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EXHIBIT 99.2
AMENDED AND RESTATED INTELLECTUAL PROPERTY TRANSFER AGREEMENT
This AMENDED AND RESTATED INTELLECTUAL PROPERTY TRANSFER AGREEMENT (the
"Agreement") is made as of the ____th day of September, 1998 (the "Execution
Date") by and between AXCESS INC. f/k/a Lasertechnics, Inc., a Delaware
corporation having its principal place of business at 0000 Xxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxx 00000 ("AXSI"), and XL Vision, Inc., a Delaware corporation,
having its principal place of business at 00000 000xx Xxxxxxx, Xxxxxxxxx,
Xxxxxxx 00000 ("XLV").
The following recitals are true and constitute the basis for this Agreement:
A. AXSI and XLV entered into that certain Intellectual Property Transfer
Agreement dated as of January 7, 1998 (the Intellectual Property Transfer
Agreement, as amended, supplemented, modified or restated being hereinafter
referred to as the "Transfer Agreement"); and
B. AXSI and XLV desire to amend and restate certain terms and conditions
of the Transfer Agreement and to reduce such changes to writing.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
SECTION I. GENERAL DEFINITIONS.
Terms in this Agreement (other than the headings) that are capitalized have the
meanings established for such terms in the succeeding Paragraphs of this
Section I.
A. "Execution Date" shall have the meaning set forth above.
B. "Intellectual Property" shall mean and include the following
interests and rights: (a) all patents and patent rights including, without
limitation, all utility models, applications, continuations, divisions,
provisionals, continuations-in-part, reissues, and any reexamined patents; (b)
all patentable subject matter including, without limitation, any and all
inventions, information, proprietary processes and formulae, designs,
schematics, parts list, manufacturing diagrams, devices, source code, object
code, algorithms, architecture, structure, display screens, layouts, processes,
development tools, and the like that may contain subject matter that is
eligible to be protected through patent protection, whether or not fixed in a
tangible medium and whether or not reduced to practice; (c) all Trademarks; (d)
all copyrights and copyright applications including, without limitation, all
original works of authorship fixed in a tangible medium, whether registered or
unregistered; (e) all trade secrets; (f) all know-how; (g) all confidential
information including, without limitation, all data, information, compilations,
disclosures, documentation, source code commentary and media constituting,
describing or relating to the above, and the like; and (h) all other world-wide
intellectual property rights, whether currently vested, perfected, registered,
or available only through the common law.
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C. "Trademarks" shall mean all rights in registered, unregistered,
intent-to-use, and/or common law trademarks, service marks, trade names, icons,
logos, slogans, trade dress, and any other indicia of source or sponsorship of
goods and services, including all associated and appurtenant goodwill
throughout the world.
D. "Products" shall mean and include the systems specified in Exhibit C
developed and commercialized based on the XLV Technology as defined herein.
E. "Shares" shall mean unregistered shares of the Common Stock, $.01 par
value per share, of AXSI, the certificates for which shall bear the following
restrictive legend:
These securities have not been registered under the Securities Act of 1933 or
any state securities law. They may not be sold or offered for sale or pledged
or otherwise transferred, in the absence of an effective registration statement
as to the securities under that state and any applicable state law, or an
opinion of counsel satisfactory to the company that such registration is not
required.
SECTION II. EXCLUSIVE OPTION.
A. If AXSI either (i) fills an order for a commercial sale of Product(s)
by delivering such Product(s) (not a demonstration unit) to an AXSI customer or
(ii) determines in its sole discretion that there is sufficient market demand
for the Product(s), then AXSI shall have the right to receive, at AXSI's
option, and XLV shall grant to AXSI upon AXSI exercising such option, an
exclusive, fully transferable, worldwide, irrevocable, royalty-free, perpetual
license to make, have made, use, import, sell, and offer to sell, in all fields
of use except the field of use specified in Exhibit D, the Intellectual
Property rights to the XLV Technology (the "Exclusive License Option").
B. AXSI may exercise the Exclusive License Option by notifying XLV in
writing of its desire to obtain the above exclusive license within the time
frame specified in Section II.A above.
C. Upon the exercising of the Exclusive License Option by AXSI, and in
consideration of the above exclusive license, AXSI shall cause to be issued to
XLV Three Hundred Thousand (300,000) Shares.
D. Any Shares issued to XLV under this Section II shall be delivered to
XLV within forty-five (45) days the exercise of the Exclusive License Option by
AXSI.
SECTION III. ASSIGNMENT OF XLV TECHNOLOGY AND XLV LICENSE OPTION.
A. Assignment Option.
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1. On May 15, 1999, or upon such date as: (i) AXSI accelerates technology
enhancement funding in accordance with Section V.B.3 of this Agreement and AXSI
pays to XLV all sums required under Section V of this Agreement; and (ii) XLV
delivers all components of the XLV Technology necessary for AXSI to produce
Products on a commercialized basis, whichever date occurs first, and extending
for a period of ninety (90) days thereafter, provided AXSI has exercised the
Exclusive License Option, AXSI shall have the right to receive an assignment of
the XLV Technology (as hereinafter defined) from XLV, such right to be
exercised at AXSI's option (the "Assignment Option"). AXSI may exercise the
Assignment Option by providing XLV with written notice of AXSI's desire to
exercise the Assignment Option within the time frame specified above.
