EXECUTION COPY
This TECHNOLOGY PURCHASE AGREEMENT (the "Agreement"), made as of the 30th
day of June, 1997, between ADVANCED PARTICLE TECHNOLOGIES, INC., a Delaware
corporation ("APT"), and VANGKOE INDUSTRIES, INC., a Florida corporation
("VANGKOE");
WITNESSETH:
WHEREAS, VANGKOE is the owner of the proprietary particulate color-coating
technology described on Exhibit A hereto (the "Technology"); and
WHEREAS, APT desires to purchase, and VANGKOE desires to sell to APT, the
Technology in accordance with the terms hereof; and
WHEREAS, simultaneously with the execution and delivery hereof, the parties
are entering into a Distributor Agreement (the "Distributor Agreement") pursuant
to which, among other things, VANGKOE will become a distributor of products
manufactured and color-coated by APT utilizing the Technology;
NOW THEREFORE, in consideration of the premises and of the consideration to
be received by the parties hereunder, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
1. Purchase and Sale of Technology. VANGKOE hereby sells and assigns to
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APT, and APT hereby purchases from VANGKOE, all of VANGKOE's right, title and
interest in and to the Technology. The parties agree that for the purposes
hereof, the term Technology shall include all formulae, inventions, know-how and
other proprietary rights constituting and embodied in the Technology, such that
this transfer will vest APT with complete and absolute ownership of the
Technology and the sole right to modify, enhance, improve and commercially
exploit the same.
2. Purchase Price. (a) The purchase price for the Technology shall be
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$100,000 (with the right to receive the additional payments set forth below),
payable by check or wire transfer to an account designated by VANGKOE. Such
purchase price is payable as follows:
(i) $75,000 has been paid prior to the date hereof pursuant to the terms of
the Letter of Intent dated February 14, 1997, between VANGKOE and APT relating
to, among other things, the transaction contemplated hereby; and
(ii) $60,000 will be paid simultaneously with the execution and delivery of
this Agreement.
(b) In addition, VANGKOE will have the right to receive, by check or wire
transfer to an account designated by VANGKOE, an additional $30,000 upon
satisfactory production of all colors set forth in Section 2(d) and satisfactory
documentation of the related formulas. Such determination shall be made in
accordance with Section 2(c).
(c) The parties acknowledge that achievement of the requirements set forth
in Section 2(b) will require the diligent good faith efforts of both parties
(and, with respect to VANGKOE, the diligent good faith efforts of Bo Gimvang in
particular), and each party hereby commits to use such diligent good faith
efforts to cooperate to achieve the satisfaction of such requirements within 60
days following the date hereof or as soon thereafter as possible. The
determination of satisfaction of such requirements shall be made by APT acting
in good faith and on a reasonable basis. In the event of a dispute regarding
such determination, such dispute shall be subject to the dispute resolution
procedure established pursuant to Section 6.2 hereof.
(d) The parties expressly acknowledge that the payments to be made pursuant
to this Section 2, and the good faith efforts to achieve the milestones set
forth in this Section 2, are in respect of the following colors deemed necessary
by the parties to effectively compete in the Market: black, blue, teal,
turquoise, jade, light blue, dark blue and the blue color required by VANGKOE's
prospective customer Rhino-coat. Accordingly, APT acknowledges that to the
extent that it desires Vangkoe to provide assistance to develop other colors,
APT will pay for the consulting services of Vangkoe at the rate of $150 per hour
(or such other amount as shall be agreed upon by the parties). Vangkoe agrees to
use its good faith efforts to provide the services of Bo Gimvang and Xxxx
Xxxxxxxx in that regard to the extent possible without unreasonably interfering
with the abilities of such persons to perform the services required of them to
Vangkoe.
(e) It is expressly understood and agreed by the parties that the amount of
technology transfer payments made pursuant to this section 2 include all past
research and development, out of pocket expenses and associated costs, reflected
in the lump sum payments by APT to VANGKOE hereunder.
