ASSET PURCHASE AGREEMENT BY AND BETWEEN JINKHOLD, LTD. A United Kingdom Corporation 21 Tudor Street London #06286236 (Purchaser) And ANDRONICS, LTD. A Northern Ireland Corporation 20 Balliniska Road Springtown, BT48 0NA #NI 17460 (Seller) ASSET PURCHASE AGREEMENT
Contract Categories:
Business Finance
- Purchase Agreements
EX-10.1 2 exhibit10-1.htm EXHIBIT 10.1 ASSET PURCHASE AGREEMENT exhibit10-1.htm
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
JINKHOLD, LTD.
A United Kingdom Corporation
21 Tudor Street
London
#06286236
(Purchaser)
And
ANDRONICS, LTD.
A Northern Ireland Corporation
20 Balliniska Road
Springtown, BT48 0NA
#NI 17460
(Seller)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of the date set forth below (the “Execution Date”), by and between Jinkhold, Ltd., a corporation duly organized under the laws of the United Kingdom (“Jinkhold” or the “Purchaser”), Andronics, Ltd., a corporation duly organized under the laws of Northern Ireland (“Andronics” or the “Seller”) and Robert Andrews, an individual residing in Northern Ireland and a founder of Andronics (“Andrews”). Jinkhold, Andronics and Andrews are hereinafter at times collectively referred to as the “Parties.”
RECITALS:
WHEREAS, the Purchaser’s success requires ongoing access to and control over the development and use of certain key technologies;
WHEREAS, the Seller is engaged in the business of providing two-way global data solutions for the monitoring and control of customers’ remote assets (the “Business”);
WHEREAS, the Seller desires to sell to the Purchaser significant Assets (defined in Section 1) and transfer employees engaged in the ongoing operations of the Business (the “Continuing Operations”); and
WHEREAS, the Purchaser desires to acquire the Assets of the Seller in exchange for cash and/or stock of SARS Corporation, a corporation duly organized under the laws of the state of Nevada (“SARS”) and other valuable Consideration (defined in Section 4).
NOW, THEREFORE, for and in consideration of the premises, and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1. Assets Purchased. The following properties, as described below in Sections 1.1 - 1.5, are collectively referred to herein as the “Assets”:
1.1 Assets. The Seller agrees to sell to the Purchaser and the Purchaser agrees to purchase from the Seller, on the terms and conditions set forth in this Agreement, all of the Assets listed and identified in Schedule 1.1, annexed hereto and made apart hereof. Additionally, the Assets listed on Schedule 1.1 include all due and outstanding accounts receivable by the Seller as of the Closing Date and all outstanding work-in-progress listed on Schedule 1.1 or otherwise.
1.2 Employees. At the Closing (defined below), the Seller agrees to reassign all current employees of the Seller involved in the ongoing operations of the Business to the Purchaser. A list of these employees is set forth on Schedule 1.2, annexed hereto and made apart hereof (the “Employees”).
1.3 Contracts. At the Closing, the benefit of the Seller’s Contracts (defined below) shall be transferred to the Purchaser. The burden of the Contracts shall be novated to the Purchaser simultaneously on the Closing Date. The Contracts and all novations are set forth and included on Schedule 1.3, annexed hereto and made apart hereof (the “Contracts”).
1.3.1 No Violation of Existing Agreements. Neither the execution and delivery of Agreement, nor the consummation of the transactions contemplated hereby, will conflict with or (with or without notice and/or lapse of time) result in a termination, breach, impairment or violation of any Contract. Seller has received all necessary consents to enable the transfer of the Contracts to the Purchaser.
1.4 Intellectual Property. On or before the Closing, the Seller agrees to transfer ownership and title of all intellectual property and intellectual property agreements of the Seller to the Purchaser. A list of this property is set forth on Schedule 1.4, annexed hereto and made apart hereof. As used herein, the term “Intellectual Property” shall mean all worldwide industrial and intellectual property rights, including, without limitation, patents, patent applications, patent rights, trademarks, trademark applications, trade names, service marks, service mark applications, copyright, copyright applications, franchises, licenses, inventories, know-how, trade secrets, customer lists, proprietary processes and formulae, all source and object code, algorithms, structure, display screens, layouts, inventions, development tools and all documentation and media constituting, describing or relating to the above, including, without limitation, manuals, memoranda and records.
1.5 Goodwill. On or before the Closing, the Seller agrees to transfer all goodwill of the Seller to the Purchaser. A list of this goodwill is set forth on Schedule 1.5, annexed hereto and made apart hereof.
2. Excluded Assets. All other forms of assets not included on Schedules 1.1 – 1.5 will remain the sole property of the Seller, and Seller shall retain all the rights, title and interests to these assets, including but not limited to the statutory books and records of Andronics.
3. Liabilities Assumed. The Purchaser agrees to assume and pay, discharge or perform, as appropriate, all liabilities directly attached to the Assets listed on Schedule 3 (the “Assumed Liabilities”). The obligations of the Purchaser under this section are subject to whatever rights the Purchaser may have under this Agreement or otherwise for breach by the Seller of any representation, warranty, covenant or agreement contained in this Agreement, including but not limited to any right of indemnification provided by this Agreement.
3.1 Offset. Any liabilities not listed on Schedule 3 shall remain the sole obligation of the Seller and Robert Andrews. In the event that undisclosed liabilities arise or are uncovered within one (1) year after the Closing Date (the “Undisclosed Liabilities”), the Undisclosed Liabilities United States Dollar amount shall be offset first, by one (1) share of unvested Andrews Monthly Options, defined in Section 4.6; second, by one (1) share of unvested Andrews Quarterly Options, defined in Section 4.6; and third, by one (1) Convertible Debenture, defined in Section 4.2, United States Dollar for every One United States Dollar ($1.00 USD) of Undisclosed Liability, with partial dollar amounts rounded up to the nearest dollar (collectively, the “Offset”).
4. Consideration. In consideration of the sale, transfer and conveyance to the Purchaser of the Assets and the Assumed Liabilities, Purchaser shall submit the following to the Seller on the Closing Date (collectively referred to herein as the “Consideration”):
4.1 Stock. Fifty thousand (50,000) shares of restricted SARS common stock, $0.001 par value per share (“SARSCommon Stock”);
4.2 Convertible Debentures. Convertible debentures in the total aggregate principal amount of Seven Hundred Twenty-Two Thousand Two Hundred United States Dollars ($722,000 USD) (the “Convertible Debentures”). The Convertible Debentures shall include the following terms: (i) the interest rate shall be ten percent (10%) compounded annually, (ii) the Convertible Debenture shall automatically convert into shares of SARS Common Stock (the “Conversion”) one (1) year from the date the Convertible Debenture was executed (the “Debenture Maturity Date”), (iii) the exercise price shall be One United States Dollar ($1.00 USD) per share, a form of Convertible Debenture is annexed hereto and made apart hereof as Exhibit A. The Convertible Debentures shall be issued to the individuals and/or entities listed on Schedule 4.2.
4.3 Assumption of Tax Liability. Purchaser agrees to assume Seller’s tax liability to HM Revenue & Customs Service up to, but not to exceed, Two Hundred Thousand Pounds (£200,000 GPB).
5. Payment of Consideration. On or before the Closing Date, the Purchaser shall transfer, or direct its agent to transfer, the Consideration, referred to in Sections 4.1 and 4.2, to the Seller.
6. Adjustments. In regards to the Assets, the operation of the Seller’s Business and related income and expenses up to the close of business on the day before the Closing Date shall be for the account of the Seller and thereafter for the account of the Purchaser.
7. Value Added Tax (“VAT”).
7.1 The Parties intend that the Value Added Tax Act 1994 Section 49 (“Section 49”) and the Value Added Tax (Special Provisions) Order 1995/1268 Article 5 (“Article 5”) shall apply to the transactions contemplated herein. The Parties shall use all reasonable endeavours to ensure that the transactions contemplated herein are not treated as a supply of goods or a supply of services for the purposes of VAT and pursuant to Section 49 and Article 5.
7.2 On or before the Closing Date, Andronics shall deliver to the Purchaser all records relating to the Business referred to in Section 49.
7.3 If VAT is chargeable on the transfer of any of the Assets pursuant to this Agreement, then, subject to the receipt by the Buyer of a valid VAT invoice or invoices relating to those assets, the Buyer shall pay to the Seller (in addition to the Consideration referred to in Section 2.1) an amount equal to the amount of VAT payable in respect of them together with any penalty or interest incurred for late payment of the tax thereif.
8. Employees.
8.1 The Parties acknowledge that the Employees' contracts of employment shall automatically transfer to the Purchaser pursuant to the Transfer of Undertaking (Protection of Employment) Regulations 1981 (as amended) (the “Regulations”). Additionally, the Seller acknowledges that (i) no employee of the Purchaser has an employment agreement; and (ii) no employee of the Seller shall be granted an employment agreement.
8.2 The Purchaser shall be responsible for and undertakes to indemnify and keep the Seller indemnified from and against all accrued holiday pay entitlements and accrued holiday entitlements of the Employees which have accrued prior to the Closing Date.
8.3 Unless actions for the claim(s) arise before the Closing Date, the Purchaser shall have no recourse against the Seller in respect of any claim made by or in relation to the Employees whether by virtue of the assumption of Undertakings (Protection of Employment) Regulations 1981, the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999 or arising under contract, statute, regulation, directive or otherwise.
8.4 Beginning on the Closing Date, the Purchaser shall be responsible for the payment of all wages and salaries due, any related pay-as-you-earn, National Insurance or deductions in respect of the Employees.
8.5 The Seller undertakes to indemnify and keep the Purchaser indemnified from and against all liabilities, obligations, costs, claims and demands arising from or in respect of any of the Employees, insofar as and to the extent that the same was caused by any act or omission by the Seller prior to the Closing Date.
| 8.6 | All the obligations of the Seller under or in connection with the contracts of employment of the Employees arising in respect of any event or period on or prior to the Closing Date shall be performed and discharged by the Seller and the Seller shall indemnify the Purchaser from and against any and all actions, proceedings, costs, claims, expenses, demands, damages, awards (whether of compensation or otherwise), fines, penalties, judgements, order and liabilities whatsoever (including, without limitation, national insurance and pension entitlements and any liability to pay accrued holiday pay) which: |
8.6.1 relate to or arise out of or in connection with the employment or dismissal of any of the Employees or any other employee by the Seller or any other person or any act or omission by the Seller or any associate of the Seller or any other event occurring on or prior to the Closing Date for which the Purchaser is liable by reason of the operation of the Regulations or other measure having the force of law; or
8.6.2 (whether or not in respect of a period before or after the Closing Date) relate to any contract of employment of any employee of the Seller or any other person (other than any of the Employees) in respect of which the Purchaser is liable as a result of the Regulations or Directive 77/187 of the Council of European Communities or the termination of any such contract (and in this connection the Purchaser shall terminate such contacts of employment promptly on becoming aware of the same); or
8.6.3 arise from any failure by the Seller to comply with its obligations made or contemplated by the Regulations.
8.7 The Seller undertakes to authorise and hereby authorises each of the Employees to disclose to the Purchaser after the Closing Date all information in his or her possession relating to the Business notwithstanding any term of his or her employment with the Seller (whether express or implied) which would otherwise preclude him or her from so doing.
8.8 Should any liabilities, obligations, costs, claims and demands arising from or in respect of any of the Employees, insofar as and to the extent that the same was caused by any act or omission by the Seller prior to the Closing Date (the “Employee Liabilities”), arise on or after the Closing Date, the Employee Liabilities shall be subject to the Offset defined in Section 3.1.
9. Closing.
9.1 Time and Place. The closing of the sale and purchase of the Assets (the “Closing”) shall take place at The Otto Law Group, PLLC, at 5:00 p.m. PST on or before November 15, 2007 (the “Closing Date”), or at such other time as the Parties may mutually agree and upon which time all (i) closing conditions; (ii) closing covenants; and (iii) outstanding exhibits and schedules have been completed, attached hereto and fully satisfied. This Agreement may be executed in any number of counterparts, each of which will be an original as regards any party whose signature appears thereon and all of which together will constitute one and the same instrument. This Agreement will become binding when one or more counterparts hereof, individually or taken together, will bear the signatures of each of the Parties reflected hereon as signatories. The “Execution Date” shall be defined as the date this Agreement is executed by the Parties.
9.2 Obligations of Seller at the Closing. At the Closing, the Seller shall execute, or cause to be executed, and shall deliver to the Purchaser the following:
9.2.1 Such documents as the Purchaser may reasonably request for the purpose of (A) evidencing the accuracy of any of Seller’s representations and warranties, (B) evidencing the performance by Seller of, or the compliance by Seller with, any covenant or obligation required to be performed or complied with by it, (C) evidencing the satisfaction of any condition referred to in this Agreement, or (D) otherwise facilitating the consummation or performance of any of the transactions contemplated in this Agreement.
9.2.2 The Seller shall provide the Purchaser an accounting of all prepayments received from customers in respect of any of the Contracts to the extent that such prepayments exceed the actual costs (if any) incurred by the Seller in partially performing such Contracts prior to the Closing Date.
9.2.3 Rent, water, electricity, telephone charges, salaries, wages, accrued holiday pay and other outgoings and costs of a periodical nature which relate to periods commencing before the Closing Date and ending after the Closing Date shall be apportioned on a time basis and those referable to the period ended on the Closing Date shall be borne by the Seller and those referable to the period commencing on the day following the Closing Date shall be borne by the Purchaser.
9.3 Obligations of Purchaser at the Closing. At the Closing, the Purchaser shall execute, or cause to be executed, and shall deliver to the Seller the following:
9.3.1 Such documents as the Seller may reasonably request for the purpose of (A) evidencing the accuracy of any representation or warranty of the Purchaser, (B) evidencing the performance by the Purchaser of, or the compliance by the Purchaser with, any covenant or obligation required to be performed or complied with by the Purchaser, (C) evidencing the satisfaction of any condition referred to in this Agreement, or (D) otherwise facilitating the consummation or performance of any of the transactions contemplated in this agreement; and
9.3.2 A release of the obligations of the Seller under previously executed promissory notes in the aggregate total amount of Six Hundred Eighty-Two Thousand Three Hundred Ninety-Eight United States Dollars and Ninety-Two Cents ($682,398.92USD) (the “Notes”). A schedule of the Notes is annexed hereto and made apart hereof on Schedule 9.3.2.
9.4 Collateral Events. At the Closing, the Parties acknowledge that the Operating Agreement (“Operating Agreement”) dated February 7, 2007 and the Licensing Agreements (the “Licensing Agreement”), dated February 7, 2007 executed by and between the Seller, Veritas Solutions, Inc. and Secure Asset Reporting Services, Inc. shall be terminated and cancelled according to the terms set forth in the Operating Agreement and Licensing Agreement, respectively. A fully executed copy of the Operating Agreement and the Licensing Agreements is annexed hereto and made apart hereof as Exhibits C and D.
9.5 Possession. Simultaneously with such deliveries, Seller shall take all action necessary or appropriate to put Purchaser in actual possession and operating control of the Assets.
10. Seller’s Obligation Prior to Closing.
10.1 Seller’s Operation of Business Prior to Closing. The Seller agrees that between the Execution Date and the Closing Date (the “Interim Period”), the Seller will:
| 10.1.1 Continue to operate and maintain the Assets that are the subject of this Agreement in the usual and ordinary course and in substantial conformity with all applicable laws, ordinances, regulations, rules or orders, and will use its best efforts to preserve the Assets and preserve the Assets with its customers, suppliers and others having business relations with the Seller. |
| 10.1.2 Not assign, sell, lease or otherwise transfer, dispose or vary any of the Assets, whether now owned or hereafter acquired, except in the normal and ordinary course of business and in connection with its normal operation. |
| 10.1.3 Maintain all of its Assets other than inventories in their present condition, reasonable wear and tear and ordinary usage excepted, and maintain the inventories at levels normally maintained. |
| 10.1.4 Not engage any new Employee in the Business (save that the Seller may do so if such Employee’s contract of employment will not transfer to the Purchaser on or as a result of the Closing) or take any step to vary the contract of employment of any Employee or take any steps which would entitle any Employee to terminate his employment without notice or in circumstances amounting to constructive dismissal. |
| 10.1.5 The Seller covenants with and undertakes to the Purchaser that it will as soon as reasonably practicable notify the Purchaser in writing of any matter or thing which arises and becomes known to it in the Interim Period which constitutes a breach of any of the Warranties set out in Section 14. |
11. Access to Premises and Information. At a reasonable time prior to the Closing Date, the Seller shall provide the Purchaser and its representatives with reasonable access during business hours to the Assets, titles, contracts and records of the Seller and furnish such additional information concerning the Seller’s business to the Purchaser may reasonably request from time to time.
12. Covenants of Seller Prior to Closing.
12.1 Conditions and Best Efforts. The Seller will use its best efforts to effectuate the transactions contemplated by this Agreement and to fulfill all the conditions of the Seller’s obligations under this Agreement, and shall do all acts and things as may be required to carry out the Seller’s obligations and to consummate this Agreement.
