EXHIBIT 10.9
PARTICIPATION AGREEMENT
THIS AGREEMENT (the "Agreement") dated February 3, 2004 by and between
SEARCHHELP, INC., a Delaware corporation ("SearchHelp"), having a principal
address at 0000 Xxxxxxx Xxxxxx, Xxxxx 00, Xxxxxxxx, Xxx Xxxx 00000 and
Environmental Commercial Technology Corp., a Delaware corporation ("ETS"),
having a principal address at 00 Xxxxxx Xxx, Xxx Xxxxx, XX 00000.
RECITALS
WHEREAS, Bioneutral Laboratories Corporation USA ("Bioneutral") holds
an exclusive license (the "License") in connection with a certain compound (the
"Compound");
WHEREAS, ETS is a party with Bioneutral to a certain Agreement to
Supply and Allow Distribution of Product (the "LDA") of even date herewith,
pursuant to which ETS has been granted certain rights to market the Compound
with respect to its usefulness in the remediation and ability to prevent the
growth of mold and fungus (the "Product"), a true and complete copy of which
LDA, conforming to the executed version, ETS previously has supplied to
SearchHelp;
WHEREAS, a description of the Product is attached to this Agreement as
Schedule A;
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WHEREAS, SearchHelp and ETS desire that ETS grant to SearchHelp a
participation interest in the "Gross Sales" of the Product equal to five percent
(5%) of the amount of such "Gross Sales" for a specified period; and
WHEREAS, the consideration payable by SearchHelp to ETS for the
acquisition of the Interest shall be certain cash, securities and certain
services.
NOW, THEREFORE, SearchHelp and ETS, in consideration of the foregoing
and the agreements contained herein, hereby agree as follows:
1. DEFINITIONS
The following terms shall have the following meanings:
"Additional Interest" has the meaning set forth in Section 2.
"Affiliate" of any person or entity means any other person or entity
that, directly or indirectly, controls, is controlled by, or is under common
control with such person or entity.
"Aggrieved Party" has the meaning set forth in Section 8.
"Agreement" has the meaning set forth in Preamble.
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"Bioneutral Letter Agreement" means the letter agreement between
Bioneutral and SearchHelp of even date herewith.
"Cash Portion" has the meaning set forth in Section 3.
"Common Stock" has the meaning set forth in Section 3.
"ETS" has the meaning set forth in Preamble.
"ETS Warrant" has the meaning set forth in Section 3.
"Gross Sales" means the total consideration attributable to all Sales
of the Product to a third party received by ETS, less returns, allowances,
taxes, shipping charges, duties, excise taxes, and expenses passed through to or
reimbursed by a purchaser or user of Product. Without limiting the foregoing,
Gross Sales shall also include all sub-licensing, sub-contracting or rental fees
received by ETS. There is no cap on the annual Gross Sales. For purposes of this
Agreement, Gross Sales shall be calculated on a cash basis if when and to the
extent such cash is actually received by ETS, except that any Sales that shall
accrue in the final quarter-year of the term of this Agreement will be included
in Gross Sales regardless of when paid. Payments to SearchHelp in respect of
Sales that occur in the final quarter-year of the term of this Agreement shall
be due as and to the extent the underlying cash revenues are actually received
by ETS, at anytime from time to time.
SearchHelp understands and acknowledges that pursuant to the LDA (i)
ETS's rights with respect to the Products is limited to the territory and to the
applications set forth in the LDA; (ii) certain Affiliates of ETS, related
parties to ETS or other third parties may acquire or have rights to the Product
outside of ETS's current territory or for applications other than the
applications currently set forth in the LDA. SearchHelp shall have no rights to
any revenues earned or received by any entity where such revenues arise from
either (i) sales or either activities outside of the territory currently
reserved to ETS in the LDA; or (ii) sales or other activities occurring anywhere
in the world relating to any application not specifically and currently reserved
to ETS in the LDA.
Gross Sales shall also include the excess of (x) any payments that ETS
receives from Bioneutral as indemnification against liability under any final
judgment in proceedings brought by a third party against ETS in which it is
determined that ETS's marketing of Licensed Products (as defined in the LDA)
infringed any third party's copyright, patents, trade marks, industrial designs
or other intellectual property rights over (y) ETS' costs of its defense in such
proceedings.
In the event ETS obtains rights with respect to the Product (where the
"stated use" (as defined in the LDA) is principally to control, remediate, xxxxx
or otherwise affect mould or fungus) outside of the current territory, ETS will
negotiate in good faith the possibility of and the terms and conditions pursuant
to which SearchHelp's Interest may be expanded to include any Gross Sales
arising as a consequence of the foregoing.