B. Exercise of Assignment Option
Upon AXSI exercising AXSI's Assignment Option in accordance with Section II.A.1
of this Agreement, XLV agrees to the following:
1. XLV hereby agrees to assign, grant, convey, and transfer all
world-wide rights, title, and interest in all of its Intellectual Property
relating or associated in any way to the digital card imager specified in
Exhibit A and the dithering technology described in Exhibit B (collectively,
the "XLV Technology"), including all associated goodwill and world-wide rights
to xxx, recover damages, and seek injunctive relief for past infringement or
misappropriation, to AXSI, its successors, assigns and legal representatives.
2. XLV hereby agrees to execute all documents necessary to perfect and
record AXSI's interest in the XLV Technology.
3. XLV hereby agrees to cooperate fully with AXSI in the acquisition,
prosecution and enforcement of all Intellectual Property rights in the XLV
Technology and all improvements to the XLV Technology. Specifically, by way of
example and not limitation, XLV agrees to fully review and execute
declarations, oaths or any patent applications associated with the XLV
Technology, to execute any assignment documents to be recorded in the patent
office of the United States or other countries, to aid in the arguments during
examination and prosecution of any patent applications covering the XLV
Technology, and to cooperate as a consultant and/or witness in any proceedings
to enforce patent or other Intellectual Property rights associated with the XLV
Technology.
4. XLV hereby agrees to assign to AXSI all improvements to the XLV
Technology developed in whole or in part by XLV within ninety (90) days of the
assignment of the XLV Technology. XLV agrees not to disclose or market any
such improvements to any party other than AXSI for ninety (90) days following
the assignment of the XLV Technology.
5. XLV hereby agrees that it shall receive no further compensation beyond
what is specified in this Agreement for the obligations to cooperate and to
assign further rights detailed in this Section.
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C. Warranties, Representations, and Covenants of XLV Regarding the
Assignment of XLV Technology. Upon AXSI exercising AXSI's Assignment Option in
accordance with Section II.A.1 of this Agreement, XLV makes the following
ongoing warranties, representations, and covenants to AXSI regarding the
assignment of the XLV Technology:
1. XLV represents, warrants and agrees that: (a) it has all requisite
legal power and authority to execute and deliver the assignments and to perform
its obligations detailed herein; (b) the assignments specified in this Section
II shall be duly executed and delivered by a duly authorized officer of XLV;
(c) the execution and delivery of the assignments specified in this Section II
and the performance of its obligations hereunder shall be duly authorized by
all necessary corporate action of XLV; and (d) that there shall be no
outstanding agreements, assignments, or encumbrances inconsistent with any
provisions of the assignments specified in this Section II.
2. XLV agrees that the assignments, obligations and other terms specified
in this Section II shall constitute legal, valid and binding obligations and
shall be enforceable against XLV in accordance with their terms.
3. XLV represents and warrants that it owns full right, title, and
interest in and to the XLV Technology to be transferred herein, free and clear
of all liens, claims, charges, or encumbrances, and no person or entity other
than XLV has any interest in the XLV Technology, including, without limitation,
any license, security interest, royalty interest, contingent interest or
otherwise. XLV further represents and warrants to AXSI that it has full power
to convey all rights in the XLV Technology.
4. XLV represents that the XLV Technology represents and includes
valuable trade secrets owned by XLV and XLV knows of no instance of disclosure
or other circumstance that would prevent AXSI from asserting and enforcing the
ownership rights in the XLV Technology transferred under this Section II.
5. XLV represents that it knows of no reason why the XLV Technology may
not be patented in the United States or other countries.
6. XLV represents and warrants that neither XLV's present and former
employees and consultants, nor any other present or former employer or
contractor of any kind of XLV's present and former employees and consultants,
has any rights in or claim to any portion of the XLV Technology.
7. XLV represents that no other party has any rights in or claims to any
portion of the XLV Technology.
8. XLV represents that it knows of no United States or foreign
Intellectual Property rights which would be infringed by the use of the XLV
Technology by AXSI in the United States or elsewhere.
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9. XLV represents and warrants that it has no obligation to compensate
any person or entity for the development, use, sale, or exploitation of the XLV
Technology to be transferred herein, and XLV has not granted to any other
person or entity any license, option or other rights to develop, use, sell, or
exploit in any manner the XLV Technology transferred herein, whether or not
requiring the payment of royalties or other consideration.
10. XLV agrees that AXSI shall have the sole discretion and right in
determining whether to institute, maintain, or settle any suit for
infringement(s) or misappropriation of any of the Intellectual Property rights
associated with the XLV Technology to be transferred herein with all costs,
attorneys fees, and expenses to be paid by AXSI. AXSI further shall have the
sole right to collect and keep any and all damages recovered from such
infringement or misappropriation, whether past, present, or future.
11. XLV agrees to notify AXSI in writing of any claims, assertions,
allegations, suggestions, and the like that XLV or AXSI infringes any right of
a third party through the use of the XLV Technology to be transferred to AXSI
under this Section II.
