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Recent Financial Reports Note: Reports found on this web site do not
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and all reports found at www.sec.gov (edgar archives) are the legal and
final versions of such reports. Further, changes may
occur in the report due to change in formats,
transmissions, omission in tagged information, etc. Most Recent Annual and Quarterly Report: The most recent Quarterly Report on form 10QSB for the period ending March 31, 2003 and the most recent Annual Report on form 10 KSB for the period ending June 30, 2003 can be viewed below or can be found at www.sec.gov . Once there, you should search the Edgar archives. U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) For the quarterly period ended March 31, 2003 ( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) for the Transition period March 31, 2003 Commission file number 0-9951 ADVANCED OXYGEN TECHNOLOGIES, INC. -------------------------------------------------------------
Delaware 91-1143622 C/O Crossfield, Inc., 133 W 13th Street, New York, NY 10011
Check whether the issuer (1) has filed all reports required to be filled by Section 13 or 15(d) The number of shares of common stock outstanding as of March 31, 2003 was 46,973,585. Transitional Small Business Disclosure Format (check one): Yes( ) No( X )
ADVANCED OXYGEN TECHNOLOGIES, INC.
PART 1: FINANCIAL INFORMATION Item I: Financial Statements for the three months ending March 31, 2003. (Un-audited)
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations. For the three month and nine month period ending March 31, 2003, the Company had losses of $4,190 and $20,713 respectively. Theses losses were primarily the result of expenses associated with the operations of the Company and the lack of revenues of the Company. Pursuant to a stock acquisition on March 05, 2003 Advanced Oxygen Technologies, Inc. (AOXY or the Buyer) purchased 100% of the issued and outstanding stock of IP Services, ApS (IP or the Company) from all of its owners (the Shareholders) for value of five hundred thousand dollars (Purchase Price). AOXY issued fourteen million shares of common stock and one share of preferred convertible stock to the Shareholders for payment and consideration of the Purchase Price. Concurrently, pursuant to an Employment Agreement on March 05, 2003 AOXY entered into an agreement with Kurd Søndergaard (Employee). The Employee will be employed by AOXY for four years and will perform duties of president of IP, and AOXY and the Shareholders entered into a covenant of non competition agreement whereby the Shareholders agreed not to compete with IP for a period of five years. At a special meeting of the Board of Directors, AOXY removed Joseph N. Noll as a director due to his inability to perform his duties as a director. AOXY appointed Kurt Søndergaard and Lawrence Donofrio to the board of directors to replace Joseph N. Noll . Kurt Søndergaard founder and major shareholder of the company, Mr. Søndergaard was educated in the Danish Navy as an electronic engineer. He has worked for 10 years in the electronic security industry, specifically in the IT sector. During this period, Kurt has developed as a business entrepreneur, building and selling an IT business. Lawrence Donofrio graduated from Hamilton College with a BA in English studies. He then worked at Citibank for three years as a financial analyst, and five years as a private financial consultant. He then took a position with Bankers Trust for two years and since 1982 has been a private consultant in the financial industry. The Company maintains a database ("Database") of business contacts that have participated in conference events. The Database was obtained through acquisition and the Company's activities of marketing events and producing CD-ROMS for clients. The Company maintains and updates contact fields on a quarterly basis. The Company continues it efforts to raise capital to support operations and growth, and is actively searching acquisition or merger with another company that would compliment AOXY or increase its earnings potential. During this period, the Company has had discussions with candidates, and has had no success in securing negotiations or a transaction. Further, the Company's financial position makes it difficult for the Company to continue operations. The foregoing raise substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on the attainment of profitable operations and meeting its obligations on a timely basis, which during this period, the Company has not been able to do. Acquisition Efforts: The Company continues it efforts to raise capital to support operations and growth, and is actively searching acquisition or merger with another company that would compliment AOXY or increase its earnings potential. During this period, the Company has been in discussion with Companies looking to be acquired. AOXY has not negotiated any terms nor proposed any acquisition of any of these companies that has been accepted. In addition, the Company is in discussion with potential lending institutions to assist in financing any proposed acquisition. The Company expects difficulty in financing the growth of the increased business or acquisition and has been concentrating on raising capital and/or obtaining a line of credit. Historical Operations: Pursuant to an employment agreement dated March 09, 1998 between the Company and John Teuber ("Employment Agreement"), on September 04, 1998 the Company terminated John Teuber for cause without relinquishing any of its rights or remedies. Pursuant to the Note, the Purchase Agreement, and the Security Agreement between the Company and ("IMA"), the Company on September 04, 1998 exercised its right of "Set Off" of the Note, as defined therein due to IMA's breach of numerous representations, warranties and covenants contained in the Note and certain ancillary documents. The Company further reserved any and all rights and remedies available to it under the Note, Purchase Agreement and Security Agreement. The Company entered into a two year employment agreement ("NAG Agreement" as contained in Exhibit I of the registrants SEC Form 10-K for the period ending June 30, 1998) with Nancy Gaylord on March 13, 1998. On September 18, 1998, Nancy Gaylord terminated her employment with the Company. The NAG Agreement had no provision for this termination. The Company entered into a lease agreement as contained in Exhibit I of the registrants SEC Form 10-QSB for the period ending September 30, 1998 with America-United Enterprises Inc. on October 01, 1998 and took possession of 4,700 sf. of premises on November 06,1998 in Santa Clarita for its CA location. Currently, this is the only California location of the Company. On December 9, 1998 the company delivered to IMA, "Notification to Indemnifying Party and Demand for Indemnification for $2,251,266." Pursuant to the Note, the Purchase Agreement, the Security Agreement, and the Employment Agreement (collectively the "Agreements"), the Company demanded that IMA pay $2,251,266 or defend the Company against the Liabilities (as defined therein) due to, among other things, IMA's breach, representations, warranties, and violation of the Agreements. On January 29, 1999, pursuant to the Purchase Agreement of 1/28/99, Advanced Oxygen Technologies, Inc. ("AOXY") purchased 1,670,000 shares of convertible preferred stock of Advanced Oxygen Technologies, Inc. ("STOCK") and a $550,000 promissory note issued by Advanced Oxygen Technologies, Inc. ("Note") from Integrated Marketing Agency, Inc. ("IMA"). The terms of the Purchase Agreement were: AOXY paid $15,000 to IMA, assumed a Citicorp Computer Equipment Lease, #010-0031648-001 from IMA, delivered to IMA certain tangible business property (as listed in Exhibit A of the Purchase Agreement), executed a one year $5,000 promissory note with IMA, and delivered to IMA a Request For Dismissal of case #PS003684 (restraining order) filed in Los Angeles county superior court. IMA sold, transferred, and delivered to AOXY the Stock and the Note. IMA sold, transferred, assigned and delivered the Note and the Stock to AOXY, executed documents with Citicorp Leasing, Inc. to effectuate an express assumption by AOXY of the obligation under lease #010-0031648-001 in the amount of $44,811.26, executed a UCC2 filing releasing UCC-1 filing #9807560696 filed by IMA on March 13, 1998, and delivered such documents as required. In addition, both IMA and AOXY provided mutual liability releases for the other. On April 18, 2000, notice was given that the Board of Directors and persons owning 64.7%, or 19,180,500 shares of common stock of Advanced Oxygen Technologies, Inc. have elected to adopt the following proposals: 1. To amend and restate the Company's Restated Articles of Incorporation to increase the Company's authorized Common Shares from 30,000,000 to 90,000,000 shares, 2. The Board of Directors has approved an amendment to the Company s Certificate of Incorporation to change the name of the Company to AOXY, Inc. The Company s current name was adopted in 1985 when the Company was focused on applications of its technology which it has since disposed of or otherwise abandoned. The Board of Directors believes it would be more appropriate for the Company to utilize a corporate name which more accurately describes the current focus of the Company or is not misleading as to the Company s operations. The above amendments to the Certificate of Incorporation will be filed with the Secretary of State of the State of Delaware, and the Name Change will become effective as of 5:00 p.m. Eastern Time, on the date of such filing. On December 31, 2000, AOXY entered into an agreement with Eastern Star, ltd, and Baldwin Construction Co (the "Purchasers") whereby the Purchasers will buy three million shares of capital stock of AOXY for one hundred and twenty five thousand dollars pursuant to a purchase agreement ("Purchase Agreement"). The Company has concluded the issuance and delivery of the shares pursuant to the Purchase Agreement. In addition, the Company received a request from Ann Sejeroe for a conversion of her 1 Preferred Share number P 0002 issued April 16, 1998, and in accordance with the restrictions, terms and conditions, as evidenced on the reverse side of the share certificate, the Company issued 333,333 shares bearing a restrictive legend. On February 14, 2002 the Company gave notice of the change of the Company's location, and location of books and records from Advanced Oxygen Technologies, Inc. 26883 Ruether Avenue, Santa Clarita, CA, 91351 ("CA Location") to Advanced Oxygen Technologies, Inc. c/o Crossfield, Inc. 133 W 13th Street, Suite #5, New York, NY 10011, Telephone (212)-727-7085, Fax (208)-439-5488. This location is co-located with a related business of the president, Robert E. Wolfe. Forward Looking Statements Certain statements contained in this report, including statements concerning the Company's future and financing requirements, the Company's ability to obtain market acceptance of its products and the competitive market for sales of small production business' and other statements contained herein regarding matters that are not historical facts, are forward looking statements; actual results may differ materially from those set forth in the forward looking statements, which statements involve risks and uncertainties, including without limitation to those risks and uncertainties set forth in any of the Company's Registration Statement's under the heading "Risk Factors" or any other such heading. In addition, historical performance of the Company should not be considered as an indicator for future performance, and as such, the future performance of the Company may differ significantly from historical performance. PART II Item 1: Legal Proceedings There were no legal proceedings brought against the Company during this period. Item 6. Exhibits and Reports on Form 8-K There was a report filed on Form 8-K(attached hereto as Exhibit A) during the period for a stock acquisition on March 05, 2003, an Employment Agreement on March 05, 2003, a covenant of non competition agreement , and a change in the Board of Directors. SIGNATURE In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: April 29, 2003
/s/ Robert E. Wolfe /s/
Exhibit A =====================================================================
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------- FORM 8-K
CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
March 05, 2003 (Date of Earliest Event Reported)
ADVANCED OXYGEN TECHNOLOGIES, Inc. (Exact Name of Registrant as Specified in its Charter)
Delaware 000-09951 91-1143622 (State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.) C/O Crossfield Incorporated 133 West 13th St. Suite no.5 New York, NY 10011 (Address of Principal Executive Offices) Registrant's Telephone Number: (212) 727-7085 26883 Ruether Avenue Santa Clarita, CA, 91351 (Former Address)
===================================================================== ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS Pursuant to a stock acquisition agreement attached hereto as exhibit III, (Stock Acquisition Agreement), on March 05, 2003 Advanced Oxygen Technologies, Inc. (AOXY or the Buyer) purchased 100% of the issued and outstanding stock of IP Services, ApS (IP or the Company) from all of its owners (the Shareholders) for value of five hundred thousand dollars (Purchase Price). AOXY issued fourteen million shares of common stock and one share of preferred convertible stock to the Shareholders for payment and consideration of the Purchase Price. Pursuant to an Employment Agreement, attached hereto in exhibit III (Employment Agreement), on March 05, 2003 AOXY entered into an agreement with Kurd Søndergaard (Employee). The Employee will be employed by AOXY for four years and will perform duties of president of IP. Pursuant to the covenant of non competition agreement, attached hereto in exhibit III (Non Compete Agreement), the Shareholders agreed not to compete with IP for a period of five years. ITEM 6: RESIGNATIONS OF REGISTRANTS DIRECTORS: At a special meeting of the Board of Directors, AOXY removed Joseph N. Noll as a director due to his inability to perform his duties as a director. AOXY appointed Kurt Søndergaard and Lawrence Donofrio to the board of directors to replace Joseph N. Noll . Kurt Søndergaard founder and major shareholder of the company, Mr. Søndergaard was educated in the Danish Navy as an electronic engineer. He has worked for 10 years in the electronic security industry, specifically in the IT sector. During this period, Kurt has developed as a business entrepreneur, building and selling an IT business. Lawrence Donofrio graduated from Hamilton College with a BA in English studies. He then worked at Citibank for three years as a financial analyst, and five years as a private financial consultant. He then took a position with Bankers Trust for two years and since 1982 has been a private consultant in the financial industry.
