EXHIBIT 10
CONTRACT FOR THE SALE OF ASSETS
EXHIBIT 10
CONTRACT FOR THE SALE OF ASSETS
This Agreement entered into this 26th day of August, 2004, by and
between XXXXXXX XXXXX as Trustee of the Xxxxxxx Xxxxx Revocable Trust, c/o Swann
& Xxxxxx, P.A., 0000 Xxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxxxxx,
00000 (hereinafter referred to as "Seller"), and AZONIC CORP., located at 0 Xxx
Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx, 00000 (hereinafter referred to as
"Buyer").
RECITALS
WHEREAS, Seller owns and controls certain assets set forth on Exhibit
"A" which, by reference, is incorporated herein; and
WHEREAS, Buyer wishes to acquire the assets under the terms and condi-
tions outlined below; and
WHEREAS, Seller has represented to Buyer that Seller has good and
marketable title to these assets, free and clear of any and all liens or claims
by third parties;
NOW, THEREFORE, in consideration of the mutual covenants and undertak-
ings herein,
IT IS AGREED:
1. ASSET SALE: Seller shall sell to Buyer, and Buyer shall purchase and
acquire from Seller, all of the assets listed on Exhibit "A" (the "Purchased
Assets") Said conveyance shall be absolute, free and clear of any and all claims
or right of setoff from any parties.
2. CONSIDERATION: Buyer agrees to pay and/or convey to Seller the
following as consideration for the sale set forth above:
a. STOCK. As consideration for the Purchased Assets, at
the Closing, Buyer shall issue to Seller 4,797,600 shares of common stock of
Buyer (the "Shares"), which number represents no more than 19.99% of the issued
and outstanding capital and voting stock of the Buyer immediately prior to the
transactions contemplated by this Agreement.
b. EARN OUT. Seller shall also receive from Buyer an
earn out of USD $3 million paid as follows:
(1) Once Buyer has achieved a cumulative
operating profit of USD$27.5 million (operating profit for the purpose of this
agreement being defined as gross sales less cost of goods sold (i.e., direct
costs, including discounts, promotions. returns and the initial airtime included
with the phone handset units)), Buyer shall commence payment to Seller and/or
his assigns the USD$3 million listed above, payable in increments of USD$300,000
per quarter without interest. Upon the payment of the USD$3 million listed
herein, this earn-out provision shall terminate and no further payments shall be
due to Seller.
c. BOARD DESIGNEE. Seller shall have the right to
designate one (1) member of the board of directors of Buyer.
d. ANTIDILUTION PROTECTION. If the Buyer issues any
additional shares of its Common Stock within 90 days after the Closing Date in
connection with an equity financing (a "Dilutive Issuance"), Buyer shall issue
additional shares of its Common Stock to Seller such that, immediately after
such Dilutive Issuance, Seller holds 19.99% of Buyer's issued and outstanding
Common Stock.
3. Seller and Buyer shall also enter into a Shareholder Agreement,
together with the other shareholders of Buyer. Such Shareholder Agreement shall
include the normal provisions found in such agreement and will include, but is
not limited to:
1. Provisions for directors' liability insurance;
2. Restrictive covenants to protect minority shareholders'
rights;
3. Repurchase conditions;
4. Approval of annual operating and capital expenditures and
budget;
5. Other normal course clauses, including non-competition
clauses, management responsibilities and the like;
6. Restriction on shareholder remuneration;
7. Financial statement reporting requirements;
8. Change of auditors restricted without approval;
9. Permitted transfers to be approved by the board;
10. Normal warranties and representations.
4. Seller represents and warrants to Buyer:
(a) Seller is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization or formation, with
full power and authority to hold and own its properties and assets (including
the Purchased Assets), to execute and deliver this Agreement, and to consummate
the transactions contemplated hereby.
(b) Seller has all requisite power and authority to execute,
deliver and perform this Agreement, the Transactions and each other document
being executed in connection herewith to which it is a party. The execution,
delivery and performance of this Agreement and all other documents and agree-
ments contemplated hereby to be executed by Seller have been, or by the Closing
will have been, duly authorized by all requisite action of Seller, and this
Agreement and each such other document or agreement contemplated hereunder will
be, a valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, subject to applicable bankruptcy, insolvency, reorg-
anization, moratorium and similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of equity.