12.2 Confidential Information. If for any reason the transactions contemplated by this Agreement fail to consummate, the Purchaser shall not disclose to third parties any confidential information received from the Seller in the course of investigating, negotiating and performing the transactions contemplated by this Agreement.
12.3 Financial Statements. On or before the Closing Date, the Seller shall supply the Purchaser with financial statements through September 30, 2007, of which shall include, but is not limited to, (i) balance sheet, (ii) profit and loss statement, (iii) detailed accounts receivable (also to be attached as a part of Schedule 1.1), (iv) detailed accounts payable (also to be attached as a part of Schedule 3), (v) detailed inventory schedule (also to be attached as a part of Schedule 1.1) and (vi) other customary disclosures or as may be requested.
13. Covenants of Purchaser Prior to Closing.
13.1 Conditions and Best Efforts. The Purchaser will use its best efforts to effectuate the transactions contemplated by this Agreement and to fulfill all the conditions of the Purchaser’s obligations under this Agreement, and shall do all acts and things as may be required to carry out the Purchaser’s obligations and to consummate this Agreement.
13.2 Confidential Information. If for any reason the transactions contemplated by this Agreement fail to consummate, the Purchaser shall not disclose to third parties any confidential information received from the Seller in the course of investigating, negotiating and performing the transactions contemplated by this Agreement. The Parties recognize that they have received and will receive confidential information concerning the other during the course of the negotiations, preparations and due diligence the transaction contemplated herein. Accordingly, the Parties each: (a) shall use its respective best efforts to prevent the unauthorized disclosure of any confidential information concerning the other that was or is disclosed during the course of such negotiations, preparations and due diligence; and (b) shall not make use of or permit to be used any such confidential information other than for the purpose of effectuating the Agreement and related transactions. The obligations of this section will not apply to information that: (a) is or becomes part of the public domain other than by fault of the receiving party; (b) is disclosed by the disclosing party to third parties without restrictions on disclosure; (c) is received by the receiving party from a third party without breach of a contractual or fiduciary nondisclosure obligation to the other party; or (d) is required to be disclosed by law, provided that the receiving party shall give at least two (2) days’ prior written notice to the disclosing party of such disclosure required by law. If this Agreement is terminated, all copies of documents containing confidential information shall be returned by the receiving party to the disclosing party.
14. Representations and Warranties of the Seller. The Seller represents and warrants to the Purchaser as follows:
14.1 Corporate Existence. The Seller is now, and on the Closing Date shall be, a corporation duly organized, validly existing and in good standing under the laws of Northern Ireland, has all requisite corporate power and authority to own its properties and assets and carry on its business and is in good standing in each jurisdiction in which such qualification is required.
14.2 Corporation Power and Authorization. The Seller has full corporate authority to execute and deliver this Agreement and any other agreement to be executed and delivered by the Seller in connection herewith, and to carry out the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate and shareholder action. No other corporate proceedings by the Seller are necessary to authorize this Agreement or the carrying out of the transactions contemplated hereby. The Seller has consulted its own financial advisor, tax advisor and accountant, as necessary or desirable, as to matters concerning this Agreement. This Agreement constitutes a valid and binding Agreement of the Seller in accordance with its terms.
14.3 Conflict with Other Agreements, Consents and Approvals. With respect to (i) any corporate or entity formation documents, such as the articles of incorporation, bylaws or similar documents of the Seller, (ii) any applicable law, statute, rule or regulation, (iii) any contract to which the Seller is a party or may be bound, or (iv) any judgment, order, injunction, decree or ruling of any court or governmental authority to which the Seller is a party or subject, the execution and delivery by the Seller of this Agreement and any other agreement to be executed and delivered by the Seller in connection herewith and the consummation of the transactions contemplated hereby will not (a) result in any violation, conflict or default, or give to others any interest or rights, including rights of termination, cancellation or acceleration, or (b) require any authorization, consent, approval, exemption or other action by any court or administrative or governmental body which has not been obtained, or any notice to or filing with any court or administrative or governmental body which has not been given or done.
14.4 Compliance with Law. The Seller’s use and occupancy of the Assets, wherever located, has been in compliance with all applicable governmental laws or ordinances, the non-compliance with which, or the violation of which, might have a material adverse affect on the Assets, the Assumed Liabilities or the financial condition, results of operations or anticipated business prospects of the Purchaser, and the Seller has received no claim or notice of violation with respect thereto. Without in any way limiting the generality of the foregoing, the Seller is in compliance with, and is subject to no liabilities under, any and all applicable laws, governmental rules, ordinances, regulations and orders pertaining to the presence, management, release, discharge or disposal of toxic or hazardous waste material or substances, pollutants (including conventional pollutants) and contaminants. The Seller has obtained all material permits, licenses, franchises and other authorizations necessary for the conduct of its business.
14.5 Tax and Other Returns and Reports. (i) All tax returns and reports (including without limitation all income tax, payroll, unemployment compensation, sales and use, excise, privilege, property, ad valorem, franchise, license and school) required to be filed by the Seller by the Closing (“Tax Returns”) have been filed with the appropriate governmental agencies in all jurisdictions in which such returns and reports are required to be filed, and all such returns and reports properly reflect the taxes of the Seller for the periods covered thereby; and (ii) all taxes, assessments, interest, penalties, deficiencies, fees and other governmental charges or impositions, including those enumerated above with respect to the Tax Returns, which are called for by the Tax Returns, or which are claimed to be due from the Seller by notice from any taxing authority, or upon or measured by its properties, assets or income, have been properly accrued or paid by or at the Closing if then due and payable. The amount of tax payable by the Seller on the profits of the Business in the last two accounting periods of the Seller has not depended to a material extent on any agreement with any tax authority not being an agreement based on strict application of any relevant legislation.
14.5.1 Accounts. The accounts of the Seller relating to the Business for the financial year ended on February 28, 2007 comply with the requirements of the Companies Order 1989 (or when the Companies Act 2006 is brought into force) Companies Act 2006. The accounts have been prepared in accordance with all applicable Statements of Standard Accounting Practice and (to the extent that none are applicable) with generally accepted accounting principles and practices applied consistently. They show a true and fair view of the assets and liabilities of the Business as at that date, including contingent, unquantified or disputed liabilities, and of the results of the Business for the financial period ended on February 28, 2007. The accounting and other records of the Business are up to date and contain complete and accurate details of all transactions of the Business.
14.6 Intellectual Property Rights.
14.6.1 The Seller owns, possesses or has the right to use all intellectual property rights necessary or required to conduct its business as presently conducted, or otherwise used by the Seller. There are no subsisting licenses or other agreements under which the Seller has granted to any third party any rights or interest in connection with the Intellectual Property or any rights to any know-how or confidential information relating to the Business.
14.6.2 No royalties or other amounts are payable by the Seller to other persons by reason of the ownership or the use of the any intellectual property owned or used by the Seller.
14.6.3 (i) To the best knowledge of the Seller, no product or service related to the Seller’s business and marketed and sold by the Seller violates any license or infringes upon any intellectual property rights of others, (ii) the Seller has not received any notice that any such product or service conflicts with any intellectual property rights of others, and (iii) to the best knowledge of the Seller, there is no reasonable basis to believe that any such violation, infringement or conflict may exist.
14.6.4 The Seller is not a party to, or subject to, any contract which currently requires, or upon the passage of time or occurrence of an event or contingency (whether of default or otherwise) will require, the conveyance or disclosure of secret processes or formulae related to, any intellectual property of the Seller.
14.6.5 All computer hardware and software included among the Assets and currently used and/or necessary to the conduct of the Seller’s business, are in good working order.
14.6.6 Except as described in Schedules 1.1-1.5, the Seller has obtained and delivered to the Purchaser all consents and approvals of third parties necessary to duly transfer to the Purchaser all of the Seller’s rights, title and interest in and to all of its intellectual property included among the Assets.
14.7 Contracts. The Seller is not a party to or subject to any contract that involves (i) agency, distributorship, franchising, marketing rights, information sharing, manufacturing rights, servicing or maintenance; (ii) partnership, joint venture or similar arrangement; (iii) the purchase, conditional sale, credit sale, lease, hiring or similar arrangement; (iv) committing Andronics to capital expenditures; (v) disabling Andronics’ complete performance with the terms of any Contract entered into within (6) months from the date of execution; (vi) the supply of goods and/or services by or to the Seller on terms under which retrospective or future discounts, price reductions or other financial incentives are given by or to the Seller dependent upon the level of purchases or any other fact; (vii) terms not on “arm’s length;” and (viii) a loss-making nature.
14.7.1 The Seller is not in default under any of the Contracts or in respect of any other obligation or restriction binding upon it in relation to the Business. No threat or claim of default has been made and no threat or claim is outstanding against the Seller under any of the Contracts or any other agreement or arrangement to which the Seller is a party relating to the Business or the Assets and there is nothing, whereby any of the Contracts or other agreement or arrangement, that may be terminated or rescinded by any other party.
14.7.2 During the twelve (12) months immediately preceding Closing Date, there has been no substantial change in the bases or terms on which any person is prepared to do business with the Seller in relation to the Business. No substantial customer or supplier of the Business has ceased or substantially reduced its business with the Seller and no indication has been received by the Seller that there will be any such change, cessation or reduction.
14.8 Litigation. The Seller has no knowledge of any claim, litigation, proceeding or investigation pending or threatened against the Seller that might result in any material adverse change in the Business or condition of the Assets being conveyed under this Agreement.
14.9 Assets. The items included on Schedule 1.1 are to the best of the Seller’s knowledge fit for their intended purpose and are of satisfactory quality, are not obsolete, slow moving or likely to realize less than book value, and are sufficient for the normal requirements of the Business. The work-in-progress is at its normal level having regard to current orders. The raw material, packaging materials and finished goods are at their normal level having regard to the current trading requirements of the Business. All of the items comprising the fixed Assets are in a good and safe state of repair and condition and satisfactory working order, are adequate and not surplus to the requirements of the Business, and would not be expected to require replacement within a period of twelve (12) months after the Closing Date.
14.9.1 Title to Assets. The Seller holds good and marketable title to the Assets, free and clear of restrictions on or conditions to transfer or assignment, and free and clear of liens, pledges, charges or encumbrances.
14.10 Employees. No changes have been made since February 7, 2007 in the terms of employment of the Employees and the Seller is not under any legal or moral obligation to make any such change. There are no amounts owing to any present or former officers or employees of the Seller in respect of the Business and none of them is entitled to accrued holiday pay other than in respect of the Seller's current holiday year. Except as provided at schedule 1.2, No employee has been engaged by the Seller in relation to the Business since February 7, 2007 and no person employed by the Seller at or since that date has ceased, or given or received notice to cease, to be so employed or will be entitled to give such notice as a result of the provisions of this Agreement. The Seller has maintained adequate and suitable records regarding the service of each of the Employees and complied with all agreements for the time being relating to them. There is no recognition, wage bargaining or other collective or other agreement or arrangement in force or proposed between the Seller and any trade union or similar organization, there is no dispute (current or threatened) between the Seller and any trade union or similar organization and there has been no industrial action affecting the Business during the past five (5) years. The Seller is and has been at all times in compliance with all legislation, regulations and codes of practice in relation to the Employees, and no orders, awards or other notices have been served on and no other enforcement or similar proceedings have been taken against the Seller pursuant to any legislation, regulations or codes of practice in respect of the Employees. All of the Employees (and all other workers involved in the Business) are legally entitled to be in and work in the United Kingdom. No retirement, death or disability benefit scheme for present or former officers or employees or their dependants is in existence, no proposals have been announced and the Seller is not under any legal or moral obligation to establish any such scheme.
14.11 Accuracy of Representations and Warranties. None of the representations or warranties of the Seller contain or will contain any untrue statement of a material fact or omit or will omit or misstate a material fact necessary in order to make statements in this Agreement not misleading. The Seller knows of no fact that has resulted in a material change in the business, operations or assets of the Seller that has not been set forth in this Agreement or otherwise disclosed to the Purchaser.
15. Representations and Warranties of Purchaser. The Purchaser represents and warrants as follows:
15.1 Corporate Existence. The Purchaser is now, and on the Closing Date will be, a corporation duly organized, validly existing and in good standing under the laws of the United Kingdom, has all requisite corporate power and authority to enter into this Agreement and perform its obligations hereunder.
15.2 Authorization. The Purchaser has full corporate authority to execute and deliver this Agreement and any other agreement to be executed and delivered by the Purchaser in connection herewith, and to carry out the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate and shareholder action. No other corporate proceedings by the Purchaser will be necessary to authorize this Agreement or the carrying out of the transactions contemplated hereby. This Agreement constitutes a valid and binding Agreement of the Seller, in accordance with its terms. The Purchaser has consulted its own financial advisor, tax advisor and accountant, as necessary or desirable, as to matters concerning this Agreement.
15.3 Conflict with Other Agreements, Consents and Approvals. With respect to (i) the articles of incorporation, bylaws or similar document of the Purchaser, (ii) any applicable law, statute, rule or regulation, (iii) any contract to which the Purchaser is a party or may be bound, or (iv) any judgment, order, injunction, decree or ruling of any court or governmental authority to which the Purchaser is a party or subject, the execution and delivery by the Purchaser of this Agreement and any other agreement to be executed and delivered by the Purchaser in connection herewith and the consummation of the transactions contemplated hereby will not (a) result in any violation, conflict or default, or give to others any interest or rights, including rights of termination, cancellation or acceleration, or (b) require any authorization, consent, approval, exemption or other action by any court or administrative or governmental body which has not been obtained, or any notice to or filing with any court or administrative or governmental body which has not been given or done.
15.4 Employees of Andronics. The Purchaser has had the opportunity to examine full and accurate details of the 'employee liability information' (as defined in the Regulations). Additionally, the Seller has supplied the Purchaser with the following: (i) the identity of the Employees; (ii) the ages of the Employees; (iii) the information contained in the written statements of employment particulars for the Employees; (iv) the information relating to any collective agreements that apply to the Employees, where the procedures set out in the Employment Act 2002 (Dispute Resolution) Regulations 2004 apply; (v) instances within the preceding two (2) years of any disciplinary action taken by the Seller in respect of any of the Employees or of any grievances raised by any of the Employees; (vi) instances of any legal action taken by any of the Employees against the Seller in the preceding two (2) years; and (vii) instances of potential legal actions that may be brought by any of the Employees against the Seller where the Seller has reasonable grounds to believe such actions might occur.
15.5 Accuracy of Representations and Warranties. None of the representations or warranties of the Purchaser contain or will contain any untrue statement of a material fact or omit or will omit or misstate a material fact necessary in order to make the statements contained herein not misleading.
16. Conditions Precedent to Purchaser’s Obligations. The obligation of the Purchaser to purchase the Assets is subject to the fulfillment, prior to or at the Closing Date, of each of the following conditions, any one or portion of which may be waived in writing by the Purchaser:
16.1 Representations, Warranties and Covenants of Seller. The representations and warranties of the Seller contained herein and any other documents delivered by the Seller in connection with this Agreement shall be true and correct in all material respects at the Closing; and the Seller shall have performed all obligations and complied with all agreements, undertakings, covenants and conditions required by this Agreement to be performed or complied with by it or prior to the Closing.
16.2 Licenses and Permits. The Purchaser shall have obtained all licenses and permits from public authorities necessary to authorize the ownership and operation of the business of the Seller.
16.3 Conditions of the Business. There shall have been no material adverse change in the manner of operation of the Seller’s business prior to the Closing Date.
16.4 No Suits or Actions. At the Closing Date no suit, action or other proceeding shall have been threatened or instituted to restrain, enjoin or otherwise prevent the consummation of this Agreement or the contemplated transactions.
17. Conditions Precedent to Obligations of the Seller. The obligations of the Seller to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or at the Closing Date, of each of the following conditions, any one or a portion of which may be waived in writing by the Seller;
17.1 Representations, Warranties and Covenants of Purchaser. All representations and warranties made in this Agreement by the Purchaser shall be true as of the Closing Date as fully as though such representations and warranties had been made on and as of the Closing Date, and the Purchaser shall not have violated or shall not have failed to perform in accordance with any covenant contained in this Agreement.
18. Covenants Subsequent to the Closing Date.
18.1 Lease Agreement. A lease agreement with Robert and Margaret Andrews for the lease of the property consisting of the current Andronics offices, located at Unit 20 Ballinska Road, Springtown Industrial Estate, Londonderry, Northern Ireland BT48 0NA. The monthly facilities rental pursuant to the lease agreement shall be Ten Thousand Pounds (₤10,000 GBP) per month for the term of the lease. The Parties shall reasonably agree upon the lease agreement terms on or before the Closing Date. Upon the Closing Date, a copy of the lease agreement shall be attached hereto as Exhibit D and made apart hereof.
18.2 Advisory Board. The Purchaser acknowledges the personal liability of Robert Andrews in connection with the Six Hundred Fifty Thousand Pound (£650,000 GBP) personal guarantee made for the benefit of Andronics. At the Closing, Robert Andrews shall be appointed to the advisory board of Secure Asset Reporting Services, Inc. Mr. Andrews shall serve as an advisory board director until the earlier of (i) his resignation, (ii) appointment of his successor or (iii) his termination.
