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Unity Wireless - Agreement To Redeem Membership Interest
EXHIBIT 10.5
AGREEMENT TO REDEEM MEMBERSHIP INTEREST, TRANSFER INTELLECTUAL PROPERTY
AND AMEND ASSET PURCHASE AGREEMENT
THIS AGREEMENT TO REDEEM MEMBERSHIP INTEREST, TRANSFER INTELLECTUAL PROPERTY AND AMEND ASSET PURCHASE AGREEMENT ("Agreement") is made by and among TRAFFIC SYSTEMS, L.L.C., an Arizona limited liability company ("Buyer"), UNITY WIRELESS SYSTEMS CORPORATION, a corporation incorporated under the laws of British Columbia ("Seller"), TRAFFIC SAFETY PRODUCTS, INC., an Arizona corporation ("TSP"), and JIM HILL ("Hill"), effective the 9th day of April, 2001.
RECITALS:
A. The parties hereto are parties to that certain Asset Purchase
Agreement, dated October 6, 2000 ("Asset Purchase Agreement"),
whereby, among other things, Seller sold certain assets to Buyer,
licensed certain intellectual property to Buyer and received a
thirty-seven percent (37%) interest in Buyer (the "Interest"). The
intellectual property is more specifically described in Exhibit "A"
attached hereto ("Intellectual Property").
B. One of the parties to the Asset Purchase Agreement, 568608 B.C. Ltd.
has merged with Seller, with Seller the surviving corporation; and
C. Seller desires to transfer all the Interest and the Intellectual
Property to Buyer, subject to the terms and conditions of this
Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Redemption of Seller's Interest. Buyer hereby redeems the Interest.
2. Transfer of the Intellectual Property. Seller assigns to Buyer the Intellectual Property, effective April 30, 2001. Concurrent with the execution of this Agreement, Seller and Buyer agree to enter into an Assignment of Intellectual Property, in the form attached hereto as Exhibit "B". Buyer agrees to pay all costs associated with the assignment of the Intellectual Property, including any related patent office fees. Buyer accepts the Intellectual Property "as is".
3. Amendment and Restatement of Subparagraph 6(a) and Paragraph 7 of Asset Purchase Agreement. Subparagraph 6(a) of the Asset Purchase Agreement is hereby amended and restated in its entirety to read as follows:
"a. All obligations to perform any work required on existing
installations of Sonem preemption products necessary to bring
such installations into compliance with the terms of the written
warranty provided by Seller with respect to such products and for
any work required at common law on such installations, all such
work with respect to a specific installation to be completed
within a reasonable time after Buyer receives written notice that
such installation is not in compliance with such warranty
provisions or common law; and"
Paragraph 7 of the Asset Purchase Agreement is hereby amended and restated
in its entirety to read as follows:
"7. Release. Buyer hereby releases and discharges each of Seller, its
successors and assigns, from all actions, causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses,
damages, judgments, extents, executions, claims and demands
whatsoever, in law or equity, which against Seller, its
successors and assigns any of Buyer, its successors and assigns
ever had, now have or hereafter can, shall or may have, in
connection with the work obligations referred to in paragraph
6(a) above."
4. Representations and Warranties.
Seller represents and warrants as follows:
a. Seller has the full power and right to enter into this Agreement
and to consummate the sale and transfer of the Interest and the
Intellectual Property, free and clear of any option, commitment,
lien or other encumbrance.
b. Buyer shall receive good and marketable title to the Interest.
c. Seller has provided Buyer with copies of all written notices of
required or requested warranty work with respect to existing
installations of Sonem preemption products, and Seller has not
received any other such notices orally.
d. Attached hereto as Exhibit "C" is a true and correct copy of the
written warranty referred to in subparagraph 6(a) of the Asset
Purchase Agreement, as amended hereby.
