Document:

Shareholders' Agreement

 Exhibit 10.31 
  
 SHAREHOLDERS’ AGREEMENT 
  
 For 
  
 DATEC (PNG) PTY LIMITED 
  
 Between 
  
 STEAMSHIPS PTY LIMITED 
 (“Steamships”) 
  
 And 
  
 KELTON INVESTMENTS LIMITED 
 (“Kelton”) 
  
 Gadens 
 Solicitors & Attorneys 
 Investmen Haus 
 Douglas Street 
 PORT MORESBY 
  
 Telephone: 211033

 Facsimile: 211885 
  
 Document: PFD5241 

 CONTENTS 
  

					
	 1.
	  	 Interpretation
	  	1
			
	 2.
	  	 Memorandum and Articles of Association
	  	3
			
	 3.
	  	 Name of Joint Venture Company
	  	3
			
	 4.
	  	 Approval of the National Investment and Development Authority
	  	3
			
	 5.
	  	 Term
	  	4
			
	 6.
	  	 Intention of the Parties
	  	4
			
	 7.
	  	 Equality of the Parties
	  	5
			
	 8.
	  	 Lease of Properties
	  	5
			
	 9.
	  	 General Management
	  	5
			
	 10.
	  	 Directors
	  	9
			
	 11.
	  	 Meetings of Directors
	  	10
			
	 12.
	  	 Inspection of Records of the Company
	  	12
			
	 13.
	  	 Profits and Dividends
	  	12
			
	 14.
	  	 Directors’ Fees
	  	13
			
	 15.
	  	 Transfers of Shares to Associates
	  	13
			
	 16.
	  	 Guarantees and Assurances
	  	14
			
	 17.
	  	 Company Secretary
	  	15
			
	 18.
	  	 Legal Costs and Statutory Charges
	  	15
			
	 19.
	  	 Auditors and Bankers
	  	16
			
	 20.
	  	 Confidentiality
	  	16
			
	 21.
	  	 Non-Competition
	  	17
			
	 22.
	  	 Supply of Goods and Services to the Company
	  	19
			
	 23.
	  	 Consensus
	  	20
			
	 24.
	  	 Disputes
	  	20
			
	 25.
	  	 Termination
	  	21
			
	 26.
	  	 Assignment
	  	23
			
	 27.
	  	 Status of this Agreement
	  	23
			
	 28.
	  	 Governing Law
	  	23
			
	 29.
	  	 General
	  	24
			
	 30.
	  	 Interdependence of Agreements
	  	24
			
	 31.
	  	 Loans
	  	24
			
	 32.
	  	 Notices
	  	24
			
	 33.
	  	 Authority to sign
	  	25

 THIS AGREEMENT is made on the date specified in Item 1.  
  
 PARTIES 
  

	1.	The party named in Item 2 (“Steamships”). 

  

	2.	The party named in Item 3 (“Kelton”). 

  

	3.	The party named in Item 4 (the “Company”) 

  

	4.	The party named in Item 10 (the “Signatory”)  

  
 RECITES:- 
  

	A.	The total issued shares of the Company is as specified in Item 5 and the parties hereto constitute all the shareholders of the Company. Particulars of their respective
shareholdings are specified in Item 6. 

  

	B.	The Company has acquired the assets and goodwill of the business called “Computer 2000” (the “Assets”) from Steamships pursuant to the Agreement for Sale of
Business described in Item 8 (the “Agreement for Sale of Business”). 

  

	C.	The parties being the holders of the whole of the issued shares in the capital of the Company have agreed to enter into this Shareholders’ Agreement for the purposes of the
proper management of the Company. 

  
 THE PARTIES AGREE AS FOLLOWS: 
  

	1.	INTERPRETATION 

  
 In this Agreement the following terms shall have the following meanings unless otherwise specified in this Agreement or inconsistent with the context in
which the terms are used:- 
  

	 	(a)	“Steamships Shares” means the shares held by Steamships or its Associates. 

  

	 	(b)	“Kelton Shares” means the shares held by Kelton or its Associates. 

  

	 	(c)	“Associate” shall mean a related company as defined in the Act and in the case of Kelton shall include but is not limited to Generic Technology Limited and Kelton
Corporation Limited (a company incorporated in Fiji). 

	 	(d)	“the Act” shall mean the Companies’ Act Chapter 146 (as amended) of the Revised Laws of Papua New Guinea including any amendment to or re-enactment thereof.

  

	 	(e)	“Directors” and “Board of Directors” shall mean the whole of the Board of Directors of the Company from time to time. 

  

	 	(f)	“Financial Year” shall mean each period of twelve (12) months ending on 30 June each year. 

  

	 	(g)	“General Manager” shall mean the person appointed as the principal executive employed by the Company pursuant to the provisions of this Agreement.

  

	 	(h)	“Memorandum and Articles of Association” shall mean the Memorandum and Articles of Association of the Company which are set forth in Annexure “B” hereto and
“Memorandum” and “Articles” shall have a corresponding meaning. 

  

	 	(i)	“the Products” shall mean those products listed in Annexure “A” hereto and any alterations or modifications thereto as may be agreed from time to time.

  

	 	(j)	“Significant Interest” means a shareholding greater than 10%. 

  

	 	(k)	The singular shall include the plural and vice versa and one gender shall include all other genders. 

  

	 	(1)	“in writing” shall include reproduction of words in a physical form and shall include words transmitted by telex or facsimile transmission. 

  

	 	(m)	Headings are for convenience of reference only and shall not affect the meaning nor constitute any part of this Agreement. 

  

	 	(n)	A reference to an Item is a reference to an Item in the Schedule. 

  

 2. 

	2.	MEMORANDUM AND ARTICLES OF ASSOCIATION  

  
 The parties hereto shall procure the Company to change its memorandum and articles of association to adopt the Memorandum and Articles of Association set
forth in Schedule “B” hereto at the first available opportunity. 
  

	3.	NAME OF JOINT VENTURE COMPANY 

  
 If the name of the Company is not the name specified in Item 9 at the date of execution hereof the parties hereto hereby agree to pass a special
resolution at an Extraordinary General Meeting of Shareholders of the Company or to procure the passing of such a resolution to change its name to that name and the parties shall furnish all necessary consents to such change of name to the Registrar
of Companies in Papua New Guinea and shall provide such other consents as may be required by the authorities in Papua New Guinea to accomplish the change of name abovementioned. 
  

