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EXHIBIT 2
LEASE AGREEMENT BETWEEN KIBOGA SYSTEMS, INC.,
AND GREYSTONE DIGITAL TECHNOLOGY, INC.
LEASE AGREEMENT
PARTIES
THIS Agreement is made the 16th day of July 2001, by and between KIBOGA SYSTEMS,
INC., a Texas corporation, located at 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx
75324,hereinafter referred as LESSOR, and GREYSTONE DIGITAL TECHNOLOGY, INC. and
its wholly owned subsidiary, GREYSTONE TECHNOLOGY, INC., California
corporations, located at 0000 Xxxxxx Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000,
hereinafter referred to as LESSEE.
W I T N E S S E T H
WHEREAS, LESSEE and LESSOR are entering into a long term lease agreement and
whereby as a result of this agreement the business and the ownership of LESSEE
will change significantly, and LESSEE and LESSOR desire to contribute their
substantial efforts to gain access to new capital and develop and market the
business of LESSOR and which may include substantial changes to management and
to the Board of Directors of LESSEE, for the purposes of creating growth in
government and federal systems contracts, the research, development, and
integration of software and the application of software to new markets related
to city, county, state, regional, national, and international government, law
enforcement authorities and agencies; police security and surveillance
authorities; intelligence agencies and authorities; and state, national, and
international military agencies, departments and authorities; and which, may
result in the merger with or acquisition of Elagent Corporation with GreyStone.
WHEREAS, LESSOR, a Texas corporation, is in the business of development and sale
of technology products and a portion of LESSOR's business, known as "the Kiboga
Business" and hereinafter referred to as the Kiboga Business, involves certain
intellectual property and products including software, trade secrets, and
related products that have been developed for the purposes of, for the
applications of, and for the use of city, county, state, regional, national, and
international government law enforcement authorities and agencies; police
security and surveillance authorities; intelligence agencies and authorities;
and state, national, and international military agencies, departments and
authorities;
WHEREAS, LESSOR would like to lease the Kiboga Business to a company that has
the management expertise, marketing expertise, technology expertise, and
financial ability to successfully derive the commercial benefits and profit
opportunities that can reasonably be expected from providing these software
applications, related services, and related products for the needs of customers
engaged in defense, law enforcement, and intelligence activities;
WHEREAS, LESSEE is a public company based in San Diego, California whose stock
was being traded on NASDAQ (GSTN:NASDAQ:SC)on May 16, 2001 and is currently
being traded as a NASDAQ bulletin board security (GSTN:BB);
WHEREAS, LESSEE is willing to operate the Kiboga Business and has the management
expertise, the marketing expertise, and the technology expertise to successfully
develop and market the Kiboga Business in such a way as to derive the commercial
benefits and profit opportunities that can reasonably be expected from providing
these software applications, related services, and related products for the
needs of customers engaged in defense, law enforcement, and intelligence
activities;
WHEREAS, LESSEE would like to lease the Kiboga Business from LESSOR and to share
with LESSOR the benefits to be enjoyed from this endeavor;
WHEREAS, because of the services to be provided by LESSEE, LESSOR is willing to
share with LESSEE the revenues generated by the Kiboga Business;
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WHEREAS, LESSOR desires to lease the Kiboga Business to LESSEE and LESSEE
desires to lease the Kiboga Business from LESSOR;
NOW, THEREFORE, for and in consideration of the mutual covenants made and of the
obligations herein assumed by the respective parties, it is mutually agreed as
follows:
I.
DEFINITIONS
1.01 For the purposes of this Agreement, "the Kiboga Business" shall have the
following meaning and shall hereinafter be referred to as the Kiboga Business:
The definition of "The Kiboga Business" for purposes of this Agreement is
software, intellectual property, marketing experience and management expertise
related to that portion of assets owned by LESSOR, or to which LESSOR has
contractual rights, and all revenue and profits derived through the use or lease
of these assets as well as LESSOR'S obligations that relate to such assets and
contractual rights, being certain software that was developed by others and
subsequently contractually committed to LESSOR for the purposes of, for the
applications of, and for the use of, large scale and extensive network data
mining, data acquisition and data distribution; trade secrets, other
intellectual property, and related products that have been developed for the
purposes of, for the applications of, and for the use of city, county, state,
regional, national, and international government law enforcement authorities and
agencies; police security and surveillance authorities; intelligence agencies
and authorities; and state, national, and international military agencies,
departments and authorities.