18.3 Common Stock Options. For services rendered to Andronics after the Closing Date, Robert Andrews shall be entitled to acquire SARS Common Stock equal to the total aggregate amount of one million five hundred thousand (1,500,000) shares at One United States Cent ($0.01 USD) per share (the “Andrews Options”). The Andrews Options must be exercised before the end of the first quarter immediately preceding the twelve (12) month period the options vested in or they are forfeited. The Andrews Options shall vest in accordance with the following:
18.3.1 One million (1,000,000) shares shall vest monthly beginning upon the Closing Date ( “Andrews Monthly Options”).
18.3.2 Five hundred thousand (500,000) shares shall vest quarterly upon meeting the revenue projections listed in Schedule 18.3.2 and in the following amounts:
Quarter 1: 50,000 options vest
Quarter 2: 100,000 options vest
Quarter 3: 150,000 options vest
Quarter 4: 200,000 options vest
If any revenue projections are not met for any given quarter, the option amount for that quarter, less ten percent (10%), shall be added to the fourth quarter’s total. If the fourth quarter goals are not met, that quarters entire option amount (whether or not accrued options have been added to the fourth quarter) shall be forfeited. Section 18.3.2 shall be hereinafter defined as “Andrews Quarterly Options.”
Robert Andrews covenants to pay to the Purchaser (or as the Purchaser may direct) an amount equal to any liability of the Purchaser (or any other person) to pay income tax or national insurance contributions (both employers and employees) (a “Relevant Tax Liability”) arising as a result of the grant, exercise, assignment or release of the Andrews Options or as the result of the acquisition, holding or disposal of SARS Common Stock by Mr. Andrews. In connection therewith, Mr. Andrews and the Purchaser agree that:
(i) if so requested by the Purchaser at any time after the Closing Date, Mr. Andrews shall enter into an election under Section 431 of the Income Tax (Earnings and Pensions) Act 2003 in respect of any SARS Common Stock acquired by Mr. Andrews pursuant to the option; and
(ii) it shall be a condition of the exercise of the Andrews Options that Mr. Andrews shall remit to the Purchaser (or as it may direct) in cleared funds the amount of any Relevant Tax Liability or make such other arrangements for the discharge of such Relevant Tax Liability as the Board of Directors of the Purchaser may in its absolute discretion think fit.
19. Non-Competition, Non-Solicitation.
19.1 Non-Competition. Seller agrees that, without both the disclosure to and the written approval of the Board of Directors of SARS Corporation, it shall not, directly or indirectly, engage or be interested in (whether as a principal, lender, employee, officer, director, partner, venturer, consultant or otherwise) any business(es) that is competitive with the business being conducted by the Purchaser, without the express written approval of the Board of Directors of SARS Corporation.
19.2 Non-Solicitation. Seller agrees that, without the prior written consent of the Company’s Board of Directors, for a period of two (2) years after the Closing Date, it shall not, directly or indirectly disturb, entice, or in any other manner persuade, any Employee of the Seller or Purchaser to discontinue that person’s or firm’s relationship with the Business if the Employee(s) were employed by the Seller at any time during the twelve (12) month period prior to the Closing Date.
20. Purchaser’s Acceptance. The Purchaser represents and acknowledges that it has entered into this Agreement on the basis of its own examination, personal knowledge and opinion of the value of the business. The Purchaser has not relied on any representations made by the Seller other than those specified in this Agreement. The Purchaser further acknowledges the Seller has not made any agreement or promise to repair or improve any of the leasehold improvements, equipment or other personal property being sold to the Purchaser under this Agreement, and that the Purchaser takes all such property in the condition existing on the Execution Date, except as otherwise provided in this Agreement.
21. Risk of Loss. The risk of loss, damage or destruction to any of the equipment, inventory or other personal property to be conveyed to the Purchaser under this Agreement shall be borne by the Seller up to the time of Closing. In the event of such loss, damage or destruction, the Seller, to the extent reasonable, shall replace the lost property or repair or cause to repair the damaged property to its condition prior to the damage. If replacement, repairs or restorations are not completed prior to Closing, then the purchase price shall be adjusted by an amount agreed upon by the Purchaser and the Seller that will be required to complete the replacement, repair or restoration following Closing. If the Purchaser and the Seller are unable to agree, then the Purchaser, at its sole option and notwithstanding any other provision of this Agreement, upon notice to the Seller, may rescind this Agreement and declare it to be of no further force and effect, in which event there shall be no Closing of this Agreement and all the terms and provisions of this Agreement shall be deemed null and void. If, prior to Closing, any of the real properties that are the subject of the leases to be assumed by the Purchaser are materially damaged or destroyed, then the Purchaser may rescind this Agreement in the manner provided above unless arrangements for repair satisfactory to all parties involved are made prior to Closing.
22. Indemnification and Survival.
22.1 Survival of Representations and Warranties. All representations and warranties made in this Agreement shall survive the Closing of this Agreement, except that any party to whom a representation or warranty has been made in this Agreement shall be deemed to have waived any misrepresentation or breach of representation or warranty of which such party had knowledge prior to Closing. Any party learning of a misrepresentation or breach of representation or warranty under this Agreement shall immediately give written notice thereof to all other parties to this Agreement. The representations and warranties in this Agreement shall terminate two (2) years from the Closing Date, and such representations or warranties shall thereafter be without force or effect, except any claim with respect to which notice has been given to the party to be charged prior to such expiration date.
22.2 Seller’s Indemnification. The Seller hereby agrees to indemnify and hold the Purchaser, it successors and assigns harmless from and against: (i) Any and all damages, losses, claims, liabilities, deficiencies and obligations of every kind and description, contingent or otherwise, arising out of or related to the operation of the Seller’s business prior to the close of business on the day before the Closing Date, except for damages, losses, claims, liabilities, deficiencies and obligations of the Seller expressly assumed by the Purchaser under this Agreement or paid by insurance maintained by the Seller or the Purchaser, (ii) any and all damage or deficiency resulting from any material misrepresentation, breach of warranty or covenant, or nonfulfillment of any agreement on the part of the Seller under this Agreement, and (iv) any and all actions, suits, claims, proceedings, investigation, audits, demands, assessments, fines, judgments, costs and other expenses (including, without limitation, reasonable audit and attorneys fees) incident to any of the foregoing.
The Seller’s indemnity obligations under this Section 22.2 shall be subject to the following: (i) if any claim is asserted against the Purchaser that would give rise to a claim by the Purchaser against the Seller for indemnification under the provisions of this Section, then the Purchaser shall promptly give written notice to the Seller concerning such claim and the Seller shall, at no expense to the Purchaser, defend the claim, and (ii) the Seller shall not be required to indemnify the Purchaser for an amount that exceeds the fair market value of the Purchase Price paid by the Purchaser under this Agreement.
22.3 Purchaser’s Indemnification. The Purchaser agrees to defend, indemnify, and hold harmless the Seller from and against (i) any and all claims, liabilities and obligations of every kind and description arising out of or related to the operation of the business following Closing or arising out of the Purchaser’s failure to perform obligations of the Seller assumed by the Purchaser pursuant to this Agreement; (ii) any and all damage or deficiency resulting from any material misrepresentation, breach of warranty or covenant, or nonfulfillment of any agreement on the part of the Purchaser under this Agreement, and (iii) any and all actions, suits, claims, proceedings, investigation, audits, demands, assessments, fines, judgments, costs and other expenses (including, without limitation, reasonable audit and attorneys fees) incident to any of the foregoing.
23. Disputes. In the event of a dispute between the Parties as to any material term herein, the Parties shall first attempt to resolve the dispute informally.
23.1 No claim shall be brought by the Purchaser against the Seller unless notice in writing has been given to the Seller as soon as reasonably practicable, and in any event within twenty-eight (28) days after the Purchaser becomes aware of the grounds for a claim and on or before the first anniversary of this Agreement specifying the nature of the claim in reasonably sufficient detail and so far as practicable the amount claimed.
23.2 Any claim shall become fully barred and unenforceable after the second anniversary of this Agreement unless proceedings in respect of that claim have been commenced. For this purpose, proceedings shall not be deemed to have been commenced unless they have been issued and served upon the Seller.
23.3 Attorneys' Fees. If any action, suit or proceeding is commenced to establish, maintain, or enforce any right or remedy under this Agreement, the party not prevailing therein shall pay, in addition to any damages or other award, all reasonable attorneys' fees and litigation expenses incurred therein by the prevailing party.
23.4 The Purchaser shall have no claim whatever against the Seller: (i) if and to the extent that the breach on which the claim is based occurs as a result of any legislation not in force on the Execution Date that takes effect retrospectively or any increase in the rates of taxation in force at that date, or as a consequence of a change in the interpretation of the law in any jurisdiction after the Execution Date; (ii) if and to the extent that the breach on which the claim is based would not have arisen but for any voluntary act, omission, transaction or arrangement by or with the Purchaser or any person connected with the Purchaser after the Closing Date otherwise than in the ordinary course of conducting the Business which the Purchaser knew or ought reasonably to have known could give rise to a claim; (iii) to the extent that the claim arises only as a result of any changes after the Closing Date in the accounting bases, policies or methods used by the Purchaser to value any of its assets, or; (iv) to the extent that the claim relates to any loss for which the Purchaser is indemnified by insurance or for which it would have been indemnified if at the relevant time the Purchaser had maintained valid and adequate insurance cover that is normally effected by prudent companies carrying on a business similar to the Business.
23.5 No claim shall be made by the Purchaser if the fact, omission, circumstance or occurrence giving rise to the claim has been fully and fairly disclosed to the Purchaser in this Agreement.
23.6 Conduct of Claims. Should the Purchaser become aware of any grounds that might give rise to a claim, having given notice to the Seller in accordance with Section 23.1, the Purchaser (i) shall not make any admission of liability or agreement or compromise with any party without prior consultation with and the agreement of the Seller, which shall not be unreasonably withheld or delayed; (ii) should the claim result from or arise from a dispute with a third party, take such action to avoid, dispute, resist, appeal, compromise or contest the dispute as the Seller may reasonably request and at the Seller's expense; (iii) shall make available to the Seller all information reasonably required and available to enable the Seller to avoid, dispute, resist, appeal, compromise or contest the claim and any liability connected with the claim; and (iv) shall not be obliged to take any action which on a reasonable view is likely materially to prejudice the Business or the Purchaser.
23.7 Should the Purchaser receive any payment or benefit from any policy of insurance or any third party other than the Seller as a result of the circumstances giving rise to a claim, and the Seller has made any payment to the Purchaser in respect of that claim, the Purchaser shall, as soon as practicable after receipt, reimburse the Seller an amount which is the lesser of the amount of the payment or benefit received from the insurer or other third party and the payment received from the Seller, having deducted all costs, charges and expenses reasonably incurred by the Purchaser in obtaining the payment or benefit.
23.8 If any potential claim arises by reason of a liability that is contingent only, the Seller shall not be under any obligation to make any payment for that claim until such time as the contingent liability becomes actual.
24. Miscellaneous Provisions.
24.1 Notices. All notices, requests, demands, claims, consents and other communications required or permitted under this Agreement shall be in writing. Any notice, request, demand, claim, communication or consent under this Agreement shall be deemed duly given if (and shall be effective two (2) business days after) it is sent by certified mail and addressed to the intended recipient as set forth below:
| If to Purchaser: | Jinkhold, Ltd. c/o SARS Corporation __________________________ __________________________ __________________________ |
| With a Copy to: | The Otto Law Group, PLLC Attn: David Otto 601 Union Street, Suite 4500 Seattle, WA 98101 United States |
| If to Seller: | Andronics, Ltd. Unit 20 Balliniska Road Springtown Industrial Estate Londonderry Northern Ireland BT48 ONA |
| With a Copy to: | Ciaran Hampson 6 Castle Street Londonderry County Londonderry BT48 6HQ |
or at any other address as any party may, from time to time, designate by notice given in compliance with this section.
24.2 Time. Time is of the essence of this Agreement.
24.3 Survival. Any of the terms and covenants contained in this Agreement which require the performance of either party after the Closing shall survive the Closing and delivery of the Assets.
24.4 Waiver. Failure of either party at any time to require performance of any provision of this Agreement shall not limit the party’s right to enforce the provision, nor shall any waiver of any breach of any provision be a waiver of any succeeding breach of any provision or a waiver of the provision itself for any other provision.
24.5 Assignment. Except as otherwise provided within this Agreement, neither party hereto may transfer or assign this Agreement without the prior written consent of the other party.
24.6 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Northern Ireland, without giving effect to the conflicts of law principles thereof.
24.7 Venue. The parties to this Agreement agree that any action on this Agreement shall be brought in a court of competent jurisdiction located in Northern Ireland.
24.8 Titles and Captions. All articles, sections and paragraph titles or captions contained in this Agreement are for convenience only and shall not be deemed part of the context nor affect the interpretation of this Agreement.
24.9 Entire Agreement. This Agreement contains the entire understanding between and among the Parties and supersedes any prior understandings and agreements among them respecting the subject matter of this Agreement.
24.10 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation.
24.11 Prior Agreements. This document is the entire, final and complete agreement of the Parties pertaining to the purchase of the Assets, and supersedes and replaces all prior or existing written and oral agreements between the parties or their representatives relating to the Assets.
24.12 Modifications Must Be in Writing. This Agreement may not be changed orally. All modifications of this Agreement must be in writing and must be signed by each party.
24.13 Agreement Binding. This Agreement shall be binding upon the heirs, executors, administrators, successors and assigns of the Parties hereto.
24.14 Further Action. The Parties hereto shall execute and deliver all documents, provide all information and take or forbear from all such action as may be necessary or appropriate to achieve the purposes of this Agreement.
24.15 Good Faith, Cooperation and Due Diligence. The Parties hereto covenant, warrant and represent to each other good faith, complete cooperation, due diligence and honesty in fact in the performance of all obligations of the Parties pursuant to this Agreement. All promises and covenants are mutual and dependent.
24.16 Counterparts. This Agreement may be executed by facsimile and in several counterparts, and all so executed shall constitute one Agreement, binding on all the Parties hereto even though all the Parties are not signatories to the original or the same counterpart.
24.17 Savings Clause. If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.
24.16 Consultation. The Parties acknowledge that each has been advised to seek legal consultation regarding this Agreement and has either retained or had sufficient opportunity to retain such legal representation and hereby waives insufficiency of legal consultation or representation as a claim or defense in any action arising out of this Agreement. Except as otherwise provided in this Agreement, each Party shall bear its own attorneys’ fees and costs incurred in this matter through the Closing Date of execution of this Agreement.
24.17 Grossing Up.
24.17.1 If the Purchaser makes a payment or suffers a loss (the “Loss") in respect of which the Purchaser is entitled to be indemnified or otherwise compensated by the Seller under this Agreement and payment so made by the Seller (the “Payment") is subject to tax in the hands of the Purchaser or a withholding on account of tax, the Seller shall pay to the Purchaser such additional amount as ensures that the Purchaser is left with the same amount as it would have been entitled to receive in the absence of any such tax liability or withholding PROVIDED THAT the Seller shall not be under any obligation to make an increased payment under this Section 24.17.1 to the extent the Loss is deductible in computing the Purchaser's tax liability in respect of the Payment.
24.17.2 Any additional payment due by the Seller to the Purchaser under Section 24.17.1 shall be payable by the Seller on the later of:
| | (i) | five (5) business days before the last date on which the Purchaser can discharge the tax liability arising as a result of the Payment without incurring a liability for penalties or interest thereon; |
| | (ii) | five (5) business days after written demand has been made in respect thereof by the Purchaser. |
24.17.3 If an increased amount is paid to the Purchaser under Section 24.17.1 and the Purchaser later obtains a credit or deduction in respect of the Loss in computing its tax liability the Purchaser shall reimburse (to the extent it can do so without prejudice to its ability to retain the credit or deduction) to the Seller within five (5) business days of utilising credit or deduction the lesser of:
(i) the increased amount so paid; and
| | (ii) | the amount the Purchaser saves in tax as a consequence of utilising the credit or deduction. |
24.18 Costs. Each party hereto shall pay its own costs and expenses in relation to the preparation and execution of this Agreement and all documents ancillary hereto.
[Signature page to follow]
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the Execution Date set forth below.
DATE: October 26, 2007
SELLER:
ANDRONICS, LTD.
By: /s/ Robert Andrews
Name: Robert Andrews
Title:
ANDREWS:
ROBERT ANDREWS
By: /s/ Robert Andrews
Name: Robert Andrews
| | Title: |
PURCHASER:
JINKHOLD, LTD.
