LICENSE AGREEMENT DATED SEPTEMBER 24, 1998 BETWEEN
THE COMPANY AND TRIANGLE RESEARCH AND DEVELOPMENT CORPORATION
[INFORMATION PLACED IN BRACKETS [] HAS BEEN
OMITTED IN ACCORDANCE WITH A CONFIDENTIAL
TREATMENT REQUEST PURSUANT TO RULE 406
AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION
AGREEMENT
AGREEMENT (this "Agreement"), dated September 24, 1998, by and among Xxxxxx
Technologies, Inc., a Delaware corporation ("Xxxxxx"), Triangle Research and
Development Corporation, a North Carolina corporation ("TRDC"), Delta Thermal
Systems, Inc., a North Carolina corporation ("Delta"), and Dr. Xxxxx Xxxxxx, an
individual ("Xx. Xxxxxx").
X. Xxxxxx has agreed to grant to TRDC an option to acquire up to [This
information has been omitted in accordance with a Confidential Treatment Request
and has been filed separately with the Commission.] shares of common stock of
Xxxxxx in accordance with the terms of the option agreement attached hereto as
Exhibit A (the "Option Agreement").
X. Xxxxxx and TRDC have agreed to amend that certain Exclusive License
Agreement between TRDC and Xxxxxx dated as of May 1, 1995 (the "License
Agreement"), in accordance with the terms of the amendment to the License
Agreement attached hereto as Exhibit B (the "License Agreement Amendment").
C. TRDC has agreed to assign to Xxxxxx its rights under that certain
License Agreement between TRDC and Outlast Technologies, Inc., formerly known as
Gateway Technologies, Inc. ("Outlast"), dated January 21, 1991 (the "Outlast
Agreement"), in accordance with the terms of the assignment agreement attached
hereto as Exhibit C (the "Outlast Assignment Agreement").
D. The parties wish to set forth their understandings and agreements
relating to the foregoing and the other transactions relating thereto.
NOW, THEREFORE, the parties hereby agree as follows:
1. Outlast. (a) Simultaneously with the execution and delivery of this
Agreement, Xxxxxx and TRDC will enter into the Outlast Assignment Agreement
which provides for TRDC's assignment of its rights under the Outlast Agreement
to Xxxxxx.
(b) From and after the date hereof, Xxxxxx shall pay to TRDC the following
percentages of all "Outlast Fees" received by Xxxxxx from Outlast in respect of
each of the following calendar years:
Calendar Year Percentage of Outlast Fees
[This information has been omitted in accordance with a Confidential
Treatment Request and has been filed separately with the Commission.]
For purpose of this Paragraph 1(b), "Outlast Fees" mean (i) all annual
payments made by Outlast to Xxxxxx pursuant to Section 4.8 of the Outlast
Agreement and (ii) all other payments made by Outlast to Xxxxxx pursuant to
Articles VI or XIII of the Outlast Agreement, in each case reduced by the amount
of any set-offs against such payments which Outlast makes in accordance with
Article XIII of the Outlast Agreement or otherwise thereunder.
(c) In the event Xxxxxx conducts an audit of Outlast records for periods
prior to 1998 and, as a result of such audit, receives any payment of additional
Outlast Fees which relate to such periods Xxxxxx shall pay over to TRDC one
hundred percent (100%) of such Outlast Fees less the cost of such audit,
including legal fees, if any, incurred by Xxxxxx in conducting such audit for
such periods.
(d) Xxxxxx shall pay to TRDC all applicable percentages of the "Outlast
Fees" in respect of each calendar year noted above for which such Outlast Fees
are due not later than 30 days following receipt thereof from Outlast.
(e) In the event that TRDC receives directly from Outlast any Outlast Fees
TRDC shall promptly pay over such Outlast Fees to Xxxxxx.
(f) Without the prior written consent of Xxxxxx, which consent may be
withheld by Xxxxxx in its sole discretion, neither TRDC nor Delta shall
transfer, sell or assign its rights to the Licensed Technology (as such term is
defined in the Outlast Agreement) to any party other than a Permitted Assignee.
For purposes of this Agreement, a Permitted Assignee means (i) any of the
current shareholders of TRDC or Delta and their respective heirs at law and
devisees or (ii) any corporation, partnership or limited liability company
controlled by or under common control with TRDC. As a condition to any
assignment to a Permitted Assignee, such Permitted Assignee shall execute and
deliver to Xxxxxx an instrument reasonably satisfactory to Xxxxxx pursuant to
which such Permitted Assignee shall agree to be bound by all of the terms of
this Agreement, including the restrictions on transfer set forth herein. Any
attempt to assign or transfer the Licensed Technology (or any part thereof) not
in compliance with this Paragraph 1(e) will be null and void and of no effect.
(g) TRDC and Delta covenant to Xxxxxx that from and after the date hereof
they will execute, deliver and acknowledge (or cause to be executed, delivered
and acknowledged), from time to time at the request of Xxxxxx and without
further consideration (other than the reimbursement of any direct costs incurred
by TRDC or Delta), all such further instruments and take all such further action
as may be reasonably necessary or appropriate to enable Xxxxxx to assert its
rights under the Outlast Agreement, including without limitation, in connection
with (i) any legal proceedings commenced against any third party infringers of
the Licensed Technology, and (ii) any termination of the Outlast Agreement by
Xxxxxx. Without limiting the foregoing, TRDC and Delta hereby appoint Xxxxxx
their attorney-in-fact, with full power of substitution and resubstitution, to
execute and deliver in TRDC's and/or Delta's name any instrument that Xxxxxx
deems necessary or advisable in order to further effect the assignment of TRDC's
rights under the Outlast Agreement to Xxxxxx and to enforce such rights against
Outlast or any third party. The power of attorney granted under this Paragraph
1(f) is coupled with an interest and is irrevocable and will survive the merger,
consolidation, dissolution, liquidation or bankruptcy of TRDC or Delta.
(h) TRDC represents and warrants to Xxxxxx that (i) each of its
representations and warranties of TRDC contained in the Outlast Agreement,
including without limitation, those set forth in Section 11.1 thereof, are true
and correct on the date hereof with the same force and effect as if made on and
as of the date hereof, (ii) the Outlast Agreement is in full force and effect,
has not been amended or modified, that TRDC has performed all of its obligations
required to be performed by it thereunder, and TRDC is not (with or without the
lapse of time or the giving of notice of both) in breach or default thereunder,
(iii) it has no other agreements or understandings with Outlast relating to the
subject matter of the Outlast Agreement other than the Outlast Agreement and the
Agreement for Research and Development of Microencapsulated Phase Change Fibers
and Fabrics dated January 22, 1991 between TRDC and Outlast and the related
letter dated May 3, 1995 between TRDC and Outlast, and it has not assigned, or
subjected any of its rights or interests in the Outlast Agreement to any lien,
encumbrance or security interest, and (iv) Outlast has not asserted or, to the
best of TRDC's knowledge, threatened to assert any claims against TRDC,
including, without limitation, any claims under the Outlast Agreement or with
respect to the subject matter thereof.
