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:
<PAGE>
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 3225
East 2nd Avenue, Denver, Colorado 80206 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 Wagner 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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<PAGE>
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 Parminder Rai; 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. Jeffrey
Krupka 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. Jeffrey Krupka to
Color-Spec and/or
PocketSpec to settle a list of short-term accounts
payable shown as Exhibit "C".
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<PAGE>
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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<PAGE>
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 Ste