By: /s/ Clayton Shelver
Name: Clayton Shelver
| | Title: Director |
EXHIBITS
AForm of Convertible Debenture
BOperating Agreement
CLicensing Agreement
DLease Agreement
SCHEDULES
1.1List of Assets (including assumed Accounts Receivable)
1.2List of Employees
1.3List of Contracts (including British Petroleum Novation)
1.4List of Intellectual Property
1.5List of Goodwill
3.0Assumed Liabilities (including Excluded Liabilities)
4.2Convertible Debenture Holders
9.3.2Promissory Notes
18.3.2Revenue Projections for Andrews Quarterly Options
Exhibit A
Form of Convertible Debenture
[The Form of Convertible Debenture appears on the following pages]SARS CORPORATION
10% CONVERTIBLE DEBENTURE
No. [insert debenture #] [date] , 2007
$ [value] [location]
SARS CORPORATION (“Maker” or the “Company”) hereby promises to pay to the order of [name of debenture holder] or his , her, its assigns (“Holder”), the sum of [value] United States Dollars ($XX,XXX), with interest at the rate of ten percent (10%) per annum until paid. All outstanding principal and accrued and unpaid interest shall become due twelve months from the date upon which this 10% Convertible Debenture (“Debenture”) is executed (the “Maturity Date”). All payments due and owning under this Debenture shall be subject to the terms and conditions set forth herein.
| 1. | Agreement. |
The Debenture is issued pursuant to that certain Asset Purchase Agreement (the “Agreement”), dated the same date as first set forth herein, by and between Andronics, Ltd. and Jinkhold, Ltd., a wholly owned subsidiary of the Maker, which is hereby incorporated by reference.
| 2. | Register. |
The Company shall keep at its principal office a register in which the Company shall provide for the registration of the Holder of the Debenture or for the registration of a transfer of the Debenture to a different Holder.
| 3. | Loss Theft, Destruction or Mutilation of the Debenture. |
Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of the Debenture and, in the case of any such loss, theft or destruction, upon receipt of an indemnity bond in such reasonable amount as the Company may determine (or if such Debenture is held by the original Holder, of an unsecured indemnity agreement reasonably satisfactory to the Company) or, in the case of any such mutilation, upon surrender and cancellation of such Debenture, the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Debenture, a new Debenture of like tender and unpaid principal amount and dated as of the date to which interest has been paid on the Debenture so lost, stolen, destroyed or mutilated.
| 4. | Registered Holder. |
The Company may deem and treat the person in whose name any Debenture is registered as the absolute owner and Holder of such Debenture for the purpose of receiving payment of the principal of and interest on such Debenture and for the purpose of any notices, waivers or consents thereunder, whether or not such Debenture shall be overdue, and the Company shall not be affected by notice to the contrary. Payments with respect to any Debenture shall be made only to the registered Holder thereof.
| 5. | Surrender of the Debenture. |
The Company may, as a condition of payment of all or any of the principal of, and interest on, the Debenture, or its conversion, require Holder to present the Debenture for notation of such payment and, if the Debenture be paid in full or converted at the election of Holder as herein provided, require the surrender hereof.
| 6. | Subordination. |
The Company, in its sole discretion, may subordinate the Debenture to any Senior Debt of the Company. For purposes of the Debenture, “Senior Debt” shall mean all indebtedness for all principal, fees, expenses, interest, penalties, post-bankruptcy petition interest, and all other amounts payable for money borrowed.
| 7. | Conversion. |
At any time prior to or at the Maturity Date, at the option of the Holder, all principal and accrued interest due on this Debenture (the “Convertible Amount”) may be converted at $1.00 USD per share. Upon the Maturity Date, all outstanding principal and accrued interest shall automatically convert into common stock of the Company.
The Conversion Amount shall be adjusted downward in the event the Company issues common stock (or securities exercisable for convertible into or exchangeable for common stock) at a price below the Conversion Amount, to a price equal to such issue price.
8. Mechanics of Conversion.
Upon the Company’s receipt of written notice of Holder’s election to convert the Debenture or upon the Maturity Date, the principal amount of this Debenture plus any accrued interest shall be deemed converted into such number of shares of the Company’s Common Stock as determined pursuant to Section 7, and no further payments shall thereafter accrue or be owing under the Debenture. The entire balance due and owing under the Debenture must be converted to Common Stock; no partial conversions will be allowed. Holder shall return this Debenture to the Company at the address set forth below, or such other place as the Company may require in writing. Within ten (10) days after receipt of this Debenture, the Company shall cause to be issued in the name of and delivered to Holder at the address set forth above, or to such other address as to which Holder shall have notified the Company in writing, a certificate evidencing the securities to which Holder is entitled. No fractional securities will be issued upon conversion of the Debenture. If on conversion of the Debenture a fraction of a security results, the Company shall round up the total number of securities to be issued to Holder to the nearest whole number.
| 9. | Notice. |
Any notice required or desired to be given under this Agreement shall be in writing and shall be deemed given when personally delivered, sent by an overnight courier service, or sent by certified or registered mail to the addresses set forth below, or such other address as to which one party may have notified the other in such manner.
| 10. | Default. |
The following will be “Events of Default” under the Debenture: (a) the Company shall default on the payment of principal or interest on the Debenture or on any other indebtedness of the Company when due; (b) the Company shall default on the observance or performance of any other covenant set forth in the Debenture; (c) the Company shall issue any indebtedness senior to the Debenture or grant any security for any other indebtedness (other than in connection with operating leases such as stand-alone office equipment leases); (d) the Company shall become insolvent or file a voluntary petition in bankruptcy (or have such a petition filed against it) or have an assignment for the benefit of creditors or other creditor arrangement or similar event occur with respect to it or its assets; or (e) failure to comply with any other term or condition of the Debenture, which shall not have been cured within ten (10) business days receipt of written notice to the Company.
Upon Default, and at the option of Holder, or Holder’s successors or assigns, with fifteen (15) days written notice to the Company, demand or presentment, Holder may (i) accelerate all amounts due and owing under this Debenture and demand payment immediately and/or (ii) declare the right to exercise any and all remedies available to Holder under applicable law.
| 11. | Miscellaneous. |
(a) 10% per annum calculated using a 360-day year composed of 12 30-day months, payable in full, unless otherwise converted to common stock in the Company, at maturity or conversion.
(b) The Company agrees that all Conversion Shares shall be fully paid and non-assessable. Maker shall pay upon demand any and all expenses, including reasonable attorney fees, incurred or paid by Holder of this Debenture without suit or action in attempting to collect funds due under this Debenture or in connection with the issuance of the Conversion Shares. In the event an action is instituted to enforce or interpret any of the terms of this Debenture including but not limited to any action or participation by Maker in, or in connection with, a case or proceeding under the Bankruptcy Code or any successor statute, the prevailing party shall be entitled to recover all expenses reasonably incurred at, before and after trial and on appeal or review, whether or not taxable as costs, including, without limitation, attorney fees, witness fees (expert and otherwise), deposition costs, copying charges and other expenses.
(c) All parties to this Debenture hereby waive presentment, dishonor, notice of dishonor and protest. All parties hereto consent to, and Holder is hereby expressly authorized to make, without notice, any and all renewals, extensions, modifications or waivers of the time for or the terms of payment of any sum or sums due hereunder, or under any documents or instruments relating to or securing this Debenture, or of the performance of any covenants, conditions or agreements hereof or thereof or the taking or release of collateral securing this Debenture. Any such action taken by Holder shall not discharge the liability of any party to this Debenture.
(d) This Debenture shall be governed by and construed in accordance with the laws of the state of California without regard to conflict of law principles.
(e) All payments due and owing under this Debenture shall be delivered to the following:
[name of holder]
[address of holder]
[city, state, ZIP]
IN WITNESS WHEREOF, the parties hereto execute this Convertible Debenture as of this ____ day of_______, 2007.
Maker: SARS, Corporation
____________________________
By: Clayton S. Shelver
Its: Chief Executive Officer
| Holder: [name] Holder’s address: [address] [city, state, ZIP] | |
| Maker’s address: SARS, Corporation Attn: Clayton S. Shelver 601 108th Avenue NE, 19th Floor Bellevue, WA 98004 USA | With a copy to: The Otto Law Group, PLLC Attn: David M. Otto 601 Union Street, Suite 4500 Seattle, WA 98101 USA |
_________, 2007
SARS Corporation
601 108th Avenue NE, 19th Floor
Bellevue, WA 98004 USA
Attention: Clayton S. Shelver
RE: SARS, Corporation (the “Company”) Convertible Debenture
Dear Mr. Shelver:
I, ________________________, am the holder of convertible debenture #___ of the Company, issued on ______________, 200__ for $____________ (the “Debenture”). The original Debenture is enclosed and attached hereto. Subject to Section 8 of the Debenture, I wish to convert the entire principal and any accrued interest into such number of shares of the Company’s common stock as determined pursuant to Section 7 of the Debenture. I understand that by converting the Debenture into common stock, no further payments shall thereafter accrue or owe under the Debenture.
Once the Debenture is converted into common stock of the Company, please direct the Company’s transfer agent to submit the stock certificates to the following street address:
_____________________
_____________________
_____________________
_____________________
Phone: _______________
Please do not hesitate to contact me at the above referenced phone number if you need further assistance. Thank you for your time.
Sincerely,
_____________________
Enclosure
Exhibit B
Operating Agreement
[the Operating Agreement appears on the following pages]
OPERATING AGREEMENT
THIS OPERATING AGREEMENT (this “Agreement”) is entered into as of this ___ day of January, 2007 (the “Execution Date”), between Andronics, Ltd. (“Andronics”), Veritas Solutions, Inc. (“VSI”) and Secure Asset Reporting Services, Inc., a wholly owned subsidiary of VSI (“SARS”). Collectively referred to herein as the “Parties.”
W I T N E S S E T H:
WHEREAS, Andronics is engaged in the business of offering global two-way data solutions for monitoring and control of remote assets (the “Services”);
WHEREAS, VSI and SARS are contemplating the purchase of certain assets of Andronics (the “Asset Purchase”), a list of substantially all of these assets is attached hereto as Exhibit A (the “Assets”), the Assets are currently valued at ____________ Dollars ($________);
WHEREAS, pursuant to and until that certain contemplated Asset Purchase occurs, VSI, through its subsidiary, SARS, would like to exclusively control, operate, market, sell and manage the Assets of Andronics in accordance with the terms and conditions of this Agreement;
WHEREAS, Andronics desires to engage VSI and SARS to allow VSI and SARS to exclusively control, operate, market, sell and manage the Assets of Andronics in accordance with the terms and conditions of this Agreement;
WHEREAS, SARS would like to obtain the consulting services of the individuals listed on Exhibit B (collectively referred to as the “Andronics Consultants”);
WHEREAS, the Andronics Consultants would like to provide consulting services to SARS to assist with the management and operation of the Services and Assets; and
WHEREAS, the Parties would like to acknowledge the operating expenses already paid by VSI and secure such expenses (listed below) with a promissory note (the “Note”) in accordance with the terms and conditions of this Agreement and the Note, a form of which is attached hereto as Exhibit C.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
PURPOSE; EFFECTIVENESS
1.1 Purpose. The primary purpose of the activities contemplated by this Agreement is to provide for the (i) exclusive control, operation, marketing, selling and management of the Assets by VSI and SARS, and (ii) to obtain the services of the Andronics Consultants to manage the Assets and to provide the Services.
1.2 Effectiveness. This Agreement shall become effective as of the December _____, 2006 (the “Effective Date”).
1.3 Promissory Note. As of Execution Date, VSI has provided Andronics approximately Sixteen Thousand United States Dollars ($16,000) for operating expenses and working capital needs. Andronics agrees to secure such expenses with a promissory note, a form of which is attached hereto as Exhibit C.
1.4 License Agreement. As of the Execution Date, the Parties shall have executed the License Agreement, a form of which is attached hereto as Exhibit D.
1.5 Asset Purchase. VSI and SARS are contemplating effectuating an Asset Purchase with Andronics, of the Assets owned by Andronics. The Assets are currently valued at ____________ Dollars ($________) (the “Purchase Price”).
(a) If the Asset Purchase closes and becomes effective within six (6) of the Execution Date of this Agreement, the Note amount (and any additional amended amounts thereto) shall be applied against the Purchase Price and the Note shall be cancelled in its entirety.
ARTICLE II
DESIGNATION AS OPERATOR; NATURE OF AGREEMENT
2.1 Engagement. Andronics hereby engages and grants to SARS the exclusive right to operate and control the Services for the term specified in Section 5, and SARS hereby agrees to perform the Operator Duties for such term, on the terms and conditions specified in this Agreement. The Operator Duties shall be carried out under the name of VSI and SARS on behalf of Andronics and all revenue shall be attributed to VSI.
2.2 Relationship. This Agreement is not intended to create, and shall not be deemed or treated as creating, a partnership, joint venture, employment contract or any other relationship between the Parties other than the service relationship expressly provided for in this Agreement. All commitments, obligations, undertakings and liabilities associated with the Operator Duties shall be entered in the name of, and shall be the sole responsibility of SARS and neither party shall be authorized to enter into any commitment, obligation, undertaking or liability in the name of, or on behalf of, the other party.
ARTICLE III
PERSONNEL; OPERATIONS; PERFORMANCE
3.1 Personnel.
(a) SARS shall execute consulting services agreements with the Andronics Consultants to perform its obligations under this Agreement because they possess such qualifications, knowledge and experience in the provision of the tasks to which they are assigned as would be required for comparable positions and tasks in competitive businesses. SARS shall provide appropriate training to such personnel as and when required in order to facilitate the efficient and knowledgeable performance of services under this Agreement. SARS shall monitor the performance of such personnel and shall take such action as is necessary to remedy promptly any deficiencies in such performance.
(b) The Andronics Consultants shall render all services hereunder as an independent contractor and shall not hold itself out as an agent of VSI or SARS. Nothing herein shall be construed to create or confer upon the Andronics Consultants the right to make contracts or commitments for or on behalf of VSI or SARS.
3.2 Operations and Duties.
(a) Andronics shall maintain (whether by acquisition or lease) suitable facilities and equipment for the efficient and effective performance of operating the Services and Assets (the “Duties”). Such facilities and equipment shall be kept in good working order, normal wear and tear excepted.
(b) SARS shall be responsible for all costs associated with the Duties.
3.3 Licenses, Etc. The Andronics Consultants shall be responsible for obtaining and maintaining (i) all licenses and permits required from any governmental body or agency for the performance of its services hereunder, and (ii) all licenses or rights required from any third parties for the performance of its services hereunder.
3.4 Insurance. The Andronics Consultants shall obtain, and maintain during the term of this Agreement, insurance for the Assets against such risks and in such amounts as are carried by similar businesses in similar circumstances.
3.5 Expenses. The Parties shall be solely responsible for all expenses, obligations or commitments incurred in connection with the performance of their respective obligations under this Agreement.
3.6 Performance Standards.
(a) Except to the extent otherwise expressly provided, VSI and SARS shall, in the performance of its obligations and duties under this Agreement, exercise and use a degree of care and skill that a similarly situated service provider would exercise and use in providing services in similar circumstances.
(b) VSI and SARS shall use reasonable commercial efforts to broaden the geographic penetration of the Services.
3.7 Inspection of Records. VSI and SARS may (i) at any time it reasonably believes Andronics is in breach of any provision of this Agreement (in which case, it shall notify Operator in writing of such belief and the reasons therefor) and (ii) once during any calendar year, request Andronics to, and Andronics shall, upon reasonable advance notice, permit employees, agents or representatives of VSI and SARS, during normal business hours, to review, inspect and/or audit Andronics’ financial records and its operating procedures relating to the performance of services under this Agreement. Andronics shall cooperate and make available appropriate personnel to assist representatives of VSI and SARS in inspecting or auditing the books, records and facilities of Andronics, and Andronics will reasonably cooperate with respect to any such audit or inspection.
ARTICLE IV
FEES; COMPENSATION
4.1 Fees. SARS shall have the authority to, on behalf of Andronics, establish, revise and collect fees with respect to the Services.
4.2 Compensation. As compensation for its services hereunder, VSI and SARS shall be entitled to one hundred percent (100%) of all gross revenue derived from providing and operating the Services and Assets.
4.3 Late Payments. Any payment not made by a party when due under the terms of the Note shall bear interest as the Default Rate (as defined in the Note) from the due date under this Agreement until paid.
ARTICLE V
TERM; TERMINATION AND EXTENSION
5.1 Term. This Agreement shall continue in effect until (i) terminated by one (1) of the parties pursuant to Section 5.2; (ii) the mutual written agreement of the Parties; or (iii) the contemplated Asset Purchase closes and becomes effective.
5.2 Termination.
(a) A party may terminate this Agreement by notice to the other party in the event that: (i) the other party (the “Defaulting Party”) shall fail to perform, or shall breach, any of its obligations set forth in this Agreement, and such failure shall continue for thirty (30) days after written notice thereof has been given to the Defaulting Party, or if the breach is not capable of cure within such thirty (30) days, reasonable efforts to cure have not been undertaken; or (ii) the other party (1) makes any general assignment for the benefit of creditors, (2) initiates or is the subject of a request to initiate a bankruptcy or insolvency proceeding under any provision of law, including the United States Bankruptcy Code, that is intended to liquidate or rehabilitate such other party, and is not dismissed within sixty (60) days, (3) files, or is the subject of a filing (that is not dismissed within sixty (60) days) with a court of competent jurisdiction for the appointment of a receiver, guardian, conservator or similar officer, or (4) is rendered or declared insolvent; and a termination hereunder shall be effective, if no cure has occurred thirty days after notice has been given to such other party.
(b) Upon written notice to Andronics, VSI and SARS may terminate this Agreement in the event that the Asset Purchase fails to close within six (6) months of the Execution Date.