(i) Xxxxxx shall indemnify and hold TRDC and its directors and officers
harmless from and against (i) any claims asserted by Outlast arising out of any
breach by Xxxxxx of its assumed obligations under the Outlast Agreement, (ii)
any claim asserted by Outlast that the assignment of the Outlast Agreement to
Xxxxxx constitutes a breach of the Outlast Agreement, and (iii) any other claims
asserted by Outlast against TRDC relating to events occurring prior to the date
hereof. Notwithstanding the foregoing, Xxxxxx shall not indemnify and hold TRDC
harmless from and against any claims asserted by Outlast relating to obligations
which are personal to the shareholders of TRDC.
(j) In the event of the termination of the Outlast Agreement in accordance
with its terms, each of TRDC and Xxxxxx hereby agree that the Licensed
Technology will automatically be deemed to be included in the definition of
Technology (as such term is defined in the License Agreement), and that TRDC
will have no rights to use or exploit such Licensed Technology (including any
further licensing thereof), other than as provided for under the License
Agreement, including the right to conduct research and development relating to
the Licensed Technology.
(k) In consideration for the foregoing and the other obligations of TRDC
contained in this Agreement, Xxxxxx shall pay to TRDC or its designee(s) [This
information has been omitted in accordance with a Confidential Treatment Request
and has been filed separately with the Commission.] The 1998 Cash Payment shall
be due and payable upon execution and delivery of this Agreement and receipt by
Xxxxxx of payment instructions from TRDC. The 1999 Cash Payment shall be due and
payable on or after January 1, 1999 and upon receipt by Xxxxxx of payment
instructions from TRDC. Not later than two business days following receipt of
such payment instructions, Xxxxxx shall deliver to TRDC the 1998 Cash Payment or
the 1999 Cash Payment, as the case may be, in immediately available funds by
wire transfer to the account or accounts designated by TRDC in its payment
instructions.
2. Option Agreement. As additional consideration for the assignment of the
Outlast Agreement, simultaneously with the execution and delivery of this
Agreement, Xxxxxx and TRDC will enter into the Option Agreement which provides
for the grant to TRDC of an option to acquire up to [This information has been
omitted in accordance with a Confidential Treatment Request and has been filed
separately with the Commission.] shares of common stock of Xxxxxx.
3. License Agreement Amendment. As additional consideration for the
assignment of the Outlast Agreement, simultaneously with the execution and
delivery of this Agreement, Xxxxxx and TRDC will enter into the License
Agreement Amendment which provides for the amendment of certain provisions of
the License Agreement.
4. Research and Development Funding. Commencing in January 1, 1999 and on
each January 1 thereafter through and including January 1, 2001 (the "R&D
Funding Years"), Xxxxxx shall provide TRDC with funding to support certain
research and development projects of TRDC solely related to microencapsulated
phase change materials technology and thermal management ("R&D Projects"),
subject to the following conditions and limitations:
(a) Xxxxxx will provide TRDC with funding for each R&D Project upon review
of the budget (which will set forth in detail the terms and conditions of such
R&D Project) and payment schedule submitted therewith, which funding will be in
the amount of [This information has been omitted in accordance with a
Confidential Treatment Request and has been filed separately with the
Commission.] in respect of the calendar year 1999 and [This information has been
omitted in accordance with a Confidential Treatment Request and has been filed
separately with the Commission.] per year in respect of each of the calendar
years 2000 and 2001.
(b) TRDC acknowledges that all inventions, developments, proprietary
information, patents, improvements, and know how resulting from such R&D
Projects will be subject to the terms of the License Agreement to the extent
applicable thereto.
5. Appointment to Advisory Board. Upon the execution and delivery of this
Agreement by TRDC, Xxxxxx shall appoint Xx. Xxxxxx to be a member of the Xxxxxx
Innovation Advisory Board (the "Advisory Board"), such appointment to be for not
less than a two year term. As a member of the Advisory Board, Xx. Xxxxxx will be
entitled to receive options to purchase [This information has been omitted in
accordance with a Confidential Treatment Request and has been filed separately
with the Commission.] shares of common stock of Xxxxxx for each year he serves
on the Advisory Board at a price equal to no less than the fair market value of
Xxxxxx'x common stock on the date of the granting of such option. The specific
terms and conditions of such option shall be set forth in the option agreement,
the form of which is attached hereto as Exhibit D. In addition, Xxxxxx will
reimburse Xx. Xxxxxx for expenses he incurs in connection with his attendance at
Advisory Board meetings in accordance with Xxxxxx'x expenses and reimbursement
practices and policies.
6. Representations. (a) Xxxxxx hereby represents and warrants to TRDC as
follows: (i) it has all corporate power and authority, and has taken all action
necessary, to execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations hereunder; (ii) the execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
violate or conflict with any contract, judgment, order, law, rule or regulation
applicable to Xxxxxx; and (iii) no consent of, or filing with, any court,
governmental authority or other person is required to be obtained or made by
Xxxxxx in connection with the execution and delivery of this Agreement or the
consummation by Xxxxxx of the transactions contemplated hereby.
(b) TRDC represents and warrants to Xxxxxx as follows: (i) it has all
corporate power and authority, and has taken all action necessary (other than
any action which may be necessary under the Outlast Agreement), to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to perform its obligations hereunder; (ii) the execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof will not, violate or conflict with any
contract, judgment, order, law, rule or regulation applicable to TRDC; and (iii)
no consent of, or filing with, any court, governmental authority or other person
is required to be obtained or made by TRDC in connection with the execution and
delivery of this Agreement or the consummation by TRDC of the transactions
contemplated hereby.
7. Delta Acknowledgment. Delta hereby acknowledges and confirms to Xxxxxx
that, to the extent that any of the transactions contemplated by this Agreement
affect any of the rights and/or obligations of Delta, Delta hereby consents to
all such transactions and agrees to be bound by all of the terms and conditions
set forth herein, including Exhibits A, B and C hereto.
8. Miscellaneous. (a) All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally or by
telecopier, or three days after being mailed by registered or certified mail
(return receipt requested), to the parties at the following addresses (or at
such other addresses for a party as shall be specified by like notice):
If to Xxxxxx:
Xxxxxx Technologies, Inc.