3. Royalty Payment. If APT or its affiliates shall sell color coated
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particles utilizing the coating technology purchased by APT pursuant to this
Technology Purchase Agreement, as the same may be modified, enhanced or improved
by APT, to any customer for use in any market other than the market (as defined
in the Distribution Agreement), or to any customer (other than VANGKOE) for use
in the Market (in the event VANGKOE fails to maintain its exclusive rights to
distribute the Products in the Market), APT or its affiliates shall pay to
VANGKOE a royalty equal to $0.02 per pound of coated material sold during the
term of this Agreement and $0.01 per pound of coated material sold during the
five-year period following the termination of this Agreement. Such payment will
be made on a semi-annual basis on or prior to March 31 and September 30 of each
year and shall be accompanied by reasonably detailed documentation supporting
the calculation of such royalty. Such royalty shall be due regardless of whether
the coating technology was applied at APT's current St. Augustine, Florida
facility or at another new or existing facility of APT or any of its affiliates,
suppliers or customers. If VANGKOE shall disagree with the calculation of any
semi-annual royalty
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payment, VANGKOE shall provide written notice thereof to APT within 10 days
following its receipt of the calculation and payment. VANGKOE and APT shall then
work together in good faith to resolve the dispute within the following 30-day
period. During such period, VANGKOE shall have the right to review the books and
records of APT and its affiliates with respect to coated product sales and the
calculation of the royalty payment at the offices of APT (or its affiliates)
during normal business hours and at VANGKOE's sole expense. If the parties are
unable to resolve the dispute within such 30-day period, the dispute will be
resolved by arbitration in accordance with Section 6.2 below.
4. Certain Additional Agreements.
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(a) VANGKOE recognizes the highly competitive nature of the business to be
conducted by APT and the importance of preserving the confidentiality of the
Technology. Accordingly, as an inducement to APT to enter into this Agreement
and in partial consideration of the amounts to be received by VANGKOE hereunder,
as well as the benefits to be realized by VANGKOE under the Distributor
Agreement, VANGKOE agrees that (i) it will not, directly or indirectly, disclose
(verbally, in writing or otherwise) the particulate color-coating formula or
process that constitutes the Technology to any third party and (ii) until the
later of the fifth anniversary of the date hereof and the termination of the
Distributor Agreement, it will not, directly or indirectly, engage in the
business, or assist any other party (except APT or its affiliates) in engaging
in the business, of manufacturing color-coated particles or developing or
selling color-coating technologies for particles; provided, however, that (A)
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the restrictions set forth in clause (i) above shall not apply after such time
as the formula and process constituting the Technology enters the public domain
through the issuance of a patent or otherwise becomes generally known to the
public (as evidenced by academic or trade books, articles or journals or similar
written publicly available sources and (B) the restriction set forth in clause
(ii) above shall cease to apply 20 days following notice by VANGKOE to APT of a
material breach by APT or its affiliates of any material term of this Agreement
or the Distributor Agreement (unless such breach is cured within such 20-day
period).
(b) VANGKOE acknowledges and agrees that simultaneously with the execution
and delivery of this Agreement, each of Cytech Laboratories, Inc. ("Cytech"),
Xxxx Xxxxxxxx and Bo Gimvang will sign a letter pursuant to which they will
agree to be bound by this Section 4.
(c) APT and its affiliates acknowledge that Cytech is a research and
development company controlled by Xxxx Xxxxxxxx and Bo Gimvang and that Cytech
develops alkali silicate coatings for various commercial applications. APT and
its affiliates hereby acknowledge that the purchase hereunder is limited to the
Technology and that neither APT nor its affiliates has purchased or will assert
rights with respect to other alkali silicate coating formulas or processes of
Cytech.(d) The parties acknowledge that they hope to be engaged in a long-term,
mutually beneficial relationship. Accordingly, APT and its affiliates agree to
evaluate in good faith any potential coating technology or other technology that
could be applicable and beneficial to the business to be conducted by APT and
VANGKOE agrees to use
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its good faith efforts to provide APT and its affiliates the first opportunity
to review and evaluate any such technologies for commercial exploitation on
terms to be agreed upon by the parties.
5. Representations and Warranties. (a) Each party represents and warrants
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to the other that such party is duly incorporated, validly existing and in good
standing under the laws of the State of its incorporation. Each party further
represents and warrants to the other that the execution, delivery and
performance of this Agreement and the Distributor Agreement have been duly and
validly authorized by all necessary corporate action. Each party further
represents and warrants to the other that neither the execution, delivery nor
performance of this Agreement or the Distributor Agreement will violate,
conflict with or cause a default under (with or without due notice or lapse of
time) its Certificate of Incorporation or By-laws or any contract, debt
obligation or other agreement or instrument by which it is bound.