5.3 Transition. In the event that this Agreement is terminated by either party pursuant to Section 5.2(a), either party may request an extension of this Agreement, and, if mutually agreed upon, the Parties shall continue to perform hereunder at the requesting party’s sole cost and expense, for a period of up to six (6) months from the otherwise effective date of termination in order to allow the orderly migration and transition of responsibilities.
5.4 Effect of Termination. With the exception of Articles V, VII, VII and IX of this Agreement, in the event that this Agreement is terminated, all further obligations of the Parties under this Agreement shall be terminated without further liability of either party to the other.
ARTICLE VI
CONFIDENTIALITY
6.1 Confidential Information. Neither party will make any intellectual property, documentation software, enhancements or know-how, trade secrets, procedures and methods, financial and operational information and other matters relating to the Assets and/or Services available, in any form, to any other person without the prior written consent of the other. The foregoing shall not restrict a party with respect to information which (i) such party rightfully possessed before it received such information from the other party as evidenced by written documentation; (ii) subsequently becomes publicly available through no fault of such party; (iii) is subsequently provided to such party by a third party without restrictions on use or disclosure; (iv) is required to be disclosed by law; or (v) has become the sole property of the party making the disclosure.
ARTICLE VII
LIABILITY AND INDEMNIFICATION
7.1 LIMITATION OF LIABILITY. IN NO EVENT OR UNDER ANY CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR EXEMPLARY, PUNITIVE OR CONSEQUENTAL DAMAGES OF ANY KIND WHATSOEVER; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATION SHALL NOT APPLY TO AN INTENTIONAL OR WILLFUL BREACH OF THIS AGREEMENT.
7.2 Indemnification.
(a) Each party shall indemnify and hold the other party and its officers, directors, agents and employees harmless from and against any and all claims, demands, actions, losses, liabilities, costs, expenses (including reasonable legal fees and expenses), suits and proceedings of any nature whatsoever arising from the gross negligence or willful misconduct of the indemnifying party that arise out of or are in any manner connected with its performance under this Agreement, except to the extent such claim, demand, action, loss, liability, expense, suit or proceeding is attributable to the gross negligence, willful misconduct, or breach of this Agreement by, the party seeking indemnification hereunder.
(b) VSI and SARS shall indemnify and hold Andronics and its officers, directors, agents and employees harmless from and against any and all claims, demands, actions, losses, liabilities, expenses (including reasonable legal fees and expenses), suits and proceedings arising from VSI’s or SARS’ performance involving the Duties and/or the Services.
ARTICLE VIII
DISPUTE RESOLUTION
8.1 Dispute Resolution. In the event of a dispute between the Parties as to any material term herein, the Parties shall first attempt to resolve the dispute informally. If, after ten (10) days, the Parties are unsuccessful, the Parties agree to mediate their dispute, with each Party appointing one (1) mediator to represent itself. If, after fifteen (15) days of the mediation’s commencement, no resolution is reached, the Parties shall submit to mandatory binding arbitration in any controversy or claim arising out of, or relating to, the Agreement or any breach hereof. Such arbitration shall be conducted in accordance with the commercial arbitration rules of the American Arbitration Association in effect at that time, and the Parties agree to be bound by any judgment, determination or award rendered by the arbitrator. The arbitrator is hereby authorized to award to the prevailing party the costs (including reasonable attorneys’ fees and expenses) of any such arbitration. The Parties further agree that any mediation and arbitration meetings may be held via teleconference.
8.2 Recourse to Courts and Other Remedies. Notwithstanding the Dispute resolution procedures contained in Sections 8.1, any party may apply to any court having jurisdiction (a) to enforce this agreement to arbitrate, (b) to seek provisional injunctive relief so as to maintain the status quo until the arbitration award is rendered or the Dispute is otherwise resolved, (c) to avoid the expiration of any applicable limitation period, (d) to preserve a superior position with respect to other creditors or (e) to challenge or vacate any final judgment, award or decision of the Panel that does not comport with the express provisions of Section 8.2.
8.3 Attorneys' Fees. If any action, suit or proceeding is commenced to establish, maintain, or enforce any right or remedy under this Agreement, the party not prevailing therein shall pay, in addition to any damages or other award, all reasonable attorneys' fees and litigation expenses incurred therein by the prevailing party.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and effective (a) upon receipt, if delivered in person, by cable or by telegram, or (b) one (1) business day after deposit prepaid with a global overnight express delivery service:
If to Andronics and/or the Andronics Consultants:
If to VSI or SARS: Veritas Solutions, Inc.
601 108th Avenue NE, Suite 1908
Bellevue, WA 98004
Attn: Clayton Shelver
Fax: ###-###-####
with a copy to: The Otto Law Group, PLLC
601 Union Street, Suite 601
Seattle, Washington 98110
Attn: David M. Otto
Fax: ###-###-####
9.2 Amendments. This Agreement may be amended or modified only by a dated written instrument so stating and executed by the Parties.
9.3 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
9.4 Parties in Interest; No Assignment. This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and assigns. Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies under or by reason of this Agreement. Notwithstanding the foregoing, this Agreement may not be assigned without the prior written consent of the other party hereto.
9.5 Applicable Law. The rights and obligations of the Parties shall be construed under and governed by the internal laws (without application of the conflicts of laws provisions thereof) of the State of Washington. Venue shall be in the County of King, Washington.
9.6 Waiver. No provision in this Agreement shall be deemed waived by course of conduct, unless such waiver is in writing signed by both Parties and stating specifically that it was intended to modify this Agreement.
9.7 Partial Invalidity. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such invalid, illegal or unenforceable provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.
9.8 Entire Agreement. This Agreement and the agreement referred to herein and the schedules attached hereto constitute the entire agreement between the Parties governing the matters addressed herein. No prior agreement or representation, whether oral or written, shall have any force or effect thereon.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day and year first above written.
VERITAS SOLUTIONS, INC.
By: Clayton Shelver
Title: Director and CEO
SECURE ASSET REPORTING SERVICES, INC.
By: Clayton Shelver
Title: Director and CEO
ANDRONICS LTD.
By:
Its:
Exhibit A
Assets and Licensed Property
Exhibit B
Andronics Consultants
Exhibit C
Note
Exhibit C
Licensing Agreement
[the Licensing Agreement appears on the following pages]
LICENSING AGREEMENT
THIS EXCLUSIVE PATENT AND INTELLECTUAL PROPERTY LICENSING AGREEMENT (the “Licensing Agreement”), made and entered into this ___ day of January, 2007 (the “Execution Date”), between Andronics, Ltd. (“Andronics” or the “Licensor”), Veritas Solutions, Inc. (“VSI”) and Secure Asset Reporting Services, Inc., a wholly owned subsidiary of VSI (“SARS”). VSI and SARS are collectively referred to as the “Licensee.”
WITNESSETH:
WHEREAS, Andronics desires to engage VSI and SARS to allow VSI and SARS to exclusively control, operate, market, sell and manage the Assets (as defined in the Operating Agreement) and Licensed Property (defined below) of Andronics in accordance with the terms and conditions of this Agreement;
WHEREAS, Licensor wishes to grant an exclusive license of the Licensed Patents (as defined below) and Licensed Intellectual Property (as defined below) to Licensee, and Licensee wishes to obtain an exclusive license of the Licensed Patents and Licensed Intellectual Property (collectively, the “Licensed Property”) from the Licensor, a list is located under the heading, “Licensed Property” and is attached to the Operating Agreement as Exhibit A, all in accordance with and pursuant to the terms, covenants and conditions of this Licensing Agreement;
WHEREAS, Licensor is the owner of certain patents that Licensor desires to license to Licensee (the “Licensed Patents”); and
WHEREAS, Licensor is the owner of certain Licensed Intellectual Property rights pertaining to the Licensed Patents, including trade secrets, trademarks, service marks, trade names (including, in the case of trademarks, service marks and trade names, all goodwill pertaining thereto), inventions, copyrights, technology licenses, know-how, confidential information, shop rights, technical data, drawings, diagrams, designs, prototypes, engineering files, documentation, processes, procedures, marketing techniques and/or materials, marketing plans, timetables, strategies and development plans, charts, research, design specifications either developed or acquired by Licensor in connection with the development of the Licensed Patents and documents (written or electronic), physical properties of components of manufactured goods, techniques used or sequences in manufacture, sources (suppliers) and costs of components, costs of any aspect or phase of manufacture, profit margins, sub-licensing agreements and other information pertaining to customers, pricing policies and financial information (the “Licensed Intellectual Property”).
AGREEMENT:
NOW, THEREFORE, for and in consideration of the foregoing, the warranties and representations herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto have agreed and do hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
.
| a. | Unless otherwise defined below, capitalized terms shall have the meaning as set forth in the Operating Agreement. The following terms, as used herein, have the following meanings: |
“Bankruptcy Event” means any of the following events: (a) Licensee commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar Law of any jurisdiction relating to Licensee; (b) there is commenced against Licensee any such case or proceeding that is not dismissed within sixty (60) days after commencement; (c) Licensee is adjudicated insolvent or bankrupt, or any order of relief or other order approving any such case or proceeding is entered; (d) Licensee suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within sixty (60) days; (e) Licensee makes a general assignment for the benefit of creditors; (f) Licensee fails to pay, or states that it is unable to pay or is unable to pay, its debts generally as they become due; (g) Licensee calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (h) Licensee, by any act or failure to act, indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“Contracts” means all contracts, agreements, arrangements, understandings, leases, licenses, commitments, sales and purchase orders and other instruments.
“Governmental Entity” means any Federal, state or local or any foreign governmental, regulatory or administrative authority, agency, official, body or commission or any court, tribunal or arbitral body.
“Knowledge of Licensor” shall mean that Licensor is actually aware of a fact or a matter.
“Law” means any Federal, state, foreign or local statute, law, ordinance, regulation, rule, code, order, judgment, decree, other requirement or rule of law of the United States or any other jurisdiction and any other similar act or law.
“Lien” means any mortgage, liability, lien (including any tax lien), obligation, pledge, charge, security interest or encumbrance of any kind.
“Licensed Property” means the assets listed on Exhibit A under the heading “Licensed Property” attached to the Operating Agreement.
“Material Adverse Effect” means any change in or effect on the Purchased Assets that, individually or in the aggregate (taking into account all other such changes or effects), is, or is reasonably likely to be, materially adverse to the value of the Purchased Assets individually or taken as a whole.
“Person” means an individual, corporation, partnership, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
ARTICLE II
GRANT OF LICENSES
2.1 Exclusive License. Licensor hereby grants, bargains, assigns, licenses, conveys and setsover to the Licensee an exclusive world-wide license to utilize the Licensed Patents and the claims set forth therein and the Licensed Intellectual Property for the purpose of developing, manufacturing (directly or through subcontractors), marketing and selling products incorporating the inventions contained in the Licensed Patents and Licensed Intellectual Property and for the purposes of sub-licensing the Licensed Patents and Licensed Intellectual Property. Notwithstanding any provision to the contrary set forth in this Agreement, (i) any sub-licenses to be granted under this Agreement by Licensee first shall be approved in writing by the Licensor and shall be granted in an enforceable written agreement, of which Licensor is a third-party beneficiary, that contain terms and conditions at least as restrictive as all of the terms and conditions set forth in this Agreement, and (ii) promptly following the execution of any such sub-license, Licensee shall provide Licensor with a copy of the same.
a. Notwithstanding anything to the contrary in this Section or elsewhere in this Agreement, all rights granted to Licensee in this Agreement shall be subject to the terms and conditions of any and all existing licenses and other obligations related to the Licensed Property existing at the time the Agreement is entered into.
b. Licensee acknowledges and agrees that, (i) the Licensed Property and all goodwill associated therewith are and shall remain the sole property of Licensor, (ii) nothing in this Agreement shall convey to Licensee any right of ownership in the Licensed Property, (iii) Licensee shall not in any manner take any action and shall ensure that none of its permitted sub-licensees take any action, that disparages or would impair the value of, or goodwill associated with, the Licensed Property and (iv) all rights not expressly granted to Licensee are reserved to Licensor. Licensee acknowledges and agrees that all use of the Licensed Property by Licensee shall inure to the benefit of Licensor.
2.2 Ownership and Use of Licenses.
a. Licensor and Licensee agree that throughout the term of this License Agreement (and any extensions thereof) that Licensee may engage in research and development activities that produce new formulas, methods, inventions, techniques, properties or products that enhance the Licensed Property (“Licensee Enhancements”). In the event Licensee develops such Licensee Enhancements, then Licensor shall retain ownership of such Licensee Enhancements and the Licensee Enhancements shall not be deemed to be a part of the Licensed Property and Licensor shall have all right, title and interest in and to any of the Licensee Enhancements.
b. Licensor and Licensee agree that throughout the term of this License Agreement (and any extensions thereof) that Licensor may engage in research and development activities that produce new formulas, methods, inventions, techniques, properties or products that enhance the Licensed Property (“Licensor Enhancements”). When Licensor develops such Licensor Enhancements, the Licensor Enhancements shall not be deemed to be a part of the Licensed Property and shall not be deemed to have been licensed to Licensee in accordance with the terms of this License Agreement.
2.3 General Duties of Licensor. Throughout the term of this Licensing Agreement (including any extensions thereto), Licensor shall, (i) provide Licensee with copies of the Licensed Patents and Licensed Intellectual Property, (ii) provide Licensee with complete specifications of the raw material and design and use specifications pertaining to the same and (iii) provide Licensee with a complete list of all persons known to Licensor that were contacted during the development of the Licensed Patents and Licensed Intellectual Property (including, but not by way of limitation, lists of possible suppliers, sub-contractors, sub-licensees and customers).
2.4 General Duties of Licensee. Throughout the term of this Licensing Agreement (including any extensions thereof), Licensee shall use its best efforts to effectively develop and promote widespread use and manufacturing of products based on the claims included in the Licensed Patents and Licensed Intellectual Property. Such efforts shall include (but not by way of limitation), (i) engaging in the final stages of product development and testing, (ii) following successful completion of product development and testing, developing a “demonstration” manufacturing facility, (iii) engaging in market research to identify discrete market opportunities for products based on the Licensed Patents and Licensed Intellectual Property, (iv) developing and implementing marketing, pricing and distribution strategies for the products developed, and (v) attending industry forums and expositions to support marketing, promotion and distribution of products produced that utilize the Licensed Patents and Licensed Intellectual Property.
2.5 Reservations and Limitations; Foreign Licensed Patents. Except as provided in this Section and in Sections 2.1(a), 2.8(a), 2.8(b), 3.8(b) and 3.8(c) of this Licensing Agreement, the parties agree that Licensor retains all of its rights, title and interest in and to the Licensed Patents and Licensed Intellectual Property. Licensor and Licensee agree that, during the term of this Licensing Agreement (including any extensions thereof), Licensee shall have the sole right and discretion to determine whether, when and if to apply for foreign Licensed Patents covering the inventions contained in the Licensed Patents. In the event that Licensee determines to apply for foreign Licensed Patents covering the inventions contained in the Licensed Patents, Licensee shall prosecute such foreign patent applications at Licensee’s sole expense. Any such foreign Licensed Patents shall be prosecuted in the name of Licensor. Licensor hereby agrees that during the term of this Licensing Agreement (including any extensions thereof), Licensee shall have and is hereby granted the same license rights with respect to any such foreign Licensed Patents as Licensee is granted with respect to the Licensed Patents by Section 2.1(a) of this Licensing Agreement. Licensor agrees to cooperate with Licensee in prosecuting any such patent applications and, subsequent to the granting of any such Licensed Patents, to confirm Licensee’s exclusive worldwide license rights thereunder and hereby appoints Licensee its attorney-in-fact for such purposes.
2.6 Future Improvements and Discoveries. Licensee acknowledges that, except as expressly proscribed by this Licensing Agreement, Licensor shall have the right to continue Licensor’s research and development activities in building materials and designs. Should those activities produce formulas, methods and inventions (“New Inventions”) which arise from Licensor’s independent activities which Licensor decides to license, Licensor hereby grants to Licensee a right of first refusal with respect to the licensing of the New Inventions. In the event Licensor decides to license some or all of the New Inventions, Licensor shall provide Licensee with a written notification of Licensor’s intent to license and of the terms (including fees and royalties) on which the license will be offered. The parties will then have thirty (30) days to negotiate a mutually agreeable licensing agreement. If the parties fail to reach agreement within thirty (30) days, Licensor shall be free to offer a license of the New Inventions to third-parties on the terms initially offered to Licensee. If Licensor subsequently modifies the terms on which the license will be made available, Licensee shall be provided additional rights of first refusal to consider the modification(s) in Licensor’s proposal. Notwithstanding the foregoing, nothing contained in this Section 2.6 shall be interpreted to permit Licensor to incorporate elements of the Licensed Patents in any New Invention in contravention of the warranties and representations contained in Section 3.8(a) of this Licensing Agreement.
