Exhibit 10.19
Purchase and Sale Agreement
(With Operating and Marketing Agreement Incorporated)
August 17, 2004
This Purchase and Sale Agreement hereinafter (the "Agreement") made and
entered between PocketSpec Technologies Inc., hereinafter referred to as
("PocketSpec") and Color-Spec Technologies, Inc., hereinafter referred to as
("Color-Spec").
WHEREAS, PocketSpec desires to separate its operations into two parts and
at the same time enhance its financial statement and pay significant accrued
operating expense.
WHEREAS, Color-Spec is a wholly owned subsidiary corporation of PocketSpec,
and will serve nicely to restructure financing and business operations of
PocketSpec. The directors have authorized the issuance of 100,000 shares of its
common stock in Color-Spec to PocketSpec.
WHEREAS, PocketSpec and Color-Spec have also agreed to terms of an
Operating and Marketing Agreement which is incorporated into this Agreement as
an integral component to this Agreement which governs required combined
operations of the business affairs for a limited term expiring December 31,
2004, except as set forth in section 3. d. ix.
WHEREAS, PocketSpec and Color-Spec have entered into this Agreement to
recite and set down the terms and conditions of the Agreement.
Agreement
The terms and conditions of the purchase and sale and salient terms are
described as follows:
1. For and in consideration of the Purchase Price described in this Agreement,
PocketSpec hereby conveys to Color-Spec every asset it owns in connection
with the operation of its color technology business, including by way of
example, but not limited to the following:
a. Inventory of assembled color sensing devices and all its other
component parts; and
b. All furniture, fixtures, equipment, computers, software, telephone and
security systems, supplies; and
c. Assignment of lessee's interest in leases for office space at 0000
Xxxx 0xx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 and the Minolta copy machines;
and
d. All of PocketSpec's right, title and interest in and to current
agreements of a beneficial interest, including for example, its
agreement with Logicol, S.r.l. ("Logicol") dated May 21, 2004, subject
to a current liability owed to Logicol for 2nd Quarter PocketSpec
sales of $4,935.00. This liability is included in a list of short term
liabilities to be paid pursuant to the terms of the Agreement; and
e. A patent referred to the Colorimeter Patent, to be formally
transferred as soon as possible by IP counsel, subject to maintenance
fees, and a pending patent approved and presently in the name of
Color-Spec referred to as the Xxxxxx Patent which is expected to have
a patent number assigned to it in the next 2 months, subject to
expenses and maintenance associated with that patent; and
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f. All trademarks issued and pending, subject to expenses and maintenance
associated with the said trademarks. Separate assignments shall be
prepared for execution by IP counsel; and
g. The non-exclusive use of the business name of PocketSpec Technologies
Inc., telephone numbers and email addresses, which rights are
described in Operating and Marketing Agreement below; and
h. All websites, domain names and graphics material currently maintained
by Xxxxxxxxx Xxx; and
i. All beneficial interests of PocketSpec in its core operations and
business.
2. Purchase Price. Color-Spec will pay to PocketSpec the purchase price that
includes multiple components, described as follows:
a. Fixed costs established by settlement agreements with creditors,
employees, affiliates and vendors of PocketSpec in the amount of
$1,768,627.14. There is a list of these people and companies attached
hereto as Exhibit "A". Payment of this sum is by execution of a series
of three-year 8% interest promissory notes, to be secured by the
assets acquired from PocketSpec. A list of promissory notes to be
executed in the amount of $1,908,627.14 is attached as Exhibit "B".
Included in the list in F. Xxxxxxx Xxxxxx who has agreed to accept
$140,000.00 as a settlement of future employment benefits, plus other
sums owed to him. His promissory notes total $416,825.72, which
represents an excess payment of $140,000.00. The excess amount of
$140,000.00 is agreed to be paid back by F. Xxxxxxx Xxxxxx to
Color-Spec and/or PocketSpec to settle a list of short-term accounts
payable shown as Exhibit "C".