D. Warranties, Representations and Covenants of AXSI Regarding the
Assignment of XLV Technology. Upon AXSI exercising AXSI's Assignment Option in
accordance with Section II.A.1 of this Agreement, AXSI makes the following
ongoing warranties, representations, and covenants to XLV regarding the
assignment of the XLV Technology:
1. AXSI warrants and represents that AXSI shall have all requisite legal
power and authority to execute and receive the assignments specified in this
Section II and to perform its obligations hereunder.
2. AXSI agrees that AXSI will present to XLV information related to
dithered 2D imaging product offerings to other parties acquiring the same
dithered 2D imaging products from AXSI that XLV has purchased. AXSI agrees to
provide sufficient information to allow XLV to evaluate the terms and
conditions of such later offerings. XLV shall have the option to acquire
dithered 2D imaging products under such later terms and conditions if XLV
determines that such later terms and conditions are more advantageous than the
terms and conditions offered directly to XLV by AXSI. AXSI is not obligated to
provide the identity of the other parties or any details of the relationship
with such parties not relevant to the offerings to XLV. XLV's option shall be
limited to the acceptance or rejection of all terms and conditions associated
with another party and XLV shall not have the option to accept only some of the
terms and conditions and not others.
E. Assignment Fee
1. Upon AXSI exercising AXSI's Assignment Option, and in consideration of
the above assignment, AXSI agrees to pay XLV a technology assignment fee
payable in full by delivery of Three Hundred Thousand (300,000) Shares. The
Shares paid to XLV under this Section II.D.1., shall be delivered to XLV upon
the completion of the assignment of the XLV Technology.
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SECTION IV. LICENSE OF INTELLECTUAL PROPERTY RIGHTS.
A. License Grant. Upon AXSI exercising AXSI's Assignment Option in
accordance with Section II, AXSI agrees to the following:
1. AXSI hereby agrees to grant to XLV, and XLV agrees to accept from AXSI
an exclusive, fully transferable, worldwide, irrevocable, royalty-free, fully
paid-up and perpetual license to make, have made, use, import, sell, and offer
to sell, the Intellectual Property rights to the XLV Technology within the
field of use specified in Exhibit D attached hereto. XLV shall have and
maintain the right to modify and make derivative works of the XLV Technology
for improvements solely applicable within the field of use specified in Exhibit
D and the right to grant sublicenses to its rights limited to within such field
of use. Subject to Section II.B.4, the derivative works of XLV for such
improvements shall be the sole and exclusive property of XLV.
2. For all improvements to the XLV Technology applicable in any manner
outside the field of use specified in Exhibit D, XLV agrees to assign to AXSI
all improvements to the XLV Technology in accordance with Section II.B.1 of
this Agreement.
SECTION V. OPTION PURCHASE AND TECHNOLOGY ENHANCEMENT.
A. Technology Enhancement Services.
1. XLV agrees to continue to provide personnel services and project
management for the enhancement and commercialization of the Products specified
in Exhibit C in accordance with the product development schedule as detailed
below and shown in Exhibit C attached hereto. Any personnel supplied by XLV
shall be deemed to be independent contractors and shall not be deemed to be
employees of AXSI for any purpose.
2. XLV and AXSI acknowledge and agree that staffing for the enhancement
of the Products of employees and/or independent contractors has been completed
(the "Staffing Date").
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3. XLV and AXSI agree that upon the first (1st) day of each calendar
month after the Execution Date, AXSI management and XLV project management
personnel shall meet to discuss the development of the Products. XLV shall
supply to AXSI at such meetings the latest Expense Report and any and all
relevant information relating to the enhancement of the Products, including,
but not limited to, all current Product specifications and documentation,
Product development schedules and marketing studies. Any modifications
requested by AXSI to the Product development schedule or Product specifications
described above must be approved in writing by XLV so as not to materially
alter the terms of this Agreement. Such approval shall not be unreasonably
withheld.
4. XLV and AXSI agree that AXSI shall have the right to cease payments
under Section V.B any time after the Staffing Date, without further liability,
in accordance with reasonable business judgment decisions or for failure of the
development to meet critical milestone dates as detailed in Exhibit C. Upon
the cessation of payments under this Section V.A.5 or failure of AXSI to make
payments under Section V.B when due, any Exclusive License Option or Assignment
Option right not previously exercised by AXSI as of the date of payment
cessation shall be terminated, and each of AXSI's and XLV's obligations and
rights under this Agreement, except for liability for pre-termination breaches
of this Agreement, shall be terminated following the notice and cure time
periods provided for under Section IX.R of this Agreement including, but not
limited to, the obligation of XLV to provide personnel services and project
management for the enhancement and commercialization of the Products pursuant
to this Section.
5. AXSI shall notify XLV in writing of its decision to cease payments
pursuant to Section V.A.5 of this Agreement.