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION and EXHIBITS
Revisorerne Strandvejen 58 Postbox 17 DK-2900 Hellerup TH. 45 39 29 25 00 Fax 45 39 29 25 03 revisorerne revisor.comwww.revisor.com Statsautoriseret Revisionsinteressentskab v.m.b.a. CVR. nr. 2424772 Interessentskab of Revisionsselskaber
INDEX TO FINANCIAL STATEMENTS Financial Statements of the Company IP Service ApS Report of Independent Auditors .............................................................................. F-2 Balance Sheets at December 31, 2000..................................................................... F-3 Statements of Operations for the years ended December 31, 2000 ....................... F-4 Statements of Shareholders' Equity for the years ended December 31, 2000........ F-5 Statements of Cash Flows for the years ended December 31, 2000....................... F-6 Notes to Financial Statements................................................................................... F-7
REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders IP Service ApS We have audited the accompanying balance sheets of IP Service ApS as of December 31, 2000 and the related statements of operations, shareholders' equity and cash flows for the year ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of IP Service ApS at December 31, 2000 and the results of its operations and its cash flows for the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. Revisorerne Strandvejen 58 Statsautoriseret revisionsinteressentskab /s/ Soren Jonassen Authorized State Public Accountant Copenhagen, Denmark November 6, 2002
IP Service ApS BALANCE SHEETS December 31, 2000 DKK ASSETS Current assets:
See accompanying notes.
IP Service ApS STATEMENTS OF OPERATIONS
See accompanying notes.
IP Service ApS STATEMENTS OF SHAREHOLDERS' EQUITY
See accompanying notes.
IP Service ApS STATEMENTS OF CASH FLOWS 2001
See accompanying notes.
1. Summary of Significant Accounting Policies Description of Business The Company offers an array of IT services to customers located mainly in Denmark. These include both sales of IT-security products and consultant fees. The company was founded in April 2000, but has been inactive until December 31, 2000. Reporting currency The functional currency of the Company is DKK of the country in which the company conduct its business. Risks and uncertainties The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents Cash and cash equivalents represent cash and short-term deposits with maturities of less than three months at the time of purchase. Equipment and furniture Equipment and furniture are carried at cost. Equipment is depreciated on a straight-line basis over the expected useful lives at a rate 20% per annum. Earnings per share The company has not issued any stock options or warrants, why the basic earnings per share equals the diluted earnings per share. 1. Summary of Significant Accounting Policies (continued) Revenue recognition Revenues are recognized when the services are rendered or the products are delivered. Fair value of financial instruments Carrying amounts of certain of the Company's financial instruments including cash and cash equivalents, short-term borrowings, accrued payroll and other accrued liabilities approximate fair value because of their short maturities. The fair value of investments are determined using quoted market prices for those securities or similar financial instruments. Concentration of credit risk Cash and cash equivalents are maintained with a major financial institution in Denmark Advertising Advertising costs are expensed as incurred. Advertising expenses totaled DKK 0 Income taxes The Company accounts for income taxes using the liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. Other post-retirement and post-employment benefits The Company does not provide its employees with post-retirement and post- employment benefits. 2. Equipment, works of art and improvements Equipment and furniture consisted of the following: December 31, 2000 Less accumulated depreciation......................................... 0 3. Income Taxes Deferred income taxes represent the tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts reported for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of December 31, 2000 are as follows:
4. Shareholders' equity Share capital The company has 125 shares at DKK 1,000 each. 5. Commitments The company does not have any commitments.
Deloitte and Touche Telefon: 33 76 33 33 Statsautoriseret Revisionsaktieselskab Telefax: 33 76 39 93 H. C. Andersens Boulevard 2 www.deloitte.dk 1780 Kobenhavn V IP Service ApS (A Development Stage Enterprise) Financial Statements Periods Ended December 31, 2001 and June 30, 2002, and Independent Auditors Report Deloitte Touche Tohmatsu IP SERVICE APS TABLE OF CONTENTS Page INDEPENDENT AUDITORS REPORT ON FINANCIAL STATEMENTS 1 FINANCIAL STATEMENTS FOR THE PERIODS ENDED DECEMBER 31, 2001 AND JUNE 30, 2002:
INDEPENDENT AUDITORS REPORT To the Board of Directors and Stockholders of IP Service ApS Horsens, Denmark We have audited the accompanying balance sheets of IP Service ApS as of December 31, 2001 and June 30, 2002, and the related statements of income, stockholders equity, and cash flows for each of the two periods ending December 31, 2001 and June 30, 2002. These financial statements are the responsibility of the Corporations management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of IP Service ApS at December 31, 2001 and June 30, 2002, and the results of their operations and their cash flows for each of the two periods ending December 31, 2000 and June 30, 2002, in conformity with accounting principles generally accepted in the United States of America. Deloitte and Touche Statsautoriseret Revisionsaktieselskab /s/ Frank Schiott State Authorized Public Accountant IP SERVICE APS BALANCE SHEETS DECEMBER 31, 2001 AND JUNE 30, 2002
IP SERVICE APS STATEMENTS OF INCOME THE PERIODS JULY 4, 2000 - DECEMBER 31, 2001 AND JANUARY 1, 2002 - JUNE 30, 2002
IP SERVICE APS STATEMENTS OF STOCKHOLDERS EQUITY EACH OF THE TWO PERIODS IN THE PERIOD ENDED DECEMBER 31, 2001 AND JUNE 30, 2000
IP SERVICE APS
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS PERIODS ENDED DECEMBER 31, 2001 AND JUNE 30, 2002 1. DESCRIPTION OF BUSINESS IP Service ApS (the Corporation) offers an array of IT services to customers located mainly in Denmark. The services include both sales of IT-security products and consultant fees. The Corporation is a Private Limited Liability company organized under the company code of the Kingdom of Denmark. Corporation was founded in April 2002, but has been inactive until January 1, 2001. 2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES Basis of Presentation - From April 2002, the Corporation changed the primary focus of the business. Onwards, the corporations primary focus is to develop internet security database software. Therefore, the corporation has transformed into a development stage company. Significant Accounting Policies - The significant policies followed are in conformity with generally accepted accounting principles in the United States of America (GAAP) and are summarized below: a. Reporting currency - The functional currency of the corporation is Danish Kroner (DKK). b. Research and Development expenses - Research and development expenses during the start-up phase are expensed when incurred. c. Equipment - Equipment is measured at cost. Equipment is depreciated on a straight-line basis over the expected lives of 3 years for computer equipment. d. Earnings per share - The company has not issued any stock options or warrants. Therefore, basis earnings per share equals diluted earnings per share. e. Revenue recognition - Revenues are recognized when the services are rendered and the products are delivered. f. Concentration of credit risk - Cash and cash equivalents are maintained with a major financial institution in Denmark. g. Income taxes - The corporation accounts for income taxes using the liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. h. Post-retirement and post-employment benefits - The Corporation does not provide its employees with post-retirement and post-employment benefits. -6- 3. ANALIZT SOFTWARE Since July 2002 the corporation has been developing an internet security software by name of Analizt. Prior to July 2002 research was carried out by a related party to the corporation (IP Solutions A/S) pertaining to a product (MYTH-Software) with some of the same characteristics as Analizt. IP Solutions A/S filed for bankruptcy in April 2002. Soon after a Danish public funding
organization (Vaekstfonden) took pledge in the research which had been carried out prior to the bankruptcy. In August 2002 IP Service ApS purchased the project from Vaekstfonden.
However, since Vaekstfonden did not deliver the research, IP Service ApS never paid the price of DKK 25,000 in cash plus a DKK 300,000 loan on special terms, and Vaekstfonden finally recalled the sale on October 2, 2002. It is uncertain whether Vaekstfonden will file a lawsuit against IP Service for violation of the sale agreement with Vaekstfonden. It is further a possibility, that Vaekstfonden will seek compensation due to the similarity of the product functionality of the product MYTH and the new developed product ANALIZT. According to the board of Directors assessment, IP Service ApS has not infringed on Vaekstfondens rights to the MYTH software, as ANALIZT is developed in a different platform environment, but we cannot be sure that Vaekstfonden will not initiate a lawsuit related to this matter.
5. INCOME TAXES Deferred tax assets as of December 31, 2001 and June 30, 2002 are as follows: Deferred tax assets 45,750 57,406 The tax assets pertain to the allowance for doubtful accounts receivable. The current portion of income taxes amount to 40,986 DKK as of December 31, 2001 and 67,707 DKK as of June 30, 2002.