	4.	APPROVAL OF THE NATIONAL INVESTMENT AND DEVELOPMENT AUTHORITY 

  

	 	(a)	This Agreement shall be conditional upon the approval of the National Investment and Development Authority of Papua New Guinea (NIDA) to the establishment of the Company and the
acquisition by it of the Assets and the conduct of the business on conditions reasonably acceptable to each of the parties. 

  

	 	(b)	If the conditions of approval imposed by NIDA are not reasonably acceptable either party may terminate this Agreement by giving notice in writing to the other party providing such
notice is given within fourteen (14) days of receiving a final offer for registration of the Company by NIDA. 

  

	 	(c)	 In the event that an offer for registration on terms reasonably acceptable to each of the 

  

 3. 

	 	 
parties is not received and accepted within six (6) months of the date of this Agreement then either party may rescind this Agreement and the Agreement
for Sale of Shares specified in Item 11 whereupon the shares held by Kelton will be transferred to Steamships and all moneys paid by Kelton will be repaid to Kelton together with interest thereon at fifteen percent (15%) per annum.

  

	5.	TERM 

  
 The term of this Agreement shall commence on the date hereof and shall continue for so long as the parties or their respective Associates are the shareholders of the Company or is otherwise terminated in accordance
with the provisions contained in this Agreement. 
  

	6.	INTENTION OF THE PARTIES 

  
 The principal objective of the parties in this Agreement is for the Company to acquire the Assets for the purposes of marketing and selling high quality
goods being the Products for the benefit of the people of Papua New Guinea AND in furtherance of that objective Steamships will bring to the Company:- 
  

	 	(a)	expertise and knowledge of the Papua New Guinea markets, the customs of the people and its ability to service such people; 

  

	 	(b)	training programmes for the training of citizens of Papua New Guinea; 

  
 AND in furtherance of that objective Kelton will bring to the Company:- 
  

	 	(c)	expertise in management of a company in the business of and marketing selling and servicing the Products. 

  

	 	(d)	knowledge expertise and experience in the marketing, selling, installation and servicing of computer software and hardware; 

  

 4. 

	 	(e)	expertise and know how in the distribution of the Products and the benefits of international research and development in respect of goods of the nature of the Products utilizing
international contacts and associations available to Kelton and/or any Associate of Kelton. 

  

	7.	EQUALITY OF THE PARTIES 

  
 The parties hereto hereby acknowledge that each party holds 50% of the issued capital of the Company and that the parties are equal so that: 

 

	 	(a)	one party shall have the same number of votes as the other party at meetings of shareholders or meetings of Directors; 

  

	 	(b)	each party will have the right to appoint the same number of Directors; 

  

	 	(c)	each party will bear equally the ultimate responsibility for the management funding and financial support of the Company with a view to achieving a first class Company of
international standard and competitiveness. 

  

	8.	LEASE OF PROPERTIES 

  
 The Company shall subject to the approval of the Directors lease from the party named in Item 7 certain premises described in the Memoranda of Lease
annexed and marked “C”, “D”, “E” and “F” (the “Leases”). The Company shall execute the Leases upon the same being tendered to the Company by the Lessor. 
  

	9.	GENERAL MANAGEMENT 

  

	 	(a)	The General Manager shall be a person nominated by Kelton to the Board of Directors for approval and appointment and such approval shall not be arbitrarily nor unreasonably
withheld. 

  

	 	(b)	The Directors may terminate the employment of the General Manager by dismissing such person with or without notice subject to the terms of the employment contract of the General
Manager. 

  

 5. 

	 	(c)	The management of the technical operations including the marketing sale installation and service of the Products, the staffing of the personnel and the performance of all things
reasonably necessary for the efficient and proper running of the Company in accordance with first class international standard facilities shall be the responsibility of the General Manager under the directions of the Board as directed by the
Chairman 

  
 This responsibility includes but is
not limited to:- 
  

	 	(i)	responsibility for the profitability of the Company; 

  

	 	(ii)	responsibility for industrial relations and personnel policy and decisions;] 

  

	 	(iii)	purchasing, pricing, stocking policies and procedures; 

  

	 	(iv)	the marketing of the Products including the selection, appointment and discharge of distributors, sales agencies, stockists and representatives of any kind;

  

	 	(v)	the determination of sales promotions schemes including the selection, appointment and discharge of advertising agencies; 

  

	 	(vi)	the introduction, development and maintenance of financial reporting and budgetary control procedures and the establishment and maintenance of suitable books of control and
accounts; 

  

	 	(vii)	the acceptance and banking of all monies receivable; 

  

	 	(viii)	 the furnishing to the Directors, on a monthly basis of a balance sheet, profit 

  

 6. 

	 	 
and loss statement and Management Report, cash flow forecast for the next month, quarter or year end and such other financial information as may be requested
by the Board from time to time; 

  

	 	(ix)	the preparation and furnishing to the Board of an annual trading budget capital expenditure budget and cash flow for the forthcoming financial year and the preparation of balance
sheet and profit and loss statements for the past financial year; 

  

	 	(x)	the determination for approval by the Board of the management structure of the Company and any changes from time to time required thereto; 

  

	 	(xi)	the appointment of senior and other personnel to be employed by the Company; 

  

	 	(xii)	the termination of employment of senior and other personnel (except that the financial controller for the Company shall be appointed by the Board of Directors);

  

	 	(xiii)	in addition to the responsibilities of the General Manager specified in this Agreement, the Board may direct the General Manager to perform specific tasks from time to time;

  

	 	(xiv)	the preparation and submission of tenders and feasibility studies. 

  

	 	(d)	The parties agree that the General Manager will report to the Board of Directors monthly or as and when required by the Board of Directors. 

  

	 	(e)	 At the first meeting of the Board of Directors the General Manager shall be appointed and acknowledge his responsibilities and that he 

  

 7. 

	 	 
accepts the terms of this Agreement and that appointment and acknowledgement will be recorded in the minutes of that Board Meeting.

  

	 	(f)	The General Manager shall not implement any of the following without prior approval of the Board: 

  

	 	(i)	Any Capital Expenditure for over Five hundred Kina (K500.00). 

  

	 	(ii)	Completion of any lease to the Company. 

  

	 	(iii)	Any disposal of assets other than stock with a value in excess of Five hundred Kina (K500). 

  

	 	(iv)	Increase in the maximum amount of any of the Company’s credit facilities. 