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II.
AGREEMENT TO LEASE THE KIBOGA BUSINESS
2.01. LESSOR does hereby lease to LESSEE and LESSEE does hereby lease from
LESSOR "the Kiboga Business" as defined herein subject to the terms and
conditions of this Agreement.
III.
TERM OF AGREEMENT
3.01 The term of this Agreement shall be for just under 99 years beginning on
the day and year first above written and ending on June 30, 2100.
IV.
COMPENSATION TO LESSOR
4.01 LESSEE does hereby agree that LESSOR has the right to twenty percent (20%)
of all revenue received by the Kiboga Business. As used in this paragraph and
elsewhere in this Agreement, the term "all revenue" shall mean all revenue
received by the Kiboga Business without any deductions.
4.02 LESSEE does hereby agree to pay LESSOR the following consideration under
the terms of this Agreement for the lease of Kiboga Business:
(a) LESSEE agrees to pay to LESSOR monthly, before the 10th day of the following
month, twenty percent (20%) of all revenue received by LESSEE that is generated
from the Kiboga Business during the preceding month.
(b) LESSEE agrees to make a cash payment to LESSOR of $700,000 within thirty
(30) days of date of execution of this Lease.
(c) On date of execution of this Lease, LESSEE will issue to LESSOR 20,000,000
shares of common stock of GreyStone Digital Technology, Inc.
(d) On the first day of the twenty-fifth month following the date of this
Agreement, LESSEE agrees to issue to LESSOR additional number of shares of
common stock based upon the earnings before interest, taxes, depreciation,
amortization, and corporate overhead expenses (EBITDAOH) that the Kiboga
Business earns as accounted for by LESSEE according to generally accepted
accounting principles and as determined and audited by a recognized independent
certified public accounting firm. The number of shares to be issued shall be
based upon the EBITDAOH earned by LESSEE that is generated from the Kiboga
business for the first twenty four (24) months following the date of this
Agreement as shown below:
Shares to If EBITDAOH earnings
be issued of the Kiboga Business
Lessor over 24 months is
------- -----------------
0 $0
1,000,000 $8,572,727
2,000,000 $10,072,727
3,000,000 $11,572,727
4,000,000 $13,072,727
5,000,000 $14,572,727
6,000,000 $16,072,727
7,000,000 $17,572,727
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8,000,000 $19,072,727
9,000,000 $20,572,727
10,000,000 $22,072,727
11,000,000 $23,572,727
12,000,000 $25,072,727
13,000,000 $26,572,727
14,000,000 $28,072,727
15,000,000 $29,572,727
Such additional shares shall be issued to LESSOR only if and when the EBITDAOH
earned by the LESSEE that is generated from the Kiboga Business over the first
twenty four (24) months following the date of this Agreement is not less than
fifty percent (50%) of all EBITDAOH earned by the entire business of LESSEE and
except for that portion of the overhead and expenses that is specifically
associated with the Kiboga Business. For purposes of calculating EBITDAOH, any
additional EBITDAOH that is generated for the Kiboga Business from the efforts
of Kiboga, its officers, and agents such as, but not limited to, the merger with
or acquisition of Elagent Corporation with GreyStone or Kiboga assigning to
GreyStone in a subsequent written agreement its rights in said OEM Agreement and
the Technical and Marketing Agreement with Elagent Corporation as they relate to
the marketing of this technology and products to commercial and business
customers, shall be included.
V.
RETURN OF COMMON STOCK BY LESSOR
5.01 LESSOR agrees that in the event that revenues generated from the Kiboga
Business are less that $6,000,000 for the first twelve(12) months immediately
following the date of this Agreement,LESSOR shall transfer back to LESSEE
5,000,000 shares of common stock of GreyStone Digital Technology, Inc. For
purposes of calculating EBITDAOH, any additional EBITDAOH that is generated for
the Kiboga Business from the efforts of Kiboga, its officers, and agents such
as, but not limited to, the merger with or acquisition of Elagent Corporation
with GreyStone or Kiboga assigning to GreyStone in a subsequent written
agreement its rights in said OEM Agreement and the Technical and Marketing
Agreement with Elagent Corporation as they relate to the marketing of this
technology and products to commercial and business customers, shall be included.