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In the event ETS exploits its current rights under the LDA through a
wholly owned subsidiary or through a partially owned subsidiary, Gross Sales
shall include ETS's allocable proportion of such entity's activities. By way of
example, if ETS were to own 75% of an entity that was deriving revenues from
activities that would be included within SearchHelp's Interest as set forth in
this Agreement, then 75% of such entity's revenues from Products would be deemed
Gross Sales that are subject to this Agreement.
It is further understood and agreed that, until the full amount of the
payment specified in Section 3.1 below is received by or has been offset by ETS,
Gross Sales shall not include any revenues attributable to or derived from the
portion of ETS' business relating to sales of the Product for use in Commercial
Properties (as such term is defined in the LDA).
"Indemnifying Party" has the meaning set forth in Section 8.
"Interest" has the meaning set forth in Section 2.1.
"License" has the meaning set forth in the Recitals.
"Participation Period" has the meaning set forth in Section 2.
"Product" has the meaning set forth in the Recitals.
"Purchase Price" has the meaning set forth in Section 3.
"Sale" means any bona fide transaction for which consideration is
received by ETS or a relevant subsidiary for the sale, use, lease, transfer or
other disposition of the Product. For purposes of this Agreement, a Sale of the
Product shall be deemed completed at the time ETS or such subsidiary receives
payment on account of such Sale.
"SearchHelp" has the meaning set forth in Preamble.
"SearchHelp Audit" has the meaning set forth in Section 2.
"Securities Act" has the meaning set forth in Section 3.
"Shares" has the meaning set forth in Section 3.
"Trigger Quarter" means the first Calendar quarter in which the
payments to SearchHelp for that quarter and for all prior quarters have
aggregated at least $ 50,000.
"Warrant Shares" has the meaning set forth in Section 3.
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2. THE INTEREST
2.1 In consideration for the Purchase Price set forth in Section 3, ETS
hereby grants and transfers to SearchHelp a participation interest (the
"Interest") in all Gross Sales during the period commencing January 1, 2004 and
ending sixty-six (66) months after the first day of the Trigger Quarter (the
"Participation Period"). The Interest shall equal five percent (5%) of Gross
Sales.
2.2 Simultaneously with any payment to Bioneutral, but no more than 45
days after the end of each calendar quarter during the Participation Period, ETS
shall pay to SearchHelp an amount in good United States funds, equal to the
Interest, payable for such quarter. For each such quarter, whether there shall
be a payment due or not, ETS shall deliver to SearchHelp a statement showing in
reasonable detail the Gross Sales for that quarter, specifying all deductions
taken in calculating such Gross Sales (the "ETS Report").
2.3 At any time, but no more than two (2) times per year, upon reasonable
notice, SearchHelp or its agents shall have the right to examine and take copies
from ETS's relevant books and records in order to verify the amount of Gross
Sales for any period ("SearchHelp Audit"). SearchHelp and its agents shall keep
confidential all information and documents made available to SearchHelp in
connection with such SearchHelp Audit, shall use such documents and information,
solely for the purpose of calculating and recovering any sums due to SearchHelp,
and shall return all documents, notes, and other records so obtained immediately
following the final resolution of the SearchHelp Audit. If after any SearchHelp
Audit, it shall be demonstrated that additional amounts are due to SearchHelp,
ETS shall promptly pay such additional amounts together with interest from the
date such amounts should have been paid equal to the prime rate as published by
Citibank N.A. on the date such amounts shall have been paid.
2.4 Notwithstanding the provisions of Section 2.3, if after a SearchHelp
Audit it is demonstrated that the amount paid to SearchHelp for any quarter was
deficient by $75,000 or more, then ETS shall pay to SearchHelp (i) all
reasonable out of pocket expenses in connection with the SearchHelp Audit, up to
a maximum of $10,000 per SearchHelp Audit, and (ii) the amounts due to
SearchHelp in accordance with the terms in Section 2.3.
2.5 Each ETS Report and the payment of any sums due to SearchHelp in
connection therewith shall be deemed final, binding and not subject to any
challenge, dispute or right to audit by SearchHelp 18 months after such ETS
Report is received by SearchHelp, unless prior thereto SearchHelp has delivered
notice to ETS that it disputes any calculation in such ETS report.