B. Option Purchase Rights and Technology Enhancement Funding. In
consideration for the option rights to purchase technology and the technology
enhancements set forth in this Agreement, and provided that AXSI has not
terminated this Agreement for any reason prior to the due date of any
particular payment pursuant to this Section, AXSI, either directly or through a
corporate intermediary, has paid XLV $2,050,000 as of the date of this
Agreement and shall pay to XLV the additional sums specified below:
1. On the 15th day of August, 1998, AXSI shall pay to XLV the sum of
Thirty Six Thousand Nine Hundred Dollars ($36,900.00) related to the original
glyph scanners and software, and Sixty Three Thousand One Hundred Dollars
($63,100.00) in consideration for the option rights set forth in this
Agreement;
2. On the 15th day of September, 1998, and on the 15th day of each month
from September 15, 1998, to December 15, 1998, AXSI shall pay to XLV the sum of
One Hundred Thousand Dollars ($100,000.00);
3. On the 15th day of March, 1999, AXSI shall pay to XLV the sum of One
Hundred Thousand Dollars ($100,000.00);
4. On the 15th day of May, 1999, AXSI shall pay to XLV the sum of One
Hundred Fifty Thousand Dollars ($150,000.00);
5. AXSI may, at AXSI's option, accelerate the technology funding schedule
detailed in this Section V.B. and pay the sums indicated prior to the dates
specified herein; and
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6. All sums paid to XLV by AXSI under this Section V.B shall be
nonrefundable. Further, prior to the date of this Agreement, XLV designed the
original glyph scanners and software for AXSI and incurred certain expenses in
connection therewith (the "Design Expenses"). All sums paid to XLV by AXSI
under this Section V.B include all of the Design Expenses and, accordingly, XLV
hereby releases AXSI from all such amounts previously owed for design work
formed by XLV prior to the date of this Agreement.
C. Ownership of Technology.
1. All technology and any Intellectual Property rights associated
therewith conceived or developed by XLV or AXSI in performance of the work or
obligations contemplated under this Agreement relating in whole or in part to
the enhancement and commercialization of the Products (the "Product
Technology"), including but not limited to the Products, or the process of
manufacture thereof, shall be owned solely and exclusively by XLV subject to
the Exclusive License Option and the Assignment Option.
2. XLV shall execute and deliver any documents reasonably requested by
AXSI to transfer such Product Technology to AXSI under the Exclusive License
Option or the Assignment Option in accordance with their respective terms as
described herein.
3. Provided AXSI exercises the Assignment Option, AXSI shall control the
filing of applications for patents, trademarks, copyrights and other
Intellectual Property rights for such Product Technology whether or not it
shall be deemed to have been jointly or solely developed and whether or not one
party is believed to have contributed more to the development than the other.
4. Provided AXSI exercises the Assignment Option, XLV agrees to cooperate
fully in the acquisition, prosecution and enforcement of all Intellectual
Property rights relating in whole or in part to the Product Technology.
Specifically, by way of example and not limitation, XLV agrees to fully review
and execute any patent applications associated with the Product Technology, to
execute any declarations, oaths or assignment documents to be recorded in the
patent office of the United States or other countries, to aid in the arguments
during examination and prosecution of any patent applications covering the
Product Technology, and to cooperate as a consultant and/or witness in any
proceedings to enforce patent or other intellectual property rights associated
with the Product Technology.
SECTION VI. WARRANTIES, REPRESENTATIONS AND COVENANTS REGARDING PRODUCT
ENHANCEMENT AND SERVICES.
A. XLV warrants and represents that XLV consulting and management
personnel will use all reasonable efforts to develop and market the Products.
B. XLV warrants and represents that, provided AXSI has exercised the
Assignment Option, XLV shall not disclose to any third party any proprietary,
confidential, technical and/or business information, know-how, data, operating
practices, developments or inventions relating to the enhancement and
commercialization of the Products.
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C. Provided AXSI has exercised the Exclusive License Option, XLV shall
indemnify and hold AXSI harmless against any and all claims by third parties
that may be brought or instituted against AXSI prior to July 1, 2004, that any
use of the XLV Technology contemplated under this Agreement infringes upon any
Intellectual Property rights of any third party. AXSI shall give XLV prompt
notice of any claim and shall offer XLV the opportunity to control the defense
of such claim; provided, however, AXSI shall have the opportunity to control
the defense of such claim if: (1) XLV fails to defend a claim that XLV is not
obligated to indemnify AXSI against such claim; (2) the claiming third party
seeks non-monetary damages against AXSI; or (3) AXSI obtains a legal opinion
that AXSI has defenses different from or additional to defenses available to
XLV. XLV shall have the right to: (i) obtain for AXSI a perpetual,
royalty-free license to use, improve, and commercialize the XLV Technology; or
(ii) refund to AXSI all payments in cash or stock made to XLV under this
Agreement and to terminate this Agreement. XLV shall not be obligated to
indemnify AXSI against claims of infringement to the extent such claim is based
upon AXSI modifications to the XLV Technology or upon AXSI using the XLV
Technology with any other hardware or software. All obligations of XLV to
indemnify AXSI under this Section V.E.3. shall be limited to the total value
of money received by XLV from AXSI under this Agreement. XLV agrees to
cooperate fully and use its best efforts to assist AXSI in the defense of any
such claim brought or instituted against AXSI and shall provide to AXSI
assistance and information as may reasonably be required to fully defend
against such claim including, but not limited to, providing access to fact and
expert witnesses and producing requested documents. XLV agrees that XLV shall
not take any action or any position adverse to the interest of AXSI in the
defense of such claim.