VI.
COMPENSATION TO LESSEE
6.01 LESSOR does hereby agree that LESSEE has the right to eighty percent (80%)
of all revenue received by the Kiboga Business and has the right to one hundred
percent (100%) of all profits that is earned by the Kiboga Business. As used in
this paragraph and elsewhere in this Agreement, the term "all revenue" shall
mean all revenue received by LESSEE that is generated from the Kiboga Business
without any deductions.
VII.
EXCLUSIVE REPRESENTATIVE
7.01 LESSOR agrees that the LESSEE shall be its exclusive representative during
the term of this Agreement for the Kiboga Business and agrees not to employ any
other person, persons or companies to act for it in like capacity during the
term hereof. LESSEE agrees to provide the following services under this
Agreement through its officers: operate the Kiboga Business; serve as manager of
the Kiboga Business, serve as Marketing agent for the Kiboga Business, serve as
Financial Advisor for the Kiboga Business, negotiate contracts for the Kiboga
Business, secure legal services when needed to protect the interest of the
Kiboga Business including protecting intellectual property and trade secrets,
and provide such other services as necessary to successfully operate the
business and to achieve the goals of LESSOR and LESSEE for the Kiboga Business.
LESSEE further agrees that it will assume all the necessary and reasonable
costs,
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expenses, and the liabilities of financing, operating and managing the Kiboga
Business from the date of this Agreement forward.
VIII.
ASSIGNMENT OF REVENUE
8.01 In consideration for the services to be provided by LESSEE and because
LESSEE is assuming all costs, expenses, and the liabilities of financing,
operating and managing the Kiboga Business, LESSOR does hereby sell, assign,
transfer, and set over unto the LESSEE, all of its right, title and interest in
100% of all revenue to be generated by the Kiboga Business during the term of
this Lease subject to LESSOR'S right to receive compensation as set forth in
Section IV above.
IX.
SHARING OF INFORMATION
9.01 LESSOR and LESSEE agree to share information and ideas to the extent
possible under the terms of this Agreement in order to successfully derive the
commercial benefits and profit opportunities that can reasonably be expected
from providing the software applications, related services, and related products
of the Kiboga Business to customers engaged in defense, law enforcement, and
intelligence activities successful.
X.
ANTI-DILUTION
10.01 LESSEE agrees that any shares of common stock issued by GreyStone Digital
Technology, Inc. after May 16, 2001 to anyone other than Lessor will be
considered a diluting event subjecting the use of the following algebraic
formula to determine additional shares to be issued to LESSOR to avoid dilution
of LESSOR'S ownership interest acquired under this Agreement. LESSEE agrees that
all stock issued pursuant to this Agreement shall be subject to the following
anti-dilution formula:
X = K x D / O where;
X = Additional shares of common stock to be issued to LESSOR to prevent dilution
of LESSOR'S ownership interest as set forth in this Agreement.
K = Shares of common stock to be issued to of Kiboga Systems, Inc. pursuant to
this Agreement.
D = Diluting shares of common stock, being any shares issued by GreyStone
Digital Technology, Inc. after May 16, 2001 except those shares of common stock
to be issued to LESSOR pursuant to this Agreement.
O = Number of issued and outstanding shares of common stock of GreyStone Digital
Technology, Inc. on May 16, 2001 and being 17,773,555 shares.
For purposes of calculating anti-dilution provisions contained herein, any
preferred stock of GreyStone Digital Technology, Inc. purchased by and converted
by LESSOR to common stock within one year from the date of this Agreement shall
be considered as converted on May 16, 2001.
XI.
OWNERSHIP AND USE
11.01 LESSEE and LESSOR agree that the assets of the Kiboga Business and any
improvements made by the LESSOR thereto shall at all times be the sole and
exclusive property of LESSOR, and any improvements made by the LESSEE to
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the Kiboga Business shall at all times be the sole and exclusive property of the
LESSEE. LESSEE shall not have any rights or property interest in such LESSOR
assets or improvements thereto except for the right to use such assets for the
benefit of the Kiboga Business in compliance with and in accordance with the
terms and conditions of the Agreement.
XII.