(c) Seller has good and marketable title to the Purchased
Assets and the Purchased Assets, whether tangible or intangible, shall be at the
time of transfer, free of all liens, security interests, claims, rights of set-
off and encumbrances of any kind or nature whatsoever.
(d) The execution, delivery and performance of this Agreement
and all other documents and agreements contemplated hereby and the consummation
of the Transactions do not and will not (a) violate any provisions of law applic
-able to Seller; (b) with or without the giving of notice or passage of time, or
both, conflict with or result in the breach of any provision of Seller's consta-
tive documents or any material instrument, license, agreement or commitment to
which Seller is a party, or by which the Purchased Assets are bound; (c) consti-
tute a violation of any order, judgment or decree to which Seller is a party or
by which any of its assets or properties are bound; (d) require the consent,
approval, order or authorization of, or registration or filing with any court,
administrative agency, or other U.S., Canadian or other governmental agencies or
(e) assuming the correctness of Buyer's representations and warranties require,
any approval of, or filing or registration with, any U.S., Canadian or other
governmental agency or third person.
(e) Exhibit "A" attached hereto sets forth a list of all
registered intellectual property owned by Seller (the "Registrations"). The
Registrations are valid and subsisting and Seller is the exclusive owner of, and
enjoys all rights of ownership with respect to, the Registrations.
(f) Exhibit "A" sets forth all of the Intellectual Property in
which Seller has an interest as a licensee. Such licensed Intellectual Property
is free and clear of any lien or encumbrance whatsoever (including, without
limitation, any royalty obligation or any limitation on the right to use such
Intellectual Property anywhere in the world). Seller has the right to transfer
or assign such licenses to Buyer without the consent or approval of any party.
(g) Except as set forth in Exhibit "A" Seller has not received
any threat, demand or notice of claim from any person or entity asserting that
Seller's use of any of the intellectual property contained in the Purchased
Assets or the Registrations constitutes any infringement, interference, xxxxx-
tion, misappropriation, breach or wrongful use of the intellectual property
rights of any other person or entity and Seller is not party to any proceeding
or outstanding decree, order, judgment, agreement or stipulation restricting in
any manner the use, transfer, or licensing by Seller of any Intellectual
Property, or which may affect the validity, use or enforceability of such
Intellectual Property by Seller.
(h) No action, proceeding, revocation proceeding, amendment
procedure, writ or injunction is pending, and to Seller's actual and construc-
tive knowledge, no action, proceeding, revocation proceeding, amendment proced-
ure, writ or injunction has been threatened by any U.S., Canadian or other
governmentalagency against Seller concerning any consents affecting the Purchas
-ed Assets and Seller has no actual or constructive knowledge of any fact or
circumstance which is reasonably likely to involve Seller in any litigation
related thereto or impose upon Seller any material liability affecting the
Purchased Assets.
(i) There are no actions, suits, proceedings or arbitrations,
investigations or claims of any kind pending, or, to the actual or constructive
knowledge of Seller, threatened before any court, commission, agency or other
administrative authority against Seller or any of its representatives relating
in any way to any of the Purchased Assets, and Seller is not the subject of any
order or decree. There is no injunction, order, judgment, decree or regulatory
restriction that has been imposed upon Seller or the Purchased Assets.
(j) The Seller has not incurred any obligation of any kind
whatsoever to anyparty for a finder's fee (or similar compensation) in connec-
tion with the transactions contemplated by this Agreement.
(k) No approval, authorization, order, license or consent of
or registration, qualification or filing with any U.S., Canadian or other govern
-mental agency and no approval or consent by any other person or entity is
required in connection with the execution, delivery or performance by Seller of
this Agreement and any related agreements.
(l) The Seller has determined that the consideration it is
receiving for the Purchased Assets is fair and reasonable consideration in all
respects.