2.7 Non-disclosure and Confidentiality. Licensor and Licensee agree that many documents constituting the Licensed Patents and Licensed Intellectual Property, together with other documents and information of a similar nature that will be developed by Licensor or Licensee during the term of this Licensing Agreement (and any extensions thereof) are and will be of a confidential and proprietary nature (such documents and information hereafter referred to as “Confidential Information”). Licensor and Licensee agree that such Confidential Information shall include any information concerning the Licensed Patents which is furnished now or during the term of this Licensing Agreement (including any extensions thereof) by or in behalf of the Licensor pursuant to or in accordance with the terms of this Licensing Agreement (whether or not reduced to writing or still in development and whether or not specifically marked confidential or proprietary by Licensor or Licensee). Licensor and Licensee agree that they shall use their best efforts to safeguard Confidential Information. To that end, Licensor and Licensee shall, (i) designate all such information by marking each such document or piece of information “Confidential/Proprietary,” (ii) restrict access to Confidential Information to those with a need to access that information, (iii) train employees and agents in the importance of non-disclosure of Confidential Information and (iv) include in all sub-contracts and sub-licenses provisions that require sub-contractors and sub-licensees to accord similar protections to Confidential Information. For purposes of Section 2.7 of this Licensing Agreement, the term “Confidential Information” does not include information that is generally available to the public other than as a result of a disclosure by a party to this Licensing Agreement, became available to the Licensee on a non-confidential basis from a source other than the Licensor (provided that such source is not bound by a confidentiality agreement with or other contractual relationship, legal or fiduciary obligation of confidentiality with respect to such information) or is part of the public record as a result of the registration of the Licensed Patents. Notwithstanding the foregoing, it shall not be a breach of Section 2.8 of this Licensing Agreement for either the Licensor or the Licensee to provide Confidential Information to a court of competent jurisdiction or an agency, department or subdivision of the United States or a state, territory or possession thereof having a lawful right to obtain the information requested, provided the Licensor or Licensee notifies the other party of the request and provides the other party with the opportunity to seek a stay or otherwise contest the request for information if that contest does not expose the other party to liabilities which are not or cannot be indemnified by the party wishing to contest the request.
2.8 Assignment and Sub-Licensing.
a. Assignment. Except as provided in this Section 2.8, neither Licensor nor Licensee may assign their rights and obligations under this Licensing Agreement to any other person. For purposes of this Section 2.8, the granting of a security interest in the rights created under this Licensing Agreement constitutes an assignment. Licensor may assign Licensor’s rights under this Licensing Agreement to any person or entity, but may assign its obligations under this Licensing Agreement to another person, in whole or in part, only with the prior written consent of Licensee, which consent shall not be unreasonably withheld. Any refusal to consent to an assignment of the obligations of the Licensor that would interfere with the Licensor’s personal performance of the duties set forth in Section 2.4 of this Licensing Agreement or that would defeat or jeopardize protection of the Licensed Patents shall not be deemed unreasonably withheld. Licensee may assign Licensee’s rights and obligations under this Agreement to any third person (including a business entity which Licensee controls on the date of the assignment) without the prior consent of the Licensor. For the purposes of this Section 2.8, the term “assignment” shall include the granting of a security interest in the rights created under this Licensing Agreement and any change in voting control of a business entity. An assignee receiving an assignment of rights and obligations under this Licensing Agreement shall have the same rights to further assign interests and obligations under this Licensing Agreement as did the assignee’s assignor.
b. Sub-licensing and Distribution. Licensor and Licensee agree that Licensee shall have the right to sub-license the Licensed Patents and Licensed Intellectual Property and to enter into distribution agreements with respect to products manufactured utilizing inventions contained in the Licensed Patents and Licensed Intellectual Property to such persons and on such terms as Licensee deems appropriate. Licensor and Licensee agree that during the term of this Licensing Agreement (including any extensions thereof), Licensee shall have the sole right and responsibility to contact, discuss, negotiate and execute sub-licensing and distribution agreements with sub-licensees and potential sub-licensees. No such agreement shall be permitted to cover a term longer than the remaining term of this Licensing Agreement in effect on the date the sub-licensing or distribution agreement is executed and in effect absent the prior written consent of Licensor. Licensee shall provide Licensor with a copy of each such agreement within thirty (30) days of the agreement’s execution. Each agreement shall provide that notifications by one party to the sub-license agreement to the other shall also require the party giving the notice to the other party to also send a copy of the notice to the Licensor. In the event that this License Agreement terminates prior to the termination of any sub-license agreement (either because Licensor has consented to a term for the sub-license agreement that exceeds the term of this License Agreement in effect on the date of execution of the sub-license agreement or because of the termination of this License Agreement other than upon the normal expiration of its term), the rights of the sub-licensee under the sub-license agreement shall remain in full force and effect. From the date of termination of this Licensing Agreement through the date of termination of the sub-licensing agreement, remittances required to be made by the sub-licensee to the Licensee shall continue to be made to the Licensee and remittances due from Licensee to Licensor with respect to any such sub-license shall continue to be made as though this Licensing Agreement was still in full force and effect.
2.9 Rights and Duties Upon Termination; Return of Materials. Within thirty (30) days of the termination of this Licensing Agreement, each party to this Licensing Agreement that has possession of or control over any confidential or proprietary information of the other party shall return to the other party all written and otherwise recorded or stored matter containing confidential or proprietary information, including both original matter and all copies thereof; provided, that each party’s legal counsel may retain one copy of any such information in its files solely for the purpose of identifying information to be protected under applicable confidentiality provisions. For purposes of the foregoing, Licensee shall not be deemed to be in possession or control of confidential or proprietary information in possession of sub-licensees with a right to retain such information during the term of their sub-license agreement following termination of this Licensing Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LICENSOR
Licensor hereby represents and warrants to Licensee that all such exceptions to be referenced to a specific representation set forth in this Article III, or shall be deemed to be referenced to a specific representation in which such exception would be appropriate and reasonably apparent from the context, as of the date hereof, that:
3.1 Organization and Qualification
. Licensor is a corporation organized under the law of Northern Ireland and has the requisite power and authority to own, lease and operate these properties, except for such failures to be so qualified that could not reasonably be expected to, individually result in a Material Adverse Effect.
3.2 Absence of Certain Changes
. Licensor has utilized the Purchased Assets in the ordinary course consistent with past practices, and there has not been:
a. any Material Adverse Effect or any event, occurrence, development or state of circumstances or facts known to Licensor which could reasonably be expected to result in a Material Adverse Effect;
b. any event that could reasonably be expected to prevent or materially delay the performance of the obligations of Licensor pursuant to this Agreement;
c. any incurrence, assumption or guarantee by Licensor of any indebtedness for borrowed money with respect to the Licensed Property other than in the ordinary course of business and in amounts and on terms consistent with past practices;
d. any creation or other incurrence of any Lien on any Licensed Property or any failure to discharge or satisfy any such Lien or pay or satisfy any material obligation or liability (whether absolute, accrued, contingent or otherwise) relating to or affecting the Purchased Assets;
e. any transaction or Contract entered into by Licensor relating to any Licensed Property (including the acquisition or disposition of any assets) or any relinquishment by Licensor of any such Contract or other right relating to any Licensed Property, in either case, other than transactions and commitments in the ordinary course of business consistent with past practices and those contemplated by this Agreement;
f. any settlement, waiver, release, assignment or compromise relating to or affecting any material action, suit, proceeding, claim arbitration or litigation affecting the Licensed Property;
g. any sale or transfer of any of the Licensed Property (including, without limitation, any disposition or license of any Proprietary Rights) except for inventory sold in the ordinary course of business consistent with past practices or cancellation of any material debts or claims relating to the Licensed Property or waiver of any rights relating thereto;
h. any authorization of, or agreement entered into or commitment made to do any of the foregoing.
3.3 Title to Licensed Assets
. No Licensed Property is subject to any Lien. Upon consummation of the transactions contemplated hereby, Licensee will have acquired good and marketable title in and to, or a valid leasehold interest in, each of the Licensed Property, free and clear of all Liens.
3.4 No Undisclosed Liabilities
. There are no liabilities relating to or affecting the Licensed Property of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability other than liabilities that, individually or in the aggregate, would result in a Material Adverse Effect with respect to the Licensed Property.
3.5 Litigation
. There is no action, suit, claim, investigation or proceeding (or any basis therefore) pending against, or to the Knowledge of Licensor, threatened against, or relating to or affecting, any Licensed Property before any court or arbitrator or any Governmental Entity, and to the Knowledge of Licensor, there are no existing acts or circumstances that could reasonably be expected to result in such an action, suit, claim, investigation or proceeding. Licensor is not subject to any outstanding order, writ, injunction or decree which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or materially interfere with Licensor’s ability to consummate the transactions contemplated hereby.
3.6 Material Contracts
.
| a. | Licensor is not a party to or subject to: |
1. Any Contract that substantially limits the freedom of Licensor to compete in any line of business or with any Person or in any area or to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any Licensed Property or that would so limit the freedom of Licensee after the Closing Date; or
2. Any material Contract not made in the ordinary course of business that relates to or affects the Licensed Property.
3.7 Compliance with Laws
. Licensor is not in violation of, Licensor has not violated, and to the Knowledge of Licensor, Licensor is not under investigation with respect to or been threatened to be charged with or given notice of any violation of, any Law or judgment, order or decree entered by any court, arbitrator or Governmental Entity, applicable to the Licensed Property or the conduct of the Business. No violation of any Law relating to or affecting any Licensed Property currently exists or has existed at any time. There are no developments relating to or affecting any of the Licensed Property pending or threatened, which might reasonably be expected to materially detract from the value of such Licensed Property, materially interfere with any present or intended use of any such Licensed Property or result in a Material Adverse Effect with respect to the marketability of such Licensed Property.
3.8 Proprietary Rights
.
a. All patents (including, without limitation, all U.S. and foreign patents, patent applications (including provisional applications), invention disclosures and any and all divisions, continuations, continuations-in-part, re-issues, re-examinations and extensions thereof), design rights, trademarks, trademark applications (including intent to use filings), trade names and service marks (whether or not registered), trade dress, logos, copyrights (whether or not registered) and any renewal rights therefore, sui generis database rights, statistical models, technology, inventions, supplier lists, trade secrets, know-how, databases, technical documentation, mask works, registrations and applications for any of the foregoing and all other tangible and intangible proprietary information, materials and associated goodwill (collectively, “Proprietary Rights”) that are held by or have been or are planned to be used in (including in the development of) the Business and/or in any product, technology or process (i) currently being or formerly manufactured, published or offered by the Licensor or (ii) currently under development for possible future manufacturing, publication, marketing or other use by the Licensor, are hereinafter referred to as the “Licensor Proprietary Rights.”
b. The Licensor Proprietary Rights contain only those items and rights that are: (i) owned by the Licensor; (ii) in the public domain; or (iii) rightfully used by the Licensor pursuant to a valid and enforceable license or other similar agreement (the Licensor Proprietary Rights which are used pursuant to sub-section; (iii) are referred to as “Licensor Licensed Proprietary Rights”). The Licensor has all rights in Licensor Proprietary Rights owned by the Licensor and in Licensor Licensed Proprietary Rights necessary (and had all rights necessary to carry out its former activities at the time such activities were being conducted), including, to the extent required to carry out such activities, rights to make, use, reproduce, modify, adopt, create derivative works based on, translate, distribute (directly and indirectly), transmit, display and perform publicly, license, rent and lease and, other than with respect to Licensor Licensed Proprietary Rights, assign and sell Licensor Proprietary Rights.
c. To the Knowledge of Licensor, the use, reproduction, manufacturing, distribution, licensing, sub-licensing, sale or any other exercise of rights in any Licensor Proprietary Rights, product, activity, technology or process as now used or offered for use, licensing or sale by the Licensor does not, directly or indirectly, infringe on any rights in any Proprietary Rights or other proprietary right of any person, anywhere in the world. No claims or investigations, (i) challenging or threatening the validity, enforceability, effectiveness or ownership by the Licensor of any Licensor Proprietary Rights or (ii) to the effect that the use, manufacturing, distribution, licensing, sublicensing, sale or any other exercise of rights in any Licensor Proprietary Rights, product, activity, technology or process as now used by the Licensor directly or indirectly infringes any Proprietary Rights or other proprietary right of any person, have been asserted or threatened by any person. All of the rights within Licensor Proprietary Rights are enforceable and subsisting. To the Knowledge of Licensor, there is no unauthorized use, infringement or misappropriation of any Licensor Proprietary Rights by any third-party, employee, former employee or contract worker.
d. The Licensor has taken all appropriate measures to protect the proprietary nature of the Licensor Proprietary Rights and to maintain in confidence all trade secrets and confidential information owned or used by the Licensor.
e. Except as would not otherwise materially impair the Licensor’s ability to account for, enforce its rights under, make use of, understand or memorialize the Licensor Proprietary Rights, the Licensor has taken all steps, in accordance with normal industry practice, to preserve and maintain notes and records relating to Licensor Proprietary Rights and to cause the same to be readily understood, identified and available.
f. The Licensor Proprietary Rights are free and clear of any and all Liens.
g. All data which has been collected, stored, maintained or otherwise used by the Licensor has been collected, stored, maintained and used in accordance with all applicable U.S. and foreign Laws, rules, regulations, guidelines and industry standards. The Licensor has not received a notice of noncompliance with applicable data protection laws, rules, regulations, guidelines or industry standards.
3.9 Licensed Patents: Representations and Warranties; Third-Party Infringement Claims Defense; Prosecution of Infringement Claims Against Third-parties; Right of Set Off; When Failure to Establish Validity Becomes Grounds for Terminating Payments.
a. Licensor Representations and Warranties Respecting Licensed Patents. Licensor represents and warrants to Licensee that, (i) the Licensed Patents do not infringe on the patent rights of any third-party, (ii) Licensor is the sole owner of the Licensed Patents and Licensed Intellectual Property, (iii) Licensor has granted no other license(s) that permit any other person or entity to develop, manufacture, exploit, sub-license or otherwise use the inventions used in the Licensed Patents and Licensed Intellectual Property and will grant no other such license(s) or use rights to any third-party during the term of this Licensing Agreement (or any extensions thereof), (iv) Licensor has neither applied for nor obtained foreign Licensed Patents with respect to the inventions contained in the Licensed Patents and Licensed Intellectual Property and during the term of this Licensing Agreement (or any extensions thereof) will not apply for or obtain any such foreign Licensed Patents (except with the prior written consent of Licensee on such terms and conditions as Licensee in its sole discretion finds acceptable), (v) Licensee will not undertake modifications of the Licensed Patents through which essentially similar processes, products or techniques may be implemented that would be competitive with processes or techniques employed or products produced by Licensee utilizing the Licensed Patents and/or Licensed Intellectual Property and (vi) Licensor has not and during the term of this Licensing Agreement (or any extensions thereof) will not engage in or encourage the development of competing products, processes or techniques under the Licensed Patents or other similar Licensed Patents either in the United States or any foreign patent jurisdiction.
b. Third-party Infringement Claims Defense. In the event that any third-party asserts that the Licensed Patents infringe on the third-party’s patent rights, it shall be the Licensor’s obligation to defend such infringement claim and to conform Licensee’s continued right to develop, manufacture and sell products based on the claims set forth in the Licensed Patents and to sub-license the Licensed Patents. Licensor and Licensee agree to make each other aware of any third-party infringement claim within thirty (30) days of being made aware of the claim by the third-party. Licensor shall defend against any such infringement claim at Licensor’s own cost and expense. In the event that Licensor fails to defend such infringement claim, Licensee shall have the right (but not the obligation) to defend against such claim and Licensor hereby appoints Licensee its attorney-in-fact to defend against any such infringement claim and in Licensee’s sole discretion, to take all acts with respect to the claim (and its settlement) which Licensee deems appropriate. Licensor agrees to cooperate fully with Licensee in connection with any such defense (including, but not by way of limitation, by joining in any such defense).
c. Prosecution of Third-parties for Infringement of Licensed Patents. In the event that Licensor or Licensee become aware of any potential infringement of the Licensed Patents by any third-party, Licensor and Licensee agree to make each other aware of any such potential infringement within fifteen (15) days of becoming aware of the potential infringement. Licensor and Licensee agree that it shall be Licensee’s right (but not its obligation) to warn third-parties of potential infringements of the Licensed Patents during the term of this Licensing Agreement (including and extensions thereof) and Licensor agrees to assist Licensee in the prosecution of any patent infringement claim (including, but not by way of limitation, by joining in the prosecution of any such claim). Licensor hereby appoints Licensee its attorney-in-fact for purposes of prosecuting any such patent infringement claims. Any such patent infringement claims shall be conducted at the expense of the Licensee.
d. Set Off. In the event Licensee undertakes the defense of a patent infringement claim or the prosecution of a patent infringement claim, Licensee shall be entitled to recover Licensee’s expenses (including court costs, reasonable attorneys’ fees and reasonable expert witness’ fees, settlement payments and fees or royalties paid to third-parties in settlement of infringement claims) as a set off against other amounts owning to Licensor by Licensee under this License Agreement (including fees payable this Licensing Agreement). Licensor and Licensee agree that this right of set off exists in addition to, any other rights Licensee may have at law or in equity to recover such expenses from Licensor or any third-party.
e. Patent Prosecution and Maintenance. Except as otherwise provided in this Licensing Agreement, Licensor may proceed with the prosecution of patent applications with respect to inventions independently developed by Licensor at Licensor’s own discretion and at Licensor’s own cost. Licensee may proceed with prosecution of patent applications with respect to patentable products and techniques developed during product development under this License Agreement at Licensee’s own discretion and expense and without receiving the consent or approval of Licensor; provided, however, that if the new inventions that are the subjects of such patent applications utilize elements of the Licensed Patents, such patent applications may be prosecuted by Licensee only with the approval and participation of Licensor on such terms (including expense, royalty and fee sharing) as may be mutually agreed to by Licensor and Licensee.
f. Grounds for Terminating Payments Pertaining to Licensed Patents. Licensee’s right to terminate payments required under Sections 2.2 of this Licensing Agreement in the event that that the Licensed Patents licensed hereunder are found invalid or unenforceable shall arise only upon a “final adjudication” of such invalidity or unenforceability. For purposes of this Section 3.8(f), “final adjudication” shall mean an adjudication or determination by a trial court or a court of appeal, which adjudication or determination shall be final and binding. Notwithstanding the foregoing, Licensor and Licensee agree that from the time that either Licensor or Licensee is on notice of any assertion of a third-party patent infringement claim until any such final adjudication, all payments required to be made to Licensor under Sections 2.2 shall be made instead into an escrow account to be held there pending final adjudication of the third-party claim. Upon such final adjudication, the sums held in escrow will be distributed as follows: first, if defense of any such action is undertaken by Licensee under this Licensing Agreement, to reimburse Licensee of expenses incurred (including court costs and reasonable attorneys and expert witness fees) in the defense; second, to pay the third-party any amount to which the third-party becomes entitled as a consequence of the settlement or final adjudication of the third-party’s claim; and finally, if any amounts remain after the payments referred to above, to Licensor. Interest earned on the amounts held in escrow shall be and remain the property of Licensee. Nothing herein contained shall be construed as a limitation upon any rights Licensee may otherwise have under this Licensing Agreement, at law or in equity, arising from Licensor’s breach of any representation or warranty contained in this Licensing Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LICENSEE
Licensee hereby represents and warrants to Licensor, all such exceptions to be referenced to a specific representation set forth in this Article IV, or shall be deemed to be referenced to a specific representation in which such exception would be appropriate and reasonably apparent from the context, as of the date hereof, that:
4.1 Organization and Qualification
. Licensee is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted. Licensee is duly qualified or licensed to do business, and is in good standing (to the extent applicable), in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified and in good standing that could not reasonably be expected to, individually or in the aggregate, result in a material adverse effect on the Licensee.