CONFIDENTIALITY AND NONDISCLOSURE
12.01 LESSEE understands and agrees that the software, related services, related
products, other intellectual property, and other assets owned by or in which
LESSOR has contract rights to be used in the Kiboga Business constitutes
valuable properties and trade secrets of LESSOR embodying substantial creative
efforts, confidential information, ideas, and expressions. LESSEE hereby
undertakes for itself, and for its officers, employees, and agents, to maintain
in confidence all confidential information concerning the Kiboga Business owned
by LESSOR, and shall not at any time, either during or after the term of this
Agreement, permit or cause such confidential information to be disclosed or
divulged to any other person or company, except as may be required by any
governmental regulatory body or by the rules of such a body, or to be used in
any manner except in furtherance of the purposes of this Agreement. LESSEE shall
permit Confidential Information belonging to LESSOR to be disclosed only to
LESSEE'S officers, directors, employees, consultants, and agents who need such
confidential information to exercise their right or carry out their
responsibilities under this Agreement.
12-02 LESSEE agrees to obtain adequate written Nondisclosure and Non Use
Agreements from all of its officers, directors, employees, consultants, and
agents who may acquire any Confidential Information belonging to the Kiboga
Business.
XIII.
NONCOMPETITION
13.01 During the term of this Agreement, LESSEE agrees not to market, sell,
support, or maintain, whether directly or indirectly, any similar or competing
large scale and extensive network data mining, data acquisition, and data
distribution software applications, related services, and related products to
customers engaged in defense, military, law enforcement, and intelligence
activities, except that nothing in this paragraph is intended to limit or
interfere with the normal government business as being done by LESSEE at the
time this Agreement is executed.
13.02 LESSEE further agrees to use its reasonable best efforts to prevent its
directors, officers, employees, consultants, and agents from competing to the
same extent as provided in section 13.01.
13.03 LESSEE agrees to obtain adequate written Noncompetition Agreements from
all of its directors, officers, employees, consultants, and agents who may
acquire or have access to confidential information and trade secrets of the
Kiboga Business to prevent their use of such confidential information to
compete, either directly or indirectly, with the Kiboga Business.
XIV.
ACCOUNTING RECORDS AND EXAMINATIONS
14.01 LESSEE agrees to keep accurate records of all revenue received by the
LESSEE that is generated by the Kiboga Business and to provide monthly,
quarterly, and annual reports thereof to LESSOR, and LESSEE agrees that all
accounting records of LESSEE involving the Kiboga Business shall be open during
reasonable business hours at the place where such records are customarily kept
for the examination by a certified public accounting firm selected by LESSOR,
for the purposes of verifying the accuracy of such revenues of the Kiboga
Business as reported to LESSOR by LESSEE and to verify the accuracy of any
payments due LESSOR under this Agreement, whether it involves a cash payment due
LESSOR or issuance of common stock to LESSOR. Said accountants shall not
disclose any information that they may
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thereby obtain other than that necessary for the purpose of enabling LESSOR to
determine the accuracy of such reports and payments made in connection
therewith.
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XV.
EXAMINATION OF DOCUMENTS AND ASSETS OF THE KIBOGA BUSINESS
15.01 During the term of this lease, LESSOR or his agents, shall have the right
to enter the business at all reasonable hours for the purpose of examining
documents, computer records, and other assets relating to the Kiboga Business to
determine whether LESSEE is complying with the terms of this Agreement.
XVI.
DUTIES OF LESSOR
16.01 LESSOR will provide LESSEE with all software which LESSOR owns or has
contractual rights that has been developed for the purposes of, for the
applications of, and for the use of city, county, state, regional, national, and
international government law enforcement authorities and agencies; police
security and surveillance authorities; intelligence agencies and authorities;
and state, national, and international military agencies, departments and
authorities.
16.02 LESSOR agrees to provide LESSEE, upon request, with copies of all
documents and computer records in the possession of Lessor relating to the
Kiboga Business.
16.03 LESSOR agrees to promptly refer to the LESSEE all written communications
received by or on behalf of the Kiboga Business.
XVII.
DUTIES OF LESSEE
17.01 LESSEE agrees to operate the Kiboga Business and assume all necessary and
reasonable costs, expenses, and the liabilities of financing, operating and
managing the Kiboga Business.