00 Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Chief Executive Officer
If to TRDC, Delta or Xx. Xxxxxx:
Triangle Research and Development Corporation
X.X. Xxx 00000
Xxxxxxxx Xxxxxxxx Xxxx, X.X. 00000
Telecopier: (000) 000-0000
Attention: President
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina applicable to contracts entered into and
wholly to be performed therein.
(c) This Agreement may not be modified, amended, altered or supplemented
except by an agreement in writing executed by the parties to be charged and
bound.
(d) If any provisions hereof shall be determined to be invalid or
unenforceable in any respect, such determination shall not affect such provision
in any other respect or any other provision of this Agreement which shall remain
in full force and effect, and this Agreement shall, if possible, be construed in
all respects which most closely reflects the intent of the parties hereto as if
such invalid or unenforceable provision were not contained herein.
(e) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, personal representatives, successors
and assigns. Except as otherwise specifically provided for in this Agreement, no
party shall assign this Agreement or any of its rights or obligations under this
Agreement without the prior written consent of the other parties; provided,
however, that Xxxxxx shall have the right to assign this Agreement to (a) any
entity controlling, controlled by or in common control with Xxxxxx or (b) any
entity which acquires all or substantially all of the assets or stock of Xxxxxx,
provided that Xxxxxx shall remain liable for its obligations herein.
(f) This agreement (together with the Exhibits hereto) shall constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and shall supersede all prior verbal or written agreements, covenants,
communications, understandings, commitments, representations or warranties,
whether oral or written, by any party hereto or any of its representatives
pertaining to such subject matter.
(g) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same Agreement.
(h) Captions and paragraph headings used herein are for convenience and are
not part of this Agreement and shall not be used in construing it.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
XXXXXX TECHNOLOGIES, INC.
By: /s/Xxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board
and Chief Executive Officer
TRIANGLE RESEARCH AND
DEVELOPMENT CORPORATION
By: /s/Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President
DELTA THERMAL SYSTEMS, INC.
By: /s/Xxxxx X. Xxxxxx
----------------------
Name: Xxxxx X. Xxxxxx
Title: President
/s/Dr. Xxxxx Xxxxxx
--------------------------
Dr. Xxxxx Xxxxxx
Exhibit A
OPTION AGREEMENT DATED SEPTEMBER 24, 1998
BY AND BETWEEN TRIANGLE RESEARCH AND DEVELOPMENT CORPORATION,
DELTA THERMAL SYSTEMS, INC. AND THE COMPANY
[INFORMATION PLACED IN BRACKETS [] HAS BEEN
OMITTED IN ACCORDANCE WITH A CONFIDENTIAL
TREATMENT REQUEST PURSUANT TO RULE 406 AND
HAS BEEN FILED SEPARATELY WITH THE COMMISSION.
OPTION AGREEMENT
This Option Agreement (this "Agreement") is made and entered into as of
September 24, 1998 by and between Triangle Research and Development Corporation,
a North Carolina corporation ("TRDC"), Delta Thermal Systems, Inc., a North
Carolina corporation ("Delta") and Xxxxxx Technologies, Inc., a Delaware
corporation ("Xxxxxx").
RECITALS:
A. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto have entered into an agreement (the "Master Agreement") which,
inter alia, sets forth the terms of the assignment to Xxxxxx from TRDC of its
rights under the Outlast Agreement (as such term is defined in the Master
Agreement).
B. In connection with the transactions contemplated under the Master
Agreement, Xxxxxx desires to grant to TRDC an option to acquire certain shares
of common stock, par value $0.001, of Xxxxxx (the "Common Stock").
NOW, THEREFORE, the parties hereto hereby agree as follows:
I. DEFINITIONS AND CERTAIN INTERPRETIVE MATTERS
I.1. Defined Terms. In addition to the terms defined elsewhere herein,
terms used herein which are not defined herein will have the meanings ascribed
to them in the Master Agreement.
I.2. Certain Interpretive Matters. This Agreement will be interpreted in
accordance with the provisions of the Master Agreement.
II. THE OPTION
II.1. Option Grant. On the terms and subject to the conditions set forth in
this Agreement, for $10.00 and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Xxxxxx hereby grants to
TRDC an option (the "Option") to purchase up to [This information has been
omitted in accordance with a Confidential Treatment Request and has been filed
separately with the Commission.] shares of its Common Stock (the "Option
Shares") at a price per share equal to [This information has been omitted in
accordance with a Confidential Treatment Request and has been filed separately
with the Commission.] (the "Exercise Price").
II.2. Vesting and Exercise of Option. (a) The Option may be exercised in
whole or part (subject to the restrictions set forth in clause (b) below) at any
time and from time to time from and after the second anniversary of the date
hereof. Notwithstanding the foregoing, this Agreement and the Option shall
terminate and expire on the earlier of (i) the fifth anniversary of the date
hereof or (ii) the date on which all of the Option Shares are purchased pursuant
to exercise of the Option.
(b) TRDC may exercise the Option by giving Xxxxxx a notice (an "Exercise
Notice") which specifies (i) the total number of Option Shares to be purchased,
which shall be not less than [This information has been omitted in accordance
with a Confidential Treatment Request and has been filed separately with the
Commission.] (ii) the aggregate Exercise Price payable in respect of such Option
Shares, and (iii) a date not earlier than 5 business days nor later than 10
business days from the date of receipt of the Exercise Notice for the closing of
such purchase (the "Option Closing Date"). The closing of any complete or
partial exercise of the Option (the "Option Closing") will take place at the
principal executive offices of Xxxxxx.
(c) The Exercise Price will be payable by delivery by TRDC of a promissory
note, in the form of Annex A hereto (the "Note"), in the aggregate principal
amount of the Exercise Price for the Option Shares being purchased. As security
for repayment of the Note, TRDC will pledge all of its right, title and interest
in and to the Option Shares being purchased to Xxxxxx.
II.3. The Option Closing. Subject to adjustment as contemplated by Section
2.4, at each Option Closing, (a) TRDC shall deliver to Xxxxxx the Note in the
aggregate principal amount of the Exercise Price for the Option Shares being
purchased and (b) Xxxxxx will deliver to TRDC a certificate or certificates
evidencing the Option Shares acquired in connection therewith.
II.4. Adjustments to Option Shares. (a) In the event of any change in the
outstanding equity securities of Xxxxxx by reason of any stock dividend or stock
split that would alter the percentage of equity interest in Xxxxxx to be
acquired by TRDC hereunder, the number of Option Shares subject to the Option
shall be adjusted appropriately so as to provide that upon exercise of the
Option, TRDC will acquire the same percentage of equity interest in Xxxxxx as
TRDC would have acquired prior to such stock dividend or stock split.