(b) VANGKOE represents and warrants to APT (and Conversion Technologies
International, Inc. ("CTI"), which shall be a third party beneficiary of this
representation and warranty) that (i) it has good and valid title to the shares
(the "Shares") of APT Common Stock being transferred to CTI simultaneously with
the execution and delivery of this Agreement, (ii) the transfer of the Shares to
CTI in consideration of $0.01 per share has been duly and validly authorized by
all necessary corporate action by VANGKOE and (iii) the delivery to CTI of the
certificate representing the Shares, together with a duly executed stock power
assigning the Shares to APT, will be sufficient to transfer ownership of the
Shares to CTI, free and clear of any claims, liens, pledges, security interests
or other encumbrances of any nature whatsoever.
(c) VANGKOE's representations and warranties set forth in the letter dated
May 9, 1996, a copy of which is attached hereto as Exhibit B, are incorporated
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herein by reference as if set forth herein in their entirety and made for the
benefit of APT as well as CTI.
Section 6. Miscellaneous.
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6.1 Notices. Any notice required or permitted hereunder shall be given in
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writing and shall be conclusively deemed effective when given upon personal
delivery or delivery by courier, or five days after deposit in the United States
mail, by registered or certified mail, postage prepaid, addressed as follows (or
at such other address as may be designated by written notice):
(i) if to APT, to:
Advanced Particle Technologies, Inc.
c/o Conversion Technologies International, Inc.
00 Xxxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: President
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and
(ii) if to VANGKOE, to
VANGKOE Industries, Inc.
0 Xxx Xxxxxxx Xxxxx
Xx. Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: President
6.2 Dispute Resolution. In the event of any dispute between the parties
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under this agreement, the parties shall attempt to resolve it in good faith as
soon as possible. If such dispute is not resolved within 20 days following
written notice thereof from one party to the other (or such number of days as
shall be otherwise specified herein), such dispute shall be resolved by
arbitration pursuant to the rules of the American Arbitration Association or
other mediation procedure agreed to by the parties. Such arbitration or
mediation shall take place in St. Augustine, Florida or other mutually agreeable
location. The arbitrator or mediator will be instructed to attempt to resolve
the dispute within 30 days of commencement of proceedings and any award shall be
final and binding upon the parties, unless non-binding arbitration or mediation
is mutually agreed upon. Each party will bear its own legal fees and other
expenses related to any such proceeding.
6.3 Assignment. This Agreement may not be assigned by VANGKOE without the
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prior written consent of APT or, whether by operation of law or otherwise,
except to a purchaser of substantially all of the assets or business of VANGKOE
following APT's (or its affiliates') refusal to exercise its right of first
offer under the Distributor Agreement. This Agreement may not be assigned by APT
and/or its affiliates without the prior written consent of VANGKOE, whether by
operation of law or otherwise, except to an affiliate of APT or to a purchaser
of substantially all of the assets or business of APT following VANGKOE's
refusal to exercise its right of first offer under the Distributor Agreement.
6.4 Independent Contractors. The parties are independent contractors and
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neither party has, or will represent that it has, authority to bind the other
with respect to any matter whatsoever.
6.5 Amendments. This Agreement may not be amended without the written
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agreement of the parties.
6.6 Entire Agreement. This Agreement constitutes the complete agreement of
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the parties with respect to the subject matter hereof and supersedes all prior
agreements of the parties, if any, whether oral or in writing, and no course of
dealing shall alter the terms hereof.
6.7 Severability. In the event that any provision of this Agreement would
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be held in any jurisdiction to be invalid, such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such
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provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
6.8 Successors and Assigns. Subject to the limitations set forth herein,
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this Agreement shall be binding on each party's successors and assigns.
6.9 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws.
6.10 Counterparts. This Agreement can be signed in counterpart, with each
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such counterpart constituting an original but all such counterparts constituting
one agreement.
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IN WITNESS WHEREOF, the undersigned have entered into this Agreement as of
the date appearing on the first page hereof.
ADVANCED PARTICLE
TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: Acting President
CONVERSION TECHNOLOGIES
INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: Acting President
VANGKOE INDUSTRIES, INC.
By: /s/ Bo Gimvang
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Bo Gimvang
President
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