4.2 Corporate Authorization
. Licensee has the necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Licensee of this Agreement, and the consummation by Licensee of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Licensee and no further corporate action on the part of Licensee is necessary to authorize this Agreement or to consummate the transactions contemplated hereby or thereby. This Agreement has been duly executed and delivered by Licensee and constitutes valid and binding agreements of Licensee, enforceable against Licensee in accordance with their respective terms.
4.3 Governmental Authorization
. The execution, delivery and performance by Licensee of this Agreement, and the consummation by the Licensee of the transactions contemplated hereby and thereby, do not and will not require any action by or in respect of, or filing with, any Governmental Entity, except where the failure to take such action or obtain authorizations, consents or approvals or to make such filings would not reasonably be expected to, individually or in the aggregate, result in a material adverse effect on the Licensee.
4.4 Non-Contravention
. The execution, delivery and performance by Licensee of this Agreement, and the consummation by the Licensee of the transactions contemplated hereby and thereby, do not and will not, (i) contravene or conflict with the certificate of incorporation or bylaws of Licensee, (ii) contravene or conflict with or constitute a violation of any provision of any Law, judgment, injunction, order or decree binding upon or applicable to Licensee; or (iii) constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of Licensee or to a loss of any material benefit relating to Licensee’s business to which Licensee is entitled under any provision of any material Contract binding upon Licensee or by which any of Licensee’s assets is or may be bound; except, in each case, for violations and defaults that, individually and in the aggregate, could not reasonably be expected to have or result in a material adverse effect on the Licensee, or materially impair the ability of Licensee to perform its obligations hereunder.
ARTICLE V
MISCELLANEOUS
5.1 Indemnities and Arbitration.
a. Licensee Indemnity. Licensee shall defend, indemnify, save and hold harmless Licensor from all losses, claims, suits, damages, costs, fees and expenses (including attorneys fees) resulting from or arising out of any act or omission of Licensee related to this Licensing Agreement. Licensor shall promptly notify Licensee of any loss, claim or suit for which indemnification is sought hereunder. A failure to give such prompt notification shall act as a waiver of Licensor’s rights under this Section 5.1(a).
b. Licensor Indemnity. Licensor shall defend, indemnify, save and hold harmless Licensee from all losses, claims, suits, damages, costs, fees and expenses (including attorneys fees) resulting from or arising out of any act or omission of Licensor relating to this Licensing Agreement or from a breach by Licensor of any representation, warranty or covenant contained in this Licensing Agreement. Licensee shall promptly notify Licensee of any loss, claim or suit for which indemnification is sought hereunder. A failure to give such prompt notification shall act as a waiver of Licensee’s rights under this Section 5.1(b).
c. Dispute Resolution. In the event of a dispute between the parties as to any material term herein, the parties shall first attempt to resolve the dispute informally. If, after ten (10) days, the parties are unsuccessful, the Parties agree to mediate their dispute, with each party appointing one (1) mediator to represent itself. If, after fifteen (15) days of the mediation’s commencement, no resolution is reached, the parties shall submit to mandatory binding arbitration in any controversy or claim arising out of, or relating to, the Agreement or any breach hereof. Such arbitration shall be conducted in accordance with the commercial arbitration rules of the American Arbitration Association in effect at that time, and the parties agree to be bound by any judgment, determination or award rendered by the arbitrator. The arbitrator is hereby authorized to award to the prevailing party the costs (including reasonable attorneys’ fees and expenses) of any such arbitration. The parties further agree that any mediation and arbitration meetings may be held via teleconference.
5.2 Accounting and Audit. Licensee shall be responsible for maintaining current and accurate financial records of all sales of the Licensed Property, which records shall be maintained in accordance with generally accepted accounting principles (“GAAP”). Licensor shall have the right to inspect and/or audit such records, from time to time, upon providing ten (10) days written notice to Licensee.
5.3 Attorneys’ Fees. In the event of any dispute between the parties that arises out of this Licensing Agreement, the substantially prevailing party with respect to the dispute shall be entitled to recover from the other party, in addition to whatever other amounts the prevailing party is entitled to recovery in law or equity, attorneys’ fees and expenses, expert witness fees and expenses and court costs whether incurred in pretrial, trial or on appeal.
5.4. Governing Law. Except as specifically preempted by the federal laws of the United States of America, this Licensing Agreement shall be governed by and construed in accordance with the laws of the State of Washington.
5.5 Notices. All notices required or permitted to be given pursuant to this Licensing Agreement shall be given in writing and shall be sent by registered mail or certified mail, return receipt requested, postage prepaid, to the following addresses:
If to Andronics:
If to VSI or SARS: Veritas Solutions, Inc.
601 108th Avenue NE, Suite 1908
Bellevue, WA 98004
Attn: Clayton Shelver
Fax: ###-###-####
with a copy to: The Otto Law Group, PLLC
601 Union Street, Suite 601
Seattle, Washington 98110
Attn: David M. Otto
Fax: ###-###-####
Any notice given pursuant to this Section 5.5 shall be effective upon the date of actual receipt by the addressee, as evidenced by a return receipt or other similar written confirmation. Either party hereto may, from time to time, by advance written notice given in accordance with and pursuant to this Section 5.5, designate a substitute address for the receipt of notices under this Licensing Agreement.
5.6 Severability. If any term or other provision of this License Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this License Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this License Agreement is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this License Agreement be consummated as originally contemplated to the fullest extent possible.
5.8 Parties, Successors and Assigns. This Licensing Agreement shall inure to the benefit of and be binding upon the parties hereto, their successors and permitted assigns.
[Signature Page to Follow]
This License Agreement may be executed by the parties individually or in any combination, by facsimile and in two (2) or more counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
VERITAS SOLUTIONS, INC.
By: Clayton Shelver
Title: Director and CEO
SECURE ASSET REPORTING SERVICES, INC.
By: Clayton Shelver
Title: Director and CEO
ANDRONICS LTD.
By:
Its:
Exhibit D
Lease Agreement
[the Lease Agreement appears on the following pages]
Schedule 1.1
List of Assets
| Fixed asset register - equipment (depn @ 20% sl pa) | |
| Details | Acqn date |
| Kingswood software | 28/02/98 |
| Inmac cables | 31/05/98 |
| Aurora-2 PCs | 31/05/98 |
| Compaq cpmpr equip(NIIB) | 31/08/98 |
| Tracking system (ex PMH) | 31/08/98 |
| Equip-Computer Workbench | 31/08/98 |
| Equipment - visa | 30/09/98 |
| Equip-Micro Warehouse | 30/09/98 |
| Equip-Digital Workshop | 31/10/98 |
| Equipment-visa | 30/11/98 |
| Inmac-compr equip | 31/12/98 |
| Inmac-compr equip | 31/12/98 |
| Inmac-compr equip | 31/12/98 |
| Equip-Micro Warehouse | 31/12/98 |
| Equip-Micro Warehouse | 31/01/99 |
| Mapinfo | 28/02/99 |
| MapExtreme-4 PCs (NIIB) | 28/02/99 |
| Inmac-hardware upgrades | 31/05/99 |
| CPC-fax machine | 31/05/99 |
| CPC file holder | 31/05/99 |
| Phone socket | 31/05/99 |
| M Dawes-phone | 31/05/99 |
| Sundry equipment | 31/05/99 |
| Colour laserjet printer | 31/07/99 |
| BT phones | 31/07/99 |
| RS - drill | 31/08/99 |
| RS - drill set | 31/08/99 |
| 15" monitor | 31/08/99 |
| Router | 15/09/99 |
| Osciliscope | 26/10/99 |
| Label machine | 05/11/99 |
| Wavecomm modems | 10/11/99 |
| Photocopier | 16/11/99 |
| SX3 computer equipment | 16/11/99 |
| Mobile tech equip | 29/11/99 |
| Mobile phones | 10/12/99 |
| Soldering station | 14/12/99 |
| Mobile phone | 14/12/99 |
| Cisco 1600 PS | 06/01/00 |
| Mobile phone | 19/01/00 |
| RS 232 cable | 16/02/00 |
| Nokia phone | 17/02/00 |
| Nokia phone | 26/02/00 |
| SX3 computer equipment | 06/03/00 |
| Sony Vaio laptop | 08/03/00 |
| Antenna tester | 10/03/00 |
| Remote mouse | 21/03/00 |
| 2 X compiuters | 27/03/00 |
| Ladders | 05/04/00 |
| Socket set | 05/04/00 |
| Capture board | 14/04/00 |
| Dual speed hub | 14/04/00 |
| Tapered hole cutter | 09/05/00 |
| Computer | 17/05/00 |
| Server cabinet | 23/05/00 |
| B&Q equipment | 29/05/00 |
| Computer | 30/06/00 |
| Hoover | 05/07/00 |
| Gateway PC | 07/08/00 |
| GDC boundary data | 08/08/00 |
| 56k modem | 24/08/00 |
| Monitor | 12/10/00 |
| Gate pendants | 17/11/00 |
| Calculators | 30/11/00 |
| Dell PCs x 2 | 19/12/00 |
| HP Scanjet | 27/01/01 |
| Computer (2nd hand) | 02/02/01 |
| Budget DIY equip | 06/02/01 |
| Clickman | 09/02/01 |
| Heatgun | 14/02/01 |
| Computer equip | 15/01/00 |
| Antenna x 3 | 23/03/00 |
| PC | 09/03/00 |
| Coldfusion software | 29/03/00 |
| Equipment | 30/04/00 |
| Scanner | 31/03/01 |
| 10GB hard disk | 30/04/01 |
| Steam cleaner | 30/04/01 |
| 20GB HDD | 31/05/01 |
| 10GB hard disk | 30/06/01 |
| Compaq server/instn | 30/09/01 |
| 2 display systems | 30/11/01 |
| Fax/printer | 30/11/01 |
| Answerphone | 30/11/01 |
| Adaptor cards | 31/01/02 |
| Laptop | 07/06/02 |
| Spider engineer-equip | 30/05/02 |
| Phones | 30/05/02 |
| Credit card-sundry equip | 31/08/02 |
| Computer mouse ps2 | 16/09/02 |
| Multimeter | 30/09/02 |
| Iomega software | 04/10/02 |
| UPS for server | 14/10/02 |
| Phones *2 | 15/10/02 |
| Solder irons | 01/11/02 |
| Cables and adapter | 15/11/02 |
| Laptops *3 | 19/12/02 |
| 17" monitors x 2 | 22/09/03 |
| Phone upgrade | 29/10/03 |
| Car phone adaptor | 30/09/03 |
| Rechargeable spotlight | 14/11/03 |
| Sundry equipment | 27/02/04 |
| Laptop | 04/04/03 |
| Comb binder | 12/06/03 |
| Backup machine | 30/04/04 |
| Mobile phones and accessories | 05/05/04 |
| Drills and accessories | 25/06/04 |
| OKI printer | 13/01/05 |
| Sundry equipment | 28/02/05 |
| Ladder | 25/03/05 |
| Nokia phone kits | 16/06/05 |
| Linux server IBM 346 | 08/08/05 |
| B4250 printer | 01/03/05 |
| IBM Server | 08/01/07 |
| Uninterrupted power supply | 08/01/07 |
| Laptop computer (2) | 08/01/07 |
| Fixed asset register - fixtures and fittings (depn @ 20% sl pa) | |
| Details | Acqn date |
| Fiesta blinds | 07/05/99 |
| CPC operators chairs | 31/05/99 |
| ADT intruder alarm system | 28/05/99 |
| Graphix-signs | 14/06/99 |
| CPC conf room chairs | 15/06/99 |
| CPC operators chairs | 16/06/99 |
| Fridge | 04/08/99 |
| World map | 06/09/99 |
| Stands | 13/12/99 |
| Shelving | 21/12/99 |
| Desks | 28/04/00 |
| Desks | 01/05/00 |
| Chairs and bookshelves | 29/06/00 |
| Exhibition stands | 22/11/99 |
| NOBO board | 27/04/00 |
| Filing cabinet | 28/01/00 |
| Display equipment | 31/03/01 |
| Filing cabinet | 31/05/01 |
| Fireproof safe | 31/05/01 |
| External ashtrays x 2 | 31/12/01 |
| Gate automation system | 18/10/02 |
| Storage bins | 19/06/02 |
| Operator chair | 23/09/02 |
| Armchairs x 2 | 11/04/03 |
| Fan Heaters x 2 | 23/11/05 |
| Fixed asset register - motor vehicles (depn @ 25% sl pa) | |
| Details | Acqn date |
| Fiat Brava-KUI 4809 | 06/03/00 |
| BMW C1-KUI 7002 | 27/11/00 |
| Reg no KUI 2222 | 31/03/01 |
| Fixed asset register - premises expenditure (depn @ 2% sl pa) | |
| Details | Acqn date |
| Building work (O'Neill Bros) | 31/05/99 |
| Renovations (O'Neill Bros) | 01/10/02 |
Schedule 1.1 Continued
Assumed Accounts Receivable
| Forex Rate | 0.492 | 0.682 | 72,064.37 | 10,566.12 | 52,338.93 | 9,159.33 | 144,128.75 | ||||||
| Invoice GBP | VAT GBP | Euros Invoice | Euros VAT | Invoice GBP to Total$ | VAT GBP to Total$ | Euros Invoice to Total$ | Euros VAT to Total$ VAT | *Total Orbcomm Invoices | |||||
| October | 9,520.44 | 1,666.06 | 11,499.40 | 2,012.40 | 19,350.49 | 3,386.30 | 16,861.29 | 2,950.73 | |||||
| November | 9,956.56 | 1,742.39 | 12,262.95 | 2,146.02 | 20,236.91 | 3,541.44 | 17,980.87 | 3,146.66 | |||||
| December | 10,229.08 | 1,790.08 | 11,932.80 | 2,088.24 | 20,790.81 | 3,638.37 | 17,496.77 | 3,061.94 | |||||
Schedule 1.2
List of Employees
| Employees: | Forename | Dept |
| Surname | ||
| Andrews | Margaret | Admin |
| Andrews | Robert | Directors - 7001 |
| Andrews | Paul Robert | Sales/Marketing - 6001 |
| Connolly | Anthony | Sales/Marketing - 6001 |
| Craig | Shaun | Development Engineers - 7003 |
| Duffy | Fergus | Productive - 6000 |
| Gallagher | Eimear | Development Engineers - 7003 |
| Hasson | Christopher | Development Engineers - 7003 |
| Kelly | Sheila | Web Design - 7003 |
| McCaughan | Karen | Directors - 7001 |
| *McCorkell | Mark David | Web Design - 7003 |
| Moore | Paul Gerard | Productive - 6000 |
| Nagurski | Kevin | Web Design - 7003 |
| Strawhorne | Paul Thomas | Development Engineers - 7003 |
| Thomson | Thomas James | Productive - 6000 |
| **Watson | Adam | Development Engineers - 7003 |
*Mr. McCorkell was hired as a summer intern after February 7, 2007 but is no longer on the payroll.
