RESTRUCTURING AGREEMENT
This Restructuring Agreement (the "Agreement") is entered into as of
this 4th day of January 2007 (the "Execution Date") by and between:
(1) TRUE PRODUCT ID, INC. ("TPID"), a Delaware corporation, formerly known as
OnTV, Inc. ("ONTV"), with an address at 0000 Xxxxxx Xxxxxx Xxxx, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, XX 00000; and
(2) SURE TRACE SECURITY CORPORATION ("SSTY"), a Utah corporation, with an
address at 0000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, XX 00000; and
(3) SURE TRACE ASIA LIMITED, later renamed and also known as True Product ID
Technology Limited ("STA"), a Hong Kong company, with an address at Suite 1005,
Allied Kajima Building 000, Xxxxxxxxxx Xxxx, Xxxx Xxxx; and
(4) XXXXXXX XXXX, also known as CHAN XXX XXXXX, an adult individual and Hong
Kong citizen, with an address at Suite 1005, Allied Kajima Xxxxxxxx 000,
Xxxxxxxxxx Xxxx, Xxxx Xxxx.
SSTY and TPID are hereinafter collectively referred to as the "Parties," and
individually referred to as a "Party."
RECITALS:
WHEREAS, SSTY (whether directly by itself and/or indirectly through its
affiliates, STA and Xxxxxxx Xxxx) currently holds a forty percent (40%)
ownership interest in a Chinese joint venture company called True Product ID
Technology (Beijing) Limited (the "Chinese Joint Venture") (All of SSTY's and/or
STA's and Xxxxxxx Xxxx'x current or future interest in the Chinese Joint Venture
are hereinafter collectively referred to as "SSTY's Chinese JV Interest");
WHEREAS, in March 2006 SSTY acquired the controlling interest in ONTV
(subsequently renamed TPID) through, inter alia, the purchase of ONTV stock in
exchange for cash and the grant to ONTV of a license from SSTY to certain
technology and contractual rights held by SSTY (the "Acquisition");
WHEREAS, SSTY received approximately 200 million shares of TPID
(formerly ONTV) as a result of the Acquisition and subsequent increase in
authorized shares and forward split, which SSTY issued to its shareholders as a
dividend, and which the Parties explicitly agree is, by itself, more than
adequate consideration for the Acquisition;
WHEREAS, as of the Execution Date, SSTY owes the former owners of ONTV
a balance of funds (excluding interest and penalties) in connection with the
acquisition of ONTV (the "Owed Acquisition-Related Balance"), in the amount of
approximately Two Hundred Eighty-Five Thousand United States Dollars
(US$285,000), in addition to the six million common shares of TPID described in
subsection 4.3(c) below;
WHEREAS, SSTY and ONTV entered into a licensing agreement dated March
16, 2006 (the "March 16, 2006 Licensing Agreement"), in which SSTY licensed to
ONTV, inter alia, certain contractual rights of SSTY in exchange for, inter
alia, a royalty, a monthly fee, and repayment;
WHEREAS, SSTY and ONTV entered into an agreement dated March 17, 2006
(the "March 17, 2006 Agreement"), in which ONTV acquired a license to certain
technology owned by SSTY in exchange for, inter alia, 52,349,249 shares of ONTV
common stock and 16,000 shares of ONTV Series B Preferred Stock (collectively,
the "Subject Shares");
WHEREAS, in May 2006 ONTV subsequently changed its name to True Product
ID, Inc. ("TPID");
WHEREAS, as a result of the above transactions, TPID is no longer a
subsidiary of, or in any way affiliated with, SSTY. Rather, TPID is an
independent entity separate from SSTY, which does not own any interests in TPID;
WHEREAS, the Parties, STA, and Xxxxxxx Xxxx have agreed to restructure
their contractual arrangements in accordance with the terms and conditions of
this Agreement;
WHEREAS, in connection with, as part of, and to induce the execution
of, this Agreement, the Parties have agreed to certain restrictive covenants
regarding confidentiality, non-solicitation, and non-competition. Without the
Parties' complete agreement to adhere to these restrictive covenants and the
provisions of Section 4 of this Agreement, the Parties would not have entered
into this Agreement;
NOW, THEREFORE, in consideration of the payments and other benefits as
set forth herein, the mutual covenants and promises herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties, STA, and Xxxxxxx Xxxx agree as follows:
ARTICLE I
TRANSFER OF SSTY'S CHINESE JV INTEREST TO TPID
1.0. Subject to the terms and conditions of this Agreement, in return
for the consideration set forth in Article IV of this Agreement, on the
effective date defined in Section 9.17 below of this Agreement (the "Effective
Date"), SSTY, STA, and/or Xxxxxxx Xxxx shall transfer and/or cause to be
transferred SSTY's Chinese JV Interest (as defined above) to TPID (the
"Transfer").
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ARTICLE II
TERMINATION OF THE MARCH 16, 2006 LICENSING AGREEMENT
2.0. Subject to the terms and conditions of this Agreement, in return
for the consideration set forth in Article IV of this Agreement, SSTY agrees as
of the Effective Date to terminate, negate, rescind and/or void in its entirety
and totality the March 16, 2006 Licensing Agreement (as defined above) and any
and all past (or accrued), current, and future obligations required by or of
TPID under the March 16, 2006 Licensing Agreement.