3. PURCHASE PRICE
3.1 In consideration for the transfer of the Interest to SearchHelp, at
the Closing, ETS will receive from SearchHelp the following purchase price (the
"Purchase Price"):
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(a) $600,000 in cash ("Cash Portion"). The Cash Portion shall be paid
(i) $400,000 upon the execution of this agreement; (ii) $100,000 on or before
March 15, 2004 (the "March Payment") and (iii) $100,000 on or before August 5,
2004 (the "August Payment"); provided, however, that in the event the March
Payment is not made when due, then commencing on the due date of such payment
and until the March Payment is made, SearchHelp shall not be entitled to receive
or accrue any payments otherwise due with respect to the Interest; and provided,
further, that if the August Payment is not paid in full when due, ETS may
thereafter offset any amounts owing to SearchHelp against any amounts remaining
on such obligation; and
(b) 575,000 presently unregistered shares (the "Shares") of SearchHelp
common stock, par value $.0001 ("Common Stock"); and
(c) a warrant (the "ETS Warrant"), in the form attached hereto as
Exhibit A, to purchase 575,000 presently unregistered shares (the "Warrant
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Shares") of SearchHelp Common Stock, at an exercise price of $.33 per share (or
such exercise price as may result as a consequence of any adjustment thereto as
set forth herein or in the ETS Warrant) (the "Exercise Price"). The right to
purchase the Warrant Shares pursuant to the ETS Warrant will vest immediately
and be exercisable through June 30, 2010. The ETS Warrant will not be registered
under the Securities Act of 1933, as amended (the "Securities Act").
(d) REGISTRATION. On or before June 30, 2004, SearchHelp will cause a
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registration statement (the "Registration Statement") to be filed with the
Securities and Exchange Commission (the "SEC") to permit or facilitate the sale
of:
(i) the presently unregistered Shares referred to in paragraph
3.1 (b) above; and
(ii) the 1,725,000 presently unregistered shares of Common Stock
that are being conveyed by SearchHelp to Bioneutral pursuant to the
Bioneutral Letter Agreement (such shares, the "Bioneutral Shares"); and
(iii) the presently unregistered shares of Common Stock which may
be acquired upon the exercise of the "Bioneutral Warrant" (as that term
is defined in the Bioneutral Letter Agreement); and
(iv) all of the presently unregistered Warrant Shares which may
be acquired upon the exercise of the ETS Warrant to be registered under
the Securities Act ("Registration Statement"). SearchHelp covenants that
it shall maintain the effectiveness of the foregoing Registration
Statement until (x) the closing bid price of the Common Stock, as
reported by the principal market on which such Common Stock trades, has
been equal to or exceeded $1.00 on at least ninety percent (90%) of the
trading days within any period of six consecutive months, or (y) all of
the shares registered under such Registration Statement have been sold,
whichever is earlier. In the event that the Registration Statement does
not become effective within the following time frames then the Exercise
Price shall be decreased for the unexercised portion of the shares that
may be acquired pursuant to the ETS Warrant and the Bioneutral Warrant as
follows:
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REGISTRATION STATEMENT NOT EFFECTIVE: EXERCISE PRICE
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On or before September 1, 2004 $.32
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On or before October 1, 2004 $.31
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On or before November 1, 2004 $.30
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On or before December 1, 2004 $.28
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On or before January 1, 2005 $.27
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On or before February 1, 2005 $.23
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On or before March 1, 2005 $.21
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On or before April 1, 2005 $.19
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On or before May 1, 2005 $.17
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On or before June 1, 2005 $.15
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On or before July 1, 2005 $.13
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On or before August 1, 2005 $.11
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On or before September 1, 2005 $.09
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On or before October 1, 2005 $.07
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On or before November 1, 2005 $.05
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On or before December 1, 2005 $.03
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On or before January 1, 2006 $.01
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In the event that the effectiveness of the Registration Statement is
delayed in order to respond to a comment letter from the SEC containing
substantive comments relating solely to ETS or Bioneutral, ETS and SearchHelp
shall cooperate in the preparation of the response and the lowering of the
Exercise Price as set forth above shall be delayed for the period from the
receipt of such comment letter by SearchHelp until all of such comments have
been resolved to the satisfaction of the SEC.
3.2 In addition to the lowering of the Exercise Price as set forth above,
in the event that the Registration Statement shall not have become effective on
or before January 1, 2005 and, as long as no portion of the ETS
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Warrant has been exercised, ETS may at any time thereafter terminate this
Agreement and within ten (10) days of such termination, return to SearchHelp
both (i) the Cash Portion of the Purchase Price, less any Interest paid to
SearchHelp, (ii) the ETS Warrant and (iii) 287,500 Shares or, to the extent that
287,500 Shares are not then in ETS' possession, fifteen cents ($0.15) for each
such Share that is no longer in ETS' possession.
3.3 The expiration of the ETS Warrant shall automatically be extended such
that it shall not expire until six years after the effective date of the
Registration Statement; provided that such expiration shall be further extended
for an additional number of days equal to the actual number of days, if any,
after such effective date, that ETS is not permitted to sell such registered
securities under the Registration Statement (or a subsequent Registration
Statement filed in replacement thereof) for any reason.
3.4 SearchHelp shall pay all fees and expenses incident to the performance
of or compliance with this Agreement by SearchHelp, including without limitation
all registration and filing fees and expenses, including without limitation
those related to filings with the SEC, Nasdaq (or other exchange or market) and
in connection with applicable state securities or "Blue Sky" laws.