  

	 	(v)	Any guarantee or indemnity or buy back arrangement to be given by or entered into by the Company other than standard indemnities in the ordinary course of business to customers of
the Company for purchases of Products from the Company. 

  

	 	(vi)	Any decision which would lead to the creation of the mortgage charge or lien or other encumbrance over any of the Company’s assets. 

  

	 	(vii)	Any decision to deal or trade in any goods not within the description of the Products. 

  

	 	(viii)	Any acquisition or disposal of any shares in any other company. 

  

	 	(ix)	Any contract binding the Company for a period in excess of twelve (12) months. 

  

	 	(x)	Submitting any tender or quotes for contracts for Five hundred Thousand Kina (K500,000) or more. 

  

 8. 

 The above limits are to be reviewed by the parties on the first anniversary hereof. 
  

	 	(g)	Should the General Manager embark on a course of action or activity without the prior approval of the Board of Directors any Director may advise the Chairman whereupon the Chairman
shall require the General Manager to cease and desist from or otherwise suspend the said course of action or activity until the Board of Directors otherwise determines. 

  

	10.	DIRECTORS 

  

	 	(a)	The Directors shall be equally responsible for the management and conduct of the affairs of the Company and no shareholder shall have a right to recover from another shareholder any
damages resulting from any act or omission of any Director when acting as a Director or an employee of the Company but nothing herein contained shall in any way negate any right of the Company against any such Director. 

  

	 	(b)	At the first meeting of Directors of the Company the Chairman of Directors shall be elected. The first Chairman of Directors shall be nominated by Steamships and shall serve as
Chairman for one year. In each subsequent year the Chairman shall be nominated and elected alternatively by Kelton and Steamships respectively. 

  

	 	(c)	 At the first meeting of the Directors of the Company each Director shall declare to the meeting whether he has been appointed by Steamships or Kelton. He shall also
declare to the meeting any interest within the meaning of the Act or pursuant to the Articles of Association of the Company. Following any change in Directors each Director at the first meeting 

  

 9. 

	 	 
of Directors following his appointment will disclose to that meeting the shareholder he represents and will declare any interest within the meaning of the
Act or pursuant to the Articles of Association. 

  

	 	(d)	No person shall be eligible for nomination as a Director if: 

  

	 	(i)	he is disqualified pursuant to the Articles of Association of the Company or the Act from acting as a Director; 

  

	 	(ii)	he has at any time been removed otherwise than by resignation as a Director of the Company; 

  

	 	(iii)	he has been found guilty by a court of competent jurisdiction in Papua New Guinea of an offence under the Act. 

  

	11.	MEETINGS OF DIRECTORS 

  

	 	(a)	The Chairman of Directors shall be the Chairman of each meeting of Directors. At the first Board Meeting each year he shall appoint a Deputy Chairman and if the Chairman of
Directors is unable to attend a meeting of Directors the appointed Deputy Chairman shall be Chairman of that meeting including any adjournment thereof. 

  

	 	(b)	Directors’ meetings shall be called in accordance with the Articles of Association at least four (4) times a year and in respect to each Directors’ meeting the following
shall apply: 

  

	 	(i)	 not less than fourteen (14) days notice shall be give to each Director such notice to be transmitted by telex and facsimile to each Director care of the relevant
telex and facsimile numbers specified in Item 2 or Item 3 (as the case may be) nominating a place and time when the 

  

 10. 

	 	 
meeting will be held and in addition a copy of each telex and facsimile shall be sent by prepaid registered mail to the address specified in Item 2 or
Item 3 (as the case may be); 

  

	 	(ii)	each meeting will be held in Papua New Guinea unless the parties hereto agree to an alternative venue; 

  

	 	(iii)	the notice of meeting shall set forth an agenda of business to be conducted at the meeting which shall include the minutes of the previous meeting; 

  

	 	(iv)	any Director may appoint any other Director or person to act on his behalf at such meeting subject to that appointment being in writing and handed to the Chairman of the meeting
before or at the commencement of the meeting and the Director or person so appointed shall be entitled to vote on behalf of the person so appointing him; 

  

	 	(v)	In the event an alternative Director is not appointed the sole Director representing either of Steamships or Kelton will automatically have an additional vote for the purpose of the
meeting. 

  

	 	(c)	 Subject to this Agreement the mandatory quorum for a meeting of Directors shall be at least one of the Directors representing each of Steamships and Kelton. If
within one hour from the time appointed for the meeting of Directors a quorum is not present the meeting shall stand adjourned for a further fourteen (14) days to the same day in the relevant week at the same time and place 

  

 11. 

	 	 
and if at the adjourned meeting no quorum is present the Directors shall conduct the meeting by facsimile transmission and resolutions confirmed by telex and
registered mail. As between the parties no resolution of Directors shall be valid unless the provisions of this clause are strictly complied with. 

  

	 	(d)	The Chairman of Directors shall not have a casting vote at a meeting of the Directors or at a meeting of shareholders. 

  

	 	(e)	Subject to the provisions of this Agreement in respect to Directors appointed by Steamships and subject to the provisions of this Agreement in respect to Directors appointed by
Kelton the parties shall not during the term of this Agreement seek the removal from office of any Director other than by consensus with the other shareholder. 

  

	12.	INSPECTION OF RECORDS OF THE COMPANY 

  
 The Directors and the parties to this Agreement shall have a right to inspect the premises and records and all other documents of the Company at any time
upon reasonable notice such access not to be unreasonably withheld. 
  

	13.	PROFITS AND DIVIDENDS 

  

	 	(a)	 In the first twelve calendar months after the commencement of employment by the General Manager the holders of the Steamships Shares shall be entitled to Sixty
percent (60%) of the dividends of the Company and the holders of the Kelton Shares shall be entitled to forty percent (40%). Until the commencement of employment of the General Manager and in any subsequent year in which dividends are declared
and paid the Steamships Shares and the Kelton Shares shall 

  

 12. 

	 	 
participate equally in the profits and dividends of the Company. 

  

	 	(b)	Unless otherwise resolved by the Directors the Company shall declare dividends each year to the total minimum value of eighty percent (80%) of the after-tax profits of the
Company. In the event of dispute as to the profits available for payment of dividend such dispute shall be referred to the Company’s Auditors for determination and the determination of the Company’s Auditors shall be final and binding upon
the parties and the decision of the Company’s Auditors shall be that of an expert and not an arbitrator. 