17.02 LESSEE agrees to provide management expertise for the Kiboga Business.
17.03 LESSEE agrees to provide marketing expertise and to diligently promote and
market the products of the Kiboga Business.
17.04 LESSEE agrees to develop a marketing plan and to implement said plan in a
way that will give the Kiboga Business the opportunity to reach its goal of
deriving the commercial benefits and profit opportunities that can reasonably be
expected from providing software applications and related services for the needs
engaged in defense, law enforcement, and intelligence of customers activities.
17.05 LESSEE agrees to provide technology expertise that is necessary for the
successful operation of the Kiboga Business.
17.06 LESSEE agrees to protect the interest of the Kiboga Business including
protecting intellectual property and trade secrets.
17.07 LESSEE agrees to provide good accounting records and good business records
for the Kiboga Business.
17.08 LESSEE agrees to maintain offices, staff, and facilities reasonably
adequate for the operation of the Kiboga Business.
17.09 LESSEE agrees to properly maintain the assets of the Kiboga Business.
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XVIII.
REPRESENTATIONS OF LESSOR
18.01 LESSOR represents and warrants that it is a corporation duly organized and
existing in good standing under the laws of the State of Texas and has the
corporate power to own its properties and to carry on its business as now
conducted. No proceeding is pending or threatened involving the corporation.
18.02 LESSOR represents and warrants that the Board of Directors of Kiboga
Systems, Inc. has approved this Agreement and has authorized it President and
CEO, Xxxx X. Xxxxxx, to execute this Agreement for and in behalf of the
Corporation.
18.03 LESSOR represents and warrants that it owns or has contractual rights in
certain large scale and extensive network data mining, data acquisition, and
data distribution software and intellectual property as well as having adequate
contract rights in patents, copyrights, licenses, trade secrets, trademarks,
formulas, design rights, and other intangible assets necessary to conduct the
Kiboga Business as it is expected to be conducted by LESSEE.
18.04 LESSOR represents and warrants that this intellectual property has been
developed for and that LESSOR has contractual rights to software for the
purposes of, for the applications of, and for the use of city, county, state,
regional, national, and international government law enforcement authorities and
agencies; police security and surveillance authorities; intelligence agencies
and authorities; and state, national, and international military agencies,
departments and authorities; and for commercial and business customers.
18.05 LESSOR represents and warrants that one specific asset not covered by this
Agreement is the software and related products developed for commercial and
business customers by LESSOR and Elagent Corporation, which technology and
products will be marketed to commercial and business customers rather than to
defense, military, law enforcement, and intelligence customers, and LESSEE
understands that it will have no obligations and will receive no benefits, fees,
or revenue from the OEM Agreement and the Technical and Marketing Agreement
between LESSOR and Elagent Corporation covering the licensing of certain
software to LESSOR and the joint marketing efforts of LESSOR and Elagent
Corporation as they relate to the marketing of this technology and products to
commercial and business customers unless Elagent Corporation is merged with or
acquired by GreyStone or Kiboga assigns to GreyStone in a subsequent written
agreement its rights in said OEM Agreement and the Technical and Marketing
Agreement with Elagent Corporation as they relate to the marketing of this
technology and products to commercial and business customers.
18.06 LESSOR represents and warrants that, to the extent LESSOR possesses such
other information or can acquire such other information regarding the Kiboga
Business without unreasonable effort or expense, LESSOR will make such
information available to LESSEE to verify the accuracy of the information set
forth in this Agreement and to used by LESSEE in operating the Kiboga Business;
however, there are certain trade secrets and other confidential information that
LESSOR can not disclose to LESSEE because of the nature of such information or
because of certain Confidentiality Agreements and Nondisclosure Agreements to
which LESSOR and its officers are parties. LESSOR represents that an envelope is
attached to this lease enclosing a copy of the OEM Agreement and the Technical
and Marketing Agreement between LESSOR and Elagent Corporation covering the
licensing of certain software to LESSOR and that these agreements are very
confidential and should be seen only by Xxxxxxx X Xxxxx, CEO, and by other
officers or agents of GreyStone only on a very limited need to know basis.
18.07 LESSOR represents and warrants that it has other assets besides those
assets being leased to LESSEE under the terms of this Agreement and this
Agreement is not intended to be a merger of LESSOR and LESSEE.
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XIX.