The statutory tax rate for a corporation in Denmark is 30%. The reconciliation of income tax is: 6. SHAREHOLDERS EQUITY The corporation has 125 shares at DKK 1,000 each. 7. COMMITMENTS The company does not have any commitments. 8. RELATED PARTY TRANSACTIONS In 2002 the corporation has purchased equipment from a related party IP Solutions A/S. The purchase amounted to DKK 131,696 and has been based on market price. In addition, the corporation leases office space from the CEO on a operating lease agreement. The lease price has been based on market price. Future minimum payments for noncancelable operating leases as of June 30, 2002, amount to DKK 15,000. Rent expense under the operating lease was DKK 15,000 in 2002 and DKK 0 in 2001 ******* ii) Combined Pro-Forma financial statements for the period ending December 31, 2002
Exhibits: Exhibit I: IP Business Description Exhibit III: Stock Acquisition Agreement, Covenant of Non Competition, Employment Agreement, Consulting Agreement and Exhibits SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: March 05, 2003. ADVANCED OXYGEN TECHNOLOGIES, INC. BY:/s/ Robert E. Wolfe Exhibits: IP Business Description: Company Overview IP Service is a Danish based privately owned company. The business was incorporated in July 2000 to distribute and develop e-security software products for global markets. The financial status of the business has been audited to 31st December 2001. Management Team It is recognized that experienced international management is a requirement, together with the continuity of the founders technical expertise, to achieve investment and sales success. The Board of Directors will consist of the following: Kurt Søndergaard: President and CTO of IP Solutions. A founder and major shareholder of the company, Mr. Søndergaard was educated in the Danish Navy as an electronic engineer. He has worked for 10 years in the electronic security industry , specifically in the IT sector. During this period, Kurt has developed as a business entrepreneur, building and selling an IT business. Laue Traberg Schmidt, Esq., Chairman of the board The business The business of IP Solution has been doing consultancy work for the security industry mainly in Denmark and further to develop a proprietary software solution to secure early warning systems for network and internet applications. The Analizt Solution IP Service have developed Analizt, a scaleable solution that can be rapidly deployed across any size of network locally or globally. It delivers affordable secure solutions that demonstrate a fast return on investment by maximizing efficiencies in personnel and other resources. Analizt highlights potential weaknesses or vulnerabilities that may be potential targets for hackers. As a result of this, any weaknesses are reported immediately. Uniquely, Analizt also offers a solution. Analizt provides a database of known weaknesses and vulnerabilities that can be cross-matched against an organizations IT inventory, highlighting weaknesses in that particular network. The system alerts the relevant personnel or individual as to the nature and risk of the threat and ultimately offers solutions and information in order to deal with these weaknesses to ensure that the systems cannot be exploited. Analizt is an IT based security solution positioned to be a next generation product, addressing the needs of both commercial and non-commercial organizations. Analizt provides a structured approach, able to leverage the growing demand for content based security technologies. This allow for greater protection against hackers, cyber theft and damage resulting from such actions. Analizt is patent pending technology that protects the valuable knowledge based assets residing across networks from one single source. This removes the need to rely upon numerous sources to identify weaknesses within that network. It also reduces the need for consultancy services, personnel or other services to search for, find and implement a solution. Using Analizt, organizations are able to combine IT functions, control costs, and enable valuable IT personnel to focus on areas that will derive business benefit. Analizt is a Security Early Warning Solution (SEWS) that highlights any weaknesses and vulnerabilities in a network. It allows for a complete inventory of the network either manually or automatically. The system issues warnings on risk levels via secure email, SMS reports or other forms of alerts. It allows for the system to be configured specifically for the organization or department. Highlighting risks to the network as high, medium or low enables personnel within both the IT department and business to make informed, relevant decisions in order to protect the assets, business, intellectual property and reputation of the organization. This is achieved by comparing known vulnerabilities to the configuration of an organizations network and highlighting any weakness. Central to the solution is a database that holds all known vulnerabilities and weaknesses. By comparing the network inventory to the database it is able to create a profile, or a complete network vulnerability overview. Prior to Analizt, companies would access a number of different databases and services in order to identify vulnerabilities. Not only was this time consuming, it is a major drain on resources and does not produce a solution to the problem. Analizt covers most operating systems, applications and firmware. It is no longer the case that the most vulnerable areas of a network are the servers. This vulnerability has now extended to the desktop and routing technology. The Analizt tool can aid the design of software solutions from a security perspective. It enables comparative review of different designs and approaches. Analizt reduces the workload contained in monitoring the large flow of security related information related to the corporate computer systems. The administrator or IT-department will be notified when the information is relevant to their system. Analizt will keep the entire system updated from a security vulnerability point of view. When combined with the traditional firewalls and IDS systems this gives a much higher level of security. Analizt provides the basis of a security policy across the enterprise encompassing applications, operating systems and firmware within the network. IP Service believe that Analizt is unique. Relocation of office In January of 2002 IP Service moved to the offices at Sønderbrogade 99, 8700 Horsens and at the same time acquired office equipment located at the premises. The company has a dispute with the vendors of the equipment regarding actual payment for the equipment. Whereas Ip Service ApS claims to have paid for the equipment in full the vendor claims that there is still owed app. 15,000 USD. This dispute is handled in the Courts of Horsens, Denmark and a solution will e found sometime in 2003 or 2004.
Purchase of Myth. During the summer of 2002 IP Service entered into an agreement with the Danish Innovation Fund (Controlled by the Danish State) Vækstfonden whereby IP Service ApS acquired the products rights to the product MYTH. A product that provides specific alerts to Internet Security customers. The product was acquired for a total sum of 300.000 DKK. However Vækstfonden has been unable to actually deliver the product, and IP Service has filed a demand for compensation for costs and losses. This case might go to trial. Change of ownership In May of 2002 the ownership of the all shares in IP Service changed from KS Holding to the current owners, Logical Management Ltd, Henistone Project Ltd and Borkwood Developments Ltd. This move has provided a new and stronger development arm of the company and has strengthened the marketing.
Exhibit III: Stock Acquisition Agreement, Covenant of Non Competition, Employment Agreement, Consulting Agreement and Exhibits STOCK ACQUISITION AGREEMENT MARCH 05, 2003
FOR: 100 % IP SERVICES A/S STOCK
BETWEEN: THE SHAREHOLDERS OF IP SERVICES, ApS AND ADVANCED OXYGEN TECHNOLOGIES, INC. Table of Contents STOCK ACQUISITION AGREEMENT * 1. Recitals. * 2. Construction and Interpretation. * 3. Definitions. * 4. Purchase and Sale; Closing. * 5. Purchase Price * 6. Deliveries * 6.1. Shareholders Deliveries * 6.2. Buyers Deliveries * 6.3. Release of Escrow * 7. Representations and Warranties * 7.1. Buyer represents, warrants, covenants and agrees as follows: * 7.2. The Shareholders represent, warrant, covenant and agree as follows: * 8. Indemnification. * 9. Taxes. * 10. Costs and Expenses * 12. Brokers, Finders or Commissions * 13. Confidentiality; Public Announcements * 14. Miscellaneous Provisions * Signatures: * Exhibits * Schedule 1 * Delivered Documents * Exhibit A * Shareholders * Exhibit B * COVENANT OF NON-COMPETITION * Exhibit C * Audited Financial Statements * Exhibit D * Lease * Exhibit E * US PERSON * Exhibit F * EMPLOYMENT AGREEMENT * Schedule E-1 * Exhibit G * Buyers Legal Opinion * Exhibit H * Shareholders Legal Opinion * Exhibit K * Liabilities * Exhibit L * Excluded Assets/Excluded Liabilities * Exhibit M * Lease Contracts * Exhibit N * Service Agreement * Exhibit O * ESCROW AGREEMENT * Exhibit P * CONSULTING AGREEMENT * Exhibit Q * Subsidiaries *
STOCK ACQUISITION AGREEMENT THIS STOCK ACQUISITION AGREEMENT (this Agreement) is dated as of March 03, 2003, among: (i) Advanced Oxygen Technologies, Inc., a Delaware corporation (Buyer, or AOXY); and (ii) the shareholder(s) as listed on Exhibit A herein (collectively, the Shareholders). 2. Construction and Interpretation. 3. Definitions. 4. Purchase and Sale; Closing. 5. Purchase Price 6.2. Buyers Deliveries. 6.3. Release of Escrow 7. Representations and Warranties 7.2. The Shareholders represent, warrant, covenant and agree as follows: 8. Indemnification. 9. Taxes. 10. Costs and Expenses 11. Right of Set Off If Buyer exercises its right of set-off in good faith and it is subsequently determined that such exercise was unwarranted, Buyer shall promptly pay all amounts improperly set off, and upon such payment Buyer shall be deemed to be in full compliance with its obligations under this Note. 12. Brokers, Finders or Commissions 13. Confidentiality; Public Announcements 14. Miscellaneous Provisions In the case of: Addressed to: 14.13.2. BUYER : IN WITNESS WHEREOF, the parties have subscribed their names to this Agreement or, in the case of corporate parties, have (or have caused their duly-authorized officers, as the case may be) to execute this Agreement, effective on the date first written above. Signatures: BUYER: Name:______________________ Witness:
Hennistone Projects Limited By:________________________ Date: Name:______________________ Witness: Title: ______________________ Name: Logical Management UK Limited By:________________________ Date: Name:______________________ Witness: Title: ______________________ Name: Borkwood Developments Limited By:________________________ Date: Name:______________________ Witness: Title: ______________________ Name:
Exhibits Schedule 1 Delivered Documents GENERAL INFORMATION 2000 and 2001 Supplier correspondences (other than invoices) 3 Years of Bank Statements 3 Years Credit facilities, Factoring or other Bank Statements 3 years Management salary history including salary, bonus, and perks 3 years General Ledger GL 5 Year Projections 3 years tax returns of the Company, A/R Aging Schedules All Applicable Contracts or Agreements. All Corporate Resolutions: Any/All Employee Contracts Any required operating licenses Any Regulatory Proceedings and/or Compliance Issues Board of Directors, Listing, Officers and terms Brochures of Equipment (if available). Budget cycles Business Plan Bylaws as amended Call accounting records/example Certificate of Good Standing Client Correspondences for 1998 through 2002 Competitor Analysis and anticipated response Contact Name, Address, Phone Number, Fax Number, Title, Home Phone, Home Address. Copies of all signed debt obligations Copies of Special Permits, Licenses, etc. Copies of all Insurance policies Copy of Articles of Incorporation Copy of 1 Years Business Tax Return. Copy of Certificate of Incorporation. Corporate Name, Issues involving the use of MM, d.b.a. Current (open) Litigation with Comments (re: Status) Current Aging of Account Receivable Current Shareholders (owners) - Name of %5+ owners Current inventory methodologies (LIFO/FIFO) Employee/Union Suits or grievances Employee list for 2002 Employee Separation Agreements Employee ID nos Employment Contracts Equipment Schedules Executive Summary Federal Tax I.D. (same if outside U.S.) Financials Goodwill History, Status, Objectives, Resumes, etc. Goodwill listing all managed projects. H/R plans Job Descriptions/Pay ranges for Key Contacts that have Significant Impact on Business Last 2 Years in Business Operating Statements. Legal Issues/Representation Line of Credit Agreements List of Accounts Receivables with names, addresses and telephone numbers. List of Equipment and All Assets- Include make and model numbers and serial numbers if sale/leaseback; Include appraised cost and book value. Marketing plan Minute Book, Past 3 years Mission Statement Operating Plan Organizational structure Ownership issues/disputes/changes 3 years Partnership agreement(s) Past Litigation with Statement of Resolution Pending (or anticipated) Litigation with Brief Description Phone contracts Pricing Policies Product discussions Proforma Operating Statements and Balance Sheets for 4 years Public Relations Quality Assurance Programs Resolution from Board of Directors authorizing this transaction. Resumes of management Sales Tax Certificate Schedules of Inventory Summary of marketing plans with samples of advertisements, brochures, and marketing materials to be used. Total Quality Management Goals (TMQ) Total Shares Authorized and Par Value Total Shares Issued and Outstanding Volume Forecasts Work Force demographics Exhibit A Shareholders