2.1. Included amongst, without limitation, the obligations of TPID
under the March 16, 2006 Licensing Agreement to be completely terminated are any
and all past and/or accrued obligations which TPID may have had to SSTY prior to
the Effective Date, including, but not limited to, any and all royalties,
monthly fees, and repayment which TPID may have owed SSTY under the March 16,
2006 Licensing Agreement prior to the Effective Date. For the sake of clarity,
as of the Effective Date, TPID shall not have any obligations at all or in any
form or manner to SSTY under the March 16, 2006 Licensing Agreement.
ARTICLE III
MODIFICATION OF THE MARCH 17, 2006 AGREEMENT
3.0. The March 17, 2006 Agreement, including, but not limited to,
Article I of the March 17, 2006 Agreement (entitled "Agreement To Issue Stock
For Technology License") and Article V, Section 5.02 of the March 17, 2006
Agreement (entitled "Shares and License"), shall be amended and modified to
completely eliminate and negate any and all obligations (past, accrued, current,
and future) owed by TPID (formerly ONTV) as of the Execution Date to issue any
additional common shares of TPID, include, but not limited to, the issuance of
the Subject Shares on or after the Execution Date, to SSTY.
3.1. For the sake of clarity, as of the Execution Date, TPID shall have
no obligations (past, current, or future) at all or in any form to issue any
additional shares of TPID, including the Subject Shares (as defined above), to
SSTY, and SSTY forever waives, relinquishes, and releases TPID from any claim in
any form or manner arising from or related in any way to the issuance of the
Subject Shares on or after the Execution Date.
3.2. The Parties explicitly acknowledge that the Subject Shares have
not been issued as of the Execution Date and that even without the Subject
Shares there is adequate consideration for the Acquisition (as defined above).
3.3. SSTY agrees to fully assist TPID and not to oppose any reasonable
modification or amendment that TPID may wish to make to any filings to reflect
the provisions of this Article III.
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3.4. To the extent that the provisions of the March 17, 2006 Agreement
(other than Article I and Article V, Section 5.02 thereto) are not contradicted
by or are not inconsistent with Article III of this Agreement or the Parties'
intent underlying Article III of this Agreement, those provisions shall remained
unchanged and in full effect. This Section 3.4 only shall supersede all
provisions contained in any and all agreements (oral or written) the Parties
entered or may have entered prior to, up to, and including the Effective Date,
which are inconsistent with the provisions of Article III of this Agreement. For
the sake of clarity, any provisions contained in any and all agreements (oral or
written) the Parties entered or may have entered prior to, up to, and including
the Effective Date, which are not inconsistent with the provisions of Article
III of this Agreement, shall remain in effect.
ARTICLE IV
CONSIDERATION TO BE PAID BY TPID
4.0. Subject to the terms and conditions of this Agreement, in return
for the promises, covenants and benefits given or provided by SSTY under this
Agreement, as set forth in more detail in this Agreement, TPID shall remit the
following consideration to SSTY (whether in cash or the assumption of debt): (a)
the royalty set forth in Section 4.1 of this Agreement; (b) the TPID
Post-Spinout Expenses as set forth in Section 4.2 of this Agreement; (c) the
assumption by TPID of the Owed Acquisition-Related Balance subject to and as set
forth in Section 4.3 of this Agreement; and (d) the cash payments set forth in
Section 4.4 below of this Agreement.
4.1. Royalties. Subject to the terms and conditions of this Agreement,
TPID agrees to pay SSTY a royalty in the amount of two percent (2%) of its gross
receipts which TPID actually receives and collects from customers outside the
People's Republic of China, Hong Kong, and Macau for a period of two (2) years
commencing as of the Execution Date of this Agreement (the "Royalty"). Gross
receipts shall be defined as the total amount of funds actually received and
collected by TPID from sales relating only to anti-counterfeiting/ product
authentication products or services, including sales from its affiliates and
licensees and divisions, but not limited to (x) cash, money orders, and cleared
checks less charges imposed by banks for clearing, deposits, re-deposits or
returns and (y) cleared credit cards charges less the bank discount rate.
Revenue received and collected from foreign sources shall be at its value in
U.S. dollars when received.
4.1.1. Audit. For the purposes of verifying the Royalty set
forth in Section 4.1 above of this Agreement, SSTY shall have the right, upon at
least fourteen (14) days written notice and no more than twice per calendar
year, to inspect TPID's books and records and all other documents and material
in the possession of or under the control of TPID with respect to the subject
matter of this Agreement at the place or places where such records are normally
retained by TPID. All books and records relative to TPID's obligations hereunder
shall be maintained and kept accessible and available to SSTY for inspection for
at least one (1) year after the date to which they pertain. In the event that an
investigation of TPID's books and records is made, certain confidential and
proprietary business information of TPID related to the Royalty payments may
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necessarily be made available to the person or persons conducting such
investigation. It is agreed that such confidential and proprietary business
information shall be retained in confidence by SSTY and shall not be used by
SSTY or disclosed to any third party for a period of five (5) years from the
date of disclosure, or without the prior express written permission of TPID
unless required by law. It is understood and agreed, however, that such
information may be used in any proceeding based on TPID's failure to pay the
Royalty required under this Agreement.