(b) In the event of any recapitalization, combination, consolidation or
merger of Xxxxxx into another entity or other similar transaction in which
Xxxxxx is not the surviving entity (a "Disposition Event") while any unexercised
Option remains outstanding then, in such a situation, at Xxxxxx'x election and
upon notice to TRDC prior to the consummation of the Disposition Event, (i) the
Option may be canceled as of the effective date of the Disposition Event
provided that notice of such cancellation shall have been provided to TRDC, and
TRDC shall have the right to exercise the Option in full during a period
specified by Xxxxxx preceding the effective date of such Disposition Event, or
(ii) Xxxxxx and all other persons participating in the Disposition Event shall
have executed and delivered to TRDC an agreement that provides that TRDC will
have the right from and after the occurrence of the Disposition Event, upon
exercise of the Option and payment of the Exercise Price in effect immediately
prior to such Disposition Event, to purchase, on the same terms and conditions
that were available to the other persons, the kind and amount of shares of the
Common Stock and other securities, assets and property that TRDC would have been
entitled to receive upon or after the happening of any such transaction had TRDC
exercised the entire Option immediately prior to such Disposition Event.
III. REPRESENTATIONS AND WARRANTIES
III.1. Representations and Warranties of Xxxxxx. Xxxxxx represents and
warrants to TRDC that the Option Shares which are subject to the Option are
presently authorized but unissued and such Option Shares will remain reserved
and available for issuance upon the timely exercise of the Option. The Option
Shares to be purchased upon any complete or partial exercise of the Option will
be validly issued upon payment of the Exercise Price and such Option Shares,
when so issued upon such exercise, will be duly and validly issued, fully paid
and free and clear of all liens, claims and encumbrances other than those
imposed by applicable securities laws.
3.2 Representations and Warranties of TRDC. TRDC represents and warrants to
Xxxxxx, by acceptance of the Option, as follows:
(a) This Option and the right to purchase Common Stock hereunder is
personal to TRDC and shall not be transferred to any other person, other than to
TRDC's and Delta's existing shareholders and their respective heirs at law and
devisees, the immediate family members of Xx. Xxxxxx (spouse and children) and
the following persons: Xxxxxx Xxxxxx, Xxxxxxx XxXxxxxx, Xxxxxxx XxXxxxxx, Xxxxx
Xxxxx and Xxx Xxxxxxxx, Xxxxxxxx X. Xxxxxxx (each, a "TRDC Holder" and together
with TRDC and Delta, the "TRDC Holders"); provided, however, that as a condition
to any such transfer each such TRDC Holder shall have executed and delivered to
Xxxxxx an instrument reasonably satisfactory to Xxxxxx pursuant to which such
TRDC Holder shall have agreed to be bound by the terms of this Agreement
applicable to TRDC.
(b) TRDC acknowledges that (i) this Option has been issued in reliance upon
an exemption from registration under the Securities and Exchange Act of 1933, as
amended (the "Securities Act") and applicable state statutes, (ii) the exercise
of the Option and the Option Shares have not been registered under the
Securities Act or applicable state statutes and must be held and may not be
sold, transferred or otherwise disposed of for value unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available, (iii) Xxxxxx is under no obligation to register the
Option or the Option Shares under the Securities Act or the applicable state
securities, and (iv) that any certificate issued upon exercise of the Option
representing the Option Shares will bear on its face a legend in substantially
the following form restricting the sale of the Option Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION THEREFROM.
IV. TRDC PUT RIGHT
IV.1. Put Right. (a) At any time from and after the exercise of the Option
and purchase by TRDC of all of the Option Shares and prior to the fifth
anniversary of the date hereof, TRDC shall have the right to cause Xxxxxx to
purchase all of its Option Shares (the "Put Right") at a price equal to the
Exercise Price plus [This information has been omitted in accordance with a
Confidential Treatment Request and has been filed separately with the
Commission.] (the "Put Price"); provided, however, that the Put Right shall
terminate automatically upon the registration of the Option Shares under the
Securities Act.
(b) TRDC may exercise the Put Right by giving Xxxxxx a notice (a "Put
Exercise Notice") which specifies (i) TRDC's election to exercise its Put Right
with respect to all of the Option Shares then owned by TRDC, and (ii) a date not
earlier than 10 business days from the date of receipt of the Put Exercise
Notice for the closing of such purchase (the "Put Closing Date"); provided,
however, that if, prior to the date of such Put Exercise Notice, the closing
price of Xxxxxx'x Common Stock on NASDAQ, or any other recognized stock exchange
on which it is then publicly traded, is equal to or greater than the Put Price,
then the Put Price shall be a price equal to the closing price of Xxxxxx'x
Common Stock on NASDAQ, or any other recognized stock exchange on which it is
then publicly traded, on the last trading date immediately prior to the date of
the Put Exercise Notice. The closing of any exercise of the Put Right (the "Put
Closing") will take place at the principal executive offices of Xxxxxx.
IV.2. The Put Closing. At the Put Closing, (a) the Note(s) previously made
by TRDC in favor of Xxxxxx shall be canceled and (b) Xxxxxx shall pay to TRDC an
amount equal to the aggregate Put Price less an amount equal to the principal
amount and all accrued interest on the Note(s), (c) TRDC will deliver to Xxxxxx
the certificate or certificates evidencing the Option Shares owned by TRDC, duly
endorsed in blank or accompanied by a stock power in form and substance
reasonably satisfactory to Xxxxxx, (d) TRDC will be deemed to represent to
Xxxxxx that, upon the Put Closing, TRDC will transfer and Xxxxxx will acquire
the entire record and beneficial ownership of, and good title to, the Option
Shares, free and clear of any and all liens, encumbrances and security
interests, and (e) each of the parties will take such additional actions as may
be reasonably requested by the other to carry out the intent and purposes
hereof.
IV.3. Assignment of Obligation. Xxxxxx shall have the right to assign all
of its rights and obligations with respect to the Put Right to a third party,
including any shareholder or affiliate of Xxxxxx; provided, however, that such
assignment shall not relieve Xxxxxx of any of its obligations in respect of the
Put Right.
4.4. TRDC Holders' Rights. Any right or action that may be taken at the
election of the TRDC Holders shall be taken by a representative of the TRDC
Holders (the "TRDC Holder Representative") on behalf of all the TRDC Holders.
The initial TRDC Holder Representative shall be Xx. Xxxxxx. Upon the death or
permanent disability (or during any period of temporary disability) of Xx.
Xxxxxx, the successor TRDC Holder Representative shall be designated by the
estate of Xx. Xxxxxx; provided, however, that if no such successor is so
designated within 30 calendar days from such death or permanent disability, such
successor will be the TRDC Holder holding a majority of the Option Shares (or
Option to acquire a majority of such Option Shares) then held by the TRDC
Holders. Any change in the TRDC Holder Representative shall become effective
upon notice in accordance with Section 5.1 of this Agreement.
