequence of the lateness of any
payment.
X. NON USE OF NAMES
XXXXXXXX shall not use the names of ASI or Alexeff nor any adaptation or either,
in any advertising, promotional or sales literature without the prior written
consent of ASI in each case, which consent may be withheld in ASI's sole and
absolute discretion, except that XXXXXXXX may state that it is licensed by ASI
under one or more of the patents and/or applications comprising the Patent
Rights.
XI. TERM AND TERMINATION
A. Unless sooner terminated as provided herein, this Agreement
and all rights of XXXXXXXX hereunder shall terminate ten (10)
years from the Effective Date.
B. This Agreement and all rights of XXXXXXXX hereunder shall
terminate immediately upon the termination of the Patent
License Agreement or ASI's sublicense rights thereunder.
C. In the event XXXXXXXX files for bankruptcy or a receiver is
appointed, this Agreement may immediately thereafter be
terminated by ASI upon written notice to XXXXXXXX.
D. Should XXXXXXXX fail to pay the royalties, and/or other
consideration due and payable hereunder, ASI shall have the
right to terminate this Agreement on thirty (30) days written
notice. Upon the expiration of the thirty (30) day period, if
XXXXXXXX shall not have paid all such royalties, other
consideration and interest thereon, ASI shall have the right
to terminate this Agreement. Upon any material breach or
default of this Agreement by XXXXXXXX, other than those
Page 5 of 11
EXHIBIT F
occurrences set out herein above which shall always take
precedence in that order over any material breach or default
referred to in this Section, ASI shall have the right to
terminate this Agreement and the rights, privileges and
license granted hereunder upon thirty (30) days written notice
to XXXXXXXX. Such termination shall become effective unless
XXXXXXXX shall have cured any such breach or default prior to
the expiration of thirty (30) days from the date XXXXXXXX
receives notice of the breach or default.
E. Upon termination of this Agreement for any reason, nothing
herein shall be construed to release either party from any
obligation that matured prior to the effective date of such
termination. XXXXXXXX may, however, after the effective date
of such termination, complete the Sale of Licensed Products
for which XXXXXXXX has received consideration from a Customer
at the time of such termination, provided that XXXXXXXX shall
pay to ASI the royalties or other consideration thereon as
required under the provisions of Section IV of this Agreement,
and shall submit the reports required under Section IX
regarding the Sale of the Licensed Products.
F. Upon termination of this Agreement for any reason, all rights
sublicensed hereunder, including without limitation, all
Patent Rights and all Technology Rights shall revert to ASI,
and XXXXXXXX shall have no further right thereto or continuing
interest therein.
X. XXXXXXXX, its successors or assigns, shall have the option to
terminate this Agreement upon thirty (30) days written notice
to ASI and in that event, XXXXXXXX shall cease using the
Patent Rights and Technology Rights and return same to ASI.
H. Any time after three (3) years of the date of this Agreement,
ASI shall have the right to terminate this Agreement if
XXXXXXXX within thirty (30) days after receiving written
notice from ASI of intended termination fails to provide
reasonably satisfactory written evidence that XXXXXXXX has
reasonably and continually maintained an effective, ongoing
and active research, development, manufacturing, marketing or
sales program as appropriate, directed toward obtaining
regulatory approval, production or Sales of Licensed Products
in the Territory.
XII. PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
Any payment, notice or other communication made to any party pursuant to this
Agreement shall be sufficiently made or given on the date of mailing if sent to
such party by certified first class mail or air courier, postage prepaid,
addressed to it at its address below, or at such other address as it shall have
designated by written notice given to the other party.
XXXXXXXX:
Xxx Xxxxx
Xxxxxxxx Technologies, Inc.