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b. Variable and undetermined costs included in the purchase price
described as follows:
i. The actual payment to satisfy the list of short-term accounts
payable in the Exhibit "C"; and
ii. The actual operating costs of the business from August 1, 2004
through December 31, 2004 which Color-Spec agrees to pay in
accordance with the Operating and Marketing Agreement; and
iii. The costs owed to settle the Minolta lease, which according to
Minolta has a payoff of approximately $72,000.00. Color-Spec may
negotiate a discount or other settlement of the lease, but in any
event, Color-Spec indemnifies and holds harmless PocketSpec for
all costs and liabilities thereon; and
iv. To the extend possible these variable and uncertain costs of the
acquisition will be ascertained by December 31, 2004; and
v. Continued variables detailed in the said Operating and Marketing
Agreement, such as the difference between operating income and
operating expenses from August 1, 2004 through December 31, 2004.
3. PocketSpec and Color-Spec agree to the terms of an Operating and Marketing
Agreement as part of the terms and conditions of this Agreement, briefly
described as follows:
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a. PocketSpec has a known name and established websites, credit card
accounts and bank accounts. Color-Spec shall operate the business
through PocketSpec through December 31, 2004 for convenience, but at
the expense of Color-Spec; and
b. PocketSpec and Logicol have an existing 500,000 shares option to
purchase restricted stock at a price of $.08 per shares dated May 21,
2004 (the "Logicol Option"), which is, expires January 31, 2005. The
Logicol Option was granted as part of a Software Development and
Marketing Agreement also dated May 21, 2004. This option has been
partially exercised, leaving 438,317 shares detailed below.
i. Logicol and PocketSpec by a separate memorandum (email
correspondence) have agreed that Logicol will accept delivery of
shares of stock in lieu of1/2of its 20% fee entitlement to
product and software sales through December 31, 2004 which will
be treated as partial exercise of the Logicol Option. Pursuant to
memorandum, Giorgio Stevanato is to receive these shares
personally, and he has been authorized the issuance of 61,683
shares at a value of $4,935.00 for entitlement through July 31,
2004. PocketSpec agrees to set aside as needed or issue the
438,317 shares of stock in accordance with the memorandum and the
Logicol Option. PocketSpec shall retain all moneys that are
received for the exercise of the stock options, whether or not,
credited to fee entitlement owed to Logicol. The schedule of
short-term debts (Exhibit "C") reflects a debt of $4,935.00 which
will be paid by Color-Spec, for the unpaid cash portion of the
July 31, 2004 entitlements due Logicol.
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c. PocketSpec has previously agreed to pay some of its debts owed for
proper services by issuing stock. Although the issuances shall be
after July 31, 2004, they shall not be considered debts owed by
Color-Spec for the purposes of the Operating and Marketing Agreement.
Specific issuances applicable to this section:
i. 186,713 shares of S-8 stock to Xxxxx Xxxxxx for the credit of
Xxxxx Xxxxxx and Associates;
ii. 60,000 shares of S-8 stock to PocketSpec's press release firm for
credit to PocketSpec's contract with XxxXxxxxx.Xxx, with issuance
to its consultant, V. Xxxxxxx Xxxxxxxxx Xx.;
iii. 40,000 shares of S-8 stock to Xxxxxxxxx Xxx for credit to web
services and his entitlement to revenues from Logicol software
sales through July 31, 2004;
iv. 175,000 shares of restricted stock to Xxxxx Xxxxxxx for invoices
through 7-31-04.
d. Product sales and costs of operation through December 31, 2004:
i. During this period PocketSpec shall continue to make sales of
products and software. PocketSpec shall owe Color-Spec the
proceeds of the sales on December 31, 2004 in accordance with
Settlement of Accounts below; and
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ii. During this period PocketSpec shall pay as a convenience for
Color-Spec agreed sums on compensation agreements in accordance
with their terms to Xxxxxxx Xxxxx, Xxxxx Xxxxxx, F. Xxxxxxx
Xxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxxx, Logicol S.r.l., and other
agreed service and product vendors. Color-Spec shall owe
PocketSpec the expenses paid on its behalf by PocketSpec on
December 31, 2004 in accordance with Settlement of Accounts
below; and
iii. During this period, or anytime thereafter, if the company name
"PocketSpec Technologies Inc." is abandoned by a vote of
PocketSpec's shareholders, Color-Spec shall be able to change its
name to PocketSpec Technologies Inc.; and
iv. During this period, Color-Spec shall prepare to take over the
operations including product sales and servicing of expenses, as
well as opening bank accounts, establishing credit card merchant
accounts, payroll accounts, IRS and Colorado State employer
registration, etc.
v. During this period and forever thereafter, any written agreements
to distribute products and software require approval and
signatures of Color-Spec. As part of any agreement, Color-Spec
has permission to authorize the use and marketing of products and
software with or without the branding name of PocketSpec; and
vi. During this period, or so long as PocketSpec is the sole
shareholder of Color-Spec, it may investigate the possibility of
selling its ownership interest in Color-Spec to others.