4.2. Post-Spinout Expenses. Subsequent to this Agreement and as an
explicit condition of its execution by SSTY, the TPID agrees to resolve any
issues relating to any and all reasonable, direct out-of-pocket expenses SSTY
incurred and/or paid on TPID's behalf after TPID ceased being a subsidiary of
SSTY (the "TPID Post-Spinout Expenses"). As soon as practicably possible after
the Execution Date, SSTY shall provide TPID with any and all documentation and
information related to any claimed TPID Post-Spinout Expenses. SSTY and TPID
shall agree upon a complete list of TPID Post-Spinout Expenses to be paid by
TPID (the "List") no later than forty-five (45) days from the Execution Date.
The List shall be subsequently attached to this Agreement as Attachment A. TPID
reserves the right not to pay any claimed TPID Post-Spinout Expense, which is
not substantiated by original invoices or other proper documentation. Nothing in
this Agreement shall preclude SSTY from seeking repayment of the reasonable TPID
Post-Spinout Expenses. TPID acknowledges that there are, in fact, expenses that
have been paid on TPID's behalf by SSTY which were and will be either made
solely on behalf of TPID or should be shared/allocated between the Parties. TPID
agrees to pay the amounts agreed upon in this Section 4.2 within twelve (12)
months of the Effective Date hereof.
4.3. Assumption of Certain SSTY Debt. Subject to the terms and
conditions of this Agreement, TPID shall assume all outstanding payments
required of SSTY to the former owners of ONTV, Inc. (the "Former ONTV Owners")
to acquire the ONTV corporate shell (the "ONTV Shell Payments"), in accordance
with the terms and conditions set forth in an amended payment agreement between
the Former ONTV Owners and TPID (the "Amended ONTV Agreement"), which shall be
approved by SSTY. Pursuant to the Amended ONTV Agreement:
(a). Subject to the terms and conditions of this Agreement, TPID shall
assume the outstanding principal balance of Three Hundred Seventy Thousand U.S.
Dollars (US$285,000) SSTY owed the Former ONTV Owners as of August 2006 (the
"August 2006 SSTY-ONTV Balance"). TPID shall pay the Former ONTV Owners One
Hundred Thousand U.S. Dollars (US$100,000) of the August 2006 SSTY-ONTV Balance
by January 31, 2007 or other subsequent date agreed to by the Former ONTV
Owners. TPID shall pay the Former ONTV Owners One Hundred Eighty-Five Thousand
U.S. Dollars (US$185,000) of the August 2006 SSTY-ONTV Balance by March 31, 2007
or other subsequent date agreed to by the Former ONTV Owners. In return for,
inter alia, waiving US$85,000 of the Owed Acquisition-Related Balance as of May
2006 and any associated penalties related to the US$85,000, in accordance with
SSTY's pre-spin-out May 2006 agreement with the Former ONTV Owners, TPID shall
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issue the Former ONTV Owners Six Million restricted common shares of TPID, as
set forth in subsection 4.3(c) of this Agreement.
(b). Subject to the terms and condition of this Agreement, TPID shall
assume any penalties, late fees or charges, interest payments,
collection-related fees or charges, and other payments imposed by the Former
ONTV Owners over and above the August 2006 SSTY-ONTV Balance arising from SSTY's
failure to timely make the required payments to the Former ONTV Owners related
to the ONTV corporate shell (collectively, the "ONTV Penalties"). Any and all
monies that TPID shall pay towards the ONTV Penalties shall be deducted from the
amount of the Subject Payment (defined in Section 4.4 below of this Agreement).
TPID shall pay the amount of the ONTV Penalties in full to the Former ONTV
Owners by June 30, 2007 or other subsequent date agreed to by the Former ONTV
Owners. SSTY shall remain jointly and severally liable to the Former ONTV Owners
with respect to the ONTV Penalties; and
(c). After SSTY's Acquisition of ONTV, but before the issuance of
acquired ONTV shares to SSTY's shareholders, SSTY defaulted on its agreements
associated with the Acquisition of ONTV and therefore agreed with the Former
ONTV Owners to issue them Six Million (6,000,000) restricted common shares of
TPID (the "ONTV Former Owners-Owed Restricted Shares"), in substitution of the
agreement to have paid Eighty-Five Thousand U.S. Dollars (US$85,000) towards the
Owed Acquisition-Related Balance. TPID agrees to issue the ONTV Former
Owners-Owed Restricted Shares to the Former ONTV Owners in compliance with an
available exemption from registration under the Securities Act of 1933 and
applicable state law. In return, SSTY shall give TPID a credit towards the cash
payments owed by TPID to SSTY under this Agreement in the amount of Eighty-Five
Thousand U.S. Dollars (US$85,000), as further set forth in Section 4.4 below of
this Agreement.
4.4. Cash Payments. Subject to the terms and conditions of this
Agreement, including, but not limited to, Section 4.3 above of this Agreement
and the further provisions of this Section 4.4, within three (3) years from the
Effective Date, TPID shall remit to SSTY, on an interest-free basis, the total
sum of Xxx Xxxxxxx Xxx Xxxxxxx Xxxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars
(US$1,130,000) minus the amount of the ONTV Penalties paid by TPID to the Former
ONTV Owners. (The total amount of cash payments owed by TPID to SSTY under this
Section the "Subject Payment"). For the sake of clarity, the US$1,130,000
referenced in the preceding sentence represents: (a) the parties' total payment
amount pre-deductions of US$1,500,000, MINUS (b) the US$85,000 credit set forth
in Section 4.3(c) of this Agreement), MINUS (c) the remaining principal balance
of the Owed Acquisition-Related Balance of $285,000 (which excludes certain
interest and penalties); the US$1,130,000 does not include the amount of the
ONTV Penalties paid by TPID to the Former ONTV Owners, which are to be further
deducted from the Subject Payment. TPID shall remit the Subject Payment in
accordance with the terms, conditions and payment schedule set forth in this
Section 4.4 and subsection 4.4.1 of this Agreement.