Henistone Projects Ltd: Directors: Ben Weiner, 4 Bury Farms, Old Amershvm, Buckinghamshire, HP7 OSJ, United Kingdom Secretary: Dan Sommer, Søtoften 10, Tårnet, 8660 Skanderborg, Denmark Beneficial Owner: Edith Madsen, 8700 Horsens, Denmark Logical Management Ltd: Directors: Ben Weiner, 4 Bury Farms, Old Amershvm, Buckinghamshire, HP7 OSJ, United Kingdom Secretary: Dan Sommer, Søtoften 10, Tårnet, 8660 Skanderborg Beneficial Owner: Johs. Nielsen, 3200 Helsinge, Denmark Borkwood Development Ltd: Directors: Hanna Van Breukelen, Amsterdam, Nederlands. Secretary. Aage Madsen, Voervadsbro, Skanderborg, Denmark Beneficial owner: Aage Madsen, Voervadsbro, Skanderborg, Denmark Exhibit B COVENANT OF NON-COMPETITION THIS COVENANT OF NON-COMPETITION (Agreement) is executed and made effective on March 05, 2003 by the Shareholders (as listed in the Stock Acquisition Agreement) (collectively and individually referred to as Covenantor) in the State of New York. 1 Recitals. The covenants, obligations and rights created by and arising hereunder are premised upon the following facts which are recited hereat to have the force of conclusive presumptions: 1.1.1. Covenantor has, contemporaneously with the execution hereof, closed a transaction pursuant to a Stock Acquisition Agreement (annexed hereto as Exhibit B) whereby Covenantor has sold to Advanced Oxygen Technologies, Inc. (Covenantee herein) 100% of all classes of equity of a corporation organized and existing under the laws of the State of Denmark, IP Service ApS (herein referred to as Company), its wholly owned or majority owned subsidiaries as listed in the Stock Acquisition Agreement, goodwill, and all of the Company assets of which the Company has heretofore engaged in business as a Network Security and software security systems company (Business), and the like and which operates under the name IP Service ApS nationally. 1.1.2. Covenantor is a majority shareholder, director or key officer of Company, such that he has a personal and beneficial interest in the said Stock Acquisition Agreement. 1.1.3. A material, bargained-for benefit to the Covenantee in said Stock Acquisition Agreement is the agreement of the Covenantor that they will cease and desist from engaging in the Business which, if not proscribed by operation of this covenant, would substantially devalue the business advantages acquired by Covenantee pursuant to the said Stock Acquisition Agreement, except as provided with respect to Covenantor in any Employment Agreement as defined in the Stock Acquisition Agreement. 1.2 In consideration of the benefits conferred upon Covenantor under the said Stock Acquisition Agreement, the receipt and sufficiency of which are hereby acknowledged, Covenantor hereby irrevocably binds and pledges themselves to the terms set forth hereinbelow, by creating this covenant of non-competition. 2. Covenant of Non-Competition. 2.1 Subject to the terms of 2.3 below, Covenantor hereby covenants to Covenantee, and Covenantee's parent companies, subsidiaries, partners, affiliates, successors and assigns, that with the sole exception of the activities permitted in Section 2.2 hereinbelow, for a period of Five (5) years, Covenantor shall not, directly or indirectly, whether as an owner, sole proprietor, partner, shareholder, director, agent, employee, advisor, independent contractor or in any other capacity whatsoever, or through any person or entity under the direction or control of Covenantor, carry on or engage in the Business within the geographical area specified in Exhibit A hereto (including non-contiguous states, territories, possessions and protectorates). 2.2 Notwithstanding anything to the contrary appearing herein, Covenantor shall not be deemed to be in breach hereof if any one or more of them engage in the proscribed activities in the capacity of employee of the Covenantee or as an agent acting on behalf of Covenantee. 2.3 Notwithstanding the foregoing, and in the event that Covenantee shall be in default of any monetary payment due to Covenantor under the Stock Acquisition Agreement, or any Employment Agreement, then, and only in such event, the Covenantor shall be released from this Covenant Not to Compete. 3. Covenant Absolute; Good Faith Observance; Binding Covenant. 3.1 No cause, claim, event or circumstance of any type or nature, whether or not foreseeable (including but not limited to any cause, claim, event or circumstance which may relate to or affect the Covenantee at any time in the future) shall be deemed to extinguish, release or excuse the faithful performance of the foregoing covenant of non-competition, the good faith observance of which shall be an absolute duty which shall be performed without offset or counterclaim of any type or nature whatsoever. 3.2 Covenantor hereby expressly acknowledges that the acts of prohibited competition enumerated above are not only proscribed as to their own direct or indirect conduct; but also it shall be impermissible, and shall constitute a breach of the covenant of non-competition hereunder, to carry out any act of the prohibited competition or to attempt to do so through the auspices of any other party or entity or to enlist the aid of, engage the services of or to conspire with any other party or entity so as to circumvent the spirit and intent of this covenant by using other parties or entities to stand in the place of, or as alter ego of, Covenantor, which Covenantors themselves are prohibited from doing (including by way of example, but not as a limitation, the use of a so-called front man, straw man, sham company, family member, relative, friend or other party to create the false appearance that acts of prohibited competition are instead the act and deed of a party other than Covenantor). 4. Miscellaneous Provisions. 4.1 Attorney's Fees and Costs. In the event that any action or other formal proceeding is instituted to enforce or interpret any part of this agreement, the party prevailing in such action or proceeding shall be entitled to recover, in addition to the prevailing party's costs of suit, such attorney's fees as the presiding tribunal deems to have been reasonably incurred by the prevailing party. 4.2 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which, when taken together, shall constitute one and the same document. 4.3 Definition of Writing. All references in this Agreement to written consents, notices or other documentation required to be given, received or obtained, shall mean a writing (printed, typewritten or hand written) actually signed by the party giving such consent, notice or otherwise, with the intent to give such consent, notice or otherwise, free from duress, undue influence, fraud and coercion. 4.4 Gender; Plural and Singular. Whenever required by the context hereof, the singular shall be deemed to include the plural, the plural shall be deemed to include the singular, the masculine the feminine, and the neuter gender shall be deemed to include the others. 4.5 Governing Law. This Agreement shall be interpreted, construed and governed by, in accordance with and consistent with the laws of the State of New York, which shall apply in all respects, including statutes of limitations, to any disputes or controversies arising out of or pertaining to this Agreement. 4.6 Severability. In the event that any term, provision, clause, article, condition or other portion of this Agreement or any agreement referenced, included, or annexed hereto, is determined to be invalid, void or unenforceable by a forum of competent jurisdiction, the same shall not affect any other term, provision, clause, article, condition or other portion hereof, and the remainder of this Agreement shall remain in full force and effect, as if such invalid, void or unenforceable term, provision, clause, article, condition or other portion of this Agreement did not appear herein. 4.7 Voluntary Execution. Each of the Covenantor and each officer executing this covenant on behalf of a corporate-Covenantor does hereby expressly acknowledge that he/she has carefully read this Agreement, that he/she is completely familiar with and understands each and every provision hereof, whereby the parties do enter into, execute and accept it of their own individual free and voluntary will, without reliance upon any statements, representations, promises, covenants or inducements made by any party, or any of the representatives, attorneys or agents of any other party, except as are incorporated into and form a part of this agreement. REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
IN WITNESS WHEREOF the parties have subscribed their names or caused an authorized officer to subscribe this agreement, effective on the date first written above.
Hennistone Projects Limited By:________________________ Date: Name:______________________ Witness: Title: ______________________ Name: Logical Management UK Limited By:________________________ Date: Name:______________________ Witness: Title: ______________________ Name: Borkwood Developments Limited By:________________________ Date: Name:______________________ Witness: Title: ______________________ Name: Covenant of Non-Competition Exhibit A TerritoryTerritory 1. All Counties and municipalities in the State of Delaware and Denmark, whether listed here or not. 2. The remainder of the United States of America. 3. Europe. 4. South America. 5. Canada. 6. Mexico. Exhibit C Audited Financial Statements
See attached: IP Service ApS Pro Forma Financial Statements as of March 05, 2003. Lease
Exhibit E US PERSON 1. US Person means: (i) Any natural person resident in the United States; (ii) Any partnership or corporation organized or incorporated under the laws of the United States; (iii) Any estate of which any executor or administrator is a US person; (iv) Any trust of which any trustee is a US person; (v) Any agency or branch of a foreign entity located in the United States; (vi) Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a US person; (vii) Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and (viii) Any partnership or corporation if: (A) organized or incorporated under the laws of any foreign jurisdiction; and (B) formed by a US person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a)) who are not natural persons, estates or trusts. 2. Notwithstanding paragraph 1 of this rule, any discretionary account or similar account (other than an estate or trust) held for the benefit or account of a non-US person by a dealer or other professional fiduciary organized, incorporated, or (if an individual) resident in the United States shall not be deemed a US person. 3. Notwithstanding paragraph 1, any estate of which any professional fiduciary acting as executor or administrator is a US person shall not be deemed a US person if: (i) An executor or administrator of the estate who is not a US person has sole or shared investment discretion with respect to the assets of the estate; and (ii) The estate is governed by a foreign law. 4. Notwithstanding paragraph 1, any trust of which any professional fiduciary acting as trustee is a US person shall not be deemed a US person if a trustee who is not a US person has sole or shared investment discretion with respect to the trust assets, and no beneficiary of the trust (and no settlement or if the trust is revocable) is a US person. 5. Notwithstanding paragraph 1, an employee benefit plan established and administered in accordance with the law of a country other than the United States and customary practices and documentation of such country shall not be deemed a US person. 6. Notwithstanding paragraph 1, any agency or branch of a US person located outside the United States shall not be deemed a US person if: (i) The agency or branch operates for valid business reasons; and (ii) The agency or branch is engaged in the business of insurance or banking and is subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located. 7. The International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the United Nations, and their agencies, affiliates and pension plans, and any other similar international organizations, their agencies, affiliates and pension plans shall not be deemed US persons. Stock Acquisition Agreement [TO BE PROVIDED] Exhibit F EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT, (Agreement) dated March 05, 2003, for purposes of identification, is made and entered into by and between IP Services Aps, a Danish Corporation (hereinafter referred to as Employer), and the employee(s) as listed on Schedule E-1, each or individually a natural person, (hereinafter referred to as Employee). 1 Definitions and Interpretation. 1.1 In addition to any other terms that may be defined elsewhere in this Agreement, the following shall govern the construction and interpretation hereof: 1.1.1 The Board means and refers to the Board of Directors of Employer. 1.1.2 Employment Year means and refers to a span of time which begins on the Closing Date (defined in the Stock Acquisition Agreement attached hereto as Exhibit B) in any calendar year during the term of the employment hereunder and which ends at midnight on the day immediately preceding the same date in the subsequent calendar year. 1.2 Whenever in this Agreement there appears the locative adverbs herein, hereunder, hereinbelow, hereinabove, or any substantially similar adverb, the same shall be deemed to refer to this Agreement in its entirety and not to any specific article, section, subsection, subpart, paragraph or subparagraph. 2 Recitals. 2.1 The contractual relationship created by operation of this Agreement is premised upon the following facts: 2.1.1 AOXY has purchased One Hundred (100) percent of the issued and outstanding shares of capital stock of IP Service A/S (Company) which is engaged in business of Network Security and software security systems company, and the like, and operates nationally under the name IP Service A/S, pursuant to that certain Stock Acquisition Agreement dated the date hereof (Business).