  

	14.	DIRECTORS’ FEES 

  

	 	(a)	Each Director shall be entitled to the same Director’s fees as each other Director and the fees shall be as determined by the Board of Directors from time to time.

  

	 	(b)	Each Director shall be fully reimbursed for all reasonable expenses incurred in attending Board meetings. 

  

	15.	TRANSFERS OF SHARES TO ASSOCIATES 

  
 Subject to the receipt of written confirmation from NIDA that NIDA will not as a result of or consequent upon the transfer of shares require the Company
to review the terms of the registration of the Company then: 
  

	 	(a)	All or any of the shares held by Steamships may be transferred to an Associate of Steamships. 

  

	 	(b)	All or any of the shares held by Kelton may be transferred to an Associate of Kelton. 

  

	 	(c)	 If a transfer of shares is proposed which complies with Clause 15 (a) or 15 (b) and complies also with Clause 15 (d) then the other shareholder in
the Company shall give its written 

  

 13. 

	 	 
approval to the transfer and shall instruct the Directors representing it to vote for the registration of the share transfer. 

 

	 	(d)	As condition precedent to the giving of that written approval, however: 

  

	 	(i)	there must first be prior consultation between the proposing transferor and the other shareholder in the Company; 

  

	 	(ii)	the prior written consent of the other shareholder must be obtained (but that consent is not to be unreasonably or arbitrarily withheld); 

  

	 	(iii)	the proposed transferee must sign a binding Deed of Covenant with the other shareholder in the Company, in a form reasonably acceptable to it, to the effect that the transferee
will, upon registration of the share transfer, accede to and become fully bound by the provisions of this Agreement. That Deed of Covenant shall contain a clause requiring the transferee to comply with the same procedure and obtain a comparable Deed
of Covenant in the event of a further disposition of the shares by the transferee. 

  

	16.	GUARANTEES AND ASSURANCES 

  

	 	(a)	Steamships and Kelton each acknowledge that it is appropriate that each should participate in giving assurances to banks finance companies and such other companies or organisations
in Papua New Guinea which provide credit facilities to the Company. 

  

 14. 

	 	(b)	Both parties acknowledge, however: 

  

	 	(i)	that it is desirable to so structure the credit facilities so that no such assurances are required; 

  

	 	(ii)	that if assurances are required, then it is preferable that each should give assurances limited to fifty per centum (50%) of the total amount, if that can be achieved and each
party shall use its best endeavours to put itself in a position to give such an assurance; 

  

	 	(iii)	that if separate assurances are given then there should be cross indemnities between the parties, to the intent that the liability of each party as between themselves under each
separate assurance shall not exceed fifty per centum (50%) of the total sum so assured; 

  

	 	(iv)	that any assurances given should, in any event, be by way of comfort letter rather than by way of guarantee or indemnity. 

  

	 	(c)	Steamships and Kelton agree to co-operate with one another to give effect to the terms of this Clause. 

  

	17.	COMPANY SECRETARY 

  

	 	(a)	The Secretary and Public Officer of the Company shall be nominated by Steamships. No voting power shall attach to the Offices of Secretary or Public Officer.

  

	 	(b)	The Company Seal will only be used with the written permission of the shareholders. 

  

	18.	LEGAL COSTS AND STATUTORY CHARGES 

  
 All legal costs and statutory charges incurred in connection with the incorporation of the Company the drawing and engrossing of this Agreement and such
other documents required for the joint venture and the 

  

 15. 

 
establishment of the Company and any other expenses incurred by either Steamships or Kelton on the Company’s behalf relative to the establishment of the
Company including obtaining staff work permits shall be borne by the Company. Payment of all such costs shall be subject to the approval of the Board of Directors. 
  

	19.	AUDITORS AND BANKERS 

  

	 	(a)	Subject to their consent the Company shall appoint as auditors Messrs Coopers & Lybrand of Papua New Guinea. 

  

	 	(b)	The Company shall use generally accepted accounting principles consistently applied having regard to the nature of the business of the Company. 

  

	 	(c)	The Company shall engage as its bankers Westpac Bank (PNG) Limited. 

  

	20.	CONFIDENTIALITY 

  

	 	(a)	Each of the parties shall keep confidential all matters relating to the business of the Company other than those matters required to be disclosed by any law of Papua New Guinea.
Neither party shall make any public announcement or release any publicity in connection with this Agreement or the Company without the prior consent of the other provided however that such consent shall not be unreasonably or arbitrarily withheld.

  

	 	(b)	Each party providing confidential information to the Company shall be entitled to obtain an undertaking from the Company and from each person who has access to that confidential
information. That undertaking shall require that such information will be held in confidence by the Company and each such persons. 

  

 16. 

	21.	NON-COMPETITION 

  

	 	(a)	Unless otherwise agreed in writing by the parties to this Agreement for the duration of this Agreement neither Steamships nor Kelton or any Associate of either of them will either
directly or indirectly compete in any capacity with the Company anywhere within Papua New Guinea AND Steamships and Kelton will each promote the interest of the Company with a view to making its business financially successful and neither
Steamships nor Kelton shall within Papua New Guinea do or suffer to be done any act or thing which may be prejudicial to the Company. 

  

	 	(b)	In this clause the term “capacity” means any capacity whatsoever (and whether alone or together with any other person and whether directly or indirectly) and includes
without derogation from the generality of the foregoing any one of more or all of shareholder, director, sole trade, partner, joint venturer, employee, agent, supplier, manager, agent, supplier, financier and licensor but excludes only the ownership
or control in any other capacity of not more than a Significant Interest in the issued share capital of any other company; 

  

	 	(c)	Each party acknowledges that:- 

  

	 	(i)	each of the restraints and undertakings specified in this clause are both fair and reasonable; 

  

	 	(ii)	it will, having regard to the provisions of this Agreement for service of a Notice of Termination, and the Agreement for Sale of Business, have received full consideration for the
restraint obligation undertaken pursuant to the provisions of this Clause. 

  

 17. 

