FIRST AMENDMENT TO THE
ASSET PURCHASE AGREEMENT
THIS
FIRST AMENDMENT to the Asset Purchase Agreement by and between
Jinkhold, Ltd ., a corporation duly organized
under the laws of the United Kingdom (“
Jinkhold ” or the “
Purchaser ”), Andronics,
Ltd ., a corporation duly organized under the laws of
Northern Ireland (“ Andronics ”
or the “ Seller ”) and
Robert Andrews , an individual residing in
Northern Ireland and a founder of Andronics (“
Andrews ”) entered into on October 26,
2007 (the “ Agreement ”) and
amends the Agreement as set forth below (the “
Amendment ”). Jinkhold,
Andronics and Andrews are hereinafter at times collectively
referred to as the “ Parties
.”
RECITALS
WHEREAS, the Parties
entered into the Agreement, attached hereto as Exhibit
A , on October 26, 2007;
WHEREAS, the Agreement
states the Closing (as defined in the Agreement) take place
on or before November 15, 2007;
WHEREAS, the Closing Date
(as defined in the Agreement) has passed and the Parties wish
to amend the Agreement to reflect a new Closing
Date;
WHEREAS, the Agreement
provides that, upon the Closing Date, the Convertible
Debentures shall be issued to the individuals and/or entities
listed on Schedule 4.2 of the Agreement;
WHEREAS, the Parties have
agreed to issue, upon the Closing Date, the Convertible
Debentures to Andronics Ltd.;
WHEREAS, the Agreement
provides Andrews Monthly Options (as defined in the
Agreement) shall be issued directly to Robert Andrews when
vested and exercised;
WHEREAS, the Parties have
agreed to issue, when vested and exercised, the Andrews
Monthly Options to Andronics, Ltd.;
WHERAS, Andronics executed
an agreement by and among Andronics, Robert and Margaret
Andrews, Invest Northern Ireland, Patrick Andrews and the
Remaining Shareholders (defined therein), a true and correct
copy is attached hereto as Exhibit B , (the “
Invest NI Agreement
”) on or about December 19, 2007.
WHEREAS,
unless otherwise defined in this Amendment, capitalized terms
have the meaning as defined in the Agreement.
AGREEMENT
Accordingly,
the Parties hereby agree as follows:
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1.
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Section
3.1 of the Agreement is hereby amended to read as
follows:
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3.1
Offset . Any liabilities not listed on
Schedule 3 shall remain the sole obligation of the
Seller and Robert Andrews. In the event that undisclosed
liabilities arise or are uncovered within one (1) year after
the Closing Date (the “ Undisclosed
Liabilities ”), the Undisclosed Liabilities
United States Dollar amount shall be offset first, by one (1)
share of unvested Andrews Monthly Options, defined in Section
4.6; second, by one (1) share of unvested Andrews Quarterly
Options, defined in Section 4.6; and third, by one (1)
Convertible Debenture, defined in Section 4.2, United States
Dollar for every One United States Dollar ($1.00 USD) of
Undisclosed Liability, with partial dollar amounts rounded up
to the nearest dollar (collectively, the “
Offset ”). In connection
with the Offset, all SARS common stock issued, options,
whether or not vested or exercised, Convertible Debentures
(defined in Section 4.2 of the Agreement) and common stock
issued pursuant to the conversion of the Convertible
Debentures may not be assigned, sold, leased or otherwise
transferred or disposed of until the first anniversary of the
Closing Date.
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2.