2.1.2 Employer's Board of Directors has determined that: 2.1.2.1 Employee has substantial experience as indicated in Schedule I herein, of the Company, by virtue of which Employee possesses skills, ability and background in and knowledge of Employer's business and the industry in which it is engaged, which are essential to the best interests of Employer. 2.2 In consideration of the mutual duties created herein and the mutual benefits conferred hereby, the adequacy of which is hereby acknowledged, each of the undersigned voluntarily enters into this Agreement. 3 Term of Employment; Effect of Expiration of Term. 3.1 Employer hereby employs the Employee and the Employee hereby accepts the below-specified employment for a period of years as indicated on Schedule E-1, defined as Employment Years. 3.2 If the employment created hereunder continues after expiration of the last Employment Year, such employment shall automatically become at-will such that either party may then terminate the employment at any time, with or without cause or reason. 4 Employee's Full Time Duties. 4.1 The Employee shall render services for the Company as follows: 4.1.1 Employee shall act as and in accordance with his/her duties and position as described in Schedule E-1 and the Company policies established by the Board, and consistent with Employer's employment policy manual adopted by the Board (and as same may be hereafter amended). This Agreement, and the said policy manual, shall be construed as one contract, such that the two together shall be deemed to set forth all the terms, conditions and covenants of the agreement existing between Employer and Employee. In the event of any conflict between the provisions of this Agreement and said policy manual, the terms of this Agreement shall prevail to the extent permitted by law. 4.2 Employee shall devote substantially all of Employee's professional time, attention and energy to the best of his ability and experience, and shall loyally and conscientiously perform the duties and obligations either expressly or implicitly required of him under this Agreement and attendant to the position for which he is employed hereunder, and shall carry out such duties in a manner that is consistent with good and lawful business practices. 4.3 Employee shall not do any of the following: 4.3.1 Participate in any other business activities, during or after the term of his employment hereunder which are proscribed by that certain Covenant of Non-Competition to which Employee is a party and which is executed by Employee contemporaneously with this Agreement. 4.4 Unless and until otherwise determined by the Board, Employee shall report directly to the general manager of Employer. 5 Compensation of Employee; Bonus. 5.1 Employer shall compensate the Employee for services rendered hereunder as follows: 5.1.1 Commencing with the Closing Date as defined in the Stock Acquisition Agreement, Employee shall receive his base annual salary (Base Salary) as set forth on Schedule E-1. 5.1.2 During any contract year (Contract Year defined as the full years one day from one year following the Closing Date and each year thereafter through the term of the employment of the Employee as set forth on Schedule E-1) the employee will receive a subsequent bonus (Subsequent Bonus) as set forth on Schedule E-1. 5.1.3 Any such Subsequent Bonus shall be payable thirty (30) days following the end of the subject Contract Year (less customary withholdings of taxes and other deductions as required by law). 6 Benefits. 6.1 During the term of the employment hereunder, Employee shall be entitled to receive the following benefits: 6.1.1 Fully-paid leaves of absence for such holidays as may be granted from time in accordance with Employer's then-current policies governing such leaves for all Employee; and 6.1.2 Leaves of absence as may be required by applicable law (including for purposes of example, but not as a limitation, reasonable time from work to vote in elections, to serve as a juror and to testify in legal proceedings if subpoenaed to do so); provided, however, that such leaves will be fully-paid only where required by law and will be limited in duration as required by law; and 6.1.3 Leaves of absence on account of illness, bereavement or family emergency in such frequency and duration as provided by Employer's then-current policies governing such leaves for all Employee. 6.2 In addition to the foregoing benefits (but not as a limitation thereon), Employee shall be entitled to be absent from his employment hereunder as defined in Schedule III. During such vacation leave, Employee shall be compensated at the rate of his above-prescribed base salary, together with all other benefits specified in this Agreement. Such vacation leave must be pre-approved by Employer (which approval will not be unreasonably withheld) and may be taken consecutively or in separate time segments; provided, however, that unless otherwise expressly agreed to by Employer's president, all accrued vacation leave must be taken within twelve (12) months following the accrual thereof unless Employer has failed to approve a request for vacation leave, in which case such leave may be taken in the following twelve (12) month period. A failure by an Employee to take vacation leave within the prescribed time shall work as a forfeiture of Employee's right to take such time, but not as a forfeiture of Employee's right to be paid Base Salary therefore. For purposes of this Agreement, the term business day is defined as any day which is not a Saturday, a Sunday, a day customarily granted by Employer as a holiday or a day which Employee would have otherwise been entitled to be absent from work under Employer's then-current policies governing such leaves for all Employee. 6.3 Employee will receive full medical insurance paid by Employer commensurate to Employee's current health benefits as listed in Exhibit A contained herein either through the continuation of the policy or through a policy of the same coverage. 7 Reimbursement of Business Expenses Incurred by Employee. 7.1 Employer shall reimburse Employee for reasonable out-of-pocket expenses incurred and paid by Employee during the term of the employment hereunder in connection with the conduct of Employer's Business and/or the discharge of such Employee's duties including, for purposes of example but not as a limitation, travel expenses, food and lodging while away from home subject, however, to the prior approval of Employer. 7.2 Employer's obligations to reimburse Employee for any expenses specified in this Agreement shall not arise unless and until Employee has submitted to Employer written vouchers evidencing such expenses in a form as may be prescribed from time to time by the rules of state and federal tax authorities. 8 Obligations Not Conditioned On Or Related To Others. 8.1 Employer may terminate Employee's employment at any time for Cause. 8.2 Employee's employment hereunder shall terminate immediately upon his death or disability. For purposes of this Section 8.2, an Employee shall be deemed to be disabled if, on account of illness or other incapacity, he has been unable to perform his duties for 60 consecutive days. The Employer shall continue to pay Employee his Base Salary and other employment benefits hereunder prior to termination by the Board of Directors pursuant to this Section 8.2, even though such Employee is disabled during the 60-day period preceding such termination. 8.3 This Agreement may be terminated with the mutual written consent of the parties 8.4 If an Employee's employment hereunder is terminated for any of the reasons set forth in Sections 8.1, 8.2 or 8.3 hereunder, then all rights and obligations of Employer and such Employee hereunder shall terminate automatically thereupon, except (i) as to any right which Employee, Employee's estate or dependents may have under COBRA or any other federal or state law, (ii) as to any Base Salary earned by him prior to such termination, or (iii) to the extent otherwise specifically set forth herein. 8.5 For purposes of this Agreement: Cause means, when used in connection with the termination of Employee's employment with Employer (or the right to effect such termination): (i) Employee's commission of any crime involving moral turpitude or any felony; (ii) Employee's commission of an act of fraud or embezzlement upon Employer;
(v) Habitual drug, alcohol or other substance abuse by such Employee which impairs such Employee's performance of his duties hereunder; (vi) Failure by Employee to disclose material, adverse personal, business or financial information at the time of signing this Agreement which failure can materially and adversely affect the business and affairs of Employer. 8.6 Upon termination of Employee hereunder for any reason, such Employee shall forthwith deliver back to Employer any and all property belonging to Employer of every type and nature, including but not limited to, keys, documents, manuals, catalogs, correspondence, product samples and documentation of every type and nature including all copies or other duplications. 9 Non Competition: 9.1 Employee hereby agrees that the terms and conditions of the Covenant of Non Competition, executed as of the date hereof, shall be effective and binding upon him for the period of Five (5) years from the date of the termination of employment, or Five (5) years from the date of the closing of the Stock Acquisition Agreement, whichever is later. 9.2 Notwithstanding anything to the contrary appearing herein, Employee shall be deemed to be in breach hereof if he engages in the activities proscribed in the Covenant of Non Competition, or as may otherwise be agreed to in writing by the Employer. 10 Confidentiality. 10.1 Without the specific prior written consent of Employer, Employee shall , directly or indirectly, at any time after the date hereof, divulge to any person or entity, or use for his own direct or indirect benefit, any information confidential and/or proprietary to Employer concerning its business, affairs, products, services, assets, liabilities, revenues, condition (financial or otherwise), or prospects, customers or suppliers, including, without limitation, any data or statistical information of or with respect to Employer whether created or developed by Employer or on its behalf, or with respect to which Employee may have knowledge or access, it being the intent of the parties hereto to restrict Employee from disseminating or using any such information of or with respect to Employer or in Employer's trade; provided that nothing in this Section 10 shall prohibit such disclosure within the scope of Employee's employment or in the best interest of Employer. 11 Miscellaneous Provisions. 11.1 Attorneys' Fees, Etc. In the event that any suit in law or equity, or other formal proceeding is instituted by any party to this Agreement, to enforce, interpret or recover damages for breach of any provision or part of this Agreement, then the party prevailing in such action or other formal proceeding shall be entitled to recover, in addition to the costs of suit incurred by such prevailing party, such attorneys' fees as the tribunal presiding in such action or other formal proceeding shall deem to have been reasonably incurred by such prevailing party. 11.2 Binding Agreement. All terms, conditions and covenants to be observed and performed by the parties hereto shall be applicable to and binding upon their respective agents, servants, heirs, executor's administrators, affiliates, subsidiaries, associates, executives, successors and assigns. 11.3 Captions. All captions (paragraph headings) set forth in this Agreement are inserted only as a matter of convenience and for reference, and shall not be construed to define, limit, interpret, prescribe or describe the scope or intent of this Agreement, or any part hereof, nor affect its meaning, and shall not be considered for such purposes. 11.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which, when taken together, shall constitute one and the same document. 11.5 Fair Interpretation. The language appearing in all parts of this Agreement shall be construed, in all cases, according to its fair meaning and not strictly construed for or against either party hereto. 11.6 Governing Law. This Agreement shall be interpreted, construed and governed by, in accordance with and consistent with the laws of the State of New York, which shall apply in all respects, including statutes of limitations, to any disputes or controversies arising out of or pertaining to this Agreement. 11.7 Method of Giving Notices. Any notice required or permitted to be given hereunder shall be so given by registered or certified (return receipt) United States Postal Service mail, postage pre-paid, unless a notice transmitted in said manner is returned to the sender as unclaimed, refused or undeliverable, or unless the party giving notice has a good faith reason to believe that a notice transmitted in said manner will be so returned, in which case such notice may be given, at the sender's option, by personal service or by first class mail provided that such alternative method is effectuated by a disinterested party who attests thereto by a written declaration under penalty of perjury in a form authorizing service by mail. Any such notice shall be addressed to or delivered to the recipient as follows: In the case of: Addressed to: Employee: See Schedule E-2 Employer: IP Services ApS, Sønderbrogade 99 DK 8700 Horsens Denmark, +45 70 22 33 30, fax +45 70 22 33 31 In the event that notice is transmitted by U.S. Mail, such notice shall be deemed to have been received by the addressee and service thereof shall be effective, five (5) days following deposit thereof with the United States Postal Service, or upon actual receipt, whichever first occurs. A party may change the above-specified address by giving the other party notice of the new address in the manner above-prescribed for all notices. 11.9 Interdependence. It is understood and agreed that terms and conditions of this Agreement are dependent upon the terms and conditions of the other agreements executed and delivered between and among the parties, including, but not limited to, those agreements recited in herein, and any Schedules or Exhibits. Any right or liability conferred in or representation or warranty made under any one of the agreements shall be considered a right of liability or representation or warranty made under all, including, but not limited to rights of set-off and indemnification. IN WITNESS WHEREOF the parties hereto have subscribed their names or caused an authorized officer to subscribe this Agreement, effective on the date first written above.