	 	(d)	In the event that one party considers the other party is in breach of the restraint obligation contained in this Clause the party alleging the breach will by notice in writing to
the other party specify the breach alleged and require that breach to be remedied within the period specified which shall be not less than 30 days from the date of service of the notice alleging the breach. In the event that the breach cannot be
rectified or in the event that the party to whom the notice is addressed refuses to rectify the breach then the party not in breach may:- 

  

	 	(i)	 institute proceedings in the name of the Company to seek injunctive relief and/or damages against the party in breach. For that purpose and for the consideration
herein appearing both Steamships and Kelton hereby agree to the irrevocable authority herein contained and agree that the party alleging the breach shall have the irrevocable authority of the other party to resolve at a meeting of Directors of the
Company to institute such proceedings in the name of the Company. Subject to compliance with the provisions herein contained Steamships and Kelton irrevocably agree that the resolution of the Directors shall be deemed to be valid and effectual
notwithstanding the Directors representing one class of the shares of the Company refuse to attend the meeting or vote in the negative to institute such proceedings and the Directors present at the meeting shall be entitled to vote for this
purpose only and 

  

 18. 

	 	 
shall have the authority to represent both classes of shares. The costs of the Company in instituting such proceedings will be sought from the party in
breach pursuant to any judgment or order of any court of competent jurisdiction. Any of the costs not recovered by the Company from the party alleged to be in breach shall be paid by the party alleging the breach and may be recovered by the Company
from that party alleging breach as a liquidated debt on demand; 

  

	 	(ii)	terminate this Agreement by serving a Notice of Termination pursuant to Clause 25 PROVIDED ALWAYS before any such termination the party alleging the breach shall request the
President for the time being of the Law Society of Queensland to appoint a solicitor of not less than 15 years standing who shall not be a member of either of the party’s firms of legal advisers to determine whether there has been a breach of
this clause and such solicitor shall act as an expert and not as an arbitrator and such termination shall only take place if the said solicitor determines there has been a breach of this Clause. 

  

	22.	SUPPLY OF GOODS AND SERVICES BETWEEN THE COMPANY AND STEAMSHIPS 

  
 The parties agree that the Company shall when acquiring goods and services distribution marketing and selling activities have regard to the goods and
services available through Steamships and its Associates and shall purchase those goods and services as required from 

  

 19 . 

 
Steamships and its Associates. Steamships and its Associates shall purchase Products as required from the Company during the Term of this agreement. Each of
the parties to such transactions shall sell goods and services or Products (as the case may be) to the other party at a price equal to the landed cost plus Fifteen percent (15%). No party shall be under any obligation under this clause to purchase
goods and services or Products if the price and quality are not competitive with the price and quality of substitutable goods and services or Products (as the case may be) during the Term of this Agreement. 
  

	23.	CONSENSUS 

  
 It is the stated objective of the parties to achieve consensus in relation to their approach to the affairs of the Company and in particular in matters of
policy and strategy. To that end if either party disagrees with matters of policy or strategy it will convey that disagreement to the other and the parties will meet through the Board of Directors and confer in good faith to resolve any differences.
Until such matter is resolved or either party considers a dispute has arisen which is incapable of resolution such matters of policy and strategy will be held in abeyance and not implemented. 
  

	24.	DISPUTES 

  

	 	(a)	Should a dispute between the parties or between the Directors representing Steamships and the Directors representing Kelton arise and the parties are unable to resolve the dispute
after conferring with a view to resolving that dispute in the interest of the Company then the provisions of this clause will apply. 

  

	 	(b)	 Either party may at the cost of the Company engage the Auditors of the Company to assist in 

  

 20. 

	 	 
the resolution of any such dispute or request the President for the time being of the Law Society of Queensland to appoint a suitably qualified person to
determine which of the Directors, if any, is being unreasonable and is therefore not acting in the interests of the Company and is thus causing the dispute and any such person shall act as an expert and not as a arbitrator.

  

	 	(c)	The costs of the said determination shall be paid by the Company if the said suitably qualified person determines that the relevant Director(s) view is reasonable and the party
requesting the appointment of the said person if no such determination is made. 

  

	 	(d)	Upon the said person making a determination the relevant Director(s) whose view is found to be unreasonable and is therefore deemed not to be acting in the interests of the Company
shall have the opportunity to change his view within thirty (30) days thus resolving the dispute. If such opportunity is not taken or the dispute is not otherwise resolved either party may then terminate this Agreement in accordance with Clause 25
hereof however the relevant Notice of Termination shall be deemed to be served by the party whose Directors have held the view which was determined to be unreasonable. The parties agree that no dispute shall be determined by arbitration otherwise
than as provided above. 

  

	25.	TERMINATION 

  
 The parties hereto agree that this Agreement may be terminated under any of the following circumstances: 
  

	 	(a)	By either party serving a Notice of Termination on the other party: 

  

	 	(i)	if the Company is insolvent; 

  

 21. 

	 	(ii)	if a dispute within the meaning of the last preceding clause cannot be resolved. 

  

	 	(b)	By one party serving a Notice of Termination on the other party in which case the party serving the Notice of Termination shall be deemed to be the party referred to as “the
other party” in the two sub-clauses following: 

  

	 	(i)	if the other party becomes insolvent or enters into any scheme of arrangement or composition with its creditors or there is appointed a receiver or manager or similar officer in
respect to assets of the other party; 

  

	 	(ii)	if the other party is in breach of the terms of this Agreement and after having been served with a Notice of Breach by the complaining party that other party continues to be in
breach of this Agreement after the lapse of thirty (30) days from the date of the service of such Notice of Breach. 

  

	 	(c)	 a Shareholder (“the offering member”) may at any time offer in writing to purchase the shares of the other party and its Associates (“the other
member”). The other member shall accept or reject such an offer in writing. If it is rejected then the offering member shall be free to offer its Shares to a third party (the “third party”) provided that the terms and conditions of
offer and Sale shall be the same as the previous rejected offer to the other member. The third party shall not be a person or corporation in direction competition with the Company in Papua New Guinea. If the offer and terms of sale to the third
party by the offering member are not the 

  

 22. 

	 	 
same as those offered to and rejected by the other member then the other member must be given a prior first right of refusal (within twenty eight days) to
purchase the shares under the terms and conditions agreed between the offering member and the third party. Notice of the offer to the third party and any subsequent conditions of sale shall be notified forthwith in writing to the other member. Any
sale to a third party shall be subject to the consent of the other member provided such consent shall not be unreasonably withheld. 

  

	26.	ASSIGNMENT 

  
 Subject to the terms of this Agreement no party may assign its rights duties or interests hereunder in whole or in part without the prior written consent
of the other party. For the purposes of this clause an assignment by way of security only for funds lent to a Shareholder shall not be considered to be an assignment. 
  