3.5 In addition to the payment of the Purchase Price, SearchHelp will
provide consulting services to ETS in connection with the marketing and sales of
the Product as part of SearchHelp's larger presence in the indoor air quality
arena.
4. ETS PURCHASE RIGHT
ETS shall have the option (but not the obligation) to purchase or
terminate the Interest at any time after two (2) years from the date of this
Agreement for a purchase price of $25,000,000 to be payable to SearchHelp over
eight (8) years at the rate of $3,125,000 per year, payable quarterly on the
last day of each quarter at a rate of $781,250 per quarter, and evidenced by a
promissory note, which promissory note shall be "full recourse" to ETS and shall
be on such other terms and conditions as are reasonably agreed to by ETS and
SearchHelp.. ETS shall provide SearchHelp with written notice of its exercising
of this option. If ETS shall not make any such payment within 15 days after its
due date which shall mutually be determined at the time of exercise of this
option, all remaining payments shall automatically and without further action
become immediately due and payable and shall bear interest, from and after such
failure to pay, at the rate of 10% per annum.
5. CONFIDENTIALITY
Each party will keep confidential the content of this Agreement and all
information concerning the within transaction, including, but not limited to
financial information, customer lists and business plans, and neither party
shall make any disclosure of its content in any manner without the prior written
consent of the other party, except to such party's advisors as necessary in
connection with the transaction.
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6. REPRESENTATIONS AND WARRANTIES OF ETS
As an inducement to SearchHelp to enter into this Agreement and to
consummate the transactions contemplated hereby, ETS represents and warrants to
SearchHelp that each of the following statements is true on the date of this
Agreement:
6.1 ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.
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(a) ETS is a corporation duly organized and validly existing and in
good standing under the laws of its jurisdiction of organization and has all
requisite power and authority (corporate and otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted.
(b) ETS is duly qualified and in good standing to transact business as
a foreign person wherever the conduct of its business requires.
6.2 AUTHORIZATION, EXECUTION AND ENFORCEABILITY. ETS has all requisite
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power and authority to execute, deliver and perform its obligations under this
Agreement and all other agreements, documents and instruments related to any of
the transactions contemplated by this Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by ETS
of this Agreement and all such documents to which it is or will be a party, and
the performance by ETS of its respective obligations hereunder and thereunder
have been duly and validly authorized by all requisite action on the part of
ETS, and this Agreement and each other document to which ETS is or will be a
party has been, or upon the execution thereof will be, duly and validly executed
and delivered by ETS, and constitutes, or upon its execution and delivery will
constitute, a valid and binding obligation of ETS, enforceable against ETS in
accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforceability of
creditors' rights generally and to general equity principles.
6.3 CONSENTS. All consents and approvals required to be obtained or
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provided by ETS in connection with the execution, delivery and performance by
ETS of this Agreement have been obtained and delivered to SearchHelp.
6.4 TITLE TO PRODUCT AND LDA. ETS has good title to the rights to the
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Product and the LDA free and clear of all encumbrances, of any kind or character
except as set forth in the LDA. ETS makes no representations as to the terms of
the LDA or the effectiveness of the Product.
6.5 THE LDA. The LDA is in full force and effect and is valid and
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enforceable by ETS in accordance with its terms. Neither ETS nor any subsidiary
nor any other party is in default in the observance or the performance of any
term or obligation to be performed by it under the LDA. The LDA has not been
modified or amended.
6.6 THE PRODUCT. ETS has made no representation, promises, guarantees
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or statements to SearchHelp as to the sales levels of the Products that ETS may
be able to attain, the revenues that SearchHelp may derive pursuant to this
Agreement, the effectiveness of the Product or the status of any entity's
intellectual property, patent, or other rights to the Product. SearchHelp
acknowledges that (i) no sales of Product or any other revenues arising from the
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Product have been effected by ETS; (ii) the ability to generate sales of the
Product may be subject to patents, obtaining governmental, regulatory approvals,
or insurance coverage, which patents, approvals or insurance coverage may be
difficult or impossible to obtain or which might result in significant delays;
Without limitation to the foregoing, SearchHelp acknowledges that ETS has
not made, and SearchHelp has not relied upon, any promises, representations,
statements, or projections except those that are expressly set forth in this
Agreement.
SearchHelp has selected and engaged such expert(s) as it sees fit to
evaluate the Product and has made its own, independent decision to enter into
this Agreement.
6.7 NO UNTRUE STATEMENTS. No statement by ETS contained in this Agreement
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contains any untrue statement of a material fact, or omits or will omit to state
a material fact necessary in order to make the statements therein contained not
misleading.