Employer: IP Service ApS. By: ____________________________ __________________________ Name: Its: President Director Employee(s):
Employment Agreement Exhibit A Employee Health Care Policy [EMPLOYER TO PROVIDE]
Stock Acquisition Agreement Incorporated by Reference Exhibit C Territory
1. All counties and municipalities in the State of Delaware, and, Denmark whether listed here or not 2. The remainder of the United States of America 3. Europe 4. South America 5. Canada 6. Mexico
Schedule E-1
Schedule E-II
Exhibit G Buyers Legal Opinion Law Office of John Tartaglia John A. Tartaglia (NY, CT) Tel: (914) 273-0324 P.O. Box 929 Fax: (914) 273-1814Bedford, NY 10506-0929 Email: Target4optonline.net March 05, 2003 IP Service ApS Shareholders Sønderbrogade 99 DK 8700 Horsens Denmark +45 70 22 33 30 Gentlemen: We have acted as counsel to Advanced Oxygen Technologies, Inc. in connection with the execution and delivery of that certain Stock Acquisition Agreement (the Stock Acquisition Agreement) among Advanced Oxygen Technologies, Inc., and the shareholders listed on Exhibit A attached hereto (collectively, the Shareholders). This opinion is being provided pursuant to Section 6.2.2 of the Stock Acquisition Agreement. Capitalized terms used herein without definition shall have the meaning given to such terms in the Stock Acquisition Agreement (The Stock Acquisition Agreement, and the Ancillary Documents annexed thereto, are sometimes also hereinafter referred as the Transaction Documents). In connection with the delivery of this opinion, we have examined an executed copy of the Stock Acquisition Agreement (including the Schedules thereto) and the company records of Advanced Oxygen Technologies, Inc., a Delaware corporation (hereinafter AOXY). We also have examined such other agreements, instruments and documents and matters of law as we deemed relevant or necessary as a basis for the opinions expressed herein. As to questions of fact material to such opinions, we have relied, without independent verification, on certificates of the Shareholders, certificates of public officials and on the accuracy and completeness of the representations set forth in the Transaction Documents. Whenever our opinion with respect to the existence or absence of facts is indicated to be based upon our knowledge, or is qualified by known to us or words of similar import, we are referring solely to the conscious awareness the undersigned attorney, who devoted substantive attention to the Transaction Documents and the matters contemplated by such Documents.
Assumptions For purposes of rendering the opinions expressed herein, we have assumed (a) the genuineness of all signatures, (b) the completeness and authenticity of all document and records submitted to us as originals, (c) the conformity to original document and records of all Document and records submitted to us as certified, photocopies or conformed copies, (d) the due authorization, execution and delivery of the Transaction Documents by the parties thereto (other than the Shareholders), (e) the validity of all applicable statutes, ordinances, rules and regulations, and (f) the legal capacity of all natural persons executing Documents. Opinion Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that: AOXY is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has full corporate power and authority to conduct its business as and where its business is now conducted. To our knowledge, AOXY has full right, power, authority and capacity to execute and deliver this agreement and any other Document and instruments required to be executed and delivered hereunder, and to perform its obligations under the Transaction Documents executed and delivered in connection herewith. AOXYs execution and delivery of and performance under the Stock Acquisition Agreement has been duly authorized by all necessary corporate action of AOXY and the Stock Acquisition Agreement constitutes the valid and binding obligation of AOXY, enforceable against it in accordance with its terms, except as may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors rights generally and subject to general principles of equity. To our knowledge, the execution, delivery and performance of the Transaction Documents by AOXY, and the consummation of any of the transactions contemplated thereby, by AOXY will not (i) violate any constitution, statute, regulation, rule or other restriction of any government or government agency to which the AOXY is subject; (ii) violate or conflict with any provision of the Articles of Incorporation or Bylaws of AOXY; (iii) conflict with, or result in the breach or termination of, or constitute a default under, any agreement, commitment or other instrument, or any order, judgment or decree, to which AOXY is a party or by which it is bound; or (iv) permit the acceleration of the maturity of any indebtedness of, or any indebtedness secured by the property of, AOXY. To our knowledge, neither the shareholders nor the board of directors of AOXY have considered any action which would result in a change in AOXYs corporate form (including merger and dissolution) nor are there any facts or circumstances presently in existence on which basis a reasonable person would have reason to believe that such action would be likely to be taken during the time that AOXY is indebted to the Shareholders named in the Stock Acquisition Agreement, nor in the Promissory Note delivered thereunder nor in any other related agreement. To our knowledge, no consent, notification, approval or authorization of, or designation, declaration or filing with, any governmental authority or any other party is required in connection with the execution, delivery and performance of the Stock Acquisition Agreement and the Ancillary Documents on the part of AOXY. Qualifications We are members of the Bar of the State of New York, and we express no opinion as to any matters covered by any laws other than the laws of the State of New York and the federal laws of the United States of America. We do not express any opinion concerning any other law. Insofar as this opinion relates to the enforceability of any document or instrument, it is subject to (a) all applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, arrangement, avoidance and other laws and court decisions affecting the rights of creditors generally; (b) limitations imposed upon creditors generally by the constitutions of the United States of America, the State of Delaware and the State of New York and other jurisdictions in which any of AOXYs real or personal properties are located; (c) general principles of equity, including, without limitation, concepts of materiality and fair dealing (regardless of whether enforceability is considered in a proceeding at law or in equity or in arbitration); (d) our assumption that, in seeking enforcement of various agreements, the parties will comply with procedural requirements; (e) our assumption (without knowledge or investigation of any kind) that, with regard to the Transaction Documents governed by the laws of any jurisdiction other than the State of New York, the laws of such jurisdiction are identical in all respects to the laws of New York; (f) limitations on indemnification, contribution or exculpation provisions contained in the Transaction Document that encompass indemnification or exculpation or require contribution with respect to the negligence or misconduct of an indemnitor, or that are found contrary to public policy (whether under federal or state securities laws or regulations or otherwise); (g) limitations imposed by applicable law and court decisions on the enforcement of the remedy, waiver, and similar provisions of the Transaction Documents; (h) the possible unenforceability of provisions purporting to require arbitration of disputes; (i) the possible unenforceability of provisions prohibiting competition, the solicitation or acceptance of customers, of business relationships or of employees, the use or disclosure of information, or other activities in restraint of trade; (j) the possible unenforceability of provisions imposing increased interest rates or late payment charges upon delinquency in payment or default or providing for liquidated damages, or for premiums on prepayment, acceleration, redemption, cancellation or termination, to the extent any such provisions are deemed to be penalties or forfeitures; (k) the possible unenforceability of provisions that determinations by a party or a party's designee are conclusive; (l) the possible unenforceability of provisions that the provisions of an agreement are severable; (m) the effect of laws requiring mitigation of damages; (n) the possible unenforceability of provisions permitting the exercise, under certain circumstances, of rights without notice or without providing opportunity to cure failures to perform; and (o) the effect of agreements as to rights of set-off otherwise than in accordance with applicable law. Our opinion that a document is duly executed means that it has been signed on behalf of a company, corporation or trust by a person having the requisite company, corporate or trust authority to bind such entity, but does not mean that such execution is effective for any particular purpose (other than under New York law). We express no opinion as to the extent to which any provision of the Transaction Documents may be specifically enforced. We express no opinion as to (a) title to any real estate or personal property, (b) the adequacy or accuracy of any descriptions of AOXYs real or personal properties, (c) the operation or effect of, or compliance with, any laws, rules, or regulations relating to environmental matters or the occupancy and use of any real estate, (d) the validity or enforceability of any provision for recovery of attorneys fees, (e) the enforceability of any choice of law provisions, (f) the validity or enforceability of any provision purporting to determine the jurisdiction whose laws shall govern the interpretation, construction, and enforcement of the Transaction Documents, (g) the validity or enforceability of any provision waiving the right to a jury trial, (h) the validity or enforceability of any provision of the Transaction Documents purporting to limit the AOXYs liability for, or obligation to indemnify the AOXY against, the consequences of its own negligent acts or omissions, (i) the validity or enforceability of any provision purporting to preclude the modification of the Transaction Documents through conduct, custom, course of performance, or course of action or dealing or purporting to waive equitable rights or remedies, (j) the enforceability of self-help and non-judicial remedies provided to parties in the Transaction Documents in the event of default, without judicial process, (k) the validity or enforceability of any provision purporting to require the payment or reimbursement of fees, costs, expenses, or other amounts, or (l) the validity or enforceability of any provision purporting to require that all amendments to any Transaction Documents be in writing and executed by certain parties. This opinion letter is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated. This opinion letter speaks as of its date and we undertake no obligation to update this opinion based on events, changes in the law or other matters occurring after the date hereof or to provide any notice to any person or entity of any subsequent events, facts, or other matters which might affect the opinions given herein. This opinion letter is provided to you at your request and is to be limited in its use to reliance by AOXY in consummating the transactions contemplated under the Transaction Documents. Other than AOXY, no other person or entity may rely or claim reliance upon this opinion. We make no representations as to the sufficiency for your purposes of the points on which we have expressed an opinion. The foregoing opinions may not be reproduced or quoted in whole or in part or otherwise referred to, nor is this letter to be delivered to or filed with, any governmental agency or other person or entity, without our prior written consent. Sincerely, Law Office of John Tartaglia LLP John Tartaglia, Partner