	27.	STATUS OF THIS AGREEMENT 

  

	 	(a)	The provisions of this Agreement shall prevail over all other present or previous agreements or arrangements between the parties relating to the Company. 

 

	 	(b)	In particular, and without limiting the generality of the foregoing, the provisions of this Agreement shall prevail over the provisions of the Company’s Articles of
Association. 

  

	28.	GOVERNING LAW 

  
 This Agreement and the rights and obligations arising therefrom shall be governed by the law in force in Papua New Guinea and the parties hereby submit to
the exclusive jurisdiction of the National Court of Justice of Papua New Guinea. 
  

 23. 

	29.	GENERAL 

  

	 	(a)	Steamships shall ensure that the Directors of the Company appointed by it from time to time are familiar with the terms of this Agreement and that it shall be the responsibility of
Steamships to ensure that the Directors appointed by it observe the terms of this Agreement. 

  

	 	(b)	Kelton shall ensure that the Directors of the Company appointed by it from time to time are familiar with the terms of this Agreement and that it shall be the responsibility of
Kelton to ensure that the Directors appointed by it observe the terms of this Agreement. 

  

	30.	INTERDEPENDENCE OF AGREEMENTS 

  
 The execution of this Agreement is conditional upon the completion of the Agreement for Sale of Business. 
  

	31.	LOANS 

  

	 	(a)	Any loans made by the Shareholders to the Company shall bear interest at a rate calculated to be 3% per annum above the Westpac Prime Rate specified in Sub-clause (b). The
Shareholders shall rank pari passu in relation to all payments of principal or interest by the Company pursuant to any loans by the Shareholders to the Company. 

  

	 	(b)	For the purposes of this clause “Westpac Prime Rate” means the rate charged by Westpac Bank-PNG- Limited to its prime corporate customers on loans in excess of K100,000.00
from time to time. 

  

	32.	NOTICES 

  

	 	(a)	 Any notice, consent, demand, approval or other communication (“Notice”) to be given, made or served pursuant to this Agreement shall be in writing and
shall be posted by pre-paid 

  

 24. 

	 	 
registered post and served by telex or facsimile transmission to the address for service of the other party specified in Items 2 and 3 of the Schedule.

  

	 	(b)	In the case of post the Notice shall be deemed to be given made or served fourteen (14) working days after it was posted. In the case of telex it shall be deemed to be given
made or served when the recipient’s answerback code is imprinted on the sender’s copy. 

  

	 	(c)	Any party may change its address for service by a Notice given to the other party in accordance with this clause. 

  

	33.	AUTHORITY TO SIGN 

  
 In consideration of payment to the Signatory by Steamships of the amount of One Kina (K1.00) receipt of which is hereby acknowledged the Signatory
warrants to Steamships that he is the governing director of Kelton and is authorised to enter into this Agreement on behalf of and to bind Kelton. 
  
 SCHEDULE 
  

			
	ITEM 1	  	 
	Date:	  	day of                      1989
		
	ITEM 2	  	STEAMSHIPS PTY LIMITED of Champion
	Steamships:	  	 Parade, Port Moresby, Papua New
 Guinea

		
	 	  	 Telex:        NE22115
 Facsimile: 211786

  

 25. 

			
	ITEM 3	  	 
	Kelton:	  	 KELTON INVESTMENTS LIMITED
 a company duly
incorporated in Fiji
 of PO Box 1122, Suva, Fiji
  
 Telex:        2150 Kelton FJ
 Facsimile:
301880

		
	ITEM 4	  	 
	Company:	  	 BALLIMORE NO. 7 PTY LIMITED
 (to become Datec
(PNG) Pty Limited) of PO Box 1, Port Moresby, Papua New Guinea

		
	ITEM 5	  	 
	Issued Capital:	  	10,000 shares of K1.00 each
		
	ITEM 6	  	 
	Shareholding:	  	 Steamships: 5,000 shares
 Kelton:         5,000 shares

		
	ITEM 7	  	 
	Lessor:	  	Steamships Trading Company Limited
		
	ITEM 8	  	 
	Agreement for Sale of Business:	  	Agreement for Sale of Business between Steamships Pty Limited and the Company dated              day
                     of
                             1989.
		
	ITEM 9	  	 
	Name:	  	Datec (PNG) Pty Limited
		
	ITEM 10	  	 
	Signatory:	  	 JAMES MICHAEL AH KOY
 governing director of GPO
Box 1122, Suva, Fiji.

		
	ITEM 11	  	 
	Agreement for Sale of Shares:	  	Agreement for Sale of Shares between Steamships and Kelton dated the              day of
                     19    

  

 26. 

							
	[SEAL]	  	THE COMMON SEAL of STEAMSHIPS PAY LIMITED was hereunto duly affixed by the authority of the Board of Directors in the presence of:	  	 )
 )
 )
 )
	  	

	 	  	

	  	 )
 )
 )
	  	Director
	 	  	Secretary	  	 	  	 
				
	[SEAL]	  	THE COMMON SEAL of BALLIMORE NO. 7 PTY LIMITED was hereunto duly affixed by the authority of the Board of Directors in the presence of:	  	 )
 )
 )
 )
	  	

	 	  	

	  	 )
 )
 )
 )
	  	Director
	 	  	Secretary	  	 	  	 
				
	[SEAL]	  	SIGNED for and on behalf of KELTON INVESTMENTS LIMITED by JAMES MICHAEL AH KOY in the presence of:	  	 )
 )
 )
 )
	  	

	 	  	

	  	 )
 )
 )
	  	 
				
	 	  	SIGNED in my presence by JAMES MICHAEL AH KOY who is personally known to me:	  	 )
 )
 )
	  	 
	 	  	

	  	 )
 )
 )
	  	 
				
	 	  	

	  	 	  	 

  

 27. 

 ANNEXURE “A” 
  
 THE PRODUCTS AND SERVICES 
 (Clause 1) 
  
 Personal Computers

  
 Mid Range Computers 
  
 R.T. Computers 
  
 Computer Software 
  
 Maintenance & Service and all other associated and incidental computer products and services 
  

 28.APPENDIX B
  

 

STOCK PLEDGE  AND ESCROW AGREEMENT

 

THIS STOCK PLEDGE AND ESCROW AGREEMENT (this “Agreement”) is entered into as of July 7, 2004 by Somerset International Group, Inc. (“Pledgor” or “Somerset”) and Robert Brantl, Esq., as escrow agent (“Escrow Agent”), for the benefit of the holders (the “Holders”) of the Series A Redeemable Convertible Preferred Stock issued by Pledgor (the “Preferred Shares”).