D. XLV agrees that upon the successful completion of a demonstration unit
of the Products, AXSI shall have the right, at AXSI's expense and on behalf of
XLV, to seek the prosecution and acquisition of all Intellectual Property
rights related to the enhancement of the Products. XLV agrees to cooperate
fully with AXSI in the prosecution and acquisition of such Intellectual
Property rights.
E. XLV and AXSI understand and agree that the parties' joint agreement to
cooperate in the enhancement of the Products is not an agreement of partnership
and none is intended hereby. In no event is one party the agent for the other
for any purpose other than as specifically required by this Agreement.
F. Provided AXSI has exercised the Exclusive License Option, AXSI agrees
that AXSI will present to XLV information related to dithered 2D imaging
product offerings to other parties acquiring the same dithered 2D imaging
products from AXSI that XLV has purchased. AXSI agrees to provide sufficient
information to allow XLV to evaluate the terms and conditions of such later
offerings. XLV shall have the option to acquire dithered 2D imaging products
under such later terms and conditions if XLV determines that such later terms
and conditions are more advantageous than the terms and conditions offered
directly to XLV by AXSI. AXSI is not obligated to provide the identity of the
other parties or any details of the relationship with such parties not relevant
to the offerings to XLV. XLV's option shall be limited to the acceptance or
rejection of all terms and conditions associated with another party and XLV
shall not have the option to accept only some of the terms and conditions and
not others.
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SECTION VII. LOCK-UP AGREEMENT.
A. XLV hereby irrevocably agrees that it will not sell, offer to sell,
solicit an offer to buy, contract to sell, grant any option to purchase, or
otherwise transfer or dispose of any Shares issued pursuant to the Exclusive
License Option or the Assignment Option for a period of one (1) year after the
exercise of the applicable option without the prior written consent of AXSI;
provided, however, that XLV may pledge such Shares as long as the beneficiary
of such pledge agrees in writing to be bound by the terms of this lock-up
provision.
SECTION VIII. REGISTRATION RIGHTS.
A. Demand Registration. XLV shall have the right on any two (2)
occasions between the second and fourth anniversary of the date on which the
issuance of the Shares was approved by the AXSI stockholders (July 21, 1998) to
make a written request of AXSI for registration with the Securities and
Exchange Commission ("SEC") (a "Demand Registration"), under and in accordance
with the provisions of the Securities Act, for the offer and sale by XLV of the
Shares issued pursuant to this Agreement (the "Registrable Securities"). Upon
receipt of the written request by XLV of a Demand Registration, AXSI shall
prepare and file with the SEC, within sixty (60) days following the receipt of
such request, a registration statement on Form S-3 (or another appropriate
form) (the "Demand Registration Statement") for the offer and sale by XLV of
the Registrable Securities and use reasonable efforts to have each such Demand
Registration Statement declared effective by the SEC as promptly as reasonably
practicable after the filing thereof with the SEC. AXSI shall use its
reasonable efforts to keep such Demand Registration Statement and the
prospectus used in connection therewith effective and in compliance with
applicable law for a period of at least twelve (12) months (the "Effectiveness
Period"). All expenses incident to AXSI's performance or compliance with this
Section VII.A shall be paid by AXSI; provided, however, XLV shall be
responsible for and shall pay any underwriting, brokerage or selling agent's
fees, discounts or commissions, and shall be responsible for and pay all legal
fees and expenses of counsel to XLV or counsel to any underwriter or selling
agent. In connection with any underwritten offering to which AXSI shall have
consented, AXSI shall provide, or cause to be provided, such representations,
warranties, covenants, opinions, "cold comfort" letters, indemnifications,
opportunities for due diligence and other matters, and shall take all such
other reasonable actions, as are customary in underwritten public offerings of
securities. Failure of AXSI to cause the Demand Registration Statement to be
declared effective within one hundred fifty (150) days of filing shall result
in a sum payable to XLV by AXSI (the "Registration Penalty"). The Registration
Penalty shall be equal to the sum of Fifty Thousand Dollars ($50,000.00) for
failing to cause the Demand Registration Statement to be declared effective
within one hundred fifty (150) days after filing and an additional Fifty
Thousand Dollars ($50,000.00) for each ninety (90) day period thereafter until
such time as the Demand Registration Statement is declared effective. Failure
of the Demand Registration Statement to be declared effective for reasons that
can be demonstrated by AXSI to be beyond the control of AXSI shall not result
in a Registration Penalty.