4.4.1. Subject to the terms and conditions of this Agreement,
TPID shall make mandatory prepayments of the Subject Payment under this
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Agreement equal to: (a) Fifty Thousand U.S. Dollars (US$50,000) upon receipt of
the first One Million U.S. Dollars of funding raised by TPID through investment
after the Execution Date (the "Initial $1 Million New Investment"); and (b)
twenty-five percent (25%) of any funding raised by TPID through investment after
the Initial $1 Million New Investment. TPID shall remit such payments on an
interest-free basis to SSTY, within seven (7) calendar days (excluding holidays)
after receipt by TPID of the applicable funding (after wire and other
transactional costs, attorney fees, and broker/ finder fees and/or commissions
are deducted) until the Subject Payment is paid in full. Amounts unpaid after
said seven (7) calendar days (excluding holidays) shall bear interest (simple
interest) at an annual rate equal to the prime rate set forth in the Wall Street
Journal on the date such amounts were due plus two percent (2%).
4.5. Upon the Effective Date, title to SSTY's Chinese JV Interest (as
defined above) (whether in the form of shares, units or other indicia of
ownership) shall be vested and held in and by TPID, subject to the security
interest discussed in this Section 4.5. To secure the full payment of the
Subject Payment, TPID hereby grants to SSTY a security interest in SSTY's
Chinese JV Interest. TPID authorizes SSTY to file the appropriate UCC-1
financing statements ("UCC-1s") to perfect SSTY's security interest in SSTY's
Chinese Joint Venture Interest simultaneous with the closing in all appropriate
jurisdictions, together with any amendments, modifications, and substitutions
thereto. SSTY shall prepare and submit any and all UCC-1s it intends to file to
TPID for TPID's review prior to SSTY's filing the UCC-1s. Upon receipt of
documentation that the Subject Payment and payment of the amounts agreed upon in
Attachment A, have been paid in full, SSTY shall: (a) immediately and
unconditionally release any and all claims by or of SSTY to SSTY's Chinese JV
Interest; and (b) shall immediately extinguish, release, and/or otherwise
terminate any UCC-1s filed against TPID relating to SSTY's Chinese JV Interest.
TPID shall be as of the Effective Date the legal and beneficial owners of SSTY's
Chinese JV Interest as to allow TPID to solely and fully participate in and make
any and all decisions and engage in any and all activities regarding the Chinese
Joint Venture. TPID shall not pledge, sell or otherwise transfer, without SSTY's
consent (which SSTY shall not unreasonably withhold), any interest in SSTY's
Chinese JV Interest (including the sale of a controlling interest in TPID) until
such time as the Subject Payment is paid in full. Subject to the terms and
conditions of this Agreement, as of the Effective Date, SSTY shall not
participate in any manner in the operations, funding, acquisition of new
contracts, affairs, decisions, management, and other activities or matters of or
relating in any way to the day to day operations of Chinese Joint Venture and
shall in no way interfere or obstruct any activity by TPID in connection with
the Chinese Joint Venture, provided, however, that Globe Staff Consulting
Corporation may continue to collaborate with the Chinese Joint Venture solely in
connection with Globe Technologies, including, but not limited to, those
technologies SSTY and/or Globe Staff Consulting Corporation owns and/or has
acquired, including, but not limited to, its proprietary technologies relating
to All-In-One-Key, and any others that do not conflict with the other terms
hereof.
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ARTICLE V
RESTRICTIVE COVENANTS
Each Party covenants to the other Party and agrees to the following
Restrictive Covenants:
5.0. DEFINITIONS.
5.0.1. For purposes of Article V only, the term, "SSTY," shall
mean SSTY and its directors, officers, parents, subsidiaries, affiliates,
employees and agents.
5.0.2. For purposes of Article V only, the term, "TPID," shall
mean TPID and its directors, officers, parents, subsidiaries, affiliates,
employees and agents.
5.0.3. For purposes of Article V only, the term, "Recipient
Party" shall mean the Party (and its directors, officers, parents, subsidiaries,
affiliates, employees and agents) receiving any nonpublic, proprietary or
confidential information, knowledge or data relating to the other Party and/or
any of its subsidiaries, affiliated companies or businesses.
5.0.4. For purposes of Article V only, the term, "Disclosing
Party," shall mean the Party (and its directors, officers, parents,
subsidiaries, affiliates, employees and agents) disclosing to the other Party
any nonpublic, proprietary or confidential information, knowledge or data of the
none-recipient Party and/or any of its subsidiaries, affiliated companies or
businesses.
5.1. Each Recipient Party agrees that it shall not, directly or
indirectly, use, make available, sell, disclose or otherwise communicate to any
person, other than for the benefit of the Disclosing Party, any nonpublic,
proprietary or confidential information, knowledge or data relating to the
Disclosing Party, any of its subsidiaries, affiliated companies or businesses.