V. MISCELLANEOUS
V.1. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or by telecopier, or
three days after being mailed by registered or certified mail (return receipt
requested), to the parties at the following address (or such other address for a
party as shall be specified by like notice):
(a) if to Xxxxxx, to:
Xxxxxx Technologies, Inc.
00 Xxxx Xxxx Xxxxxx
Xxx Xxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Chief Financial Officer
(a) if to TRDC, to:
Triangle Research and Development Corporation
X.X. Xxx 00000
Xxxxxxxx Xxxxxxxx Xxxx, X.X. 00000
Telecopier: (000) 000-0000
Attention: President
V.2. Governing Law. This Agreement will be governed by and construed in
accordance with the law of the State of North Carolina applicable to contracts
entered into and wholly to be performed therein.
V.3. Amendments. This Agreement may not be modified, amended, altered or
supplemented except by an agreement in writing executed by the parties to be
charged and bound.
V.4. Severability. If any provision hereof shall be determined to be
invalid or unenforceable in any respect, such determination shall not affect
such provision in any other respect or any other provision of this Agreement
which shall remain in full force and effect, and this Agreement shall, if
possible, be construed in all respects which most closely reflects the intent of
the parties hereto as if such invalid or unenforceable provision were not
contained herein.
V.5. Successors and Assigns. The provisions of this Agreement will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that, except as otherwise provided in
Section 3.2(a), no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the consent of the other
parties hereto.
V.6. Entire Agreement. This Agreement shall constitute the entire agreement
between the parties with respect to the subject matter of this Agreement and
shall supersede all prior verbal and written agreements, covenants,
communications, understandings, commitments, representations or warranties,
whether oral or written, by any party hereto or any of its representatives
pertaining to such subject.
V.7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
V.8. Headings. Captions and paragraph headings used herein are for
convenience and are not part of this Agreement and shall not be used in
construing it.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
XXXXXX TECHNOLOGIES, INC.
By: /s/Xxxxxxx x. Xxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board and
Chief Executive Officer
TRIANGLE RESEARCH AND
DEVELOPMENT CORPORATION
By: /s/Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President
DELTA THERMAL SYSTEMS, INC.
By: /s/Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President
EXHIBIT B
AMENDMENT AGREEMENT DATED SEPTEMBER 24, 1998
BY AND BETWEEN TRIANGLE RESEARCH AND DEVELOPMENT CORPORATION
DELTA THERMAL SYSTEMS, INC. AND THE COMPANY
[INFORMATION PLACED IN BRACKETS [] HAS BEEN
OMITTED IN ACCORDANCE WITH A CONFIDENTIAL
TREATMENT REQUEST PURSUANT TO RULE 406 AND
HAS BEEN FILED SEPARATELY WITH THE COMMISSION.
AMENDMENT AGREEMENT
Amendment No.1 (this "Amendment Agreement"), dated September 24, 1998, to
the Exclusive License Agreement, dated as of May 1, 1995 (the "License
Agreement") by and between Triangle Research and Development Corporation, a
North Carolina corporation ("TRDC"), Delta Thermal Systems, Inc., a North
Carolina corporation ("Delta") and Xxxxxx Technologies, Inc., a Delaware
corporation and successor-in-interest to Xxxxxx Technologies, Inc., a North
Carolina corporation ("Xxxxxx").
A. Contemporaneously with the execution and delivery of this Amendment
Agreement, the parties have entered into an agreement (the "Master Agreement"),
which, inter alia, sets forth the terms of the assignment to Xxxxxx by TRDC of
its rights under the Outlast Agreement (as such term is defined in the Master
Agreement); each of the parties hereby acknowledges that TRDC has previously
transferred ownership of the Technology (as such term is defined in the License
Agreement) to Delta.
B. In connection with the transactions contemplated by the Master
Agreement, TRDC, Delta and Xxxxxx desire to amend the License Agreement as
hereinafter set forth.
NOW THEREFORE, the parties hereby agree as follows:
1. Article I of the License Agreement is hereby amended by adding a new
section 1.11 which shall read in its entirety as follows:
"1.11 Selected Agricultural Applications. "Selected Agricultural
Applications" means any application of phase change material to agronomic,
ornamental, horticultural (with emphasis on fruit crops of all types) and
turfgrass crops from crop cultivation through harvest and up to the point of
transport and animal husbandry applications (limited solely to biological
processes control) wherein the purpose of the PCM is to provide, among other
benefits, (a) enhanced pesticide efficacy, (b) enhanced control of biological
organisms, (c) microenvironmental regulation, (d) crop sterilization, (e)
improved germinations and/or (f) improved crop productivity through (i) freeze
protection, (ii) heat protection, (iii) protection from pathogen organism and/or
(iv) improvements of pesticides efficacy. Selected Agricultural Applications
specifically exclude those applications wherein the purpose of the PCM is to
enhance the survivability or shelf-life of the agricultural product during
transport, as exemplified by the case of transporting perishable citrus products
in a temperature controlled container or by the case of transporting seeds or
seedlings within temperature regulating foam media."
2. Article I of the License Agreement is hereby amended by adding a new
section 1.12 which shall read in its entirety as follows:
"1.12 Passive MacroPCM Garments. "Passive MacroPCM Garments" means any
article of clothing, excluding footwear, handwear and accessories and, during
the first 36 months following the date of this Amendment Agreement, headwear
(other than headwear designed exclusively for military use and/or for fire
safety personnel), containing compartmentalized packets of MacroPCMs (1
millimeter diameter and above), wherein said MacroPCMs are the only means by
which phase change materials are incorporated into the garments."
3. Article II of the License Agreement is hereby amended by adding a new
Section 2.05 which shall read in its entirety as follows:
"2.05 Xxxxxx grants to TRDC (a) an exclusive worldwide sublicense to
develop and commercialize (including the right to further sublicense to third
parties) (i) Selected Agricultural Applications and (ii) Cutting Fluids and
systems to circulate same (to the extent covered by U.S. Patent No. 5,141,079),
and (b) a non-exclusive worldwide sublicense to develop and commercialize
(including the right to further sublicense to third parties) Macro size PCM
capsule (having a diameter of one (1) millimeter or greater) applications for
Passive MacroPCM Garments (collectively, the "Xxxxxx Licensed Applications");
provided, however, that should TRDC (i) during the 24 month period following the
date hereof (or any successive 24 month period thereafter) (A) fail to fund or
secure funding for research and development in excess of $100,000 per annum or
(B) fail to secure one or more new grants or contracts from third parties for
research and development, or (ii) commercialize the Xxxxxx Licensed Applications
within five (5) years of the date of this Amendment, all license rights to the
Xxxxxx Licensed Applications shall revert to Xxxxxx."