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B. Piggyback Registration Rights. If at any time between the second and
fourth anniversary of the date on which the issuance of the Shares was approved
by the AXSI shareholders (July 21, 0000), XXXX proposes to file with the SEC a
registration statement (a "Piggyback Registration Statement") under the
Securities Act with respect to any offering of any Shares, other than (i) a
registration statement with respect to any employee stock options or similar
securities, securities issued or to be issued pursuant to any employee benefit
plan, or any interests in any employee benefit plan, (ii) a registration
statement in connection with the consummation of an acquisition or business
combination transaction, or (iii) a registration statement filed in connection
with an exchange offer or an offering of securities to AXSI's existing security
holders, AXSI shall in each case give written notice (a "Piggyback Registration
Notice") of such proposed filing of such Piggyback Registration Statement to
XLV as soon as practicable, but in no event less than 20 days before the
anticipated filing date, and shall, subject to the provisions of this Section
VII.B, use its commercially reasonable efforts to include in such Piggyback
Registration Statement the Registrable Securities with respect to which AXSI
has received from XLV a written request for inclusion therein within 15 days
after the Piggyback Registration Notice is given to XLV. Notwithstanding the
foregoing, AXSI will not be required to include any Registrable Securities in
any registration statement if such registration statement is declared effective
on or following the fourth anniversary of the approval of the issuance of the
Shares by the AXSI shareholders (July 21, 1998). In the case of an
underwritten registration, if the managing underwriters advise AXSI in writing
that in their opinion the inclusion in such registration statement of all the
Registrable Securities proposed to be included (together with any Shares
proposed to be included in such registration statement by other holders of
Shares who also have exercised piggyback registration rights with respect to
such registration) would interfere with the successful marketing of the
securities proposed to be registered, then XLV shall be entitled to include
such number of shares as, in the opinion of the managing underwriter, would not
so interfere and such shares shall be allocated among XLV and any other holders
of Shares who have also had exercised piggyback registration rights with
respect to such registration pro rata in proportion to their respective
holdings of Shares (or as they may otherwise agree). The delivery of a
Piggyback Registration Notice by AXSI shall in no way obligate AXSI to file a
Piggyback Registration Statement under this Section VII.B and notwithstanding
any such filing, AXSI may, in its sole discretion, determine not to offer the
securities to which the registration statement relates or to otherwise withdraw
such registration statement. XLV may not participate in any registration
hereunder unless XLV (x) in the case of an underwritten registration, agrees to
sell such Registrable Securities on the basis provided in any underwriting
arrangements approved by AXSI, (y) provides all such information as is
reasonably required to effect such registration and completes and executes all
undertakings, questionnaires, powers of attorney, indemnities, underwriting
agreements (in the case of an underwritten registration) and other documents
reasonably required under the terms of such underwriting arrangements (in the
case of an underwritten registration) or applicable laws and (z) in the case of
an underwritten registration, complies with all other reasonable requests of
the managing underwriter (including but not limited to requests for the
delivery of customary legal opinions by counsel to XLV) and complies with all
other reasonable requests related to such registration.
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1. If the registration statement filed by AXSI in which the Registrable
Securities are permitted to be included pursuant to this Section VII.B provides
for the offering of Shares on a delayed or continuous basis (a "Shelf
Registration Statement" and, together with a Demand Registration Statement and
a Piggyback Registration Statement, a "Registration Statement"), then any
Registrable Securities included in such Shelf Registration Statement likewise,
subject to the provisions of this Agreement, will be permitted to be offered on
such delayed or continuous basis between the second and fourth anniversary of
the date on which the issuance of the Shares was approved by the AXSI
shareholders (July 21, 1998).
C. Notwithstanding anything to the contrary in Sections VII.A and VII.B,
AXSI may, by delivering written notice to XLV, prohibit offers and sales of
Registrable Securities pursuant to either the Demand Registration Statement or
the Shelf Registration Statement at any time if (A)(i) AXSI is in the
possession of material non-public information relating to AXSI, (ii) AXSI
determines that such prohibition is necessary in order to avoid a requirement
to disclose such material non-public information to the public and (iii) AXSI
determines in good faith that public disclosure of such material non-public
information would not be in the best interests of AXSI and its stockholders or
(B)(i) AXSI has made a public announcement relating to an acquisition or
business combination transaction including AXSI and/or one or more of its
subsidiaries that are material to AXSI and its subsidiaries taken as a whole
and (ii) AXSI determines in good faith that (x) offers and sales of Registrable
Securities pursuant to either the Demand Registration Statement or the Shelf
Registration Statement prior to the consummation of such transaction (or such
earlier date as AXSI shall determine) is not in the best interests of AXSI and
its stockholders or (y) it would be impracticable at the time to obtain any
financial statements relating to such acquisition or business combination
transaction that would be required to be set forth in such registration
statement; provided, however, that upon (i) the public disclosure by AXSI of
the material non-public information described in clause (A) of this paragraph
or (ii) the consummation, abandonment or termination of, or the availability of
the required financial statements with respect to, a transaction described in
clause (B) of this paragraph, the suspension of the use of such registration
statement pursuant to this Section VIII.B shall cease and AXSI shall promptly
notify XLV that dispositions of Registrable Securities may be resumed.
Suspension of offers and sales of Registrable Securities pursuant to this
Section VIII.C shall not occur more than once in any twelve (12) months period,
and such suspension shall not exceed ninety (90) days at any one time unless
agreed to by AXSI and XLV in advance, such agreement not to be unreasonably
withheld when further suspension would provide some benefit to shareholders.
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D. AXSI may require XLV to furnish to AXSI such information regarding the
distribution of Registrable Securities as is required by law to be disclosed in
the Registration Statement, and AXSI may delay the filing of the Registration
Statement (or in the case of a Piggyback Registration Statement, exclude such
Registrable Securities) if XLV fails to furnish such information within a
reasonable time after receiving such request. XLV agrees to notify AXSI as
promptly as practicable of any inaccuracy or change in information previously
furnished by XLV to AXSI or of the occurrence of any event as a result of which
the prospectus included in the Registration Statement contains or would contain
an untrue statement of a material fact regarding XLV or XLV's intended method
of distribution of Registrable Securities, or omits to state any material fact
regarding XLV or XLV's intended method of distribution of Registrable
Securities, necessary to make the statements therein, in light of the
circumstances then existing, not misleading and promptly furnish to AXSI any
additional information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to XLV or the distribution of the Registrable Securities, an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances then existing, not
misleading.