Exhibit H Shareholders Legal Opinion Advanced Oxygen Technologies, Inc. c/o Robert E. Wolfe 133 West 13th Street New York, NY 10011 Gentlemen: We have acted as counsel to the Shareholders (as defined herein) in connection with the execution and delivery of that certain Stock Acquisition Agreement, Covenant of Non-Competition, the Employment Agreement, and the Ancillary Documents (collectively defined in the Stock Acquisition Agreement and defined collectively herein as the Purchase Agreement) among (the Buyer), and (collectively, the Shareholders). This opinion is being provided pursuant to Section 6.1.2.1 of the Stock Acquisition Agreement. Capitalized terms used herein without definition shall have the meaning given to such terms in the Purchase Agreement. In connection with the delivery of this opinion, we have examined an executed copy of the Purchase Agreement (including the Schedules thereto) the Employment Agreements and the Non-Competition Agreements, and the other ancillary purchase and sale documents (collectively, the Transaction Documents), and the company records of IP Services, ApS, a Danish corporation (IP Services). We also have examined such other agreements, instruments and documents and matters of law as we deemed relevant or necessary as a basis for the opinions expressed herein. As to questions of fact material to such opinions, we have relied on, and have independently verified, the certificates of the Shareholders, certificates of public officials and on the accuracy and completeness of the representations set forth in the Transaction Documents. Whenever our opinion with respect to the existence or absence of facts is indicated to be based upon our knowledge, or is qualified by known to us or words of similar import, we are referring solely to the conscious awareness of the particular attorneys who have devoted substantive attention to the Transaction Documents and the matters contemplated by such documents, whose identities are:______________________________________. Assumptions For purposes of rendering the opinions expressed herein, we have assumed (a) the genuineness of all signatures, (b) the completeness and authenticity of all documents and records submitted to us as originals, (c) the conformity to original documents and records of all documents and records submitted to us as certified, photocopies or conformed copies, (d) the due authorization, execution and delivery of the Transaction Documents by the parties thereto (other than the Shareholders), (e) the validity of all applicable statutes, ordinances, rules and regulations, and (f) the legal capacity of all natural persons executing documents. Opinion Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that: 1. IP Services is a corporation validly existing and in good standing under the laws of the State of Denmark and has all necessary corporate power to own, operate and lease its properties and assets and to carry on its business as now conducted. 2. Each Shareholder has all necessary authority to execute and deliver the Transaction Documents to which such Shareholder is a party and to perform his obligations under the terms of such Transaction Documents. 3. The Transaction Documents to which the Shareholders are a party have been duly executed and delivered by or on behalf of the Shareholders and constitute legal, valid and binding obligations of the Shareholders, enforceable against the Shareholders in accordance with their terms. 4. The Shareholders execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby will not: (i) violate State of Denmark; or (ii) provided that all consents and approvals identified in the Transaction Documents (including the schedules thereto) are obtained, violate any agreement or other instrument to which any Shareholder is a party or by which any Shareholder is bound or to which any Shareholders properties, assets or business is subject, or any judgment, decree or order. Qualifications We are members of the Bar of the State of Denmark, and we express no opinion as to any matters covered by any laws other than the laws of the State of Denmark and the federal laws of the United States of America. We do not express any opinion concerning any other law. Insofar as this opinion relates to the enforceability of any document or instrument, it is subject to (a) all applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, arrangement, avoidance and other laws and court decisions affecting the rights of creditors generally; (b) limitations imposed upon creditors generally by the constitutions of the United States of America, the State of Denmark and other jurisdictions in which any of IP Servicess real or personal properties are located; (c) general principles of equity, including, without limitation, concepts of materiality and fair dealing (regardless of whether enforceability is considered in a proceeding at law or in equity or in arbitration); (d) our assumption that, in seeking enforcement of various agreements, the parties will comply with procedural requirements; (e) our assumption (without knowledge or investigation of any kind) that the laws of any jurisdiction other than the State of Denmark are identical in all respects to the laws of Denmark; (f) limitations imposed by applicable law and court decisions on the enforcement of the remedy, waiver, and similar provisions of the Transaction Documents; (g) the possible unenforceability of provisions purporting to require arbitration of disputes; (h) the possible unenforceability of provisions prohibiting competition, the solicitation or acceptance of customers, of business relationships or of employees, the use or disclosure of information, or other activities in restraint of trade; (i) the possible unenforceability of provisions that determinations by a party or a party's designee are conclusive; (j) the possible unenforceability of provisions that the provisions of an agreement are severable; (k) the effect of laws requiring mitigation of damages; (l) the possible unenforceability of provisions permitting the exercise, under certain circumstances, of rights without notice or without providing opportunity to cure failures to perform. We express no opinion as to (a) title to any real estate or personal property, except the Shareholders title to their respective shares, (b) the adequacy or accuracy of any descriptions of IP Services real or personal properties, (c) the operation or effect of, or compliance with, any laws, rules, or regulations relating to environmental matters or the occupancy and use of any real estate, (d) the validity or enforceability of any provision for recovery of attorneys fees, (e) the enforceability of any choice of law provisions, (f) the validity or enforceability of any provision purporting to determine the jurisdiction whose laws shall govern the interpretation, construction, and enforcement of the Transaction Documents, (g) the validity or enforceability of any provision waiving the right to a jury trial, (h) the validity or enforceability of any provision purporting to preclude the modification of the Transaction Documents through conduct, custom, course of performance, or course of action or dealing or purporting to waive equitable rights or remedies, (i) the enforceability of self-help and non-judicial remedies provided to parties in the Transaction Documents in the event of default, without judicial process, (j) the validity or enforceability of any provision purporting to require the payment or reimbursement of fees, costs, expenses, or other amounts, or (k) the validity or enforceability of any provision purporting to require that all amendments to any Transaction Document be in writing and executed by certain parties. This opinion letter speaks as of its date and we undertake no obligation to update this opinion based on events, changes in the law or other matters occurring after the date hereof or to provide any notice to any person or entity of any subsequent events, facts, or other matters which might affect the opinions given herein. This opinion letter is provided to you at your request and is to be limited in its use to reliance by the Buyer in consummating the transactions contemplated under the Transaction Documents. Other than the Buyer, no other person or entity may rely or claim reliance upon this opinion. We make no representations as to the sufficiency for your purposes of the points on which we have expressed an opinion. The foregoing opinions may not be reproduced or quoted in whole or in part or otherwise referred to, nor is this letter to be delivered to or filed with, any governmental agency or other person or entity, without our prior written consent. Sincerely, Laue Traberg Schmidt By: Liabilities Exhibit L Excluded Assets/Excluded Liabilities N/A
Exhibit M Lease Contracts Exhibit N Service Agreement N/A Exhibit O ESCROW AGREEMENT W I T N E S S E T H: WHEREAS, Buyer and the Shareholders have entered into a Stock Acquisition Agreement, effective as of March 05, 2003, pursuant to which Buyer has agreed to acquire from the Shareholders One Hundred (100) Percent of the issued and outstanding capital stock of IP Service ApS (herein referred to as the Stock Acquisition Agreement). WHEREAS, the parties desire that the items and documents related to the Stock Acquisition Agreement and set forth on Exhibit B attached hereto (collectively or individually, the Escrow Items) be held in escrow by Escrow Agent pursuant to the terms of this Agreement, and Escrow Agent is willing to hold such items and documents subject to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein, in the Stock Acquisition Agreement, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereto, intending to be legally bound, agree as follows:
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first written above. Signatures: BUYER: Advanced Oxygen Technologies, Inc. By:________________________ Name:______________________ Title: ______________________
Hennistone Projects Limited By:________________________ Date: Name:______________________ Witness: Title: ______________________ Name: Logical Management UK Limited By:________________________ Date: Name:______________________ Witness: Title: ______________________ Name: Borkwood Developments Limited By:________________________ Date: Name:______________________ Witness: Title: ______________________ Name:
ESCROW AGENT: John Tartaglia
By: Name: Title
EXHIBIT B Escrowed Items relating to the Stock Acquisition Agreement EXHIBIT C Instructions for Delivery of Escrowed Items Upon the occurrence of the events specified in Section 2 of this Agreement, Escrow Agent shall deliver the following documents to the following parties: Buyer Shareholders
Exhibit P CONSULTING AGREEMENT This CONSULTING AGREEMENT (this Agreement), dated effective March 05, 2003, is by and between IP Service, AS, a Danish corporation (hereinafter referred to as Client), and , Crossfield, Inc., a New Jersey Corporation (hereinafter referred to as Consultant). Definitions and Interpretation. In addition to any other terms that may be defined elsewhere in this Agreement, the following shall govern the construction and interpretation hereof: The Board means and refers to the Board of Directors of Client. Consulting Year means and refers to a span of time which begins on the Closing Date (defined in the Stock Acquisition Agreement of even date herewith Exhibit B (the Purchase Agreement)), in any calendar year during the term of the Consulting (as defined herein) and which ends at midnight on the day immediately preceding the same date in the subsequent calendar year. Whenever in this Agreement there appears the locative adverbs herein, hereunder, hereinbelow, hereinabove, or any substantially similar adverb, the same shall be deemed to refer to this Agreement in its entirety and not to any specific article, section, subsection, subpart, paragraph or subparagraph. Recitals. The contractual relationship created by operation of this Agreement is premised upon the following facts: Pursuant to the Stock Acquisition Agreement, AOXY has purchased One Hundred (100) of the issued and outstanding shares of capital stock of IP Service A/S (the Company), which is engaged in the business of Network Security and software security systems (the Business). The Board has determined that: Consultant has substantial experience as a treasurer and financial consultant of the Company, by virtue of which Consultant possesses skills, ability and background in and knowledge of Client's business and the industry in which it is engaged, which are essential to the best interests of Client. In consideration of the mutual duties created herein and the mutual benefits conferred hereby, the adequacy of which is hereby acknowledged, each of the undersigned voluntarily enters into this Agreement. Term of Consulting; Effect of Expiration of Term. Client hereby retains Consultant and Consultant hereby accept the below-specified Consulting for a period of four (4) Consulting Years. After expiration of the fourth Consulting Year, such Consulting shall automatically become terminable at the discretion of either party hereto with or without Cause (as defined herein). Consultant's Full Time