Included, without limitation, among such protected proprietary or confidential
information are trade secrets, trade "know-how", inventions, customer lists,
business plans, operational methods, pricing policies, marketing plans, sales
plans, identity of suppliers or customers, sales, profits or other financial
information, all of which is confidential to the Disclosing Party and not
generally known in the relevant trade or industry. This subsection 5.1 shall not
apply to information that (i) was known to the public prior to its disclosure to
the Recipient Party; (ii) becomes known to the public subsequent to disclosure
to the Recipient Party through no wrongful act of the Recipient Party or any
representative of the Recipient Party; or (iii) the Recipient Party is required
to disclose by applicable law, regulation or legal process (provided that the
Recipient Party provides the Disclosing Party with prior notice of the
contemplated disclosure and reasonably cooperates with the Disclosing Party at
its expense in seeking a protective order or other appropriate protection of
such information). Notwithstanding clauses (i) and (ii) of the preceding
sentence, the Recipient Party's obligation to maintain such disclosed
information in confidence shall not terminate where only portions of the
information are in the public domain.
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5.2. Until the date the Subject Payment is paid in full and for the one
(1) year period thereafter, each Party agrees that it will not, directly or
indirectly, individually or on behalf of any other person, firm, corporation or
other entity, knowingly solicit, aid or induce (i) any managerial level employee
or consultants of the other Party or any of its subsidiaries or affiliates to
leave such employment in order to accept employment with or render services to
or with any other person, firm, corporation or other entity unaffiliated with
the other Party or knowingly take any action to materially assist or aid any
other person, firm, corporation or other entity in identifying or hiring any
such employee, or (ii) any customer of the other Party or any of its
subsidiaries or affiliates to purchase goods or services then sold by the other
Party or any of its subsidiaries or affiliates from another person, firm,
corporation or other entity or assist or aid any other persons or entity in
identifying or soliciting any such customer (provided, that the foregoing shall
not apply to any product or service which is not covered by the non-competition
provision set forth in subsection 5.3 below). Included, without limitation,
among such employees and/or consultants of TPID are: Xxxxxxx Xxxxxx, Xxxx
Xxxxxxx, X.X. Xxxxxxxxxxxx, Xxxx Xxxxx, and Xxxxxxx Xxxxxx.
5.3. The Parties agree to the following anti-competition provisions:
5.3.1. SSTY Non-Competition Obligations. Subject to the other
terms and conditions of this Agreement, until the date the Subject Payment is
paid in full and for the one (1) year period thereafter, SSTY agrees that it
will not, directly or indirectly, (i) compete with respect to any services or
products of TPID relating in any way to anti-counterfeiting and/or product
authentication; or (ii) own, manage, operate, control, or render services to any
person, firm, corporation or other entity, in whatever form, engaged in any
business of the same type as any business in which TPID or any of its
subsidiaries or affiliates is engaged on Effective Date or in which they have
proposed, on or prior to such date, to be engaged in on or after such date, in
any locale of any country in which TPID conducts business. This subsection
5.3.1. shall not apply, however, to: (a) any geo- tracking-related services or
products or business wholly unrelated to anti-counterfeiting and/or product
authentication, which is owned and developed as of the Effective Date by SSTY
and/or Globe Staff Consulting Corporation; and (b) any All-In-One-Key-related
services or products or business wholly unrelated to anti-counterfeiting and/or
product authentication, which is owned and developed as of the Effective Date by
SSTY and/or Globe Staff Consulting Corporation.
5.3.2. TPID's Non-Competition Obligations. Subject to the
other terms and conditions of this Agreement, until the date the Subject Payment
is paid in full and for the one (1) year period thereafter, TPID agrees that it
will not, directly or indirectly, (i) compete with respect to any
geo-tracking-related or All-in-One-Key-related services or products of SSTY and
Globe Staff Consulting Corporation, which are wholly unrelated to
anti-counterfeiting and/or product authentication, and which are being offered
or are being developed or acquired by SSTY and/or Globe Staff Consulting
Corporation as of the Effective Date; or (ii) own, manage, operate, control, be
employed by (whether as an employee, consultant, independent contractor or
9
otherwise, and whether or not for compensation) or render services to any
person, firm, corporation or other entity, in whatever form, engaged in any
business of the same type as any business in which Globe Staff Consulting
Corporation or any of its subsidiaries or affiliates is engaged on Effective
Date or in which they have proposed, on or prior to such date, to be engaged in
on or after such date, in any locale of any country in which Globe Staff
Consulting Corporation conducts business. TPID relinquishes to SSTY any and all
rights it may have to the XXX.XXX deal.
5.3.3. The Parties recognize that there may be areas for
collaboration between TPID's anti-counterfeiting, product authentication and
KMAC software technologies on one hand and SSTY's and Globe Staff Consulting
Corporation's geo-tracking and All-In-One-Key technologies on the other hand.
For instance, a single product such as a smartcard may contain, at the same
time, anti-counterfeiting technology provided by TPID and geo-tracking
technology provided by Globe Staff Consulting Corporation or SSTY. It is not the
Parties' intent in this Agreement to preclude such possible collaboration in the
future, provided that (a) SSTY is precluded from competing with TPID on
technology that is applicable only to anti-counterfeiting, product
authentication; and (b) TPID is precluded from competing with SSTY on technology
that is applicable only to geo-tracking, XXX.XXX and All-In-One-Key
technologies.
5.3.3.1. In the event that either Party is approached or asked
by a customer to provide services, technologies, solutions and/or applications
in connection with a product which may involve anti-counterfeiting technology of
the nature provided by TPID and geo-tracking technology of the nature provided
by Globe Staff Consulting Corporation or SSTY, the Parties shall attempt in good
faith to collaborate with each other to provide and offer a joint solution
involving both TPID and Globe Staff Consulting Corporation/ SSTY technology,
services, applications or solutions to the customer.