6.8 SECURITIES MATTERS.
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(a) ETS understands that the Shares, the ETS Warrant and the Warrant
Shares have not been registered under the Securities Act, or under the
securities laws of any U.S. state jurisdiction or other jurisdiction, by reason
of a specified exception from the registration provisions thereunder.
(b) ETS acknowledges that the Shares, the ETS Warrant and the Warrant
Shares must be held indefinitely unless and until they are subsequently
registered under the Securities Act and under applicable state securities laws
or an exemption from such registration is available.
(c) ETS understands that all certificates for the Shares and the
Warrant Shares issued to them shall bear a legend in the substantially the
following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MUST BE
HELD INDEFINITELY UNLESS THEY ARE SUBSEQUENTLY
REGISTERED UNDER SAID ACT OR, IN THE OPINION OF
COUNSEL TO THE COMPANY, AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT IS AVAILABLE. ANY ROUTINE
SALES OF THE SECURITIES WHICH MAY BE MADE IN RELIANCE
UPON RULE 144 UNDER SAID ACT, IF AVAILABLE, CAN BE
MADE ONLY IN ACCORDANCE WITH ALL OF THE TERMS AND
CONDITIONS OF THAT RULE. THE COMPANY MAKES NO
REPRESENTATION THAT IT WILL MEET THE REPORTING
REQUIREMENTS OR ANY OTHER REQUIREMENTS OF RULE 144."
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6A. ADDITIONAL PROVISION CONCERNING THE LICENSE AND THE LDA
ETS covenants and agrees that it shall not consent to any amendments to
or modifications of the LDA until the date that is six months following the date
hereof. ETS further covenants and agrees that it shall notify SearchHelp of any
amendments or modifications to (i) the LDA made after such date and (ii) the
License if such amendment or modification affects the LDA, whenever made. In the
event that SearchHelp reasonably determines that any such change is material and
adverse to SearchHelp, ETS shall first have the option to continue to perform
its agreements with SearchHelp as if such amendment or modification had not been
made to the LDA or the License; provided, however, that if ETS does not continue
to so perform, SearchHelp shall have the right to terminate this Agreement and,
in such case, ETS shall promptly return to SearchHelp the Cash Portion of the
Purchase Price, any shares of the Common Stock received by ETS pursuant to
Section 3.1(b) above that remain in ETS' possession and shall pay to SearchHelp
fifteen cents ($0.15) for each such share that is no longer in ETS' possession.
In the event that this Agreement is terminated pursuant to this Section 6A, the
registration rights provisions set forth in Section 3.1(d) above shall be of no
further force and effect; provided that the Exercise Price for the shares that
may be acquired pursuant to the ETS Warrant and the Bioneutral Warrant shall
remain fixed at the price in effect at the time of such termination, as
determined by the schedule set forth in such section. Notwithstanding the
foregoing, this Section 6A shall not apply to a termination of the LDA for any
reason during the term hereof if Bioneutral grants SearchHelp a participation
interest (on terms substantially identical to the terms hereof) in accordance
with Section 4 of the Bioneutral Letter Agreement.
7. REPRESENTATIONS AND WARRANTIES BY SEARCHHELP
As an inducement to ETS to enter into this Agreement and to consummate
the transactions contemplated hereby, SearchHelp represents and warrants to ETS
that each of the following statements is true on the date of this Agreement and
at the Closing.
7.1 ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.
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(a) SearchHelp is a corporation duly organized and validly
existing and in good standing under the laws of its jurisdiction of
organization and has all requisite power and authority (corporate and
otherwise) to own, lease and operate its assets and properties and to
carry on its business as presently conducted.
(b) SearchHelp is duly qualified and in good standing to
transact business as a foreign person wherever the conduct of its
business requires.
7.2 AUTHORIZATION, EXECUTION AND ENFORCEABILITY. SearchHelp has all
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requisite power and authority to execute, deliver and perform its obligations
under this Agreement and all other agreements, documents and instruments related
to any of the transactions contemplated by this Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
SearchHelp of this Agreement and all such documents to which it is or will be a
party, and the performance by SearchHelp of its respective obligations hereunder
and thereunder have been duly and validly authorized by all requisite action on
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the part of SearchHelp, and this Agreement and each other document to which
SearchHelp is or will be a party has been, or upon the execution thereof will
be, duly and validly executed and delivered by SearchHelp, and constitutes, or
upon its execution and delivery will constitute, a valid and binding obligation
of SearchHelp, enforceable against SearchHelp in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforceability of creditors' rights generally and to
general equity principles.
7.3 ISSUANCE. The issuance of the Shares has been duly and validly
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authorized by all necessary corporate and shareholder action and, when issued
and paid for pursuant to this Agreement, will be validly issued, fully paid and
non-assessable shares of Common Stock of SearchHelp. The issuance of the Warrant
Shares has been duly and validly authorized by all necessary corporate and
shareholder action and, when issued and paid for pursuant to the terms of the
ETS Warrants, will be validly issued, fully paid and non-assessable shares of
Common Stock of SearchHelp.