4. Section 3.031 of the License Agreement is hereby amended by amending the
royalty fee provisions to read as follows:
". . . Xxxxxx agrees to pay TRDC a royalty or fee in accordance with the
following schedule . . . . [This information has been omitted in accordance with
a Confidential Treatment Request and has been filed separately with the
Commission.]
The foregoing new royalty fee rate will be effective as of June 30, 1998."
Section 3.031 of the License Agreement is hereby further amended by
amending the "Exclusion" provision thereof by deleting the phrase "in accordance
with Par. 3.032 below" at the end of the first full sentence thereof.
5. Section 3.032 of the License Agreement is hereby deleted in its
entirety.
6. Section 3.033 of the License Agreement is hereby amended by amending the
sublicense fee provisions to read as follows:
". . . Xxxxxx agrees to pay TRDC in accordance with the following schedule
. . . .
[This information has been omitted in accordance with a Confidential
Treatment Request and has been filed separately with the Commission.]
The foregoing new sublicense fee rate will be effective as of June 30,
1998."
7. Article III of the License Agreement is further amended by adding the
following new sections 3.037, 3.038, 3.039 and 3.040 which shall read in their
entirety as follows:
"3.037 Purchase of PCMs. In connection with the research and development
and commercialization of the Xxxxxx Licensed Applications, TRDC agrees to
purchase all of its MicroPCM requirements from Xxxxxx, subject to:
1. Xxxxxx satisfying TRDC's specification and reasonable delivery
requirements for such PCMs, which specification and delivery requirements shall
be in writing and of sufficient detail to enable Xxxxxx to comply therewith. If
Xxxxxx does not accept a TRDC purchase order within 10 days of receipt, said
purchase order will be deemed to have been rejected by Xxxxxx and TRDC shall
then be free to purchase the therein specified PCMs from a third party; and
2. In the event that Xxxxxx is able to satisfy TRDC's specification and
elects to supply such MicroPCMs to TRDC, Xxxxxx will provide such MicroPCMs to
TRDC at the lowest price it then offered to its other customers for MicroPCM
orders of similar quantity, quality and technical specification; provided,
however, that if TRDC is quoted a lower bona fide price from a third party
supplier for such MicroPCMs, TRDC shall have the right to purchase such
MicroPCMs from such third party supplier if Xxxxxx elects not to match such
price within 10 days after written receipt of such third parties proposal.
3.038 TRDC Product Sales. On all sales by TRDC of bulk PCMs, MicroPCMs and
End-Use Products incorporating MicroPCMs, which are based on the Xxxxxx Licensed
Applications, but excluding therefrom all direct government development
contracts related to the Xxxxxx Licensed Applications, TRDC agrees to pay to
Xxxxxx a royalty fee of [This information has been omitted in accordance with a
Confidential Treatment Request and has been filed separately with the
Commission.] of TRDC's gross sales revenues.
3.039 Sublicense Payments. On all monies received by TRDC from any
sublicensee of the Xxxxxx Licensed Applications, TRDC agrees to pay to Xxxxxx a
sublicense fee of [This information has been omitted in accordance with a
Confidential Treatment Request and has been filed separately with the
Commission.]
3.040 Payments to Xxxxxx. All amounts owed by TRDC to Xxxxxx in accordance
with this Article III shall be paid to Xxxxxx within thirty days after the end
of the calendar quarter during which payments were received by TRDC from sales
or revenues described in Sections 3.038 and 3.039. Each payment shall be
accompanied by a statement consisting of records sufficient to enable the
verification of amounts payable hereunder."
8. Section 5.04 of the License Agreement is hereby amended by inserting the
following language after the first sentence:
"Notwithstanding the foregoing, without the prior written consent of
Xxxxxx, which consent may be withheld by Xxxxxx in its sole discretion, TRDC
shall not transfer, sell or assign its rights to the Technology to any party
other than a Permitted Assignee. For purposes of this Agreement, a Permitted
Assignee means (i) any of the current shareholders of TRDC or Delta and their
respective heirs at law and devisees or (ii) any corporation, partnership or
limited liability company controlled by or under common control with TRDC. As a
condition to any assignment to a Permitted Assignee, such Permitted Assignee
shall execute and deliver to Xxxxxx an instrument reasonably satisfactory to
Xxxxxx pursuant to which such Permitted Assignee shall agree to be bound by all
of the terms of this Agreement, including the restrictions on transfer set forth
herein. Any attempt to assign or transfer the Technology (or any part thereof)
not in compliance with this Section 5.04 will be null and void and of no
effect."
9. Except as otherwise set forth herein, all other provisions of the
License Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Amendment as of the date first above written.
TRIANGLE RESEARCH AND DEVELOPMENT CORPORATION
By:/s/
Name:
Title:
DELTA THERMAL SYSTEMS, INC.
By:/s/____________________________
Name:
Title:
XXXXXX TECHNOLOGIES, INC.
By: /s/___________________________
Name:
Title:
EXHIBIT C
ASSIGNMENT AGREEMENT DATED SEPTEMBER 24, 1998
BY AND BETWEEN TRIANGLE RESEARCH AND DEVELOPMENT
CORPORATION AND THE COMPANY
[INFORMATION PLACED IN BRACKETS [] HAS BEEN
OMITTED IN ACCORDANCE WITH A CONFIDENTIAL
TREATMENT REQUEST PURSUANT TO RULE 406 AND
HAS BEEN FILED SEPARATELY WITH THE COMMISSION.
ASSIGNMENT AGREEMENT
ASSIGNMENT AGREEMENT (this "Agreement") dated September 24, 1998, by and
between Triangle Research and Development Corporation, a North Carolina
corporation ("TRDC" or "Assignor"), and Xxxxxx Technologies, Inc., a Delaware
corporation ("Xxxxxx" or "Assignee").
A. Assignor is the licensor of certain "Licensed Technology", as such term
is defined in Section 1.1 of that certain license agreement, dated January 22,
1991 (the "License Agreement"), by and between Assignor and Outlast
Technologies, Inc. (formerly known as Gateway Technologies, Inc.), a Colorado
corporation ("Outlast").
B. Assignor desires to assign its rights under the License Agreement to
Assignee and Assignee desires to acquire the rights of Assignor under the
License Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. Assignment. In consideration for $10.00 and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Assignor hereby assigns, transfers and conveys to Assignee, and Assignee hereby
accepts all right(s) Assignor has in, and with respect to, the License
Agreement.