Duties. Consultant shall render services for the Company as follows (the Consulting): Consultant will oversee and supervise the regulatory and filing operations of the Company, including but not limited to: creating, reviewing and filing regulatory documents of the Company and of its Parent, AOXY, consulting with counsel, and accountants, and performing duties in accordance with the policies established by the Board, and consistent with Client's policies as adopted by the Board (and as same may be hereafter amended). Nothing in this Agreement shall be interpreted to prohibit or restrict the activities by Consultant not related to the Consulting; provided, however, that without the prior approval of Client, which consent shall not be unreasonably withheld, Consultant shall not participate in any other business activities during the term of this Agreement on behalf of any person, firm, company or entity (in any capacity, including but not limited to that of consultant, agent, officer, director, consultant or investor), whether for profit or not-for-profit, which is engaged in any business that is competitive with Client's business; Unless and until otherwise determined by the Board, Consultant shall report directly to the general manager of Client. Consulting Fee; Subsequent Fees. Until this Agreement is terminated, Client shall compensate Consultant for Consultant's services hereunder as follows: Commencing with the Closing Date, as defined in the Purchase Agreement, Consultant shall receive an annual consulting fee (Consulting Fee) Forty Two Thousand US Dollars ($42,000.00) for services rendered hereunder; provided, however, that the Consulting Fee may be increased periodically during the term of this Agreement if, in the judgment of the president of the Client, such increase is justified based upon the growth of the Business. If, during any calendar year during the term of this Agreement the gross revenues for the Company for such year exceeds the amounts defined below, the Consultant shall receive additional fees (the Subsequent Fees) for such calendar year, equivalent to an amount as defined on Schedule II for each Consultant. Any such Subsequent Fees shall be payable thirty (30) days following the end of the subject calendar year. During the term of the Consulting hereunder, Consultant shall be entitled to receive no benefits. Reimbursement of Business Expenses Incurred by Consultant. Client shall reimburse Consultant for reasonable out-of-pocket expenses incurred and paid by Consultant during the term of the Consulting hereunder in connection with the conduct of Client's business and/or the discharge of Consultant's duties including, for purposes of example but not as a limitation, travel expenses, food and lodging while away from home subject, however, to the prior approval of Client. Client's obligations to reimburse Consultant for any expenses specified in this Agreement shall not arise unless and until Consultant has submitted to Client written vouchers evidencing such expenses in a form as may be prescribed from time to time by the rules of state and federal tax authorities. Obligations Not Conditioned On Or Related To Others. a) Subject to this Section Client may terminate this Agreement only for Cause. For purposes of this Agreement, Cause means: (i) Consultant's commission of any crime involving moral turpitude or any felony; (ii) Consultant's commission of an act of fraud or embezzlement upon Client; (iii) Willful misconduct, gross negligence or willful failure by Consultant to perform his duties to Client or material breach of this Agreement, after Consultant has been given written notice of such misconduct, negligence or failure to perform or breach and a reasonable time to cure such problem; (iv) Habitual drug, alcohol or other substance abuse by Consultant; (v) Failure by Consultant to disclose material, adverse personal, business or financial information at the time of signing this Agreement which failure can materially and adversely affect the business and affairs of Client.
Upon termination of this Agreement hereunder, Consultant shall forthwith deliver back to Client any and all property belonging to Client of every type and nature, including but not limited to, keys, documents, manuals, catalogs, correspondence, product samples and documentation of every type and nature, including all copies and duplications, and Client shall promptly pay any portion of the Consulting Fee (as adjusted pursuant to Section 5 hereof, if applicable) and Subsequent Fees due and owing to Consultant as of such termination.
Non-Employment. This Agreement does not constitute an employment agreement, contract, or obligation and further does not constitute employment by Client, and Consultant shall operate as, and have the status of, independent contractor. Consultant possesses skills, tools, equipment, and services independent of Client. The parties hereto mutually understand and agree that: The Client shall not be required to withhold tax or pay any FICA tax or unemployment, workers' compensation or other insurance on behalf of Consultant. Consultant will complete all necessary tax reporting forms with the Client and the Internal Revenue Service for all revenue derived by the services performed in accordance with this Agreement, if any.
Confidentiality. Without the specific prior written consent of Client, Consultant shall not, directly or indirectly, at any time after the date hereof, divulge to any person or entity, or use for his own direct or indirect benefit, any information confidential and/or proprietary to Client concerning its business, affairs, products, services, assets, liabilities, revenues, condition (financial or otherwise), or prospects, customers or suppliers, including, without limitation, any data or statistical information of or with respect to Client whether created or developed by Client or on its behalf, or with respect to which Consultant may have knowledge or access, it being the intent of the parties hereto to restrict Consultant from disseminating or using any such information of or with respect to Client which is at the time of such use or dissemination unpublished and not readily available or generally known to the public or in Client's trade; provided that nothing in this Section 11 shall prohibit such disclosure within the scope of Consultant's Consulting or in the best interest of Client. Notwithstanding the foregoing, nothing contained herein shall in any way restrict or impair Consultant's right to use, disclose or otherwise deal with any information or data which Consultant can show it was received by him as a matter of lawful right after the time of disclosure from a third party who did not acquire it from Client or any of its Affiliates under an obligation of confidence and that without breach of any obligation Consultant is free to disclose it to others. Miscellaneous Provisions. Attorneys' Fees, Etc. In the event that any suit in law or equity, or other formal proceeding is instituted by any party to this Agreement, to enforce, interpret or recover damages for breach of any provision or part of this Agreement, then the party prevailing in such action or other formal proceeding shall be entitled to recover, in addition to the costs of suit incurred by such prevailing party, such attorneys' fees as the tribunal presiding in such action or other formal proceeding shall deem to have been reasonably incurred by such prevailing party. Entire Agreement. This Agreement, and the said policies, shall be construed as one contract, such that the two together shall be deemed to set forth all the terms, conditions and covenants of the agreement existing between Client and Consultant. In the event of any conflict between the provisions of this Agreement and said policies, the terms of this Agreement shall prevail to the extent permitted by law. Binding Agreement. All terms, conditions and covenants to be observed and performed by the parties hereto shall be applicable to and binding upon their respective agents, servants, heirs executor's administrators, affiliates, subsidiaries, associates, executives, successors and assigns. Captions. All captions (paragraph headings) set forth in this Agreement are inserted only as a matter of convenience and for reference, and shall not be construed to define, limit, interpret, prescribe or describe the scope of intent of this Agreement, or any part hereof, nor affect its meaning, and shall not be considered for such purposes. Counterparts. This Agreement may be executed in any number of counterparts, including by means of facsimile signatures, each of which shall be deemed an original but all of which, when taken together, shall constitute one and the same document. Fair Interpretation. The language appearing in all parts of this Agreement shall be construed, in all cases, according to its fair meaning and not strictly construed for or against either party hereto. Governing Law. This Agreement shall be interpreted, construed and governed by, in accordance with and consistent with the laws of the State of New York, which shall in all respects, including statutes of limitations, to any disputes or controversies arising out of or pertaining to this Agreement. Method of Giving Notices. Any notice required or permitted to be given hereunder shall be so given by registered or certified (return receipt) United States Postal Service mail, postage pre-paid, unless a notice transmitted in said manner is returned to the sender as unclaimed, refused or undeliverable, or unless the party giving notice has a good faith reason to believe that a notice transmitted in said manner will be so returned, in which case such notice may be given, at the sender's option, by personal service or by first class mail provided that such alternative method is effectuated by a disinterested party who attests thereto by a written declaration under penalty of perjury in a form authorizing service by mail. Any such notice shall be addressed to or delivered to the recipient as follows: In the case of: Addressed to: Consultant: Crossfield, Inc. 133 W 13th St, Suite 5 New York, NY 10011 or Consultants Counsel: Law Office of John Tartaglia P.O. Box 929 Bedford, NY 10506-0929 Tel) 914-273-0324 Fax) 914-273-1814 Client : IP Services ApS, Sønderbrogade 99 DK 8700 Horsens Denmark, +45 70 22 33 30, fax +45 70 22 33 31 In the event that notice is transmitted by U.S. Mail, such notice shall be deemed to have been received by the addressee and service thereof shall be effective, five (5) days following deposit thereof with the United States Postal Service, or upon actual receipt, whichever first occurs. A party may change the above-specified address by giving the other party notice of the new address in the manner above-prescribed for all notices. Severability. In the event that any term, provision, clause, article, condition or other portion of this Agreement is determined to be invalid, void or unenforceable by a forum of competent jurisdiction, the same shall not affect any other term, provision, clause, article, condition or other portion hereof and the remainder of this Agreement shall remain in full force and effect, as if such invalid, void or unenforceable term, provision, clause, article, condition or other portion of this Agreement did not appear herein. Interdependence. It is understood and agreed that terms and conditions of this Agreement are dependent upon the terms and conditions of the other agreements executed and delivered between and among the parties, including, but not limited to, those agreements recited in herein, and any Schedules or Exhibits. Any right or liability conferred in or representation or warranty made under any one of the agreements shall be considered a right of liability or representation or warranty made under all, including, but not limited to rights of set-off and indemnification. IN WITNESS WHEREOF the parties have subscribed their names or caused an authorized officer to subscribe this Agreement, effective on the date first written above. Consultant: Client : IP Service, AS ____________________________ ____________________________ Crossfield, Inc. By: Kurt Sondergard, President Robert E. Wolfe, President
Consulting Agreement Exhibit B Stock Acquisition Agreement Incorporated by reference Exhibit C Territory 1. All Counties and municipalities in the State of Delaware, and Denmark whether listed here or not. 2. The remainder of the United States of America. 3. Europe. 4. South America. 5. Canada. 6. Mexico. Schedule II Fees Schedule
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Exhibit Q Subsidiaries NONE
Exhibit Q Subsidiaries NONE
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