7.3 CONSENTS. All consents and approvals required to be obtained or
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provided by SearchHelp in connection with the execution, delivery and
performance by SearchHelp of this Agreement have been obtained and delivered to
ETS.
7.4 NO UNTRUE STATEMENTS. No statement by SearchHelp contained in this
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Agreement or in SearchHelp's periodic reports filed with the SEC contains any
untrue statement of a material fact, or omits or will omit to state a material
fact necessary in order to make the statements therein contained not misleading.
7.5 NO OTHER REPRESENTATIONS. SearchHelp makes no representation about
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its company, business or stock price, except for statements contained in its
filings with the SEC.
7.6 SECURITIES ACT REPRESENTATIONS. SearchHelp has not offered or sold
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and will not offer or sell any other securities in connection with this
transaction other than the Shares, the Warrant Shares, the Bioneutral Shares and
the shares of Common Stock to be issued pursuant to the exercise of the
Bioneutral Warrant (the "Bioneutral Warrant Shares"). The sale of the Shares
hereunder is, and the issuance of the Warrant Shares upon exercise of the ETS
Warrants will be, exempt from the registration requirements of the Securities
Act. Neither SearchHelp, nor any of its Affiliates, or, to its knowledge, any
person or entity acting on its or their behalf has engaged in any form of
general solicitation or general advertising (within the meaning of Regulation D
under the Securities Act) in connection with the offer or sale of the Shares,
Bioneutral Shares, the Warrant Shares or the Bioneutral Warrant Shares. Neither
SearchHelp, nor any of its Affiliates, nor to its knowledge, any person or
entity acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security
other than pursuant to this Agreement and the Bioneutral Letter Agreement, under
circumstances that would require registration under the Securities Act of the
Shares, Bioneutral Shares, the Warrant Shares or the Bioneutral Warrant Shares..
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8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
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and warranties contained in this Agreement shall survive until two years after
the end of the Participation Period.
8.2 ETS'S INDEMNIFICATION OBLIGATIONS. Subject to the terms and conditions
-----------------------------------
of this Section 8, ETS agrees to indemnify and hold SearchHelp harmless against
any and all losses, costs and expenses (including, without limitation, legal and
other expenses), resulting from or relating to:
(a) any misrepresentation or breach of any warranty of ETS contained
in this Agreement;
(b) any breach of any covenant of ETS contained in this Agreement; and
(c) any and all actions, suits, demands, assessments or judgments with
respect to any claim arising out of or relating to the subject matter of the
indemnification.
8.3 SEARCHHELP'S INDEMNIFICATION OBLIGATIONS. Subject to the terms and
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conditions of this Section 8, SearchHelp agrees to indemnify and hold ETS
harmless against any and all losses, costs and expenses (including, without
limitation, legal and other expenses), resulting from or relating to:
(a) any misrepresentation or breach of warranty of SearchHelp
contained in this Agreement;
(b) any breach of any covenant of SearchHelp contained in this
Agreement; and
(c) any and all actions, suits, demands, assessments or judgments with
respect to any claim arising out of or relating to the subject
matter of the indemnification.
8.4 PROCEDURE FOR INDEMNIFICATION CLAIMS. The respective indemnification
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obligations of ETS and SearchHelp pursuant to Sections 8.2 and 8.3 shall be
conditioned upon compliance by ETS and SearchHelp with the following procedures
for indemnification claims based upon or arising out of any claim, action or
proceeding by any person not a party to this Agreement:
(a) If at any time a claim shall be made or threatened, or an action
or proceeding shall be commenced or threatened, against a party hereto (the
"Aggrieved Party") which could result in liability of the other party (the
"Indemnifying Party") under its indemnification obligations hereunder, the
Aggrieved Party shall give to the Indemnifying Party prompt notice of such
claim, action or proceeding. Such notice shall state the basis for the claim,
action or proceeding and the amount thereof (to the extent such amount is
determinable at the time when such notice is given) and shall permit the
Indemnifying Party to assume the defense of any such claim, action or proceeding
(including any action or proceeding resulting from any such claim). Failure by
the Indemnifying Party to notify the Aggrieved Party of its election to defend
any such claim, action or proceeding within a reasonable time, but in no event
more than fifteen days after notice thereof shall have been given to the
Indemnifying Party, shall be deemed a waiver by the Indemnifying Party of its
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right to defend such claim, action or proceeding; provided, however, that the
Indemnifying Party shall not be deemed to have waived its right to contest and
defend against any claim of the Aggrieved Party for indemnification hereunder
based upon or arising out of such claim, action or proceeding.