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Section
9.1 of the Agreement is hereby amended to read as
follows:
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9.1
Time and Place . The closing of the sale and
purchase of the Assets (the “ Closing
”) shall take place at The Otto Law Group, PLLC, at 5:00
p.m. PST on or before December 20, 2007 (the “
Closing Date ”), or at such other time
as the Parties may mutually agree and upon which time all (i)
closing conditions; (ii) closing covenants, including the
written consent of all shareholders and creditors of Andronics
approving of the transaction contemplated hereby; and (iii)
outstanding exhibits and schedules have been completed,
attached hereto and fully satisfied. This Agreement
may be executed in any number of counterparts, each of which
will be an original as regards any party whose signature
appears thereon and all of which together will constitute one
and the same instrument. This Agreement will become binding
when one or more counterparts hereof, individually or taken
together, will bear the signatures of each of the Parties
reflected hereon as signatories. The “
Execution Date ” shall be defined as
the date this Agreement is executed by the
Parties.
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3.
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Section
4.2 of the Agreement is hereby amended to read as
follows:
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4.2
Convertible Debentures . Convertible
debentures in the total aggregate principal amount of Seven
Hundred Twenty-Two Thousand Two Hundred United States Dollars
($722,000 USD) (the “ Convertible
Debentures ”). The Convertible
Debentures shall include the following terms: (i) the interest
rate shall be ten percent (10%) compounded annually, (ii) the
Convertible Debenture shall automatically convert into shares
of SARS Common Stock (the “ Conversion
”) one (1) year from the date the Convertible Debenture
was executed (the “ Debenture Maturity
Date ”), (iii) the exercise price shall be One
United States Dollar ($1.00 USD) per share, a form of
Convertible Debenture is annexed hereto and made apart hereof
as Exhibit A . The Convertible Debentures
shall be issued to “Andronics Ltd.”
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4.
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Section
18.3.1 of the Agreement is hereby amended to read as
follows:
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18.3.1 One
million (1,000,000) shares shall vest monthly beginning upon
the Closing Date ( “ Andrews Monthly
Options ”). The Andrews Monthly
Options, when vested and exercised in accordance with Section
18.3, shall be issued to “Andronics,
Ltd.” All remaining provisions found in the
Agreement and in Section 18.3 shall remain in full force and
effect.
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5.
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Except
as otherwise provided herein, all other terms of the Agreement
remain in full force and effect.
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6.
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This
Amendment, the Agreement, the Invest NI Agreement and all related
attachments, schedules and exhibits set forth the entire
understanding and agreement of the Parties, and supersedes any and
all prior contemporaneous oral or written agreements or
understandings between the Parties as to the subject matter of this
Amendment. This Amendment shall be governed by the laws
of Northern Ireland.
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7.
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This
Amendment may be executed by facsimile and in one (1) or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same
instrument.
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Remainder of page is intentionally left blank
]
IN
WITNESS WHEREOF, the Parties hereto have caused this Amendment
to be executed as of the date first written
above.
DATE:
December 20, 2007
SELLER:
ANDRONICS, LTD.
By:
/s/ Robert Andrews
Name: Robert
Andrews
Title:
ANDREWS:
ROBERT ANDREWS
By:
/s/ Robert Andrews
Name:
Robert Andrews
PURCHASER:
JINKHOLD, LTD.
By:
/s/ Clayton Shelver
Name:
Clayton Shelver
Exhibit A
The Agreement
Exhibit B
Invest NI Agreement
DATED December
2007
______________________________
SUPPLEMENTAL AGREEMENT
Relating to
ANDRONICS LIMITED
______________________________
THIS AGREEMENT is
dated December
2007
PARTIES:
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(1)
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ANDRONICS LIMITED a company registered in Northern Ireland
with registered number NI 017460 whose registered office is at Unit
20, Balliniska Road, Springtown Industrial Estate, Derry, BT48 0LY
(the “ Company ”).
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(2)
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ROBERT ANDREWS of 1 Darleen Park, Culmore Road, Derry
(“ RA ”) and MARGARET
ANDREWS 1 Darleen Park, Culmore Road, Derry (“
MA ”) (together the “
Promoters ”);
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(3)
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INVEST NORTHERN IRELAND whose registered office is at
Bedford Square, Bedford Street, Belfast BT2 7ES (“
Invest NI ”);
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(4)
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THE PERSONS LISTED IN SCHEDULE 1 HERETO (the
“Remaining Shareholders” );
and
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(5)
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PATRICK ANDREWS of
[address for Patrick Andrews to be
inserted] ( “PA”
).