(m) The Seller is not required to comply with any applicable
law relating to "bulk sales" or other creditor notification requirement because
no creditor has any claim whatsoever against any of the Purchased Assets.
(n) Seller has not assigned or licensed any interest in the
trade name of Cyclone.
(o) There are no written or oral employment agreements with
any parties whatsoever with reference to the management or handling of the
Purchased Assets.
(p) There are no actions or proceedings pending or threatened
against Seller with reference to the Purchased Assets.
(q) No Active Business. The Seller has never conducted an
active trade or business utilizing any of the Purchased Assets, and the
Purchased Assets do not contain any of the following:
(i) Any physical facilities;
(ii) Any employees;
(iii) Any accounts payable or receivable
(iv) Any market distribution system;
(v) Any sales force;
(vi) Any customer base or list;
(vii) Any operating rights, sales, marketing or
manufacturing contracts; or
(viii) Any production techniques or rights
(r) Seller is acquiring the Shares for his, her or its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same; and Seller has no present or contemplated agreement, undertak-
ing, arrangement, obligation, indebtedness or commitment providing for the
disposition thereof.
(s) Seller is an "accredited investor" as defined in Rule
501(a) under the Securities Act of 1933 (as amended, the "Securities Act").
(t) Seller has carefully reviewed the representations concern-
ing the Buyer contained in this Agreement, the Buyer's publicly available
filings and has made detailed inquiry concerning the Buyer, its business and its
personnel; the officers of the Buyer have made available to Seller any and all
written information which he, she or it has requested and have answered to
Seller's satisfaction all inquiries made by Seller; and Seller has sufficient
knowledge and experience in finance and business that it is capable of evaluat-
ing the risks and merits of its investment in the Buyer and Seller is able
financially to bear the risks thereof.
(u) Restricted Shares shall not be sold or transferred unless
either (i) they first shall have been registered under the Securities Act, or
(ii) the Buyer first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Buyer, to the effect that such sale or transfer
is exempt from the registration requirements of the Securities Act. "Restricted
Shares" means the Shares and any other shares of capital stock of the Buyer
issued in respect of such Shares (as a result of stock splits, stock dividends,
reclassifications, recapitalizations or similar events); provided, however, that
Shares which are Restricted Shares shall cease to be Restricted Shares (x) upon
any sale pursuant to a registration statement under the Securities Act, Section
4(1) of the Securities Act or Rule 144 under the Securities Act or (y) at such
time as they become eligible for sale under Rule 144(k) under the Securities
Act.
(v) Notwithstanding the foregoing, no registration or opinion
of counsel shall be required for a transfer made in accordance with Rule 144
under the Securities Act.
(w) Each certificate representing Restricted Shares shall bear
a legend substantially in the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be offered, sold or otherwise transferred, pledged or
hypothecated unless and until such shares are registered under
such Act or an opinion of counsel satisfactory to the Buyer is
obtained to the effect that such registration is not
required."
The foregoing legend shall be removed from the certificates
representing any Restricted Shares, at the request of the holder thereof, at
such time as they become eligible for resale pursuant to Rule 144(k) under the
Securities Act.
The representation and warranties in this paragraph shall survive closing.
5. Seller shall indemnify and hold Buyer harmless of and from all liabilities,
losses or damages arising out of any misrepresentation, breach of warranty, or
non-fulfillment of any provision of this Agreement or any claim by any third
party against the Buyer relating to the Purchased Assets.
6. Buyer represents and warrants to Seller:
(a) Corporate Existence. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada. The execution and delivery of this agreement and the consummation of the
transaction contemplated hereby by Buyer has been duly and validly authorized
and approved by all necessary corporate action. This agreement has been duly
executed and delivered by Buyer, is valid and binding upon Buyer, and is
enforceable against Buyer in accordance with its terms.
(b) No Violation. Consummation of the transaction contemplated
by this Agreement will not result in a breach of any term or provision of the
Articles of Incorporation or Bylaws of Buyer nor result in a breach by Buyer of
any term or provision of any lease, mortgage, agreement, instrument or
restriction of any kind or character or any order, judgment or decree binding
upon Buyer.