2. Assignee's Obligations. To the extent that it is practical but only to
that extent, Assignee agrees to perform obligations under the License Agreement,
as follows:
(a) Assignee shall pay patent annuities under Section 7.2 of the License
Agreement only if advised in advance by Assignor that such are due; otherwise
Assignor shall retain this obligation, subject to reimbursement by Assignee
(which may in turn seek reimbursement from Outlast, as provided in Section 7.2);
and
(b) Assignee shall assume litigation duties and expenses under Section 13.1
and Section 13.3, but Assignor shall, at Assignee's request, join as party and
cooperate in prosecution or defense at Assignee's expense using counsel selected
by Assignee.
Assignee does not assume, and Assignor hereby expressly retains, any
obligations under the License Agreement that are personal to Assignor or its
shareholders. Assignor shall retain whatever ongoing obligations it may have, if
any, under the License Agreement or any other agreement or understanding with
Outlast, express or implied, to develop Licensed Technology.
3. Further Assurances. From and after the date hereof, Assignor shall
execute and deliver such other documents or instruments and take such further
action as may be reasonably requested by Assignee in order to effect the
assignment of the License Agreement as contemplated by this Assignment.
4. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of the parties hereto.
5. Controlling Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina applicable to contracts
entered into and wholly to be performed therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
TRIANGLE RESEARCH AND DEVELOPMENT CORPORATION
By: /s/____________________________
Name:
Title:
XXXXXX TECHNOLOGIES, INC.
By: /s/___________________________
Name:
Title:
EXHIBIT D
NON-QUALIFIED STOCK OPTION AGREEMENT DATED SEPTEMBER 24, 1998
BY AND BETWEEN XX. XXXXX X. XXXXXX AND THE COMPANY
[INFORMATION PLACED IN BRACKETS [] HAS BEEN
OMITTED IN ACCORDANCE WITH A CONFIDENTIAL
TREATMENT REQUEST PURSUANT TO RULE 406
AND HAS BEEN FILED SEPARATELY WITH THE COMMISSION
Exhibit X
XXXXXX TECHNOLOGIES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS OPTION AGREEMENT is made and entered as of the __ day of
September, 1998, by and between Xxxxxx Technologies, Inc., a Delaware
corporation (the "Corporation") and Xx. Xxxxx X. Xxxxxx (the "Optionee").
WHEREAS, the Optionee is a member of the Innovation Advisory Board of the
Corporation; and
WHEREAS, the Corporation considers it desirable and in its best interests
that Optionee be given an opportunity to acquire a proprietary interest in the
Corporation by possessing a non-qualified option to purchase up to [This
information has been omitted in accordance with a Confidential Treatment Request
and has been filed separately with the Commission.] of Common Stock of the
Corporation, par value $.001 per share (the "Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows: 1. Grant of Option.
The Corporation hereby grants to the Optionee the right and option (hereinafter
the "Option") to purchase all or any part of an aggregate of [This information
has been omitted in accordance with a Confidential Treatment Request and has
been filed separately with the Commission.] of Common Stock (such number being
subject to adjustment as hereinafter provided), on the terms and conditions
herein set forth and in the Plan, which is incorporated herein by reference. The
Optionee acknowledges receipt of a copy of the Plan.
The Optionee acknowledges that the Option is not an "incentive option"
within the meaning of an "incentive stock option plan" and Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price of the Common Stock covered by
the Option shall be [This information has been omitted in accordance with a
Confidential Treatment Request and has been filed separately with the
Commission.] per share (the "Purchase Price").
3. Term of the Option. Unless terminated earlier pursuant to Paragraph
9 hereof, the Option shall vest in its entirety on the anniversary of the date
hereof. Accordingly, the Option shall be exercisable as to the full amount of
the Option commencing one year from the date hereof. The Option granted hereby
shall terminate September 23, 2003 unless earlier terminated as provided herein
or in the Plan.
4. Method of Exercising Option. The Option may be exercised in whole or
in part at any time (to the extent that it is exercisable in accordance with its
terms) by giving written notice to the Corporation, together with the tender of
the Purchase Price of the Common Stock covered by the Option. Payment of the
Purchase Price may be made in any of the following ways:
(a) in United States dollars in cash or by check payable to the
Corporation; or
(b) by delivery of shares of Common Stock of the Corporation already owned
by the Optionee, valued at fair market value; or
(c) by a combination of cash or check and Common Stock as provided in (a)
and (b) above; or
(d) in the discretion of the Corporation, by the issuance by the Optionee
of a promissory note, which shall be payable in thirty (30) days and shall bear
interest at such rate as shall be determined by the Corporation, which in no
event shall be less than the minimum rate required by the provisions of Section
483 of the Code to avoid the imputation of income to such Optionee.
As soon as practicable after receipt by the Corporation of such notice and
of payment in full of the Option price of all the Common Stock with respect to
which the Option has been exercised (including interest if payment is made in
installments), a certificate or certificates representing such Common Stock
shall be issued in the name of the Optionee, and shall be delivered to the
Optionee. All Common Stock shall be issued only upon receipt by the Corporation
of the Optionee's representation that the shares of Common Stock are purchased
for investment and not with a view toward distribution thereof.
5. Availability of Shares. The Corporation, during the term of this Option,
at all times shall keep available the number of shares of Common Stock required
to satisfy the Option. Notwithstanding the foregoing, the Corporation shall not
be obligated to deliver any Common Stock unless and until, in the opinion of the
Corporation's counsel, all applicable federal and state laws and regulations
have been complied with, nor, if the outstanding Common Stock is at the time
listed on any securities exchange, unless and until the Common Stock to be
delivered has been listed (or authorized to be added to the list upon official
notice of issuance) upon such exchange, nor unless or until all other legal
matters in connection with the issuance and delivery of the Common Stock have
been approved by the Corporation's counsel.
6. Adjustments. (a) If prior to the exercise of the Option granted
hereunder the Corporation shall have effected one or more stock split-ups, stock
dividends, or other increases or reductions of the number of shares of its
Common Stock outstanding without receiving compensation therefor in money,
services or property, the number of shares of Common Stock subject to the option
hereby granted shall (i) if a net increase shall have been effected in the
number of outstanding shares of the Corporation's Common Stock, be
proportionately increased and the Purchase Price per share of Common Stock shall
be proportionately reduced; and (ii) if a net reduction shall have been effected
in the number of outstanding shares of the Corporation's Common Stock, be
proportionately reduced and the Purchase Price per share of Common Share be
proportionately increased.