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BACKGROUND :
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(A)
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The
Company has agreed to sell its assets and business pursuant to the
terms of an asset purchase agreement made between the Company, RA
and Jinkhold Limited (the “Purchaser”) (the
“Asset Purchase Agreement”) and a first amendment to
the Asset Purchase Agreement made between the Company, RA and the
Purchaser (the “Amendment Agreement”) (the Asset
Purchase Agreement and the Amendment Agreement together the
“Agreements”), copies of which are attached at Schedule
2 hereof. The parties hereto have agreed certain matters as between
themselves in relation to the Company, the Asset Purchase Agreement
and the Amendment Agreement as more specifically set out
herein.
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(B)
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This
Agreement is supplemental to the Investment Agreement of 7
th April 2004
made between the Persons Set out in Schedule 1 Thereto, Invest NI
and the Company (the “Investment
Agreement”).
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(C)
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The
parties hereto have agreed to enter into this Agreement for the
purpose of regulating their relationship with each other and
certain aspects of the affairs of and their dealings with the
Company and each other.
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IT IS AGREED as follows:
1.
INTERPRETATION
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1.1
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In
this Agreement where the context admits:
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"
Affiliate”
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means,
in respect of any body corporate, a body corporate which is
its subsidiary or holding company, or a company which is a
subsidiary of that holding company, and each such
company;
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“Associate”
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means
any person with whom a person is or may be
connected
(as
defined in section 839 of the Income and
Corporation
Taxes
Act, 1988);
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“Assumed Liabilities”
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shall
have the same meaning as in the Asset Purchase
Agreement;
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“Articles”
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means
the Articles of Association of the Company from time to
time;
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“Closing”
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shall
have the same meaning as in the Agreements;
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“Comfort Letters”
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means
the letters in the form set out in Schedule 3
hereof;
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“Company’s Auditors”
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means
McCauley McGinty Accountants, 85 Strand Road, Derry, Co
Derry, BT48 7NN or such other firm as the Company
may appoint from time to time;
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“Company’s Solicitors”
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means
Campbell Fitzpatrick Solicitors, 6 Castle Street, Londonderry,
Co. Londonderry, BT48 6HQ or such other firm as the Company
may appoint from time to time;
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“Independent Expert”
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means
O’Connor, Kennedy, Turtle Estate Agents;
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“Invest NI Grant Obligations”
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means
the Company’s grant obligations to Invest NI pursuant to
the letters of offer referred to in Schedule 5
hereof;
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“Invest NI Grant Liabilities”
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means
the liability of the Company to repay any monies pursuant to
the Invest NI Grant Obligations as referred to in Schedule 5
hereto;
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“Lease”
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means
a lease agreement to be entered into by RA and MA with the
Purchaser in respect of the Property a copy of which is
attached at Schedule 4 hereto;
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“OTC Bulletin Board”
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means
the Over The Counter Bulletin Board being a regulated
quotation service in the United States of America that
displays real-time quotes, last-sale prices, and volume
information in over-the-counter equity securities or such
other quotation service as may supersede or replace it from
time to time;
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“Primary Shareholder Loans”
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means
loans totalling in aggregate £[1,171,419]
[amount to be confirmed] made by RA
and members of his family (including PA) and certain of the
Remaining Shareholders to the Company (which amount excludes
the Shareholders Loans).
