EXHIBIT 10.1
LEASE AGREEMENT
Parties
THIS Agreement is made the 16th day of July, 2001, by and between
KIBOGA SYSTEMS, INC., a Texas corporation, located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, hereinafter referred as LESSOR, and GREYSTONE DIGITAL
TECHNOLOGY, INC. and its wholly owned subsidiary, GREYSTONE TECHNOLOGY, INC.,
Delaware corporations, located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, 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
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Page 1
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, military, 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, military, 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;
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
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Page 2
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.
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 LESSEE that is generated from 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.
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Page 3
(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 a determine 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
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 the EBITDAOH earned by the entire business
of LESSEE and except for that portion of the overhead and expenses
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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 the 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 Lessor
6.01, LESSOR does hereby agree that LESSEE has the right to eighty
percent (80%) of all revenue received by LESSEE that is generated from 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.
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Page 5
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 of the necessary and reasonable costs, 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, military, 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:
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Page 6
X = K X D
-----
O
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 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 the
Kiboga Business shall at all times be the sole and exclusive property of 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
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Page 7
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 use its reasonable best efforts 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
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Page 8
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 accountant shall not disclose
any information that they may thereby obtain other than that necessary for the
purpose of enabling LESSOR determine the accuracy of such reports and payments
made connection therewith.
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.
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Page 9
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 of customers engaged in defense, military, law enforcement, and
intelligence 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.
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
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Page 10
Directors of Kiboga Systems, Inc. has approved this Agreement and has authorized
it President and CEO, ▇▇▇▇ ▇. ▇▇▇▇▇▇, 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; 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 use 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
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Page 11
officers are parties. LESSEE 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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 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.
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, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 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, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 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 other 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
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Page 12
warrants that after May 16, 2001 when any shares of 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 represent 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
said shares being nonassessable and having full voting rights.
19.07 LESSEE represent 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 herein.
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 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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 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
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Page 13
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, 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 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 that 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.
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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,
military, law enforcement, and intelligence activities.
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 Cooperation 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
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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 issue stock to LESSOR as set
forth in this Agreement;
(h) Any other material breach by LESSEE of the terms of this
Agreement;
(i) The voluntary agreement of all parties who are then bound by
this Agreement;
(j) 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 timely issue stock, 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 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, 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.
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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,
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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 registered agent
of the other party or parties.
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.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------- ------------------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and CEO Chairman and CEO
GreyStone Digital Technology, Inc.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman and CEO
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