TECHNOLOGY CONTRIBUTION
AGREEMENT
This TECHNOLOGY CONTRIBUTION AGREEMENT (“
Agreement ”) is entered
into as of September 25, 2009 (the “ Effective
Date ”), by and between Northeast Maritime
Institute, Inc ., a Massachusetts corporation, with an address
at 32 Washington Street, Fairhaven, MA 02719 (“
Seller ”) and hZo,
Inc., a Delaware corporation, with an address at 3855 South 500
West Suite J, Salt Lake City, Utah 84115 (“
Purchaser ”)
In consideration of the covenants and mutual
understandings herein, and for other good and valuable
consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:
“Assignment Date”
means the date and time of the ZAGG
Deferred Closing (as defined in the Series A Purchase
Agreement).
“Common Interest
Agreement” means an agreement, in the form set forth as
Exhibit A, establishing the terms under which Seller
and Purchaser will protect certain information relating to the
Patent Applications under the common interest privilege.
“Deliverables”
means any and all documents
delivered, or to be delivered, by Seller to the Escrow Agent
pursuant to Section 3.1.
“ Escrow Agreement”
means an agreement in the form attached as Exhibit B
.
“Escrow Agent”
refers to that person to be
identified as such in the Escrow Agreement.
“Executed
Assignments” means both the executed and notarized Assignment
of Patent Application Rights in Exhibit C, and the
Assignment of Technology in Exhibit D ,
as signed by a duly authorized representative
of Seller.
“Know-How”
means any inventions, know-how,
experience, knowledge, trade secrets and proprietary information
relating to the Patent Rights, including the application of any
patent rights resulting from the Patent Application.
“Liability”
means any debt, liability or
obligation of any kind, whether direct or indirect, known or
unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, matured or unmatured, determined or determinable,
disputed or undisputed, liquidated or unliquidated, or due or to
become due, excluding obligations pursuant to certain nondisclosure
agreements with third parties concerning the Technology.
“License Term”
means the period of time from the
Effective Date until the earlier of (i) the Assignment Date, (ii)
the end of the day of February 25, 2010, Mountain Time Zone; or
(iii) Purchaser’s material breach of this Agreement that is
not cured within thirty (30) days of written notice from Seller
describing in reasonable detail such breach, or if such breach is
not capable of cure within such 30-day period, Purchaser’s
failure to immediately commence a cure in a manner reasonably
satisfactory to Seller within such 30-day period or to continue all
diligent efforts to cure such breach during and after
such 30-day period, with the further requirement that in all events
a complete cure occur within no more than sixty (60) days of
Seller’s written notice.
“Marks” means certain trademarks, service marks, trade
names, trade dress, logos, corporate names and other source or
business identifiers relating to the Patent Rights and the
Know-How, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated with
any of the foregoing, and all applications, registrations, renewals
and extensions in connection therewith.
“Patent Applications”
means those US patent applications
listed in Exhibit D hereto.
“Patent Issuance Contingency
Date” means the date, with respect to each Patent
Application, is (i) four years from the Effective Date, plus (ii)
any additional days in which such Patent Application was delayed as
a result of causes primarily attributable to the USPTO, including
without limitation the issuance of a first substantive office
action.
“Patent Rights”
means the rights in and to the
Patent Applications, including any and all rights arising from the
Patent Applications, such as continuations, divisionals and
reissues, and any patents issuing from the Patent Applications, and
any patents or patent applications deriving priority, directly or
indirectly, from any Patent Applications.
“Series A Purchase
Agreement” means that certain Series A Preferred Stock
Purchase Agreement, dated as of even date herewith and which is
attached hereto as Exhibit F , among Purchaser and
the persons and entities listed on the Schedule of Investors
attached thereto as Exhibit A, which include Seller.
“Technology”
means the Patent Rights, Know-How,
Marks, Improvements (as defined below), materials, processes,
equipment, tangible property and proprietary rights; together with
all other intellectual property, copyright protected information,
routines, processes, operations, prototypes, specifications,
sketches, notebooks, technologies, formulae, drawings, algorithms,
studies, reports, costs, pricing, forecasts, orders, research and
development, market data, customer names, opportunities, suppliers,
vendor relationships, hardware and software programs, and financial
information related to the coating of manufactured goods and
components of such goods with weather-proof, splash proof,
protective coating.
2.1 Seller
has developed and owns the Technology, and Seller, subject to the
terms and conditions of this Agreement, wishes to sell to Purchaser
all right, title, and interest in the Technology free and clear of
any title restrictions, liens, claims and encumbrances.
2.2 Pursuant
to a Mutual Confidentiality and Nondisclosure Agreement, dated
January 15, 2009 ( “NDA” ), Seller has
disclosed to Purchaser or its affiliate ZAGG, Inc. (”
ZAGG ”) certain Confidential Information of
Seller (as defined therein) related to the Technology.
2.3 Purchaser,
having reviewed such Confidential Information, and subject to the
terms and conditions of this Agreement, wishes to purchase from
Seller all right, title, and interest in the Technology free and
clear of any Liabilities, title restrictions, liens, claims, and
encumbrances.