7. The closing shall take place at the offices of the Buyer located
at 0 Xxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx, 00000 on such date (the "Closing
Date") as the following conditions are satisfied, or such later time as the
parties mutually agree:
i. Buyer shall have entered into a manufacturing contract
on terms and conditions as are reasonably satisfactory to Buyer.
ii. Seller shall have confirmed that the representations
and warranties of Seller set forth in this Agreement are true in all
material respects on and as of the Closing Date.
iii. Buyer shall be satisfied that no governmental agency or
other authority shall have indicated any intention to prevent or enjoin
the consummation of this Agreement.
iv. Buyer shall be satisfied that no third party shall have
initiated or threatened to initiate any litigation or other proceeding
attempting to prevent or enjoin the consummation of this Agreement.
8. Binding Effect. This agreement shall be binding upon and inure
to the benefit of both parties hereto and their respective heirs, successors,
and assigns.
9. Non-waiver. No delay or failure by either party to exercise
any right hereunder, and no partial or single exercise of any such right, shall
constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
10. Headings. Headings in this agreement are for convenience only
and shall not be used to interpret or construe its provisions.
11. Governing Law. This agreement shall be governed by and constru
-ed in accordance with the laws of the State of New York (without regard to
conflicts of laws provisions) and venue for any action to enforce this agreement
shall be New York, New York.
12. Counterparts. This agreement may be executed by one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. And further, a facsimile
signature shall be accepted as an original.
13. Time of essence. Time is of the essence in this agreement.
14. Entire Agreement. This agreement supersedes all prior agree-
ments and constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof.
15. Miscellaneous. Should any party to this contract bring an
action to enforce their rights hereunder, the prevailing party shall be entitled
to receive all costs expended in such action, including attorneys' fees.
16. Further Assurances. The Seller shall, at any time and from
time to time after the Closing Date, upon the request of the Buyer, do, execute,
acknowledge and deliver and cause to be done, executed, acknowledged or deliver-
ed, all such further acts, deeds, assignments, transfers, conveyances, powers of
attorney or assurances as may be reasonably required to transfer, assign,
convey, grant and confirm to the Buyer, or to aid and assist in the collection
of or reducing to possession by the Buyer, the Purchased Assets, or to vest in
the Buyer good and marketable title to the Purchased Assets as herein provided.
"SELLER"
-------------------------------
XXXXXXX XXXXX as Trustee of the Xxxxxxx Xxxxx
Revocable Trust
"BUYER"
AZONIC CORP.
By:
---------------------------
Xxxx Xxxxxxx
President
EXHIBIT "A"
US Patent
Date -September 9, 2003
Number US D479,512 S
Status- Design Patent
Additional Coverage- PCT- US Provisional 60/276,141
Assignment to New Horizons Technologies International Inc.:
US Serial No. 29/157,224- filed March 15, 2002
Industry Canada
Date- July 29, 2003
Number- 99018
Status- Design Patent
FCC License
Grant of Equipment Authorization Certification:
Date of Grant: May 20, 2002
Current Status: Valid
Transfer consent received.
FCC Identifier- P4F110A
Equipment Class: Licensed Non-Broadcast Transmitter Held to the Ear
Canadian Technical Acceptance Certificate
Date: March 26, 2002
Certification Number: 4267A 1100A
Type: Portable Cellular Transceiver
Current Status: Valid
Transfer consent received.
Licenses: SOFTWARE
A. Connect 2 software license
B. Operating System software License
C. MAS 90 Accounting software
Tools and Molds:
A. Gazelle Prototype tools
B. Exterior case molds
C. Telifilter tool
D. GPS keymat tool
Equipment/ Furniture Fixtures:
A. 2 HP8920 Test Units
B. 1 Desktop computer
C. Fax Machine
D. Miscellaneous office furnishings
Inventory:
With Seller:
Phone units 1,800
Phone batteries 1,000
Packages 500
At Xxxx Technologies Florida (fully paid):
Completed units: 2,410
Scrapped units: 367
Total open orders: 9,230
Finished goods 1,320
Board level sub-assembly: 1,058
Total raw material kits: 4,300