5.3.3.2. In the event that SSTY and/or Globe Staff Consulting
Corporation is approached or asked by a customer for certain
anti-counterfeiting, product authentication, and/or KMAC software technologies,
services or other solutions/ applications in conjunction with SSTY's and/or
Globe Staff Consulting Corporation's geo-tracking, XXX.XXX and All-In-One-Key
technologies, SSTY and/or Globe Staff Consulting Corporation must first offer
those anti-counterfeiting, product authentication, and/or KMAC software services
or other arrangements to TPID, and may only pursue those anti-counterfeiting,
product authentication, and/or KMAC software services or other arrangements if
TPID cannot sufficiently and reasonably address the customer's needs and
specifications.
5.3.3.3. In the event that TPID is approached or asked by a
customer for certain geo-tracking technologies, services or other solutions/
applications and/or All-In-One Key technologies in conjunction with TPID's
anti-counterfeiting, product authentication, and/or KMAC software technologies,
services, solutions and/or applications, TPID must first offer those
geo-tracking services or other arrangements to SSTY and/or Globe Staff
Consulting Corporation, and may only pursue those geo-tracking services or other
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arrangements if SSTY and/or Globe Staff Consulting Corporation cannot
sufficiently and reasonably address the customer's needs and specifications.
5.4. The Parties acknowledge and agree that the non-breaching Party's
remedies at law for a breach or threatened breach of any of the provisions of
Article 5 of the Agreement is inadequate and will result in immediate
irreparable harm, and in recognition of this fact, the Parties agree that, in
the event of such a breach or threatened breach, in addition to, and not in lieu
of any other rights and remedies available to the non-breaching Party at law or
equity, the non-breaching Party, without posting any bond and without the
necessity of proving damages, shall be entitled to obtain equitable relief in
the form of specific performance, temporary restraining order, temporary or
permanent injunctive or mandatory relief or any other equitable remedy which may
then be available, without prejudice to any other rights and remedies which may
be available at law or in equity.
5.5. If it is determined by a court of competent jurisdiction in any
state or custody that any restriction in Article 5 of this Agreement is
excessive in duration or scope or is unreasonable or invalid or unenforceable
under the laws of that state, it is the intention of the Parties that such
restriction shall not affect the remainder of the covenant or covenants which
shall be given full effect, without regard to the invalid or unenforceable
portions, and that such restriction may be modified or amended by the court to
render it enforceable to the maximum extent permitted by the law of that state,
province, or country.
5.6. The parties hereto intend to and hereby confer jurisdiction to
enforce the Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Restrictive Covenants. In the event that the courts
of any one or more of such jurisdictions shall hold such Restrictive Covenants
wholly unenforceable by reason of the breadth of such scope or otherwise, it is
the intention of the parties hereto that such determination not bar or in any
way affect the parties' right of the relief provided above in the courts of any
other jurisdictions within the geographical scope of such Restrictive Covenants,
as to breaches of such covenants in such other respective jurisdictions, the
above covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants
5.7. The obligations contained in Article 5 of this Agreement shall
survive the termination or expiration of this Agreement and shall be fully
enforceable thereafter.
ARTICLE VI
WARRANTIES BY EACH PARTY
6.0 Warranties by TPID. Subject to the further provisions of this
Agreement, TPID represents and warrants to SSTY:
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6.0.1. TPID is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, having all
requisite corporate power to own its assets and operate its business as now
conducted.
6.0.2. TPID has the right and power and ability to enter into
and carry out each and every term or provision of this Agreement, and there are
no other agreements with any other party in conflict herewith.
6.0.3. The transactions contemplated under this Agreement do
not, to the best of its knowledge, information and beliefs infringe upon any
valid right of any third party.
6.0.4. This Agreement has been duly executed and delivered by
TPID and is a valid and binding agreement of TPID enforceable against TPID in
accordance with its terms, except as the enforceability thereof may be limited
by any applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other laws affecting the enforcement of creditors' rights
generally, and by general principles of equity.
6.0.5. With the exception of the investigation referenced in
Section 9.16 of this Agreement, to TPID's best knowledge, there are no actions,
suits, proceedings, arbitrations or investigations pending, or threatened in any
court or before any governmental agency or instrumentality or arbitration panel
or otherwise against or by TPID, which seek to or could restrain, prohibit,
rescind or declare unlawful, or result in substantial damages in respect of this
Agreement or the performance hereof by TPID.
6.1. Warranties by SSTY. Subject to the further provisions of this
Agreement, SSTY represents and warrants to TPID:
6.1.1. SSTY is a corporation duly organized, validly existing
and in good standing under the laws of the State of Utah, having all requisite
corporate power to own its assets and operate its business as now conducted.
6.1.2. SSTY has the right, power, ability, and present and
future intent to enter into and carry out each and every term or provision of
this Agreement, and there are no other agreements with any other party in
conflict herewith.
6.1.3. The transactions contemplated under this Agreement do
not, to the best of its knowledge, information and beliefs infringe upon any
valid right of any third party.
6.1.4. This Agreement has been duly executed and delivered by
SSTY and is a valid and binding agreement of SSTY enforceable against SSTY in
accordance with its terms, except as the enforceability thereof may be limited
by any applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
12
conveyance or other laws affecting the enforcement of creditors' rights
generally, and by general principles of equity.