00 Xxxxxxx Xxxx Xxxxx #000
Xxxxxxxxxx, XX 00000
Page 6 of 11
EXHIBIT F
Xxxxx X. Xxxxx
ASI Technology Corporation
000 Xxxxxxxx Xxxxxxx Xxxxx, Xxxxx #000
Xxxxxxxxx, Xxxxxx 00000
XIII. INFRINGEMENT
XXXXXXXX understands that ASI makes no representation and provides no assurance
that the Sale or other commercial exploitation of Licensed Products under this
Agreement does not and will not in the future, infringe or otherwise violate the
rights of others. ASI makes no representation as to the operability or fitness
for any use, safety, efficacy, ability to obtain regulatory approval,
patentability, or breadth of the Licensed Subject Matter. ASI makes no
representation as to whether there are any patents now held, or which will be
held, by others in the Licensed Field, nor does ASI make any representation that
the inventions contained in Patent Rights do not infringe any other patents or
other intellectual property rights now held or that will be held by others.
XXXXXXXX recognizes that ASI or its licensees may offer or sell Licensed
Products targeted for Customers in located in geographic areas other than the
Territory or for customers or others that are not defined Customers. These
products may be of similar quality or features as those developed or offered by
XXXXXXXX and at similar or different prices. Except for the exclusivity relating
to Customers and Territory set forth herein, nothing in this Agreement shall be
construed to prevent ASI or its licensees from offering products of any kind to
others. There can be no assurance that Customers will not acquire such products
offered through distribution channels targeted at non-Customers or to Customers
from outside the Territory.
XIV. IMPROVEMENTS
XXXXXXXX acknowledges that the Patent License Agreement provides, and XXXXXXXX
hereby agrees, that Improvements made by XXXXXXXX, any Affiliate, or any of
their respective employees or agents shall be the sole and exclusive property of
ALEXEFF; provided, however, that any such Improvement shall be deemed to be
included within the Licensed Subject Matter under this Agreement without the
payment of any additional royalties other than as provided in Section IV. During
the term of this Agreement, XXXXXXXX shall give written notice (each, an
"Improvement Notice") to ASI within thirty (30) days of any actual or
constructive reduction to practice of any Improvement made by XXXXXXXX, any
Affiliate, or any of their respective employees or agents. The Improvement
Notice shall set forth the particulars of the nature of the Improvement and any
test data obtained by XXXXXXXX with respect thereto. At the request of ASI,
XXXXXXXX shall promptly execute and deliver all documents reasonably necessary
to vest in ALEXEFF full right, title and interest in any such Improvement.
Page 7 of 11
EXHIBIT F
XV. CONFIDENTIAL INFORMATION
Each party agrees to protect the confidentiality of any information concerning
the other party, the other party's customers, trade secrets, business methods,
processes, or procedures, or other information learned during the course of
performance under this Agreement and marked "Confidential," any information
transferred incident to any prior non-disclosure agreement between the parties,
and any information that by its nature is normally and reasonably considered
confidential (collectively, the "Confidential Information"), with the same
degree of care that it regularly uses to protect its own similar confidential
information, and to use the other party's Confidential Information solely for
the purpose of carrying out this Agreement. The parties agree and acknowledge
that each has received Confidential Information from the other in expectation of
entering into this Agreement. If the party receiving Confidential Information
from the other is required by any governmental authority or court order to
disclose the disclosing party's Confidential Information to a third party, the
receiving party shall promptly advise the disclosing party of the requirement or
order to permit the disclosing party the opportunity to object and/or seek other
relief.
ASI and XXXXXXXX each agree that all information contained in documents marked
"confidential" or any other Confidential Information forwarded to one by the
other are to be (i) received in strict confidence, (ii) used only for the
purposes of this Agreement, and (iii) not disclosed by the recipient party, its
agents or employees without the prior written consent of the other party, except
to the extent that the recipient party can establish competent written proof
that such information:
a. was in the public domain at the time of disclosure;
b. later became part of the public domain through no act or
omission of the recipient party, its employees, agents,
successors or assigns;
c. was lawfully disclosed to the recipient party without an
obligation of confidentiality by a third party having the
right to so disclose it;
d. was already known by the recipient party at the time of
disclosure and not under an obligation of confidentiality;
e. was independently developed by the recipient party; or
f. is required by law or regulation to be disclosed.