 

WHEREAS, Secure System, Inc., a New Jersey corporation (“Secure”), Pledgor, and Secsys Acquisition Corp., a New Jersey corporation, are all parties to a certain Agreement and Plan of Merger dated June 30, 2004 (the “Merger Agreement”), which will result in Pledgor owning all of the outstanding capital shares of Secure, with a portion of the consideration being the Preferred Shares, which have certain rights as set forth in a duly adopted Certificate of Designations filed with the Delaware Secretary of State as required by law (the “Certificate of Designations”); and

 

WHEREAS in order to induce the shareholders of Secure to consent to the Merger Agreement and to accept the Preferred Shares in exchange for a surrender of their Secure shares, Pledgor has agreed to pledge certain of the issued and outstanding capital stock of Secure and to place said capital stock in escrow for the benefit of the Secure shareholders who accept the Preferred Shares (the “Holders”)

 

NOW THEREFORE, in consideration of the promises and mutual agreements, covenants and provision herein contained, the parties agree as follows: 

 

	
            1.
 	
            The term “Secured Obligations” shall mean: (a) any and all unsatisfied obligations, liabilities and indebtedness of Pledgor to the Holders under the terms of the Preferred Shares, whether arising from Pledgor’s several redemption obligations or its obligation to pay dividends to the Holders, and whether now conditional or unconditional, choate or inchoate, (b) all costs and expenses incurred by the Holders in connection with realization of the security granted hereby, and (c) all costs and expenses of any proceedings to which this Security Agreement may give rise.
 

 

	
            2.
 	
            An “Event of Default” under this Agreement shall exist if either: (a) Pledgor shall have any obligation to make payment to any Holder which it has not discharged within ten (10) days after receipt of written notice from the Holder of the accrual of the obligation; or (b) Pledgor shall breach or fail to perform any term or condition of this Agreement.
 

 

	
            3.
 	
            For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and as collateral security for performance in full of the Secured Obligations, Pledgor hereby grants to the Holders an initial security interest in Three Million and Four (3,000,004) issued and outstanding shares of the capital stock of 
 

 

 

 

Secure, together with all proceeds, products and increases thereof and substitutions and replacements therefor (collectively, the “Collateral”).

 

	
            4.
 	
            Simultaneously herewith, Pledgor has delivered to the Escrow Agent certificates representing a total of Three Million and Four (3,000,004) issued and outstanding shares of common stock of Secure System, Inc. (the “Certificate”), a corresponding stock power with respect to the said Certificate, duly endorsed in blank, and a book of blank Secure stock certificates (collectively the “Pledged Securities”), receipt of which is hereby acknowledged. During the term of this Agreement, Pledgor appoints the Escrow Agent as the sole authorized transfer agent for Secure with full authority to issue Secure common stock for the purpose of carrying out the requirements of paragraph 7 of this Agreement.
 

 

	
            5.
 	
            Pledgor represents and warrants that: (a) the shares of stock pledged hereunder represent eighty-seven and one-half (87.5%) percent of the issued and outstanding capital stock of the Company as of the date of this Agreement;  (b) Pledgor holds record and beneficial ownership of the Collateral, free and clear of all liens and encumbrances; (c) there are no restrictions upon the transfer of any of the Collateral, other than restrictions arising under applicable state or federal securities laws; and (d) the pledge, assignment and delivery of the Collateral pursuant to this Agreement creates a valid first lien on and a first priority security interest in the Collateral, and the proceeds thereof, subject to no prior lien or to any agreement purporting to grant to any third party a lien on the property or assets of the Pledgor which would include the Collateral. The
Pledgor covenants and agrees that the Pledgor will defend the Holders’ right, title and security interest in and to the Collateral and the proceeds thereof against the claims and demands of all Persons whomsoever; and covenants and agrees that the Pledgor will have like title to and right to pledge any other property at any time hereafter pledged to the Holders as Collateral hereunder and will likewise defend the Holders’ right thereto and security interest therein.
 

 

	
            6.
 	
            During the term of this Agreement, provided that no Event of Default has occurred and then exists hereunder, Pledgor shall have the right, where applicable, to vote the Collateral on all corporate questions, and the Escrow Agent shall, if necessary, execute due and timely proxies in favor of Pledgor for this purpose.
 

 

	
            7.
 	
            Upon an Event of Default, a Holder shall have the right to deliver to the Escrow Agent and Pledgor a letter stating that an Event of Default has occurred. In such letter the Holder shall specify in detail the nature of such Event of Default (a “Default Letter”). Upon receipt of a Default Letter, Escrow Agent shall deliver to the Holder a certificate representing a number of Secure shares equal to the number of Preferred Shares held by the Holder (the “Holder’s Secure Shares”) unless, within ten (10) days from receipt of such Default Letter, Pledgor delivers to Holder and Escrow Agent an Affidavit of an officer of Pledgor stating that: (a) each Event of Default alleged in the Default Letter has been cured and is no longer continuing; or (b) that each alleged Event of Default does not constitute
a default for reasons which are specified in such Affidavit (“Good Faith Dispute Affidavit”). Should Escrow Agent receive a Good Faith Dispute Affidavit within such aforementioned ten (10) 
 

 

2

 

 

day period, the Escrow Agent shall notify the Holder of such receipt by sending the Holder a copy of the same, and Escrow Agent shall not deliver to the Holder any of the Holder’s Secure Shares until such time as there has been a determination as to whether an Event of Default has or has not occurred, and the Escrow Agent has received a judgment of a court of competent jurisdiction, not subject to appeal or as to which the time to appeal has expired, or a direction from an arbitrator or a panel of arbitrators, directing the Escrow Agent as to how to deliver the Holder’s Secure Shares. If an order or judgment of a court is appealable, or upon issuance of a determination by a panel of arbitrators, the Escrow Agent shall comply with such order, judgment or determination within twenty (20) days of the issuance of such order, judgment or determination, unless within such twenty (20)
day period the party against whom the order, judgment or determination is made files an appropriate appeal therefrom. If such appeal is filed, the Escrow Agent shall continue to hold the Holder’s Secure Shares pending determination of the appeal and issuance of an order, judgment or decision by the court or panel hearing the appeal. Upon dismissal of an appeal, the Escrow Agent shall promptly comply with the order, judgment or decision which was the basis for the dismissed appeal. A proceeding to set aside the decision of an arbitration panel shall be treated as an “appeal” for the purposes of this provision of this Agreement. Notwithstanding anything herein to the contrary, upon Escrow Agent’s receipt of a joint written notice of direction from Holder and Pledgor (“Joint Direction Letter”), the Escrow Agent shall deliver the Pledged Securities as directed pursuant to such Joint Direction Letter.