Buyer represents and warrants as follows:
a. Buyer has sent the letter attached as Exhibit "D" to all Sonem
distributors.
b. Buyer will send a letter containing wording similar to that in
Exhibit "E" to all Sonem distributors on or before April 15, 2001
5. Indemnification. Buyer agrees to indemnify Seller from and against all claims, damages, costs and liabilities suffered by Seller in connection with the debts, obligations and liabilities identified in subparagraph 6(a) of the Asset Purchase Agreement, as amended hereby, within a reasonable time after receiving written notice thereof. Seller agrees to indemnify, defend, and hold Buyer harmless from any damages, costs or liabilities incurred as a result of the falsity of any representation made by Seller under this Agreement.
6. Payment of Purchase Price.
a. In the event of a sale of Buyer, either through the sale of all or substantially all of its assets which it acquired from Seller as a result of the Asset Purchase Agreement and/or this Agreement, or a transaction or series of related transactions pursuant to which the members of Buyer cease to own the majority of the outstanding membership interest of Buyer or its acquirer or successor (any such sale of Buyer, a "Sale"), in which the cash purchase price payable to Buyer or TSP upon completion of the Sale is at least US$2,500,000, Seller shall become entitled to receive the remaining balance of the amount described in Paragraph 2(b) of the Asset Purchase Agreement, within five business days following completion of the Sale or at such later time as may be agreed between Buyer and Seller.
b. In the event of a Sale in which the cash purchase price payable to Buyer or TSP upon completion of the Sale is less than US$2,500,000, Seller, on the one hand, and Buyer or TSP, on the other hand, agree to confer in good faith prior to the closing of such Sale for the purpose of arriving at a definitive written agreement regarding the allocation of the purchase price between Buyer or TSP, on the one hand, and Seller, on the other hand.
c. Buyer and TSP covenant that neither of them will enter into any agreement contemplating a Sale referred to in subparagraph 6(b) above unless such agreement requires, as a condition
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precedent to the closing of such Sale, that Seller shall have executed an agreement contemplated by subparagraph 6(b) above regarding the allocation of the purchase price in such Sale.
d. If the terms of the payment of the purchase price for any Sale do not provide for full payment on the closing of such Sale, then any such Sale agreement shall provide, in addition to its other terms, that Seller shall be entitled to fifty percent (50%) of the purchase price money payable to Buyer or TSP after the closing of such Sale, when payable, until the remaining balance of the amount described in Paragraph 2(b) of the Asset Purchase Agreement has been paid in full.
7. Asset Purchase Agreement. The parties acknowledge that no further materials or monies are due from Seller to Buyer either as a result of the Asset Purchase Agreement or otherwise and that Seller is not obligated to provide any technical, development or manufacturing support to Buyer either as a result of the Asset Purchase Agreement or otherwise.
8. Amendment and Restatement of Paragraph 15 of Asset Purchase Agreement. Paragraph 15 of the Asset Purchase Agreement is hereby amended and restated in its entirety to read as follows:
"15. The parties acknowledge that Seller is not required to maintain product liability insurance on installations installed after October 6, 2000. Notwithstanding the foregoing, Seller shall be solely responsible for maintaining in effect product liability insurance coverage for all traffic preemption installations existing as of October 6, 2000 and represents that it has named Buyer as an additional insured under the relevant policy."
9. Closing. The closing (the "Closing") of the sale and purchase of the Interest and the Intellectual Property shall take place at the offices of SACKS TIERNEY P.A. commencing at 10:00 a.m. local time on April 30, 2001 or at such other time and place as the parties may agree in writing. The date of Closing is sometimes herein referred to as the "Closing Date" or the "Closing."
10. Items to be Delivered at Closing. At the Closing and subject to the terms and conditions herein contained:
Seller will deliver to Buyer the following:
(a) duly executed Assignment of Intellectual Property in the form of
Exhibit B.
(b) duly executed Assignment by Seller to Buyer of the Interest;
Buyer will deliver to Seller the following:
(a) duly executed Assignment by Seller to Buyer of the Interest;
11. Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term may be waived (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the parties.
12. Conflict. In the event of any conflict between the terms of this Agreement and the terms of the Asset Purchase Agreement, the terms of this Agreement shall control and the Asset Purchase Agreement shall be amended as provided herein.
13. Severability. If any provision of this Agreement is held to be invalid or unenforceable to any extent in any context, it shall nevertheless be enforced to the fullest extent allowed by law in that and other contexts, and the validity and force of the remainder of this Agreement shall not be affected thereby.