Each party's obligation of confidence hereunder shall be fulfilled by using at
least the same degree of care with the other party's confidential information as
it uses to protect its own confidential information of a similar nature, which
shall not be less than a reasonable degree of care. This obligation shall exist
while this Agreement is in force and for a period of 2 years thereafter.
XVI. ALTERNATE DISPUTE RESOLUTION
Any dispute or controversy arising out of or relating to this Agreement, its
construction or its actual or alleged breach will be first taken to mediation.
If the mediation does not result in a resolution of such dispute or controversy,
it will be finally decided by an appropriate method of alternate dispute
resolution agreed to by the parties, and if the parties are unable to agree, by
arbitration conducted in the city of Las Vegas, Nevada in accordance with the
Commercial Dispute Resolution Procedures
[xxxx://xxx.xxx.xxx/xxxxx/xxxxxxxxxx-xxxxx.xxxx] of the
Page 8 of 11
EXHIBIT F
American Arbitration Association. The arbitration panel will include members
knowledgeable in the area of patent license agreements. Judgment upon the award
rendered may be entered in the highest court or forum having jurisdiction, state
or federal. The provisions of this Article XVI will not apply to decisions on
the validity of patent claims or to any dispute or controversy as to which any
treaty or law prohibits such arbitration. The decision of the arbitration must
be sanctioned by a court of law having jurisdiction to be binding upon and
enforceable by the parties.
XVII. MISCELLANEOUS PROVISIONS
A. Each party represents and warrants that it has the authority
to enter into this Agreement and that the execution, delivery
and performance of this Agreement does not conflict with any
agreement, or understanding, either written or oral, to which
it is a party or to which it is otherwise bound.
B. This Agreement shall be construed, governed, interpreted and
applied in accordance with the laws of the State of Nevada,
U.S.A without regard to conflict principles.
C. The parties hereto acknowledge that this Agreement sets forth
the entire agreement and understanding of the parties, hereto
as to the subject matter hereof, and shall not be subject to
any change or modification except by the execution of a
written instrument subscribed to by the parties hereto.
D. If any term, covenant or condition of this Agreement or the
application thereof to any party or circumstance shall, to any
extent be held to be invalid or unenforceable,
1. The remainder of this Agreement, or the application
of such term, covenant or condition to the parties or
circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected
thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the
fullest extent permitted by law, and
2. The parties hereto covenant and agree to renegotiate
any such term, covenant or application hereof in good
faith in order to provide a reasonably acceptable
alternative to the term, covenant or condition of
this Agreement or the application thereof that is
invalid or unenforceable, it being the intent of the
parties that the basic purpose of this Agreement are
to be effectuated.
E. The failure of any party to asserts a right hereunder or to
insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right or
excuse a similar subsequent failure to perform any such term
or condition by the other party.
F. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, ASI
MAKES NO REPRESENTATION AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO
WARRANTIES OF MERCHANTABILITY, FITNESS, AND VALIDITY OF THE
PATENT RIGHTS OR TECHNOLOGY RIGHTS.
H. Notwithstanding any provision herein to the contrary, this
Agreement shall be subject to the Patent License Agreement. In
the event of any conflict between this Agreement and the
Patent License Agreement, the Patent License Agreement shall
control. It is understood and agreed that ALEXEFF is a third
party beneficiary of this Agreement.
Page 9 of 11
EXHIBIT F
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals and duly
executed this Agreement the day and year set forth below.
Sublicensee: Licensor:
Xxxxxxxx Technologies, Inc. ASI Technology Corporation
By:_________________________ By:_________________________
Name:_______________________ Name:_______________________
Title:______________________ Title:______________________
Page 10 of 11
EXHIBIT F
ATTACHMENT A
------------
LISTING OF CUSTOMERS
CUSTOMERS
---------
U.S. Department of Defense including:
US Army
US Navy
US Marine Corps
US Air Force
SOCOM
DARPA
DTRA
National Laboratories (Sandia, Livermore, etc.)