E. AXSI will indemnify and hold harmless XLV from and against any and all
loss, damage, liability, cost and expense to which XLV may become subject under
the Securities Act or otherwise, insofar as such losses, damages, liabilities,
costs or expenses arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such Registration
Statement, any prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; provided, however, that AXSI will not be liable in any
such case to the extent that any such loss, damage, liability, cost or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission provided by XLV.
F. XLV will indemnify and hold harmless AXSI, each of its directors, each
of its officers who have signed the Registration Statement, and each person, if
any, who controls AXSI from and against any and all loss, damage, liability,
cost and expense to which any such person may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities,
costs or expenses are arising out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such Registration
Statement, any prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was provided by XLV.
IX. BOARD REPRESENTATION.
A. So long as XLV and permitted assigns own in the aggregate at least
Four Hundred Thousand (400,000) Shares delivered pursuant to this Agreement,
AXSI warrants and represents that AXSI will use its reasonable best efforts to
cause one (1) person designated by XLV to be nominated to serve as a member of
the board of directors of AXSI.
24. GENERAL PROVISIONS.
A. General Warranties, Representations and Covenants.
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1. AXSI warrants and represents that: (a) this Agreement has been duly
executed and received by a duly authorized officer of AXSI; and (b) the
performance of its obligations hereunder, will be, duly authorized by all
necessary corporate action of AXSI.
2. Each of XLV and AXSI represents and warrants that the obligations and
other terms specified in this Agreement shall constitute legal, valid and
binding obligations and shall be enforceable against it in accordance with
their terms.
3. XLV warrants and represents that this Agreement has been duly executed
and received by a duly authorized officer of XLV and has been duly authorized
by all necessary corporate action of XLV.
4. AXSI warrants and represents that upon delivery of the Shares pursuant
to the terms of this Agreement, such Shares will be duly authorized, validly
issued, fully paid and nonassessable, and will not have been issued in
violation of any preemptive rights of any stockholder. The Shares to be issued
to XLV pursuant to this Agreement will be issued free and clear of any lien,
option or preemptive or other right or claim.
5. AXSI warrants and represents that AXSI has made available to XLV a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by AXSI with the SEC since December 31, 1996
and prior to or on the date of this Agreement (the "SEC Documents"), which are
all the documents (other than preliminary material) that AXSI was required to
file with the SEC between December 31, 1996 and the date of this Agreement.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended, as the
case may be, and the rules and regulations of the SEC thereunder applicable to
such SEC Documents, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading as of the date filed.
The financial statements of AXSI included in the SEC Documents complied as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, were prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
the unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the
SEC) and fairly present in accordance with applicable requirements of GAAP
(subject, in the case of the unaudited statements, to normal, recurring
adjustments, none of which are material) the consolidated financial position of
AXSI and its consolidated subsidiaries as of their respective dates and the
consolidated results of operations and the consolidated cash flows of AXSI and
its consolidated subsidiaries for the periods presented therein.
15
6. AXSI represents that except as set forth in the SEC Documents, as of
the date hereof, there are no liabilities of AXSI of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
that are reasonably likely to have a material adverse effect on the financial
condition or results of operations of AXSI, other than: (i) liabilities
provided for on the balance sheet of AXSI dated as of September 30, 1997
(including the notes thereto) contained in AXSI's Quarterly Report on Form 10-Q
for the period ended September 30, 1997; (ii) additional borrowings of
$2,991,000 under a Note Purchase Agreement among AXSI and Xxxxxxxxxx
Associates II L.P.; (iii) the acceleration of all payments due under a
$2,100,000 Secured Promissory Note, dated December 26, 1996, to the benefit of
Xerox Corporation; (iv) liabilities incurred in the ordinary course of business
subsequent to September 30, 1997; and (v) liabilities under this Agreement.
B. Notices.
1. All payments, correspondence, notices, and legal process delivered or
deliverable pursuant to this Agreement shall be in writing and deemed
delivered: (i) upon personal or telecopy (with receipt confirmed) delivery;
(ii) three (3) days after being sent by reliable overnight delivery; or (iii)
ten (10) days after being sent by certified mail, postage prepaid, return
receipt requested, to the addresses set forth below:
If to XLV: Xxxxxxx X. Xxxxxxx
President and COO
XL Vision, Inc.
00000 000xx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
If to AXSI: Xxxxx X. Xxxxx
President and CEO
AXCESS INC.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
with a copy to: Xxxxxxx X. Xxxxx
Xxxxxx & Lidji
4400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
2. Either party hereto may change the address to which notice is to be
sent via written notice to the other party in accordance with the provisions of
this section.
C. Entire Agreement. This Agreement contains the entire understanding
between the parties hereto concerning the subject matter hereof, and supersedes
and replaces all prior negotiations and agreements, if any, both written and
oral.