REPRESENTATIONS OF LESSEE
19.01 LESSEE represents and warrants that it is two corporations duly organized
and existing in good standing under the laws of the State of Delaware and has
the corporate power to own its properties and to carry on its business.
19.02 LESSEE represents and warrants that the Board of Directors of GreyStone
Digital Technology, Inc. has approved this Agreement and has authorized its
Chairman and CEO, Xxxxxxx X. Xxxxx, to execute this Agreement for and in behalf
of the corporation.
19.03 LESSEE represents and warrants that the Board of Directors of GreyStone
Technology, Inc. has approved this Agreement and has authorized its Chairman and
CEO, Xxxxxxx X. Xxxxx, to execute this Agreement for and in behalf of the
corporation.
19.04 LESSEE represents and warrants that LESSEE, Greystone Digital Technology,
Inc., is a public company based in San Diego, California whose stock was being
traded on NASDAQ (GSTN:NASDAQ:SC)on May 16, 2001 and is currently being traded
as a NASDAQ bulletin board security(GSTN:BB); and that LESSEE will use its
reasonable best effort to insure that the stock will continue to be listed on
NASDAQ or on its electronic bulletin board.
19.05 LESSEE represents and warrants that on May 16, 2001, the issued and
outstanding stock of LESSEE consisted of 17,773,555 shares of common stock. All
of the issued and outstanding shares of LESSEE, GreyStone Digital Technology,
Inc., are validly issued, fully paid, and nonassessable. LESSEE further
represents that there are existing options, warrants, calls, preemptive rights,
or commitments of GreyStone Digital Technology, Inc. which are fully disclosed
in the public records, or recorded minutes of the Company's Board of Directors,
or in other disclosures provided to LESSOR. LESSEE represents and warrants that
after May 16, 2001 when any shares of the common stock are issued because of
existing options, warrants, calls, preemptive rights, or other commitments of
GreyStone Digital Technology, Inc., LESSEE will comply with the anti-dilution
provisions of Section 10.01.
19.06 LESSEE represents and warrants that the twenty million (20,000,000) shares
of common stock being issued to LESSOR on the date of this Agreement shall be
considered as issued on May 16,2001 and shall be a 52.95% ownership interest of
common stock in GreyStone Digital Technology,inc. with the said shares being
nonassessable and having full voting rights.
19.07 LESSEE represents and warrants that for purposes of calculating
anti-dilution provisions contained herein, any preferred stock purchased by and
converted by LESSOR within one year from the date of this Agreement shall be
considered as converted on May 16, 2001 and that all stock to be issued to
LESSOR under this Agreement shall be considered as issued on May 16, 2001 for
purposes of calculating anti-dilution provisions contained.
19.08 LESSEE represents and warrants that its officers have been given the
opportunity to examine sufficient documents regarding the Kiboga Business, to
examine sufficient assets of the Kiboga business, and to ask questions of and
receive answers from the representatives of LESSOR concerning the Kiboga
Business in order to make a knowledgeable decision in connection with entering
into this Agreement.
19.09 LESSEE understands that LESSOR, to the extent LESSOR possesses such other
information or can acquire such other information regarding the Kiboga Business
without unreasonable effort or expense, LESSOR will make such other information
available to LESSEE to verify the accuracy of the information set forth in this
Agreement and to be used by LESSEE in operating the Kiboga Business; however,
LESSEE understand and agrees that there are certain trade secrets and other
confidential information that LESSOR can not disclose to LESSEE because of the
nature of such information or because of certain Confidentiality Agreements and
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Nondisclosure Agreements to which LESSOR and its officers are parties. LESSEE
acknowledges that an envelope is attached to this lease enclosing a copy of the
OEM Agreement and the Technical and Marketing Agreement between LESSOR and
Elagent Corporation covering the licensing of certain software to LESSOR and
that these agreements are very confidential and should be seen only by Xxxxxxx X
Xxxxx, CEO, and by other officers or agents of GreyStone only on a very limited
need to know basis.
19.10 LESSEE represents and warrants that the intellectual property and related
products covered by this Lease will only be marketed to customers engaged in
defense, military, law enforcement, and intelligence activities unless Elagent
corporation is merged with or acquired by GreyStone or Kiboga assigns to
GreyStone in a subsequent written agreement its rights in said OEM Agreement and
the Technical and Marketing Agreement with Elagent Corporation as they relate to
the marketing of this technology and products to commercial and business
customers.