(b) If the Indemnifying Party assumes the defense of any such claim,
action or proceeding, the obligation of the Indemnifying Party as to such claim,
action or proceeding shall be limited to taking all steps necessary in the
defense or settlement thereof and, provided the Indemnifying Party is held to be
liable for indemnification hereunder, to holding the Aggrieved Party harmless
from and against any and all losses, damages and liabilities caused by or
arising out of any settlement approved by the Indemnifying Party or any judgment
or award rendered in connection with such claim, action or proceeding. The
Aggrieved Party may participate, at its expense, in the defense of such claim,
action or proceeding provided that the Indemnifying Party shall direct and
control the defense of such claim, action or proceeding. The Aggrieved Party
agrees to cooperate and make available to the Indemnified Party all books and
records and such officers, employees and agents as are reasonably necessary and
useful in connection with the defense. The Indemnifying Party shall not, in the
defense of such claim, action or proceeding, consent to the entry of any
judgment or award, or enter into any settlement, except in either event with the
prior consent of the Aggrieved Party, which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the Aggrieved Party
of a release from all liability in respect of such claim, action or proceeding.
(c) If the Indemnifying Party does not assume the defense of any such
claim, action or proceeding, the Aggrieved Party may defend against such claim,
action or proceeding in such manner as it may deem appropriate. The Indemnifying
Party agrees to cooperate and make available to the Aggrieved Party all books
and records and such officers, employees and agents as are reasonably necessary
and useful in connection with the defense. If the Indemnifying Party, within ten
days after notice shall have been given to it by the Aggrieved Party of the
latter's intention to effect a settlement of any such claim, action or
proceeding, which notice shall describe with particularity the terms of any such
proposed settlement, shall not deposit with an escrowee mutually satisfactory to
the Aggrieved Party and the Indemnifying Party a sum equivalent to the total
amount demanded in such claim, action or proceeding or deliver to the Aggrieved
Party a surety bond or an irrevocable letter of credit for such sum in form and
substance reasonably satisfactory to the Aggrieved Party, then the Aggrieved
Party may settle such claim, action or proceeding on the terms detailed in its
notice to the Indemnifying Party, and the Indemnifying Party shall be deemed to
have agreed to the terms of such settlement and shall not thereafter in any
proceeding by the Aggrieved Party for indemnification question the propriety of
such settlement. If the Indemnifying Party makes an escrow deposit or delivers a
surety bond or letter of credit as aforesaid and thereafter the Aggrieved Party
settles such claim, action or proceeding, then in any proceeding by the
Aggrieved Party for indemnification in the event the Indemnifying Party is held
liable for indemnification hereunder, the Aggrieved Party shall have the burden
of proving the amount of such liability of the Indemnifying Party, and the
amount of the payments made in settlement of any claim, action or proceeding
shall not be determinative as between the Aggrieved Party and the Indemnifying
Party of the amount of such indemnification liability, except that the amount of
the settlement payments shall constitute the maximum amount of the
indemnification liability of the Indemnifying Party. Such escrow deposit, surety
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bond or letter of credit shall by their respective terms be payable to the
Aggrieved Party in an amount determined in accordance with the last sentence of
this paragraph (C) and in the event the Indemnifying Party is held liable for
indemnification hereunder. If the Indemnifying Party neither makes an escrow
deposit nor delivers a surety bond or letter of credit as aforesaid, so that no
settlement of such claim, action or proceeding is effected, in any proceeding by
the Aggrieved Party for indemnification in the event the Indemnifying Party is
held liable for indemnification hereunder, such liability shall be for the
amount of any judgment or award rendered with respect to such claim or in such
action or proceeding and of all expenses, legal and otherwise, incurred by the
Aggrieved Party in the defense against such claim, action or proceeding.
(d) In the event an Aggrieved Party or Indemnifying Party shall
cooperate in the defense or make available books, records, officers, employees
or agents, as required by the terms of paragraphs (B) and (C), respectively, of
this Section 8.4 the party to which such cooperation is provided shall pay the
out-of-pocket costs and expenses (including legal fees and disbursements) of the
party providing such cooperation and of its officers, employees and agents
reasonably incurred in connection with providing such cooperation, but shall not
be responsible to reimburse the party providing such cooperation for such
party's time or the salaries or costs of fringe benefits or other similar
expenses paid by the party providing such cooperation to its officers and
employees in connection therewith.
9. MISCELLANEOUS
9.1 NOTICES. All notices, requests or other communications hereunder shall
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be in writing and shall be deemed to have been duly given if delivered or mailed
first class certified mail postage prepaid or sent by recognized overnight
courier addressed as follows: if to SearchHelp, at 0000 Xxxxxxx Xxxxxx, Xxxxx
00, Xxxxxxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx. CEO (with a copy
to Xxxxxxxxxx Xxxxxxx Syracuse & Hirschtritt LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxxxx, Esq.); if to ETS, to 00 Xxxxxx
Xxx, Xxx Xxxxx, XX 00000, Attention: Xxxxx Xxxxxxxxxxx (with a copy to Xxxx
Xxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx X.