Dept. of Homeland Security including:
US Coast Guard
Immigration and Naturalization Service / Border Patrol
Customs Service
Federal Protective Services
Transportation Security Agency
Federal, State and Local Agencies / organizations / entities
National Guard
Embassies
DEA
CIA
Page 11 of 11
EXHIBIT G
---------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated
effective as of March 19, 2003 by and between ASI Technology Corporation
("ASI"), a Nevada corporation, having a principal place of business located 000
Xxxxxxxx Xxxxxxx Xxxxx, Xx. 000, Xxxxxxxxx, Xxxxxx 00000 and Xxxxxxxx
Technologies, Inc., a Florida corporation (the "Company"), having a principal
place of business located at 00 Xxxxxxx Xxxx Xxxxx #000 Xxxxxxxxxx, XX 00000.
RECITALS
--------
The Company and ASI are parties to a Technology Purchase Agreement
dated as of March 19, 2003 (the "Purchase Agreement") that provides that as a
condition to the consummation of the transactions thereunder, ASI and the
Company shall enter into this Agreement. All capitalized terms not defined
herein shall have the meaning established in the Purchase Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties hereto
hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "COMMON STOCK" means the common stock of the Company.
(c) The term "HOLDER" means ASI or each assignee in accordance with
Section 13 hereof.
(d) The term "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(e) The term "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing with the SEC a registration
statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(f) The term "REGISTRABLE SECURITIES" means any and all (i) Common
Stock issued pursuant to the Purchase Agreement; (ii) Common Stock issued
pursuant to Section 9 of this Agreement (collectively, (i) and (ii) the
"Stock"); (iii) Common Stock issued as a dividend or other distribution with
respect to or in replacement of the Stock, and (iv) any Common Stock issued in
any combination or subdivision of the Stock. In determining the amount of
Registrable Securities held by any Person, the sum of (i), (ii), (iii) and (iv)
shall be used and a Person shall be deemed to "hold" all Registrable Securities
then held by and/or issuable to such Person, excluding in all cases, however,
any Registrable Securities sold by a Person in a transaction in which such
Person's rights under this Section 1 are not assigned in accordance with Section
4 below. As to any particular Registrable Securities, such securities shall
EXHIBIT G
cease to be Registrable Securities when they have been distributed to the public
pursuant to an offering registered under the Securities Act or sold to the
public through a broker dealer or market maker in compliance with Rule 144 under
the Act (or any similar rule then in force) or repurchased or redeemed by the
Company.
(g) The term "SEC" shall mean the Securities and Exchange Commission.
2. COMPANY REGISTRATION. If the Company proposes to register (including for this
purpose a registration effected by the Company for shareholders other than the
Holders) any of its stock or other securities under the Act in connection with
the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock option plan or stock purchase plan, a registration relating to a
corporate reorganization or other transaction under Rule 145 of the Act, or a
registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days after mailing of
such notice by the Company in accordance with Section 14(e), the Company shall,
subject to the provisions of Section 6, use its best efforts to cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered.
3. OBLIGATIONS OF THE COMPANY. Whenever required under Section 2 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and keep such registration statement
effective for a period of up to one hundred twenty (120) days or until the
distribution contemplated in the Registration Statement has been completed;
provided, however, that (i) such 120-day period shall be extended for a period
of time equal to the period the Holder refrains from selling any securities
included in such registration at the request of an underwriter of Common Stock
(or other securities) of the Company; and (ii) in the case of any registration
of Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule,
under the Act, permits an offering on a continuous or delayed basis, and
provided further that applicable rules under the Act governing the obligation to
file a post-effective amendment permit, in lieu of filing a post-effective
amendment which (I) includes any prospectus required by Section 10(a)(3) of the
Act or (II) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the 1934 Act in the registration statement.
2
EXHIBIT G
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders; provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, unless the Company is already
subject to service in such jurisdiction and except as may be required by the
Act.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant hereunder
to be listed on each securities exchange on which similar securities issued by
the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to Section 2, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection with a
registration pursuant to this Agreement, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
3
4. FURNISH INFORMATION. It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Sections 2 and 3 with respect to
the Registrable Securities of any selling Holder that such Holder shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of such securities as shall
be required to effect the registration of such Holder's Registrable Securities.