6.1.5. With the exception of the investigation referenced in
Section 9.16 of this Agreement, to SSTY's best knowledge, there are no actions,
suits, proceedings, arbitrations or investigations pending, or threatened in any
court or before any governmental agency or instrumentality or arbitration panel
or otherwise against or by SSTY, which seek to or could restrain, prohibit,
rescind or declare unlawful, or result in substantial damages in respect of this
Agreement or the performance hereof by SSTY.
6.1.6. Subject to the terms and conditions of this Agreement
and applicable law, SSTY will convey to TPID good and valid title to SSTY's
Chinese Joint Venture Interest, free and clear of any liens, claims, security
interests and encumbrances.
ARTICLE VII
DEFAULT
7.0 TIME IS OF THE ESSENCE IN THE PERFORMANCE OF EACH OBLIGATION,
COVENANT AND CONDITION UNDER THIS AGREEMENT.
7.1. The failure by any Party to perform any of its material
obligations under this Agreement in accordance with the schedule, timeframes,
terms and other conditions of this Agreement, if left uncured upon thirty (30)
days written notice of such failure by the other Party, shall be deemed a
default of this Agreement.
7.2. A default of this Agreement shall also arise in the event of the
filing by or against a Party of a voluntary or involuntary proceeding seeking
liquidation, reorganization or other relief with respect to the Party or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official for the Party or any substantial part of its property
and, in the case of any involuntary proceeding not consented to by the Party,
such proceeding is not dismissed within sixty (60) days.
7.3. In addition to the other equitable and legal remedies which are
set forth in this Agreement, and which the Parties may otherwise have under
applicable law, the Parties acknowledge that damages would be an inadequate
remedy for any breach of the provisions of this Agreement and agree that the
obligations of the Parties hereunder shall be specifically enforceable, and
neither Party will take any action to impede the other from seeking to enforce
such rights of specific performance.
7.4. SSTY acknowledges and agrees that TPID's remedies at law for a
breach or threatened breach of any of the provisions of Articles I, II, and III
and Section 4.4 of this Agreement are inadequate because of the immediate
irreparable harm caused to the non-breaching Party, and, in recognition of this
fact, the Parties agree that, in the event of such a breach or threatened
breach, in addition to, and not in lieu of any other rights and remedies
available at law or equity, the non-breaching Party, without posting any bond
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and without the necessity of proving damages, shall be immediately entitled to
obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunctive or mandatory relief or any
other equitable remedy which may then be available, without prejudice to any
other rights and remedies which may be available at law or in equity.
7.5. In the event TPID fails to pay the Subject Payment in full within
three (3) year of the Effective Date, after failing to cure such failure within
thirty (30) days of SSTY's written notice of such failure, the unpaid balance
owed on the Subject Payment shall accrue interest at the annual rate, simple
interest, of the prime rate set forth in the Wall Street Journal on the
three-year anniversary date of the Effective Date.
ARTICLE VIII
NOTICES
8.0. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given (i) on the date of delivery if delivered by hand,
(ii) on the date of transmission, if delivered by confirmed facsimile, (iii) on
the first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (iv) on the fourth business day following the
date delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to SSTY: If to TPID:
Xxxxxxx X. Xxxxxx, President Xxxxxxx X. Xxxxxx, CEO and President
Sure Trace Security Corporation True Product ID, Inc.
0000 Xxxxxx Xxxxxx, 0xx Xxxxx 0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000 0000 Xxxxxx Xxxxxx
Facsimile: (000) 000-0000 Xxxxxxxxxxxx, XX 00000
E-Mail: xxxxxxxx@xxxxxxxxx.xxx Fax: (000) 000-0000
E-Mail: xxxxxxx@xxxx.xxx
If to STA: If to XXXXXXX XXXX:
Xxxxxxx Xxxx, CEO XXXXXXX XXXX
SURE TRACE ASIA LIMITED also known as CHAN XXX XXXXX
later renamed True Product ID Technology Suite 1005, Allied Kajima Building 000,
Xxxxxxx Xxxxxxxxxx Xxxx, Xxxx Xxxx.
Suite 1005, Allied Kajima Building 138, E-Mail: xxxxxxxxxxx@xx.xxx
Xxxxxxxxxx Xxxx, Xxxx Xxxx
E-Mail: xxxxxxxxxxx@xx.xxx
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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ARTICLE IX
MISCELLANEOUS
9.0 EXPENSES. Each Party shall pay all of its own expenses in
connection with the authorization, preparation, execution and performance of
this Agreement, including without limitation the reasonable fees and expenses of
its agents, representatives, counsel, financial advisors and consultants.
9.1. SURVIVAL OF THE PARTIES' REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by each Party in this Agreement shall
survive the Effective Date and the closing of the transactions contemplated in
this Agreement.
9.2. AMENDMENT AND WAIVER.
9.2.1. No amendment or waiver of any provision of this
Agreement or consent to departure therefrom shall be effective unless in writing
and signed by both Parties.
9.2.2. No waiver by either Party of any default shall be
deemed as a waiver of prior or subsequent default of the same or other
provisions of this Agreement.
9.2.3. Neither the failure nor any delay on the part of any
Party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such rights, remedy, power, or privilege with respect
to any other occurrence.
9.3. SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be void or unenforceable for any reason, such
provision shall be modified or deleted in such a manner so as to make this
Agreement, as modified, legal and enforceable, and the remaining provisions
hereof shall continue in full force and effect.