Xxxxxx, Esq.); or to such other address as may have been furnished in writing to
the party giving the notice by the party to whom notice is to be given. Any such
notice which is sent by certified mail shall be deemed given three (3) days
after mailing and any such notice sent by overnight courier shall be deemed
given one (1) day after delivery to such courier.
9.2 ENTIRE AGREEMENT. This Agreement embody the entire agreements among
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the parties and there have been and are no agreements, representations or
warranties, oral or written among the parties other than those set forth or
provided for in this Agreement. This Agreement may not be modified or changed,
in whole or in part, except by a supplemental agreement signed by each of the
parties.
9.3 RIGHTS UNDER THIS AGREEMENT; ASSIGNABILITY. This Agreement shall bind
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and inure to the benefit of the parties hereto and their respective successors
and assigns.
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Either party shall have the right to assign this Agreement, with the
prior written consent of the other party, which consent shall not be
unreasonably withheld, conditioned or delayed, but each party shall remain
liable under this Agreement notwithstanding any such assignment.
Nothing contained in this Agreement is intended to confer upon any
person, other than the parties to this Agreement and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9.4 GOVERNING LAW. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of New York.
9.5 HEADINGS; REFERENCES TO SECTIONS, EXHIBITS AND SCHEDULES. The headings
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of the Sections, paragraphs and subparagraphs of this Agreement are solely for
convenience and reference and shall not limit or otherwise affect the meaning of
any of the terms or provisions of this Agreement. The references herein to
Sections, Exhibits and Schedules, unless otherwise indicated, are references to
sections of and exhibits and schedules to this Agreement.
9.6 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but which together constitute
one and the same instrument.
9.7 LEGAL FEES. In the event either party brings a lawsuit against the
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other party in connection with this Agreement, the prevailing party in the
lawsuit shall be entitled to recover legal fees and costs from the other party.
9.8 ASSURANCE OF FURTHER ACTION. From time to time after the Closing an
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without further consideration from SearchHelp, but at SearchHelp's expense, ETS
shall execute and deliver, or cause to be executed and delivered, to SearchHelp
such further instruments of sale, conveyance, assignment, transfer and delivery
and take such other action as SearchHelp may reasonably request in order to more
effectively sell, convey, assign, transfer and deliver and reduce to the
possession of SearchHelp any and all of the Interest.
[SIGNATURE PAGE ATTACHED HERETO]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
SearchHelp, Inc.
By:
-------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer,
Chief Financial Officer, Vice President
and Treasurer
Environmental Commercial
Technology Corp.
By:
-------------------------
Name: Xxxxx Xxxxxxxxxxx
Title:
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SCHEDULE A
HTPA is a proprietary chemical formulation produced by Bioneutral Laboratories
Corporation Worldwide (NZ) and sold to Bioneutral Laboratories Corporation USA
under exclusive license. The formulation is known by the acronym HTPA and has
been shown to be effective in killing and preventing the growth of mold.
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EXHIBIT A
Sentry At Home (Formerly Spike) Product Description
The Sentry browser and custom desktop features allow even the youngest children
to access the Internet in a safe and secure environment protected by advanced
safety controls that simultaneously protect your computer from your children
unintentionally damaging the computer.
Sentry At Home's child-friendly desktop replaces the Windows User Interface with
a single simple panel designed especially for young children (5-8 years old).
From this panel the child can access the Internet while enabling parents to
fully monitor pre-approved applications. An animated on-screen buddy (dog)
alerts the child when they have entered questionable areas. The child-friendly
browser makes it easier for young children to browse the Internet with simple
navigation, predefined list of sites and child-friendly ICONS.
Sentry At Home will do the following while monitoring and or blocking the user:
* Screen all sites and records.
* Alert the user when there is inappropriate content and close when a visited
site contains inappropriate content
* Screen Internet Messenger chat programs and stops the chat session when
inappropriate words, questionable phrases or slang has been utilized.
* Notify the parent via email or cell phone when their child has or has
attempted to view inappropriate content or had a questionable chat session.
* Allow the parent to control the amount of time their child spends online.
* Allow the parent to choose which programs their child is allowed to use.
* Protect the child from illegally downloading music with our unique Music
Download Blocker.
* Provide the parent with the added security of protecting their confidential
files by use of encryption technology.
SENTRY SHIELD constantly monitors Instant Messaging and chat rooms and
automatically alerts the parent when inappropriate content has been viewed, when
offensive or threatening language has been used and when the child has been
asked questions that could pose a danger.
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