Therefore, it is incumbent on the directors and officers of
Color-Spec to not enter into any financial obligations beyond
December 31, 2004, except for marketing and distribution
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agreements beneficial to Color-Spec and intended to increase its
sales and its market value. These marketing and distribution
agreements may be for terms of up to three years. Compensation
agreements may be structured to operate on a month-to-month basis
thereafter, or at will, but any may be terminated on a thirty-day
notice with no further compensation due to engages, consultants
or employees; and
vii. During this period, any contributions, gifts, discounts, free
products or services received shall belong to Color-Spec; and
viii.Settlement of Accounts: Effective December 31, 2004, Color-Spec
and PocketSpec shall complete an accounting for debts owed
between the two companies. The debts shall be adjusted and a
promissory note will be made payable to the company who is owed
money after the accounting is completed. Payment of the
promissory note shall be a single payment due July 1, 2005,
together with interest at 6% per annum, without penalty for
prepayment.
ix. Early Termination: If for any reason the officers and directors
of PocketSpec should resign, Color-Spec shall take over all
operations effective the date of resignation, in which case the
date of December 31, 2004 date set forth above shall be adjusted
accordingly.
4. Other terms and conditions:
a. PocketSpec shall pay for the following costs:
i. The costs of SEC audits after the 3rd Quarter, meaning the 10KSB
for fiscal year 2004-2005, and reporting for quarters thereafter;
and
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ii. Legal fees and consulting fees pursuant to acquisitions that it
intends to pursue; and
iii. Sales commissions and consulting fees associated with the sale of
its ownership interest in Color-Spec; and
iv. Costs of income taxes and accounting for consolidated financial
reporting of the operations of Color-Spec and tax returns for
periods that PocketSpec is the owner of the stock in Color-Spec.
b. Color-Spec shall pay for all other costs related to the assets and
technology it has acquired from PocketSpec.
c. PocketSpec and Color-Spec agree that no additional shares of stock in
Color-Spec shall be issued without the approval of the directors of
both companies.
d. PocketSpec guarantees delivery of assignments to its patents, issued
and pending as well as all trademarks, pending and issued not later
than September 16, 2004. This is critical, so that Color-Spec can
perfect its agreement to grant security agreement and interests to
secure the promissory notes described in the attached Exhibit "B".
e. Color-Spec may alternatively satisfy or assume the indebtedness
described in the attached Exhibit "C", therefore a release by the
creditor(s) listed in the list will relieve Color-Spec of the
responsibility for cash payment(s).
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PocketSpec Technologies Inc. Color-Spec Technologies, Inc.