**Mr. Watson was engaged after February 7, 2007 but has since resigned his position.
Schedule 1.3
List of Contracts
| Contract No. | Parties | Date | ||
| LPG-06-TELE-29 | BP International, Ltd. | and | Andronics, Ltd. | 9/18/2006 |
Schedule 1.4
List of Intellectual Property
| Intellectual Property | Book Value |
| Software Development for internal proprietary asset-tracking system | $1,550,300 |
| LEOCATE, Trade Mark No. 2232925 | |
| UTILITY-EYE, Trade Mark No. 003292687 | |
| Andronics, Ltd. trade name | |
| Andronics, Ltd. logo | |
Schedule 1.5
List of Goodwill
| Goodwill | |
| All Andronics, Ltd. customers and recurring revenue,including: | |
| Quinns – Leocate | |
| CSL – Fixed sites | |
| BP – LPG Product | |
Schedule 3
Assumed Liabilities
(including Excluded Liabilities)
| Accepted AP Workpaper | ||||||||||||
| Andronics Total AP | $334,058.10 | |||||||||||
| (-) Offsetting Items | $ - | |||||||||||
| (-) Unaccepted AP | $26,866.85 | |||||||||||
| (=) Total Accepted AP | $ 307,191.25 | |||||||||||
| Andronics | Limited | $ | 1 | rates as of 12/11/2007 | ||||||||
| Date: | 12/7/2007 | £ | 0.492 | ###### | Aged | Analysis | ||||||
| Report | Date: | € | 0.682 | From: | Include | transactions: | ||||||
| A/C | Name | Turnover | Balance | Future | Current | Period 1 | Period 2 | Period 3 | Older | US$ | ||
| 1890CARK | 1890 CarKits | 1,107.63 | 459.77 | 0 | 0 | 459.77 | 0 | 0 | 0 | $944.86 | ||
| AIRMAR$ | Airmar Technology Corporation | 992.91 | 1,401.86 | 0 | 0 | 29.38 | 0 | 0 | 1,372.48 | $2,880.93 | ||
| AIRTRICI | Airtricity Energy Supply (NI) Limited | 1,146.05 | 175.79 | 0 | 0 | 175.79 | 0 | 0 | 0 | $361.26 | ||
| APBMACHI | APB Machinery Moving | 315 | 158.63 | 0 | 0 | 0 | 52.88 | 105.75 | 0 | $326.00 | ||
| AUTOSECU | Auto Security Installations | 1,863.14 | 137.92 | 0 | 0 | 0 | 0 | 0 | 137.92 | $283.44 | ||
| BALLYGOW | Aquaporte Limited | 507.8 | 43.84 | 0 | -43.84 | 43.84 | 43.84 | 0 | 0 | $90.09 | ||
| BAUGHWEE | Baugh & Weedon NDT | 1,283.00 | 1,507.53 | 0 | 0 | 0 | 1,507.53 | 0 | 0 | $3,098.09 | ||
| BENEGAS | Benegas bv | 1,894.29 | 1,894.29 | 0 | 0 | 1,894.29 | 0 | 0 | 0 | $3,892.91 | ||
| BT | British Telecommunications Plc | 3,161.82 | 384.26 | 0 | 384.26 | 0 | 0 | 0 | 0 | $789.68 | ||
| CHAMBCOM | Londonderry Chamber of Commerce | 50 | 82.25 | 0 | 0 | 0 | 58.75 | 0 | 23.5 | $169.03 | ||
| CHUBB | Chubb (NI) Ltd | 121.83 | 143.15 | 0 | 0 | 0 | 0 | 143.15 | 0 | $294.18 | ||
| COILTECH | Coil Tech UK Ltd | 60.5 | 71.09 | 0 | 0 | 71.09 | 0 | 0 | 0 | $146.10 | ||
| CPC | CPC Office Supplies Limited | 299.12 | 48.7 | 0 | 10.86 | 37.84 | 0 | 0 | 0 | $100.08 | ||
| CSI | CSI (Ireland) Ltd | 9,663.00 | 767.28 | 0 | 0 | 0 | 0 | 0 | 767.28 | $1,576.82 | ||
| DAVINCI | Da Vinci's Hotel | 348.94 | 368 | 0 | 0 | 0 | 0 | 368 | 0 | $756.27 | ||
| DHL96 | DHL Express | 5,137.72 | 3,811.53 | 0 | 0 | 2,076.28 | 0 | 1,552.84 | 182.41 | $7,832.98 | ||
| DIGIKEY | uk.Digikey.com | 0 | -281.88 | 0 | -108.42 | -173.46 | 0 | 0 | 0 | $0.00 | ||
| ESENDEX | Esendex UK | 1,108.47 | -141 | 0 | -141 | 0 | 0 | 0 | 0 | $0.00 | ||
| ESS | Electronic & Security Services Ltd | 957.84 | 1,125.46 | 0 | 0 | 0 | 0 | 0 | 1,125.46 | $2,312.91 | ||
| EXPEDIT | Expeditors International | 7,079.42 | 1,357.13 | 0 | 0 | 0 | 781.38 | 0 | 575.75 | $2,789.01 | ||
| FARNELLE | Farnell Electronic Components Ltd | 2,587.78 | 826.75 | 0 | 0 | 473.25 | 353.5 | 0 | 0 | $1,699.03 | ||
| GENEVAPA | Geneva Palexpo | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | $0.00 | ||
| GLOBINC | Globalstar, Inc. | 6,558.83 | 6,057.05 | 0 | 0 | 1,248.81 | 4,808.24 | 0 | 0 | $12,447.70 | ||
| GMCNICHL | Gary McNicholl | 26,250.00 | 1,510.00 | 0 | 180 | 510 | 820 | 0 | 0 | $3,103.16 | ||
| GSG | Resource | 204.53 | 216.79 | 0 | 0 | 0 | 0 | 81.8 | 134.99 | $445.52 | ||
| HDLELECT | HDL Electronics Ltd | 2,668.95 | 3,136.06 | 0 | 0 | 1,870.21 | 1,265.85 | 0 | 0 | $6,444.84 | ||
| IDEXPO | IDEXPO | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | $0.00 | ||
| IFSCOURI | IFS Courier Express Ltd | 7,811.96 | 693.22 | 0 | 0 | 147.68 | 378.46 | 167.08 | 0 | $1,424.62 | ||
| IFSGLOBA | IFS Global Logistics Ltd | 6,987.36 | 1,714.48 | 0 | 121.63 | 401.9 | 623.39 | 370.75 | 196.81 | $3,523.39 | ||
| IMPERIAL | Imperial Connector Systems Ltd | 1,027.50 | -247.81 | 0 | 0 | 0 | 0 | 0 | -247.81 | $0.00 | ||
| ITS | Intertek Testing Services | 1,240.00 | 1,457.00 | 0 | 0 | 0 | 0 | 0 | 1,457.00 | $2,994.25 | ||
| JMTC | JMTC Ltd | 0 | 318.62 | 0 | 0 | 0 | 0 | 0 | 318.62 | $654.79 | ||
| JOHNSTON | Johnston Printing Limited | 339 | 398.33 | 0 | 0 | 398.33 | 0 | 0 | 0 | $818.60 | ||
| KEEPSOLU | Keep Solutions Simple | 5,280.00 | 1,116.25 | 0 | 0 | 916.5 | 199.75 | 0 | 0 | $2,293.98 | ||
| KMCCAULE | McCauley McGinty Chartered Accountants | 12,125.00 | 14,246.88 | 0 | 8,225.00 | 4,700.00 | 0 | 0 | 1,321.88 | $29,278.42 | ||
| LIMAVADY | Limavady Gear Company Limited | 15,628.00 | 7,207.45 | 0 | 0 | 0 | 0 | 690.9 | 6,516.55 | $14,811.86 | ||
| LJNDESIG | LJN Designs | 750 | 470 | 0 | 0 | 0 | 0 | 470 | 0 | $965.89 | ||
| MATRIX | Matrix Telematics Ltd | 841.44 | 988.69 | 0 | 0 | 0 | 0 | 0 | 988.69 | $2,031.83 | ||
| MULTIBUK | Multiband Antennas Limited | 105 | -0.21 | 0 | -0.21 | 0 | 0 | 0 | 0 | $0.00 | ||
| NITRONIC | Nitronica | 1,941.69 | 1,371.28 | 0 | 705.76 | 665.52 | 0 | 0 | 0 | $2,818.08 | ||
| NTL | NTL Business Credit Control | 7,881.00 | 7,402.50 | 0 | 0 | 0 | 7,402.50 | 0 | 0 | $15,212.70 | ||
| NUSTARTE | Nu-Start Electronics | 13,409.58 | 8,031.69 | 0 | 0 | 0 | 8,031.69 | 0 | 0 | $16,505.73 | ||
| O2 | O2 (UK) Limited | 7,197.14 | 347.31 | 0 | 214.99 | 368.54 | -209.37 | -320.81 | 293.96 | $713.75 | ||
| ORANGE | Orange | 19,543.82 | 5,079.65 | 0 | 0 | 3,082.14 | -0.55 | 0 | 1,998.06 | $10,439.07 | ||
| ORBCOMM | Orbcomm Global L.P. | 0 | -292.18 | 0 | 0 | 0 | 0 | 0 | -292.18 | $0.00 | ||
| ORBCOMML | Orbcomm LLC | 2,533.63 | 13,073.41 | 0 | 0 | 371.51 | 0 | 0 | 12,701.90 | $26,866.85 | ||
| PESTCTRL | North West Pest & Rodent Control Service | 162 | 190.35 | 0 | 190.35 | 0 | 0 | 0 | 0 | $391.18 | ||
| POWERACT | Power Action | 12,551.54 | -1,627.61 | 0 | 0 | -3,093.41 | 0 | 0 | 1,465.80 | $3,012.33 | ||
| QUAKE$ | Quake Global INC | 9,641.21 | 204.63 | 0 | 0 | 0 | 0 | 204.63 | 0 | $420.53 | ||
| RAPIDELE | Rapid Electroncs | 1,091.41 | 0.29 | 0 | 0 | 0.29 | 0 | 0 | 0 | $0.60 | ||
| RCA | Rates Collection Agency | 4,504.71 | 900.94 | 0 | 0 | 0 | 0 | 0 | 900.94 | $1,851.50 | ||
| ROCHESTE | Rochester Gauges International S.A | 0 | 38.03 | 0 | 0 | 0 | 0 | 0 | 38.03 | $0.00 | ||
| RORYMCIN | Rory McIntyre | 609.6 | 178 | 0 | 0 | 0 | 0 | 0 | 178 | $0.00 | ||
| RS | RS Components Limited | 75.7 | 16.61 | 0 | 0 | 0 | 16.61 | 0 | 0 | $34.13 | ||
| RUTLIDGE | Rutledge Joblink | 45 | 105.76 | 0 | 0 | 0 | 0 | 0 | 105.76 | $0.00 | ||
| SAFT | SAFT Ltd | 31,900.00 | 13,771.00 | 0 | 0 | 0 | 0 | 0 | 13,771.00 | $28,300.45 | ||
| SAGE | Sage (UK) Ltd | 2,112.50 | 1,240.80 | 0 | -124.7 | 60 | 0 | 0 | 1,305.50 | $2,549.94 | ||
| SARSINC | SARS Inc | 57,090.00 | 25,318.67 | 0 | 0 | 0 | 20,327.50 | 5,287.50 | -296.33 | $0.00 | ||
| SARSINC$ | SARS Inc $ | 139,150.18 | 138,300.42 | 0 | 0 | 0 | 0 | 7,362.25 | 130,938.17 | $0.00 | ||
| SCAPACK | SCA Packaging Ireland | 0 | -2,570.38 | 0 | 0 | 0 | 0 | 0 | -2,570.38 | $0.00 | ||
| SECTRAC€ | Sectrack NV | 0 | 3.59 | 0 | 0 | 0 | 0 | 0 | 3.59 | $0.00 | ||
| SELECTTR | Selective Travel Management | 14,576.92 | 3,875.76 | 0 | 0 | 1,585.00 | 2,290.76 | 0 | 0 | $7,964.98 | ||
| STELLAR$ | Stellar Satellite Communciations Ltd | 0 | 610.33 | 0 | 0 | 0 | 0 | 0 | 610.33 | $1,254.27 | ||
| STEPTOEJ | Steptoe & Johnson | 0 | -96.68 | 0 | 0 | 0 | 0 | 0 | -96.68 | $0.00 | ||
| SYSTEM | System Design Technology Ltd | 292.5 | 29,141.89 | 0 | 0 | 0 | 0 | -424.76 | 29,566.65 | $59,888.80 | ||
| TMOBILE | T-Mobile (UK) Ltd | 54,662.93 | 7,611.25 | 0 | 7,611.25 | 0 | 0 | 0 | 0 | $15,641.70 | ||
| TNT | TNT UK Limited | 0 | 42.41 | 0 | 0 | 0 | 0 | 0 | 42.41 | $87.16 | ||
| TRAKM8 | Trakm8 Limited | -825 | 8,272.67 | 0 | 0 | 0 | 0 | 0 | 8,272.67 | $17,000.97 | ||
| TRFASTEN | TR Fastenings | 532.61 | -2,048.48 | 0 | 0 | 0 | 0 | -2,079.75 | 31.27 | $0.00 | ||
| TWTLOG | TWT Logistics Limited | 480 | 564 | 0 | 0 | 141 | 0 | 423 | 0 | $1,159.06 | ||
| UNITEDWA | SITA (Northern Ireland) Limited | 665.68 | 82.53 | 0 | 0 | 82.53 | 0 | 0 | 0 | $169.61 | ||
| UPS | U.P.S. Limited | 1,334.34 | 122.54 | 0 | 0 | 122.54 | 0 | 0 | 0 | $251.83 | ||
| VODAFONE | Vodafone Ireland Limited | 5,015.64 | 2,325.80 | 0 | 0 | 0 | 0 | 704.63 | 1,621.17 | $4,779.70 | ||
| WILLIS | Willis Limited | 4,504.50 | 2,099.93 | 0 | 0 | 0 | 0 | 0 | 2,099.93 | $4,315.52 | ||
| XELLEXBA | Xellex Battery Co Ltd - $ | 3,329.76 | -6,110.98 | 0 | 0 | 0 | 0 | 0 | -6,110.98 | $0.00 | ||
| ZENITH | Zenith | 350 | 411.25 | 0 | 0 | 411.25 | 0 | 0 | 0 | $845.15 | ||
| Totals: | 523,864.42 | 311,614.13 | 0 | 17,225.93 | 19,078.41 | 48,752.71 | 15,106.96 | 211,450.12 | $334,058.10 | |||
Schedule 4.2
Convertible Debenture Holders
| Principal Amount: | Holder: |
| Four Hundred Eighty-Nine Thousand United States Dollars ($489,000 USD) | Patrick Andrews |
| One Hundred Fifty Thousand United States Dollars ($150,000 USD) | Fergus Duffy |
| Thirteen Thousand United States Dollars ($13,000 USD) | Vehicle Services (Claire Flanagan) |
| Seventy Thousand United States Dollars ($70,000 USD) | Independent Northern Ireland |
Schedule 4.6.2
Revenue Projection Schedule for Andrews Quarterly Options
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 |
| $500,000 USD | $1,000,000 USD | $1,150,000 USD | $1,350,000 USD |
Schedule 9.3.2
Schedule of Promissory Notes
| Date of Promissory Note: | Promissory Note Number: | Principal Amount of Promissory Note: |
| 12/19/06 | #1 | $16,045.00 |
| 2/16/07 | #2 | $23,000.00 |
| 2/16/07 | #3 | $2,292.00 |
| 3/2/07 | #4 | $10,000.00 |
| 3/26/07 | #5 | $21,772.18 |
| 4/26/07 | #6 | $40,000.00 |
| 5/1/07 | #7 | $44,720.00 |
| 5/11/07 | #8 | $27,105.00 |
| 5/3/07 | #9 | $69,689.82 |
| 5/8/07 | #9 | -$34,694.20 |
| 5/10/07 | #9 | -$35,031.62 |
| 5/25/07 | #10 | $16,000.00 |
| 6/19/07 | #11 | $507.00 |
| 6/22/07 | #12 | $3,127.19 |
| 6/26/07 | #13 | $893.00 |
| 6/26/07 | #14 | $43,025.72 |
| 6/29/07 | #15 | $34,000.00 |
| 7/19/07 | #16 | $35,880.00 |
| 7/20/07 | #17 | $1,585.51 |
| 7/31/07 | #18 | $45,955.88 |
| 7/31/07 | #19 | $20,000.00 |
| 7/31/07 | #20 | $4,676.00 |
| 8/6/07 | #21 | $43,141.00 |
| 9/30/07 | #22 | $38,156.65 |
| 9/30/07 | #23 | $8,015.00 |
| 9/30/07 | #24 | $83,650.00 |
| 9/21/07 | #25 | $42,757.79 |
| 9/30/07 | #26 | $16,980.00 |
| 9/30/07 | #27 | $59,150.00 |
| Total: | $682,398.92 |