(b) In the event the Corporation is merged into or consolidated with
another corporation under circumstances where the Corporation is not the
surviving corporation, or if the Corporation is liquidated or sells or otherwise
disposes of all or substantially all of its assets to another corporation while
any unexercised Options remain outstanding:
(i) subject to the provisions of clauses (iii), (iv) and (v) below, after
the effective date of such merger, consolidation or sale, as the case may be,
the Optionee shall be entitled, upon exercise of the Option, to receive in lieu
of shares of Common Stock, shares of such stock or other securities as the
holders of the shares of Common Stock received pursuant to the terms of the
merger, consolidation or sale; or
(ii) the Corporation may waive any discretionary limitations imposed with
respect to the exercise of the Option so that the Option from and after a date
prior to the effective date of such merger, consolidation, liquidation or sale,
as the case may be, specified by the Corporation, shall be exercisable in full;
or
(iii) the Option may be canceled by the Corporation as of the effective
date of any such merger, consolidation, liquidation or sale, provided that
notice of such cancellation shall be given to the Optionee, and the Optionee
shall have the right to exercise such option in full (without regard to any
discretionary limitations imposed with respect to the option) during a 30-day
period preceding the effective date of such merger, consolidation, liquidation
or sale; or
(iv) the Option may be canceled by the Corporation as of the date of any
such merger, consolidation, liquidation or sale, provided that notice of such
cancellation shall be given to the Optionee and the Optionee shall have the
right to exercise the Option but only to the extent exercisable in accordance
with any discretionary limitations imposed with respect to the Option prior to
the effective date of such merger, consolidation, liquidation or sale; or
(v) the Corporation in its discretion may provide for the cancellation of
the Option and for the payment to the Optionee of some part or all of the amount
by which the value thereof exceeds the payment, if any, which the Optionee would
have been required to make to exercise such option.
(c) Except as expressly provided herein, no issuance by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or Purchase Price of shares of Common Stock subject to
the Option.
7. Restrictions. The holder of this Option, by acceptance hereof,
represents and warrants as follows:
(a) This Option and the right to purchase Common Stock hereunder is
personal to the holder and shall not be transferred to any other person, other
than by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code, or Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or by the rules
thereunder. The Option shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of the Option or of any rights
granted hereunder contrary to the provisions of this Section 7, or the levy of
any attachment or similar process upon the Option or such right, shall be null
and void.
(b) The holder hereof has been advised and understands that the Option has
been issued in reliance upon exemptions from registration under the Securities
Act and applicable state statutes; the exercise of the Option and resale of the
Option and the Common Stock have not been registered under the Securities Act or
applicable state statutes and must be held and may not be sold, transferred, or
otherwise disposed of for value unless they are subsequently registered under
the Securities Act or an exemption from such registration is available; except
as set forth herein, the Corporation is under no obligation to register the
Option or the Common Stock under the Securities Act or the applicable state
statutes; in the absence of such registration, the sale of the Option or the
Common Stock may be practicably impossible; the Corporation's registrar and
transfer agent will maintain stop-transfer instructions against registration or
transfer of the Option and the Common Stock and any certificate issued upon
exercise of the Option representing the Common Stock will bear on its face a
legend in substantially the following form restricting the sale of the Common
Stock:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED UNDER THE
SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.
(c) Prior to one year from the date the Option has been exercised and the
Common Stock fully paid for, the Corporation may refuse to transfer the Common
Stock unless the holder thereof provides an opinion of legal counsel reasonably
satisfactory to the Corporation or a "no action" letter or interpretive response
from the staff of the Securities and Exchange Commission to the effect that the
transfer is proper; further, unless such opinion letter or response states that
the Common Stock are free of any restrictions under the Securities Act, the
Corporation may refuse to transfer the Common Stock to any transferee who does
not furnish in writing to the Corporation the same representations and agree to
the same conditions with respect to such Common Stock as are set forth herein.
Notwithstanding any of the foregoing, the Corporation may refuse to transfer the
Common Stock if any circumstances are present reasonably indicating that the
transferee's representations are not accurate.
(d) After one year but prior to two years from the date the incentive
Option has been exercised and the Common Stock fully paid for, the Corporation
may refuse to transfer the Common Stock unless the holder either (i) meets the
requirements of Subparagraph (b) above; or (ii) sells such Common Stock in
accordance with Rule 144 and furnishes to the Corporation written assurances of
compliance therewith in the form of a copy of the Notice of Form 144 and
appropriate letters of compliance from the holder of such Common Stock and the
securities broker-dealer to or through which such Common Stock are being sold.
No opinion of counsel for the holder of the Common Stock shall be required
respecting sales in reliance on Rule 144 pursuant to Clause (ii) of this
Subparagraph (d).
(e) After two years from the date that the Option has been exercised and
the Common Stock fully paid for, the Corporation shall, upon the written request
of any persons who have held the Common Stock for one year (excluding any
tolling period provided for by Rule 144) and who is not, and has not been during
the preceding three months, an affiliate of the Corporation, re-issue to such
holder in such names and denominations as the holder shall request, one or more
certificates for the Common Stock without any restriction whatsoever on their
further transfer and cancel any and all stop transfer instructions regarding
such Common Stock on the books and records of the Corporation.
8. Shareholder's Rights. The Optionee shall have no rights as a shareholder
with respect to the Common Stock issuable upon exercise of this Option until
payment of the Purchase Price and delivery to the Optionee of the Common Stock
has been made as provided herein.
9. Termination of Option. Except as otherwise stated herein, the Option to
the extent not heretofore exercised shall terminate upon the first of the
following dates to occur:
(a) In the event the Optionee ceases to be a member of the Board of
Directors of the Corporation for any reason other than death or permanent
disability, any then unexercised portion of the Option granted to the Optionee
shall, to the extent not then vested, immediately terminate and become void; any
portion of the Option which is then vested but has not been exercised at the
time the Optionee so ceases to be a member of the Board of Directors may be
exercised, to the extent it is then vested, by the Optionee within 180 days of
the date the Optionee ceased to be a member of the Board; and all options shall
terminate after such 180 days have expired.
(b) In the event that the Optionee ceases to be a member of the Board by
reason of his or her death or permanent disability, any option granted to such
optionee shall be immediately and automatically accelerated and become fully
vested and all unexercised options shall be exercisable by the Optionee (or by
the Optionee's personal representative, heir or legatee, in the event of death)
until the scheduled expiration date of the Option.
(c) September 23, 2003, the fifth anniversary of this Agreement.
10. Validity and Construction. The validity and construction of this Option
shall be governed by the laws of the State of North Carolina. Such construction
is vested in the Board of Directors and its construction shall be final and
conclusive.
IN WITNESS WHEREOF, the Corporation has caused this Option Agreement to be
executed by its proper corporate officers thereunto duly authorized.
XXXXXX TECHNOLOGIES, INC.
By: /s/Xxxxxxx X. Xxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx, President
/s/Xxxxx X. Xxxxxx
------------------------------
Xx. Xxxxx X. Xxxxxx
