Exhibit 10.3
LETTER OF INTENT
The purpose of this Letter of Intent, dated effective as of December
27, 1999, is to set forth the main terms upon which TSET, Inc., a Nevada
corporation ("TSET"), will acquire 100% of the issued and outstanding capital
stock of Electron Wind Technologies, Inc., a corporation to be formed ("EWT").
The parties in interest to the transactions outlined in this Letter of Intent
are TSET; EWT (to be formed); High Voltage Integrated, LLC, a Washington limited
liability company ("HVI"); Xxxxxx Xxxxxxxx, an individual owning 20% of HVI;
Xxxxxx X. Xxxxxxxx XX, an individual owning 20% of HVI; Dr. Xxxx Xxxxxxxxxxxxxx,
an individual owning 50% of HVI; and Xxxx Xxxxxxx, an individual owning 10% of
HVI (Xxxxxx Xxxxxxxx, Xxxxxx X. Xxxxxxxx XX, Dr. Xxxx Xxxxxxxxxxxxxx, and Xxxx
Xxxxxxx are hereinafter collectively referred to as the "Principals").
TSET, EWT, HVI, and each of the Principals intend to enter into formal
definitive legal agreements (collectively, the "Definitive Agreements") relating
to such acquisition as soon as practicable after the date hereof, based upon the
terms described herein, which Definitive Agreements shall set forth the
definitive rights, obligations, undertakings, and liabilities of the parties.
The parties' stated interest in proceeding expeditiously to complete and sign
this Letter of Intent and the Definitive Agreements is to their mutual
satisfaction and they look forward to working together to accomplish these
goals.
Based upon recent meetings and discussions, the main terms of the
proposed transactions among TSET, HVI, and the Principals (individually and
collectively) may be summarized as follows:
A. INCORPORATION OF ELECTRON WIND TECHNOLOGIES, INC. The parties intend
that TSET effect the incorporation of EWT under the laws of either the State of
Delaware or the State of Nevada (to be determined by TSET) as part of the
above-mentioned formal legal documentation. The parties intend that EWT
constitute the operating entity for purposes of their future relationship, as
described herein; provided, however, that the Principals intend to retain
discretion whether to continue the corporate existence of HVI and their
respective ownership interests therein.
B. ISSUANCE OF SHARES. The parties intend that TSET own 100% of EWT's
issued and outstanding shares, in exchange for 2,000,000 TSET "investment"
shares (the "TSET Shares"). The parties intend that the TSET Shares be issued
and allocated as will be designated in writing by the Principals. The parties
intend that any finder's or broker's fees or other compensation payable by HVI
or the Principals to any other person shall be paid out of the TSET Shares or in
such other manner as HVI, the Principals, and any such finder or broker may
agree, any such compensation being for the account of HVI and the Principals.
C. TRANSFER OF RIGHTS. The parties intend that, in consideration of the
issuance of the TSET Shares described in item B above, HVI and the Principals,
individually and collectively, sell, assign, and transfer to EWT all existing
right, title, and interest in and to any and all patents, trademarks, and
servicemarks, and including all improvements and derivatives thereof and
applications relating thereto, and all other related intellectual property,
know-how, licenses, and contract rights of any kind, character, and description,
all pertaining to that certain technology commonly referred to by HVI and the
Principals as the "electron wind generator" (collectively, the "Technology").
D. MANAGEMENT. The parties intend that those of the Principals
currently having executive management responsibility for HVI also have strategic
decision-making and day-to-day management responsibility over EWT's business,
business development, operations, marketing, intellectual property rights
protection, and finances, with the Principals to at all times seek in good faith
to advance the best business interests of EWT and the further development and
widespread exploitation and deployment of the Technology. The parties intend
that TSET be entitled to designate at least one director to EWT's board of
directors. HVI and the Principals have informed TSET that no oral or written
compensation arrangements or agreements have been entered into, and that no
shares, units, or warrants or options to acquire the same have been orally or in
writing granted to or are owned by, HVI's four advisory board members.
E. BUSINESS PURPOSE. The parties intend that EWT shall concentrate its
efforts on the further development and improvement of the Technology for
licensing, deployment, and exploitation in a full range of automotive, medical
equipment, hotel, home, and hospital/clinic applications (collectively, the
"Core Applications"). In the event applications of the Technology other than the
Core Applications (in any case, an "Alternative Application") appear viable,
TSET and EWT will give consideration to providing a "grant-back" to HVI or the
Principals (as the case may be) of patent or other intellectual property rights
on a case-by-case basis for the specific fields of use pertaining to the
Alternative Application in question, so long as (1) TSET and EWT do not desire
to pursue such Alternative Application and (2) the pursuit of such Alternative
Application does not materially interfere with, or divert significant time,
attention, and resources away from the development, improvement, deployment, and
licensing of the Core Applications.
F. SECURING OF SERVICES. The parties intend that EWT enter into
long-term employment agreements with, and obtain "key-person" insurance upon, at
least Dr. Xxxx Xxxxxxxxxxxxxx and Xxxxxx X. Xxxxxxxx XX. All expenses associated
with the matters described in this item F shall be borne by EWT.