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“Property”
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means
the business premises occupied by the Company and known as
Unit 20, Balliniska Road, Springtown Industrial Estate, Derry,
BT48 0LY:
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“Market Selling Price”
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means
the Selling Price for SARS Common Stock from time to time as
quoted by the OTC Bulletin Board;
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“Remaining Consideration”
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means
the SARS Restricted Common Stock and the SARS Common Stock
Options and the SARS Convertible Debentures less the Residual
Liabilities (if any) and the Primary Shareholder Loans (but
not the Secondary Shareholders Loans) and any other debts or
liabilities which may have been incurred by the Company after
Closing;
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“Remaining Indebtedness”
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means
at Closing any loan, bond, note, loan stock or
debenture
or
other obligation for borrowed monies, any liability
in
respect
of any acceptance credit or note or bill
discounting
facility,
any amount of consideration left outstanding by
way
of
loan under any agreement for the sale of assets and/or
the
supply
of services and any guarantee or indemnity in
respect
of
any of the foregoing, (the amount thereof in each case
being
taken
for this purpose to be the maximum amount capable
of
being
outstanding from the Company thereunder whether
or
not
then due or owing or advanced at the time of
calculation)
and
any costs or other debts or liabilities of any
kind
whatsoever
to any creditors or third parties owing by the
Company
(but excluding the Primary Shareholder Loans and
the
Secondary Shareholder Loans);
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“Residual Liabilities”
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means
all of the liabilities of the Company of any nature whatsoever
at Closing including the Remaining Indebtedness;
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“SARS Convertible Debentures”
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means
722,000 of convertible debentures of $1.00 each in SARS Inc as
referred to at clause 4.2 of the Asset Purchase
Agreement;
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“SARS Restricted Common Stock”
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means
50,000 of restricted SARS common stock of $0.001 per share as
referred to at clause 4.1 of the Asset Purchase
Agreement;
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“SARS Common Stock Options”
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means
one million of SARS common stock equal to an amount of one
million shares at $0.01 each as more specifically referred to
at clause 18.3 of the Asset Purchase Agreement;
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“Secondary Shareholders Loans”
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shall
have the same meaning as the definition of “Shareholders
Loans” in the Investment Agreement and the Articles
(being an aggregate amount of £325,000);
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“Selling Price”
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means
the bid price of stock quoted on the OTC Bulletin Board and
not the ask price for such stock;
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1.2
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In
this Agreement the headings are included for convenience only and
shall not affect the interpretation or construction of this
Agreement.
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2.
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OBLIGATIONS AND COVENANTS
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2.1
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Immediately
upon Closing the Company and RA and MA and the Remaining
Shareholders and Invest NI and PA shall (if necessary) procure the
assignment in full of the consideration referred to at clause 4.2
of the Asset Purchase Agreement from the persons listed in Schedule
4.2 of the Asset Purchase Agreement directly to the
Company.
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2.2
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Immediately
upon Closing the Company and RA and the Remaining Shareholders
shall (if necessary) procure the assignment in full of one million
of the Andrews Options (as defined in clause 18.3 of the Asset
Purchase Agreement) directly to the Company.
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2.3
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On
or before Closing the Company and RA shall procure that the
Company’s Auditors shall provide Invest NI with full details
of the Assumed Liabilities, the Residual Liabilities and the
Primary Shareholder Loans.
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2.4
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On
or before Closing the Company and RA shall procure that the
Company’s Solicitors shall provide a letter of confirmation
to Invest NI in the terms set out in Schedule 6
hereof.
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2.5
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On
or before Closing the Company and RA and the Remaining Shareholders
shall procure the delivery to Invest NI of the Comfort
Letters.
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2.6
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No
later than 30 days after Closing the Company and RA shall procure
that the Company’s Auditors shall audit and verify the
Residual Liabilities and the Primary Shareholders Loans to Invest
NI and provide Invest NI with an audit report in respect of
same.
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2.7
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As
soon as possible after Closing RA and MA and Invest NI shall agree
the terms of reference for a letter of instruction, which once
agreed shall immediately be sent to the Independent Expert in order
to determine the annual market value rental income for the Property
(the “Annual Market Rent”). RA and MA and Invest NI
hereby agree that the determination of the Independent Expert shall
be final and binding upon them
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