5. EXPENSES OF REGISTRATION. The Company shall bear and pay all expenses
incurred in connection with any registration, filing or qualification of
Registrable Securities with respect to the registrations pursuant to Section 2
for each Holder, including all registration, filing, and qualification fees, and
printers and accounting fees relating or apportionable thereto selected by them,
but excluding underwriting discounts and commissions and fees and disbursements
of counsel for the Holders, except that the Company shall be required to pay the
reasonable fees and expenses incurred by one special counsel to such selling
Holders.
6. UNDERWRITING REQUIREMENTS. In connection with any offering pursuant to
Section 2 involving an underwriting of shares of the Company's capital stock,
the Company shall not be required under Section 2 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity, if any, as the underwriters determine in their sole discretion will
not jeopardize the success of the offering by the Company. If the total amount
of securities, including Registrable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then in such event the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering;
PROVIDED, however that any such limitation by the underwriters will be
apportioned as follows: (i) first the Common Stock held by officers, directors
or affiliates of the Company will be excluded from the registration, (ii) next
the securities other than Registrable Securities will be excluded from the
registration, and (iii) last the Registrable Securities requested to be
registered by the Holders of Registrable Securities shall be excluded from such
registration to the extent required by the underwriters. If a limitation of the
number of shares is still required, the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all selling Holders in proportion, as nearly as practicable, to
the total amount of securities entitled to be included therein owned by each
selling Holder or in such other proportions as shall mutually be agreed to by
such selling Holders. No Registrable Securities or other securities excluded
from the underwriting by reason of this Section 6 shall be included in such
registration statement. For purposes of the preceding sentence concerning
apportionment, for any selling shareholder who is a Holder of Registrable
Securities and who is a partnership or corporation, the partners, retired
partners, parent corporations, shareholders and affiliates of such Holder, or
the estates and family members of any such partners and retired partners and any
trusts for the benefit of any of the foregoing persons shall be deemed to be a
single "selling shareholder," and any pro-rata reduction with respect to such
"selling shareholder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such "selling shareholder," as defined in this sentence. Notwithstanding the
foregoing, in the case of any registered public offering subsequent to the
Company's initial public offering, the number of Registrable Securities included
in such registration and underwriting shall not be reduced below 30% of the
securities included in such registration.
4
EXHIBIT G
7. DELAY OF REGISTRATION. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
8. INDEMNIFICATION. In the event any Registrable Securities are included in a
registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, the partners or officers, members, directors and
shareholders of each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter for such
Holder within the meaning of the Act or the 1934 Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "VIOLATION"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will reimburse each such Holder, member, partner
or officer, director or shareholder of each such Holder, underwriter or
controlling person, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 8(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished for use in connection with such registration by
any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder for use in connection with such
registration; and each such Holder will pay any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
5
EXHIBIT G
subsection 8(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld); and provided further, that, in no event shall any
indemnity under this subsection 8(b) exceed the net proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 8, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all other indemnified parties
which may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 8, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 8.
(d) If the indemnification provided for in this Section 8 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section I I (f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission. Notwithstanding
the provisions of this paragraph of Section 8, in no case shall any one Holder
be liable or responsible for any amount in excess of the net proceeds received
by such Holder from the offering of Registrable Securities. Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
6
EXHIBIT G
omission so to notify such party or parties from whom contribution may be sought
shall not relieve such party from any other obligation it or they may have
thereunder or otherwise under this Section. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its prior written consent, which consent shall not be unreasonably
withheld.
(e) The obligations of the Company and Holders under this Section 8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
9. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event that a
registration statement is not filed by the Company with respect to the
Registrable Securities and declared effective by the SEC within one hundred
fifty (150) days from the Closing Date (the "FINAL REGISTRATION DATE"), the
Company shall promptly, and in no event later than ten (10) days following the
Final Registration Date, issue to each Holder a number of shares of Common Stock
equal to fifteen percent (15%) of the number of shares of Common Stock then held
by such Holder.
10. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company), the Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
7
EXHIBIT G
11. "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that, during the
period of duration specified by the Company and an underwriter of Common Stock
or other securities of the Company, following the effective date of the first
registration statement of the Company filed under the Act, it shall not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except Common Stock included in such
registration; provided, however, that:
(a) all executive officers and directors of the Company and greater
than two and one-half percent (2.5%) stockholders of the Company enter into or
are subject to similar agreements; and
(b) such market stand-off time period shall not exceed 180 days.
In the event that any executive officer, director or 2.5% stockholder
of the Company is released from any standoff obligation in connection the first
registration statement of the Company filed under the Act, (i) the Company shall
concurrently therewith cause the same pro rata portion of the Company's
outstanding securities then held by each Holder to be released from any standoff
obligations, and (ii) the Company shall notify each Holder in writing of such
release within three (3) business days of such release.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 11 shall not apply to a registration relating solely to employee benefit
plans on Form S-1 or Form S-8 or similar forms which may be promulgated in the
future, or a registration relating solely to an SEC Rule 145 transaction on Form
S-14 or Form S-15 or similar forms which may be promulgated in the future.
12. TERMINATION OF REGISTRATION RIGHTS. No Holder shall be entitled to exercise
any right provided for in this Section 1 after four (4) years following the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public, or,
with respect to any individual Holder or its transferee, when all Registrable
Securities held by such Holder or such transferee may be sold under Rule 144
under the Act within a given 90-day period.
13. ASSIGNMENT OF RIGHTS. Notwithstanding anything herein to the contrary, the
registration rights of a Holder under this Agreement may be assigned only to:
(i) any subsidiary, parent, partner, limited partner, member, retired partner,
affiliate or stockholder of a Holder; (ii) any family member or trust for the
benefit of any Holder who is an individual; and (iii) any transferee who, after
such assignment or transfer, holds at least 100,000 shares of Registrable
Securities (as adjusted for any stock dividends, combinations or splits with
respect to such shares); PROVIDED, HOWEVER, that no party may be assigned any of
the foregoing rights unless the Company is given written notice by the assigning
8
EXHIBIT G
party within a reasonable time after such assignment or transfer stating the
name and address of the assignee and identifying the securities of the Company
as to which the rights in question are being assigned; and PROVIDED FURTHER,
that any such assignee shall receive such assigned rights subject to all the
terms and conditions of this Agreement, including without limitation the
provisions of this Section 13.
15. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(b) GOVERNING LAW. This Agreement shall be governed by and construed
under the internal laws of the State of Nevada without giving effect to the
principles of conflicts of laws thereof.
(c) COUNTEMARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(d) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party first written above, or at such other address as such
party may designate by ten (10) days' advance written notice to the other
parties.
(f) EXPENSES. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
(g) AMENDMENTS AND WAIVERS. Any term hereof may be amended and the
observance of any term hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of each of (a) the Company; (b) the Holders and their respective
successors and assigns holding at least a majority of the Registrable
Securities. Any amendment or waiver so effected shall be binding upon the
Company, the Holders and all of their respective successors and assigns whether
or not such party, assignee or other shareholder entered into or approved such
amendment or waiver.
(h) SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
9
EXHIBIT G
(i) AGGREGATION OF STOCK. All shares of Registrable Securities held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights or the imposition of any
obligations under this Agreement.
(j) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between and among the parties hereto pertaining to the subject matter hereof and
any other written or oral agreements between and among the parties hereto
pertaining thereto are expressly cancelled.
[Signature page follows]
10
EXHIBIT G
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
COMPANY:
XXXXXXXX TECHNOLOGIES, INC.
By:__________________________
Name:________________________
Title:_______________________
HOLDER:
ASI TECHNOLOGY CORPORATION
By:__________________________
Name:________________________
Title:_______________________
11