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DELIVERY AND
ASSIGNMENT OF THE TECHNOLOGY.
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3.1
Assignment Deliverables . On the Effective Date, Seller will
deliver to the Escrow Agent, all documents contemplated herein,
duly executed by Seller, including without limitation, the Executed
Assignments. Additionally, Seller will duly execute such
additional documents, if any, reasonably requested by Purchaser, to
confirm the assignment of the Technology (the “
Assignment ”) and deliver such additional
documents, if any, (i) if prior to the Assignment Date, to Escrow
Agent, or (ii) if subsequent to the Assignment Date, to
Purchaser. Upon the Assignment Date, without limiting
the Assignment provided in the Deliverables, Seller hereby also
sells, assigns, transfers, and conveys to Purchaser all right,
title and interest of Seller, in and to the Technology, including
without limitation all:
(b) inventions,
invention disclosures, and discoveries described in any of the
Patent Applications;
(c) rights
to apply in any or all countries of the world for patents,
certificates of invention, utility models, industrial design
protections, design patent protections, or other governmental
grants or issuances of any type related to any of the patent
applications and the inventions, invention disclosures, and
discoveries therein, and the right to claim priority to the Patent
Applications;
(d) causes
of action (whether known or unknown or whether currently pending,
filed, or otherwise) and other enforcement rights under, or on
account of, any of the Technology, Patent Applications and/or the
rights described in subsection 3.1(c), including, without
limitation, all causes of action and other enforcement rights for
(i) damages, (ii) injunctive relief, and (iii) any other remedies
of any kind for past, current and future infringement;
and
(e) rights
to collect royalties or other payments under or on account of any
of the Technology, including any of the foregoing.
3.2
Delivery of the Technology . Seller shall
promptly deliver to Purchaser, any and all Technology which
Purchaser reasonably requests in the formats and media in existence
and reasonably available to Seller.
4.1
License . During the License Term, Seller hereby
grants to Purchaser a sole and exclusive (including without
limitation to the exclusion of Seller), non-transferable,
worldwide, royalty-free license and right to fully exploit the
Technology and Improvements (as defined below), including without
limitation the right to use, license, manufacture, market, promote,
offer for sale, sell or procure orders for, distribute,
demonstrate, provide training and other services related to,
practice, or otherwise dispose of any Technology or Improvement(s)
anywhere in the world. Notwithstanding the foregoing,
Purchaser shall not do either of the following prior to the
Assignment Date without the prior written consent of Seller, which
consent may not be unreasonably withheld: (a) grant any sublicense
with respect to the Technology; or (b) grant any other right or
incur any obligation with respect to the Technology that would be
binding on Seller at the end of the License Term.
4.2
Improvements . During the License Term, each
party agrees promptly to disclose to the other party in writing all
inventions, whether patentable or not, which are
“improvements” on, or derivative works of, the
Technology or other subject matter described in the Technology (
“Improvements” ); provided,
however , that Seller shall, solely until the Assignment Date,
own all worldwide right, title and interest in and to the
Improvements, subject to (i) the Licensee’s rights herein
under this Agreement, and (ii) any third party rights included or
associated with the Improvements. Notwithstanding the foregoing,
Purchaser agrees not to challenge the validity of Seller’s
ownership of the Improvements, during the License Term, and if the
Assignment does not occur, at any time thereafter.
4.3
Maintenance of Technology . During the License
Term, Purchaser and Seller shall reasonably cooperate with each
other in filing and prosecuting any applications, continuations,
continuing applications, continuations-in-part or divisions of any
such applications, or any foreign counterparts of any such
applications for the Technology or Improvements, including without
limitation, the Patent Applications, to the extent determined by
each of Purchaser and Seller to be reasonably necessary for the
protection or exploitation of the Technology, the cost of which
shall be paid by Purchaser; provided, however , that if
Purchaser and Seller agree to abandon the prosecution of any Patent
Application, then Seller shall have the right to file and
prosecute, at its sole cost and expense and in Seller’s name,
such Patent Application, and Purchaser shall at Seller’s
request promptly assign such Patent Application to
Seller.
4.4
Enforcement of Technology . During the License
Term, Purchaser and Seller shall reasonably cooperate with each
other to take such actions as Purchaser and Seller agree are
reasonably necessary to enforce the Technology and Improvements
against infringement by a third party and to take any action with
respect to infringement, including infringement of the Technology
prior to the Effective Date. If either party determines
that a third party is infringing, or has infringed, the Technology
or any Improvement, such party shall notify the other party of such
infringement in writing. Such notice shall include all
relevant information in the notifying party’s
possession.
4.5
Effect of Expiration . Upon the Effective Date,
Purchaser shall deposit into escrow a duly-executed power of
attorney in the form attached hereto as Exhibit G ,
authorizing Seller to take such reasonable actions as Seller may
reasonably deem appropriate in its sole discretion to confirm the
termination of the license set forth in Section 4.1 at the end of
the License Term only if the License Term terminates other than due
to the ZAGG Deferred Closing.