/s/ Xxxxx Xxxxxx /s/ Xxxxxxx Xxxxx
---------------------------------- ----------------------------------
Xxxxx Xxxxxx, President Xxxxxxx Xxxxx, Secretary/ Treasurer
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Exhibit "A"
-----------
Settlement notes Xxxx Xxxxxx $140,000.00
Settlement notes Xxxxx Xxxxxx $104,000.00
Settlement notes Xxxxx Xxxxxx $104,000.00
Settlement notes Xxxxxxx Xxxxx $104,000.00
Settlement notes Xxxxx Xxxxxx $52,000.00
Settlement notes Xxxxxx Xxxxxxxxx $52,000.00
Installment loans B 7 Brand LLC $474,579.63
Installment loans Xxxxx Xxxxxx $29,104.32
Installment loans Xxxxxxx Xxxxx $24,017.05
Installment loans KBP $45,926.88
Installment loans Xxxx Xxxxx $15,949.22
Installment loans Wraith Moon House $6,351.11
Installment loans Xxxxx Xxxxxx $29,414.76
Expense reimbursements Xxxxx $51,713.88
Expense reimbursements Jeff's new charges $54,325.72
Expense reimbursements Xxxxxxx $12,826.47
Expense reimbursements Xxxxx $19,235.86
Short term loans Asset Realization Inc $1,632.39
Expense reimbursements Xxxxx Xxxxxx $8,821.82
Expenses reimbursements Xxxxx Xxxxxx & Xxxxx $629.03
Installment loan B 7 Brand LLC $37,150.00
Installment loan Cherry Creek Cottage LLC $77,000.00
Wages through 7-31-04 Xxxxxxx Xxxxx $81,000.00
Wages through 7-31-04 Xxxxx Xxxxxx $43,944.00
Wages through 7-31-04 Xxxxx Xxxxxx $116,505.00
Wages through 7-31-04 Xxxx Xxxxxx $82,500.00
Totals $1,768,627.14
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Exhibit "B"
-----------
Note Number Beneficiaries Amount of Note Payment Amount
----------- ------------- -------------- --------------
1 F. Xxxxxxx Xxxxxx $136,825.72 $1,434.00
2 F. Xxxxxxx Xxxxxx $23,000.00 $241.00
3 F. Xxxxxxx Xxxxxx $59,500.00 $623.00
4 F. Xxxxxxx Xxxxxx $50,500.00 $530.00
5 F. Xxxxxxx Xxxxxx $45,000.00 $471.00
6 F. Xxxxxxx Xxxxxx $39,500.00 $414.00
7 F. Xxxxxxx Xxxxxx $34,000.00 $356.00
8 F. Xxxxxxx Xxxxxx $28,500.00 $298.00
9 Xxxxx Xxxxxx $310,455.46 $3,254.00
10 Xxxxx X. Xxxxxx and
Xxxxxxxxxx X. Xxxxxx $115,179.86 $1,207.00
11 Xxxxxxx Xxxxx $221,843.52 $2,325.00
12 Xxxxx Xxxxxx and
Xxxxx Xxxxxx $133,733.35 $1,402.00
13 B 7 Brand LLC $411,729.63 $4,315.00
00 Xxxxxx Xxxxx Xxxxxxx LLC $77,000.00 $807.00
15 Wraith Moon House LLC $6,351.11 $67.00
16 Asset Realization, Inc. $1,632.39 $17.00
17 Xxxxxx-Xxxxxx Profit
Sharing Plan $45,926.88 $480.00
18 Xxxxxx Xxxxx $15,949.22 $168.00
19 Xxxxxx Xxxxxxx $50,000.00 $523.00
20 Xxxxxx Xxxxxxxxx $50,000.00 $523.00
21 Xxxxxx Xxxxxxxxx $52,000.00 $545.00
Total $1,908,627.14 $20,000.00
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Exhibit "C"
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Rapport $5,390.00
Longmont Plastics $800.00
ADT Security $91.16
All-American $5,213.46
American Exhibition Services $272.00
Xxxxxxxx - Xxxxxx Industries $45.00
C2 Media $6,544.15
City & County of Denver $25.00
Comcast $476.54
Comprehensive Computing $90.00
Xxxxxxxxx & Xxxxxx $102.50
Corporate Stock Transfer $1,226.47
Federal Express $1,817.97
Xxxxxxx Companies $211.00
Island Sun Times $2,432.00
Metro Comp $300.00
Minolta $7,050.45
Payroll 1 $30.00
PR Newswire $1,965.00
Rot Xxxxxx $255.00
Saelig Co. $1,609.00
Seko Worldwide $587.49
Sentry Property Service $393.00
Service By Air $1,436.99
Sprint $20.56
Telecom Elec Supply $482.34
Treasurer - City & County of Denver $3,952.40
Waste Management $226.59
Westec Plastics $11,344.19
Western Die $1,076.00
Wings Courier $12.00
Excel Energy $519.00
American Family Insurance $1,088.90
Cherry Creek Cottage LLC - NNN Charges $22,532.59
Cherry Creek Cottage LLC - Rents due $15,850.00
Logicol, S.r.l.. $4,935.00
Xxxxxxxxx Xxx $2,974.00
Xxxxx Xxxxxx $1,450.00
SEC - Audit allowance $12,000.00
PST - payment of wages to former employees $5,711.30
XxxXxxxxx.Xxx $2,600.00
Miscellaneous costs $14,860.95
Total: $140,000.00
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