D. Authority. The individuals executing this Agreement for and on behalf
of XLV and AXSI represent that they are fully authorized and empowered to do so
for and on behalf of their respective principals.
E. Successors and Assigns. This Agreement is intended to benefit and
shall be binding on XLV and AXSI and their respective successors and permitted
assigns.
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F. Amendments. No modification, amendment, waiver, termination or
discharge of this Agreement, or any of the terms or provisions hereof, shall be
binding upon either of the parties unless confirmed by a written instrument
signed by both parties.
G. No Waiver. No waiver by either party of any term or provision of this
Agreement or of any default hereunder shall affect such party's rights
thereafter to enforce such term or provision or to exercise any right or remedy
in the event of any other default, whether or not similar.
H. Severability. If any provision of this Agreement shall be held void,
voidable, invalid or inoperative, no other provision of this Agreement shall be
affected as a result thereof, and accordingly, the remaining provisions of this
Agreement shall remain in full force and effect as though such void, voidable,
invalid or inoperative provision had not been contained herein.
I. Confidentiality. XLV and AXSI agree to maintain all terms and
conditions of this Agreement in strictest confidence, except as otherwise
required by law, including the public disclosure requirements of AXSI under
federal securities law and applicable exchange or Nasdaq rules and listing
agreements. The parties agree that, except as required by law, including the
public disclosure requirements of AXSI under federal securities law and
applicable exchange or Nasdaq rules and listing agreements, neither AXSI nor
XLV shall issue any publicly available reports, statements or releases
pertaining to this Agreement without the prior consent of the other party,
which consent shall not unreasonably be withheld or delayed.
J. Cumulative Rights and Remedies. Except as otherwise provided in this
Agreement, all rights and remedies herein or otherwise shall be cumulative, and
none of them shall limit any other rights or remedies.
K. Choice of Law. The validity, performance, and all matters relating
to the effect of this Agreement and any amendments hereto shall be governed by
the laws of the State of Texas without regard to choice of law provisions,
statutes, regulations or principles of this or any other jurisdiction.
L. Non-Agency Relationship. It is understood and agreed that no agency
relationship is involved or created with respect to this Agreement.
M. Survival. All representations, warranties and covenants contained in
this Agreement shall continue in full force and effect and shall survive
notwithstanding the full payment of all amounts due hereunder or the
termination of this Agreement in any matter whatsoever.
N. Headings. The headings contained herein are for the convenience of
the parties only and shall not be interpreted to limit or affect in any way the
meaning of the language contained in this Agreement.
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O. Limitations of Liability. NOTWITHSTANDING ANY OTHER PROVISIONS OF
THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL XLV OR AXSI, ANY OF ITS OR
THEIR AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS
OR SUBCONTRACTORS BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF XLV OR AXSI OR ANY OF THEIR RESPECTIVE AFFILIATES,
EVEN IF XLV OR AXSI OR SUCH AFFILIATE HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES, OR FOR PUNITIVE DAMAGES, LOSS OF ANTICIPATED PROFITS, SAVINGS OR
BUSINESS, LOSS OF COMMERCIAL REPUTATION OR OTHER ECONOMIC LOSS, OR FOR DAMAGES
THAT COULD HAVE BEEN AVOIDED, USING REASONABLE DILIGENCE BY XLV OR AXSI OR SUCH
AFFILIATE.
P. Defaults and Remedies.
1. AXSI and XLV agree and understand that the occurrence or existence of
any one or more of the following events will constitute a default by AXSI:
(i). Material breach by AXSI of any material representation or warranty;
or
(ii). Material breach by AXSI of any material covenant after a thirty (30)
day notice and grace period to cure such breach.
2. AXSI and XLV agree and understand that the occurrence or existence of
any one or more of the following events will constitute a default by XLV:
(i). Material breach by XLV of any material representation or warranty; or
(ii). Material breach by XLV of any material covenant after a thirty (30)
day notice and grace period to cure such breach.
3. AXSI and XLV agree that in the event of Default by AXSI, XLV shall
have the following remedies:
(i). XLV may terminate the Agreement in addition to remedies at law or
equity subject to any License Option or Exclusive License Option exercised and
continuing in effect. The Exclusive License Option or Assignment Option if not
previously exercised shall terminate.
4. AXSI and XLV agree that in the event of Default by XLV, AXSI shall
have the following remedies:
(i). AXSI may terminate the Agreement and cease payments pursuant to
Section V.A.5 in addition to remedies at law or equity.
Q. Dispute Resolution. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by the
following techniques in the order provided:
1. Face-to-face good faith negotiations between the respective
Presidents of XLV and AXSI;
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2. Mediation; and
3. Binding arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof.
IN WITNESS WHEREOF, the parties hereto have caused their respective duly
authorized representatives to execute this Agreement as of the date first above
written:
AXCESS INC.
("AXSI")
By: /s/
---------------------------------------------
Xxxxx X. Xxxxx, Chief Executive Officer
and President
XL VISION, INC.
("XLV")
By: /s/
---------------------------------------------
Xxxxxxx X. (Xxxx) Xxxxxxx, Chief Operating
Officer and President