5.1
Payment of Consideration . In consideration for the
Assignment, and such other rights granted to Purchaser hereunder,
Purchaser hereby agrees to compensate Seller as follows:
(i) Upon
the Effective Date, Purchaser shall pay Seller
$1,000,000.00;
(ii) At
the ZAGG Deferred Closing, Purchaser shall pay Seller $2,000,000.00
(the “ ZAGG Deferred Closing Payment
”);
(iii) At
the ZAGG Deferred Closing, Purchaser shall issue to Seller
10,521,884 shares of Series A Preferred Stock pursuant to the
Series A Purchase Agreement, of which:
(a) 8,417,508
shares will be delivered to Seller on the date of the ZAGG Deferred
Closing (the “ NMI Closing Shares ”);
and
(b) 2,104,376
shares (the “ NMI Contingent Shares ”)
will be held in escrow, pending release or cancellation pursuant to
Subsection 5.2 below, by the Secretary of Purchaser pursuant to the
Joint Escrow Instructions of Seller and Purchaser set forth in
Exhibit H attached to this Agreement, which
instructions are incorporated into this Agreement by this
reference, and which instructions shall also be delivered to the
Secretary of Purchaser at the ZAGG Deferred Closing, together with
a stock power in the form of Exhibit I attached to
this Agreement, executed by Seller (with the date left
blank).
On the
Effective Date, ZAGG will execute in favor of Seller the Guaranty
in substantially the form attached hereto as Exhibit
J . Subject to Seller giving purchaser
reasonable advance written wiring instructions, Purchaser shall
make payment pursuant to Subsection 5.1(i) by wire instructions to
an account directed by Seller. Upon the earlier of
Purchaser’s request or February 15, 2010, Seller will provide
Purchaser written instructions regarding delivery of the ZAGG
Deferred Closing Payment.
5.2
Contingent Consideration . If with respect to any
Patent Application, despite commercially reasonable efforts of
Purchaser to diligently prosecute such Patent Application, the
United States Patent and Trademark Office (
“USPTO” ) fails to issue a patent
resulting from any Patent Application, or amendment thereto, prior
to the end of any Patent Application’s respective Patent
Issuance Contingency Date, then, upon the end of the last possible
Patent Issuance Contingency Date, Seller shall forfeit any right to
the NMI Contingent Shares and the Secretary of Purchaser shall
promptly cancel such shares; provided, however , that if the
USPTO issues a patent resulting from any Patent Application, or
amendment thereto, prior to the end of any Patent
Application’s respective Patent Issuance Contingency Date,
the Secretary of Purchaser will promptly deliver the stock
certificate representing the NMI Contingent Shares to
Seller.
5.3
Rights Regarding NMI Contingent Stock . Subject
to the terms hereof, Seller shall have all the rights of a
stockholder with respect to the NMI Contingent Stock while they are
held in escrow, including without limitation, the right to vote the
shares. If, from time to time while the shares are being
held in escrow, there is (i) any stock dividend, stock split or
other change in the shares, (ii) any dividend of cash or other
property on the shares, or (iii) any merger or sale of all or
substantially all of the assets or other acquisition of Purchaser,
any and all new, substituted or additional securities or cash or
other consideration to which Seller is entitled by reason of
Seller’s ownership of the NMI Contingent Shares shall
immediately become subject to the escrow, deposited with the
Secretary of Purchaser and included thereafter as “NMI
Contingent Shares” for purposes of this Agreement.
5.4.
Tax Consequences . The parties agree that the
Technology will be contributed by Seller to Purchaser in a tax-free
exchange with respect to all NMI Closing Shares and NMI Contingent
Shares within the meaning of Section 351 of the Internal Revenue
Code (the “ Code ”). As to any
other consideration referenced above, Seller has reviewed with
Seller’s own tax advisors the federal, state, local and
foreign tax consequences of the transactions contemplated by this
Agreement, and Seller is relying solely on such advisors and not on
any statements or representations of Purchaser or any of its
agents.
5.5
Reservation of Shares under Equity Incentive Plan
. Four percent (4%) of the shares of Common Stock
currently reserved for issuance under Purchaser’s equity
incentive plan shall be reserved for issuance to service providers
to Purchaser identified by Seller, with such grants to be made as
soon as practicable following the Effective Date at the
then-current fair market value based on an independent valuation
for purposes of Section 409A of the Code and FASB
123(R)).
5.6
Continuing Obligations under Term Sheet . The
continuing obligations of the parties under binding provisions of
that certain Amended and Restated Terms Sheet for Series A
Preferred Stock Financing of hZo, Inc. dated September 8, 2009,
shall remain in full force and effect.
6.1
Further Cooperation .
(a) At
the reasonable request of the other party, a party will execute and
deliver such other instruments and do and perform such other acts
and things as may be necessary or desirable for effecting
completely the consummation of the transactions contemplated
hereby, including, without limitation, execution,
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