G. INITIAL FUNDING. The parties intend that TSET assist and support
EWT's capital-raising efforts, to provide EWT with projected initial operational
funding needs of up to $500,000 over the 6-month next following execution of the
Definitive Agreements (the "Initial Funding"), all to be described in more
detail by the Principals in a written "use of proceeds" to be provided to TSET
no later than 21 days following execution of this Letter of Intent, and pursuant
to operating budgets to be approved by EWT's board of directors. The parties
intend that EWT's management be responsible for the establishment of appropriate
guidelines and accounting procedures and the prudent and appropriate budgeting,
conservation, and expenditure of EWT's financial resources, all with a view
toward the further development, improvement, exploitation, marketing, and
licensing of the Technology in the Core Applications and the perfection and
policing in the U.S. and appropriate global markets of patent and other
intellectual property rights and confidentiality arrangements. The parties
intend that, as necessary, TSET will use its own shares arrange for the Initial
Funding; provided, however, that TSET does not assume or obligate itself with
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respect to the indebtedness, operating expenses, or other financial liabilities
of HVI or any of the Principals.
H. FUTURE EVENTS. The parties intend that TSET and EWT will consider a
spin-off of EWT into its own public-owned entity (through reverse merger or
other appropriate mechanism) at a mutually agreed time in the future (to occur
no earlier than 12-18 months after the occurrence of a mutually-agreed
"kick-off" date). The parties intend that TSET and its designees will retain an
appropriate ownership interest in EWT's publicly-owned successor, as the case
may be.
I. PRESS RELEASE. The parties intend to collaborate on the content of
an appropriate press announcement regarding the transactions outlined herein to
be released by TSET upon signing this Letter of Intent.
J. UNDERTAKING OF GOOD FAITH. Realizing that they are unable to
anticipate and provide for every contingency which may arise during the course
of their relationship, the parties intend that principles of commercial good
faith will govern and that they will at all times seek to advance the best
interests of EWT and maximize the economic value of the Technology in the Core
Applications (and such Alternative Applications as EWT and TSET agree to
pursue).
K. PURPOSE OF THE LETTER OF INTENT. This Letter of Intent is intended
by the parties as a statement of their interests and mutual intent to complete
the Definitive Agreements in a form reflective of the business and financial
items for the purposes indicated herein and shall not be deemed of itself to
grant any binding, enforceable, or exclusive rights in or to the TSET Shares or
the Technology, or constitute any right, obligation, offer, or commitment of any
of the parties to enter into the Definitive Agreements. The parties intend that
all rights, obligations, or commitments to proceed with any transaction or
relationship shall be contained only in the Definitive Agreements signed by all
the parties. The parties do not intend that any of them be bound to each other
by this Letter of Intent for damages, expenses, failure to finally agree upon
the terms and conditions of the Transaction Documents, or in any other way. The
parties intend that the Definitive Agreements regarding the transactions
outlined in this Letter of Intent be prepared and signed by the parties, all
acting in good faith, as soon as practicable after the date hereof. The parties
intend that the Definitive Agreements contain appropriate customary terms,
conditions, representations, and warranties, including appropriate disclosures
by HVI and the Principals relating to such matters as intellectual property
ownership, material contracts, taxes, litigation, absence of breaches or
defaults in legal obligations, authority and capacity to enter into the
transactions outlined herein, outstanding proxies, ownership of warrants and
options, and the like. The parties intend that each of them will bear their
respective costs and expenses associated herewith and the transactions outlined
herein.
L. CONFIDENTIALITY. The parties acknowledge that TSET has previously
entered into the standard form confidentiality agreement used by HVI. TSET
further intends that it will be bound by the provisions of such confidentiality
agreement regardless of whether this Letter of Intent or the Definitive
Agreements are entered into by the parties, as herein proposed.
M. PRIORITY OF THE LETTER OF INTENT. Other than as provided in the
confidentiality agreement mentioned in item L above, this Letter of Intent
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supersedes all prior communications, understandings, statements of intent, and
agreements between the parties with respect to the subject matter hereof.
*****
The parties' execution in the space provided below shall evidence their
respective acceptance of the terms of this Letter of Intent and that they intend
to proceed as outlined herein.
TSET, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------------
Xxxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
HIGH VOLTAGEINTEGRATED, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------------------
Authorized Signatory
/s/ Xxxxxx X. Xxxxxxxx 12-27-99
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Xxxxxx Xxxxxxxx, individually, and as a member of
High Voltage Integrated, LLC
/s/ Xxxxxx X. Xxxxxxxx XX 12-27-99
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Xxxxxx X. Xxxxxxxx XX, individually, and as a
member of High Voltage Integrated, LLC
/s/ Xxxx Xxxxxxxxxxxxxx 12-27-99
-------------------------------------------------
Dr. Xxxx Xxxxxxxxxxxxxx, individually, and as a
member of High Voltage Integrated, LLC
/s/ Xxxx Xxxxxxx 12-27-99
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Xxxx Xxxxxxx, individually, and as a member
of High Voltage Integrated, LLC
I. Definitive agreements regarding the proposed acquisition to be prepared
and signed by the parties as soon as practicable after the date hereof. Such
agreements to contain appropriate customary terms, conditions, representations,
and warranties. TSET and Atomic Soccer will each bear their respective
transaction costs.
IN WITNESS WHEREOF, the parties have executed and delivered this Deal
Outline effective as of the date first written above.
TSET, Inc.
By /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
ATOMIC SOCCER USA, LTD.
By: /s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
President
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