14. Governing Law. This Agreement, including all matters of construction, validity and performance, shall be governed by and construed and enforced in accordance with the laws of the State of Arizona, as applied to contracts made, executed and to be fully performed in such state by citizens of such state, without regard to its choice of law and conflict of laws rules.
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15. Interpretation. The headings contained in this Agreement are for reference only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the word "including" is used in this Agreement it shall be deemed to be followed by the words "without limitation."
16. Heirs, Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective heirs, successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective heirs, successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement except as expressly provided in this Agreement.
17. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. Signatures to this Agreement are deemed acceptable by facsimile transmission.
18. Entire Agreement. This Agreement, the other documents delivered at the Closing and the Asset Purchase Agreement as amended hereby supersede all prior agreements with respect to the subject matter hereof. In interpreting and construing this Agreement, the fact that a particular party may have drafted this Agreement or any provision hereof shall not be given any weight or relevance.
19. Authority. Each party warrants that it has the authority to enter into this Agreement and that the person signing on its behalf, if any, is duly authorized to do so.
IN WITNESS WHEREOF, the parties herein have executed this Agreement the day and year first above written.
BUYER:
TRAFFIC SYSTEMS, LLC, an Arizona limited
liability company
By:
--------------------------------------------
Its:
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SELLER:
UNITY WIRELESS SYSTEMS CORPORATION
By:
--------------------------------------------
Its:
-------------------------------------------
TRAFFIC SAFETY PRODUCTS, INC., an Arizona
corporation
By:
--------------------------------------------
Its:
-------------------------------------------
--------------------------------------
JAMES L. HILL
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EXHIBIT "A"
INTELLECTUAL PROPERTY
A. Seller is the owner of the following patents for siren-detector inventions:
Country Patent Number Issue Date Expiry Date
------- ------------- ---------- -----------
Australia 681380 18 December, 1997 4 March, 2014
Canada 1,322,586 28 September, 1993 28 September, 2010
China 94195085.9 28 April, 2000 4 March, 2014
France EP 318668 8 January, 1997 1 October, 2008
France EP 748494 17 June, 1998 4 March, 2014
Germany P69411195.3 8 January, 1997 1 October, 2008
Germany EP 748494 17 June, 1998 4 March, 2014
Hong Kong HK1009352 28 May, 1999 4 March, 2014
Italy EP 318668 8 January, 1997 1 October, 2008
New Zealand 262083 8 September, 1998 4 March, 2014
Singapore 49839 21 December 1998 4 March, 2014
Spain 2011597 8 January, 1997 1 October, 2008
United Kingdom EP 318668 8 January, 1997 1 October, 2008
United Kingdom EP 748494 17 June, 1998 4 March, 2014
U.S.A. 4,864,297 5 September, 1989 14 October, 2007
U.S.A. 5,710,555 20 January, 1998 1 March, 2014
B. Seller has filed applications to patent a siren-detector invention as
follows:
Country Patent Number Issue Date Expiry Date
------- ------------- ---------- -----------
Canada 2,183,868 4 March, 1994 4 March, 2014
Japan 7-522583 4 March, 1994 4 March, 2014
C. Seller is the owner of the following patents for other inventions:
Country Patent Number Issue Date Expiry Date
------- ------------- ---------- -----------
Audio Railway Crossing Detector:
U.S.A. 5,910,929 8 June, 1999 10 July, 2018
Control Signal Coding and Detection in the Audible and Inaudible Ranges:
U.S.A. 6,133,849 17 October, 2000 20 February, 2016
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EXHIBIT "B"
ASSIGNMENT OF INTELLECTUAL PROPERTY
[This Exhibit to be provided by Traffic Systems LLC.]
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EXHIBIT "C"
SELLER'S WRITTEN WARRANTY
Limited Warranty
Sonic Systems Corporation will repair or replace any SONEM 2000 Digital
Siren Detector component or components found to be defective in materials
and/or workmanship within five (5) years from the date of shipment from
Sonic. Some states and jurisdictions do not allow limitations on duration
of an implied warranty, so the above limitation may not apply to the
...
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