19.11 LESSEE acknowledges and represents that one specific asset not covered by
this Agreement is the software and related products developed for commercial and
business customers by LESSOR and Elagent Corporation, which technology and
products will be marketed to commercial and business customers rather than to
defense, law enforcement, and intelligence customers, and LESSEE understands
that it will have no obligations and will receive no benefits, fees, or revenue
from the OEM Agreement and the Technical and Marketing Agreement between LESSOR
and Elagent Corporation covering the licensing of certain software to LESSOR and
the joint marketing efforts of LESSOR and Elagent Corporation as they relate to
the marketing of this technology and products to commercial and business
customers unless Elagent Corporation is acquired by GreyStone or Kiboga assigns
to GreyStone in a subsequent written agreement its rights in said OEM Agreement
and the Technical and Marketing Agreement with Elagent Corporation as they
relate to the marketing of this technology and products to commercial and
business customers.
19.12 LESSEE acknowledges and represents that LESSOR has other assets besides
those assets being leased to LESSEE under the terms of this Agreement and this
Agreement is not intended to be a merger of LESSOR and LESSEE.
XX.
INDEMNIFICATION AND GUARANTEE BY LESSOR
20.01 LESSOR does not indemnify LESSEE for the costs, liabilities, or other
risks of operating and managing the Kiboga Business or in any other way what so
ever and does not guarantee the success of the Kiboga Business.
20.02 LESSOR guarantees and indemnifies LESSEE that there are no outstanding
costs or liabilities of the Kiboga Business unless described in this Agreement
or described in the OEM Agreement and the Technical and Marketing Agreement
contained in an envelope that is attached to this Lease.
20.03 LESSOR indemnifies LESSEE to the full extent of damages that LESSEE incurs
as determined by due legal process, due to any and all LESSOR misrepresentations
made in Section XVIII of this Agreement.
XXI.
INDEMNIFICATION AND GUARANTEE BY LESSEE
21.01 LESSEE does not indemnify LESSOR in any way what so ever and does not
guarantee the success of the Kiboga Business; however, LESSEE will make a
determined effort to use its expertise in management, expertise in marketing
products, expertise in technology, and expertise in operating businesses to try
to successfully derive the commercial benefits and profit opportunities that can
reasonably be expected from providing these software applications, related
services, and related products for the needs of customers engaged in defense,
law enforcement, and intelligence activities.
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21.02 LESSEE guarantees all costs and liabilities of operating the Kiboga
Business and all obligations to pay royalties and fees to Elagent Corporation
under the OEM Agreement and the Technical and Marketing Agreement between LESSOR
and Elagent Corporation which covers the licensing of certain software to LESSOR
and certain joint marketing efforts. LESSEE further guarantees that the terms
and conditions of such agreements will be complied with by LESSEE. An envelope
is attached to this lease enclosing a copy of the OEM Agreement and the
Technical and Marketing Agreement.
21.03 LESSEE indemnifies LESSOR to the full extent of damages that LESSOR incurs
as determined by due legal process, due to any and all LESSEE misrepresentations
made in Section XIX of this Agreement.
XXII.
TERMINATION OF AGREEMENT
22.01 This Agreement shall terminate upon the occurrence of any of the following
events:
(a) Failure of LESSEE to provide proper management of the Kiboga Business;
(b) Failure of LESSEE to provide proper marketing for the Kiboga Business;
(c) Failure of LESSEE to provide proper technology expertise for the Kiboga
Business;
(d) Failure of LESSEE to properly protect the interest of the Kiboga Business
including protecting intellectual property and trade secrets;
(e) Failure of LESSEE to timely pay the expenses of operating the Kiboga
Business;
(f) Failure of LESSEE to timely make cash payments to LESSOR due under this
Agreement;
(g) Failure of LESSEE to timely make stock transfers to LESSOR as set forth in
this Agreement;
Any other material breach by LESSEE of the terms of this Agreement;
The voluntary agreement of all parties who are then bound by this Agreement;
Cessation of LESSEE's business, or
(k) Bankruptcy, receivership, or dissolution of LESSEE;
22.02 Upon notice from LESSOR TO LESSEE that this Agreement has been terminated
because of the occurrence of one of the above events in (a), (b),(c),
(d),(e),(f),(g),(h),or (i) LESSEE shall within ninety (90) days deliver to
LESSOR all books, records, documents, software, and other assets of the Kiboga
Business or LESSEE, as owner of such books, records, documents, software, and
other assets of the Kiboga Business, may take possession thereof without a Court
Order.