9.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
inure to the benefit of the parties and their legal representatives, successors
and assigns.
9.5. GOVERNING LAW. The formation, existence, construction,
performance, validity and all aspects whatsoever of this Agreement or of any
term of this Agreement and any disputes arising from this Agreement shall be
governed by and interpreted and construed in accordance with the laws of the
Commonwealth of Pennsylvania.
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9.6. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Parties, and supersedes all prior Agreements, whether written or
oral, relating to the subject matter hereof. Other than the representations and
warranties set forth in this Agreement, the Parties acknowledge that there are
no representations which bind the Parties and waive any and all claims relating
to such representations.
9.7. DISPUTE RESOLUTION. Any dispute or controversy arising under or in
connection with this Agreement shall be exclusively commenced in the United
States District Court for the Eastern District of Pennsylvania and, if
jurisdiction is not proper there, the Court of Common Pleas of Philadelphia
County. The Parties agree to waive any and all rights to a trial by jury.
9.8. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same original. Executed copies may be received by
facsimile or e-mail provided that the original documents is subsequently sent to
and received by all the Parties.
9.9. SECTION HEADINGS. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
9.10. FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, to induce TPID to enter into this Agreement, each of the Parties, STA,
and Xxxxxxx Xxxx each agrees to use all reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable, including, but not limited to, executing and delivering any
and all necessary agreements, to consummate, effectuate, and make effective the
transactions contemplated by this Agreement.
9.11. Words importing the singular include the plural and vice versa;
words importing a gender include every gender and references to persons include
corporations, partnerships, and other unincorporated associations or bodies of
persons.
9.12. The words and phrases "other", "including" and "in particular"
shall not limit the generality of any preceding words or be construed as being
limited to the same class as the preceding words where a wider construction is
possible.
9.13. This Agreement is the product of negotiation between the Parties,
STA, and Xxxxxxx Xxxx. This Agreement shall be construed in accordance with its
plain meaning and shall not be construed for or against any Party, STA, and
Xxxxxxx Xxxx on account of the role of any Party or its counsel in the drafting
of this Agreement. Each Party acknowledges that it has access to and/or has
consulted with independent counsel in connection with this Agreement.
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9.14. FORCE MAJEURE. Neither Party hereto shall be deemed to be in
default of any provision of this Agreement, or for any failure in performance,
resulting from acts or events beyond the reasonable control of such Party,
including, but not limited to, Acts of God, acts of civil, government, or
military authority, civil disturbance, war, strikes or other labor difficulties,
floods, fires, power failures, natural catastrophes or other "force majeure"
events.
9.15. By their signatures hereto, Xxxxxxx Xxxx and Sure Trace Asia
Limited each: (a) acknowledge that as of the Execution Date they have completely
relinquished to SSTY all right, title and interest in and to the 40% ownership
interest in the Chinese JV SSTY is selling TPID under this Agreement (the
"Subject 40% Chinese JV Interest"); (b) completely consent to and agree not to
oppose in any manner the sale by SSTY to TPID of the Subject 40% Chinese JV
Interest; and (c) release all claims, rights, and interests of Xxxxxxx Xxxx
and/or Sure Trace Asia Limited to the Subject 40% Chinese JV Interest.
9.16. In the event that the transactions contemplated in this Agreement
are adversely and materially affected by the ongoing investigation by the United
States Securities and Exchange Commission (the "SEC") regarding SSTY, subject to
SEC regulations, both Parties shall work in good faith to fully implement the
terms of this Agreement, including, but not limited to, the transfer of the
Subject 40% Chinese JV Interest from SSTY to TPID, the termination of the March
16, 2006 Licensing Agreement, and the modification of the March 17, 2006
Agreement as set forth in this Agreement, to the fullest extent possible and to
effectuate and execute any necessary amendments or modifications to this
Agreement.
9.17. The Effective Date of this Agreement shall be the earlier of: (a)
the conclusion of the aspects, if any, of the ongoing SEC investigation relating
to any transactions contemplated in this Agreement or (b) forty-five (45) days
from the Execution Date of this Agreement. SSTY explicitly acknowledges that in
the time period between the Execution Date and the Effective Date, it has no
authority nor the intent to withdraw its consent to this Agreement in any
respect. SSTY considers its consent to transfer the Subject 40% Chinese JV
Interest to be irrevocable.
9.18. TPID and SSTY shall mutually agree on the issuance of any press
release or public statements in respect of this Agreement and shall not issue
any such press release or any public statement prior to such mutual agreement,
except as may be required by applicable law. To the extent allowable by law,
each Party shall reasonably consent to a press release or public statement
prepared by the other Party within 24 hours of receiving a draft press release
or public statement and it being approved by securities counsel.
[SIGNATURE PAGE BELOW]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date above written.
SURE TRACE SECURITY CORPORATION
BY:
----------------------------
XXXXXXX X. XXXXXX
PRESIDENT
SURE TRACE ASIA LIMITED,
LATER RENAMED
TRUE PRODUCT ID TECHNOLOGY LIMITED
BY:
----------------------------
XXXXXXX XXXX A/K/A
CHAN XXX XXXXX
CEO
--------------------------------
XXXXXXX XXXX, also known as
CHAN XXX XXXXX
TRUE PRODUCT I.D., INC.
BY:
---------------------------
XXXXXXX X. XXXXXX
CHIEF EXECUTIVE OFFICER
18