22.03 For purposes of terminating this Agreement because of LESSEE's failure to
make timely payments or transfers, an expense of operation must be 30 days past
due, a cash payment due LESSOR must be 60 days past due, a stock issuance to
LESSOR must be 30 days past date stock should have been issued.
22.04 Should LESSEE disagree with LESSOR's decision to terminate this Agreement
because of the occurrence of one of the above events in (a), (b),(c),
(d),(e),(f),(g),(h),or (i), LESSEE must, within 90 days of receiving the Notice,
either (1) file a lawsuit seeking injunctive relief to prevent LESSOR, as owner
of such books, records,
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documents, software, and other assets of the Kiboga Business, from taking
possession of its assets or (2) obtain from LESSOR a written agreement
rescinding the termination of the Agreement; otherwise, LESSEE waives any legal
rights to petition a Court for injunctive relief to stop LESSOR, as owner, from
taking possession of such books, records, documents, software, and other assets
of the Kiboga Business. Nothing herein shall prevent either party from seeking
monetary damages or other relief from a Court to enforce other terms and
conditions of this Agreement.
22.05 Should termination be because of an event in (j) or (k), LESSOR may
terminate this Agreement, effective immediately, at its option and without
Notice, and as owner of such books, records, documents, software, and other
assets of the Kiboga Business, take immediate possession thereof without any
Court Order. An event in (k) by LESSEE shall mean any of the following: (1)
admits in writing its inability to pay its debts generally as they become due;
(2) institutes proceeding to be adjudicated a voluntary bankrupt or consents to
the filing of bankruptcy against it; (3) is adjudicated by a court of competent
jurisdiction as being bankrupt or insolvent;(4) seeks reorganization under any
bankruptcy act, or consents to the filing of a petition seeking such
reorganization; or (5) has a decree entered against it by a court of competent
jurisdiction appointing a receiver, trustee, or liquidator covering all or
substantially all of LESSEE'S property which appointment is not vacated within
sixty days of the entry of the order of appointment.
22.06 The failure of LESSOR to take action upon the occurrence of one or more of
the above events does not waive LESSOR's right to take action upon later
occurrences of one or more of the above events.
XXIII.
NEGOTIATIONS FOR RENEWAL
23.01 Neither party shall enter into negotiations for or agree to the renewal or
extension of this Agreement prior to the beginning of the final year of the term
hereof.
XXIV.
MISCELLANEOUS
24.01 Wherever the context shall so require, all words herein in the male gender
shall be deemed to include the female or neuter gender, all singular words shall
include the plural, and all plural words shall include the singular.
24.02 Any holding that a provision of this Agreement is unenforceable, in whole
or in part, will not affect the validity of the other provisions of this
Agreement.
24.03 This Agreement contains the entire agreement between the parties with
respect to the transactions contemplated herein and all prior oral or written
agreements with respect to the subject matter hereof are merged herein.
24.04 This Agreement shall be construed, interpreted, governed, and enforced by
and under the laws of the State of Texas.
24.05 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
24.06 Any notice required to be given by the parties hereto, must be given by
sending such written notice by telex; electronic mail; facsimile; certified or
registered mail, return receipt requested, properly stamped and addressed to the
latest known address of the other party or parties; or by actual delivery of a
written notice to the CEO, President, or other registered agent of the other
party or parties.
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IN WITNESS WHEREOF, and for the consideration herein stated, the parties have
executed this Agreement the day and year first above written.
LESSOR: LESSEE:
KIBOGA SYSTEMS, INC. GREYSTONE TECHNOLOGY, INC.
----------------- ---------------------
By:Xxxx X. Xxxxxx By: Xxxxxxx X. Xxxxx
President and CEO Chairman and CEO
GREYSTONE DIGITAL
TECHNOLOGY, INC.
--------------------
By: Xxxxxxx X. Xxxxx
Chairman and CEO