 

	
            8.
 	
            If after an Event of Default and receipt of a Default Letter, the Escrow Agent delivers to a Holder the Holder’s Secure Shares,  the Holder shall have all the rights and remedies provided in the Uniform Commercial Code of New Jersey at the date of this Agreement and, in this connection, the Holder may, upon ten (10) days’ notice to the Pledgor sent to the persons identified in and in the same manner as provided in the Certificate of Designations of the Preferred Stock, without liability for any diminution in value or price which may have occurred, sell all or any part of the Holder’s Secure Shares in such manner and for such price as the Holder may determine. At any public sale the Holder shall be free to purchase all or any part of the Holder’s Secure Shares. The Holder shall receive the proceeds of any such sale or sales, and, after deducting
therefrom any and all reasonable costs and expenses incurred in connection with the sale thereof, apply the net proceeds toward the payment of the Holder’s pro rata share of the Secured Obligations, including interest, reasonable attorneys’ fees, and all other reasonable costs and expenses incurred by Holder hereunder. If such proceeds be more than sufficient to pay the same, then in case of a surplus, such surplus shall be accounted for and paid over to Pledgor, provided Pledgor be not then indebted to the Holder otherwise under this Agreement or any other Agreement or for any cause whatsoever.
 

 

	
            9.
 	
            Upon said Holder’s receipt of the Holder’s Secure shares from the Escrow Agent pursuant to paragraph 8, all of the Holder’s unconverted and unredeemed Preferred Shares shall be canceled of record by the Pledgor, without however affecting Pledgor’s redemption and dividend obligations to the Holder.
 

 

 

3

 

 

 

 

	
            10.
 	
            If, with the written consent of a majority of the Holders, Pledgor shall substitute or exchange other securities in place of those herein mentioned, all of the rights and privileges of Holders and all of the obligations of Pledgor with respect to the securities originally pledged or held as Collateral hereunder shall be forthwith applicable to such substituted or exchanged securities on a pro rata basis.
 

 

	
            11.
 	
            The Pledgor and the Holders agree that the number of shares of the Company representing the Collateral shall, from time to time and during the term of this Agreement, be proportionately reduced to account for the partial satisfaction of the Pledgor’s obligations after completing each scheduled or conditional redemption and/or to account for any Holder’s conversion of Preferred Shares into common stock of the Pledgor. During the term of this Agreement the Escrow Agent shall, upon written request of the Pledgor, execute and deliver to Pledgor such documents as may be reasonably necessary to evidence and document such reduction of Collateral. At any time during the effectiveness of this Agreement, the Collateral shall be no greater than such percentage of the total issued and outstanding Secure shares as calculated by dividing the total number of
unconverted and unredeemed Preferred Shares by the total number of issued and outstanding Secure Shares.
 

 

	
            12.
 	
            Upon indefeasible payment in full in cash of the Secured Obligations, the Escrow Agent will promptly, at Pledgor’s reasonable expense, deliver all of the remaining Collateral to Pledgor along with all instruments of assignment executed in connection therewith, and execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence Holders’ release of their security interest hereunder, at which time this Pledge Agreement shall terminate.
 

 

	
            13.
 	
            For so long as any share of the Preferred Shares remain outstanding, the Pledgor agrees that the Pledgor will not sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Collateral, nor will the Pledgor create, incur or permit to exist any lien with respect to any of the Collateral, or any interest therein, or any proceeds thereof, except for the lien provided for by this Agreement or in favor of the Holders.
 

 

	
            14.
 	
            Under this Agreement, the Escrow Agent:
 

 

	
            (a)
 	
            Shall not be bound in any way by any agreement or contract between the parties hereto to which the Escrow Agent is not a party (whether or not the Escrow Agent has knowledge thereof) and the only duties or responsibilities of the Escrow Agent shall be to hold and disburse the Certificates and Stock Powers in accordance with the terms of this Escrow Agreement.
 

 

	
            (b)
 	
            May accept or act upon any instructions, directions, documents or instruments purportedly signed or issued by, or on behalf of, any corporation, partnership, fiduciary or individual which is a party to this Escrow Agreement; it shall not be necessary for the Escrow Agent to inquire into their authority. The Escrow Agent shall not be required or permitted to question the validity or invalidity of any 
 

 

4

 

 

termination under the Pledge Agreement. The Escrow Agent shall not be held liable in any event if he accepts as accurate and acts in good faith upon the contents of any notice received by him from either Somerset or any Holder.

 

	
            (c)
 	
            May resign as escrow agent at any time by notifying the other parties hereto in writing and, until a successor escrow agent is appointed by them and accepts such appointment, the only duty of the Escrow Agent shall be to hold the Pledged Securities safely and to deliver the same to a successor escrow agent designated by Somerset and a majority of the Holders or in accordance with a final order of a court of competent jurisdiction which is not subject to further appeal or arbitration.
 

 

	
            (d)
 	
            Shall not be liable for any exercise of judgment in the performance of his duties hereunder but only for his own fraud, willful misconduct or gross negligence and the duties of the Escrow Agent shall be determined solely by the express provisions of this Escrow Agreement. In the event the collateral becomes involved in litigation (including arbitration or any other type of proceeding which may affect the rights to and ownership of the Pledged Securities), Somerset hereby authorizes the Escrow Agent, without creating any obligation on the part of the Escrow Agent, to deposit the Certificate and Stock Power with the clerk of the court in which the litigation is pending, or with the arbitrator(s) in the case of arbitration, and thereupon the Escrow Agent shall be fully relieved and discharged of any further responsibility under this Escrow Agreement. The parties also
authorize the Escrow Agent, if he is threatened with litigation, to interplead all interested parties in any court of competent jurisdiction and to deposit the collateral with the clerk of that court and thereupon the Escrow Agent shall be fully relieved and discharged of any further responsibility hereunder.
 

 

	
            (e)
 	
            Shall be compensated by the Pledgor for services rendered at the Escrow Agent’s prevailing hourly rates and shall be fully reimbursed by Somerset for all out-of-pocket expenses necessarily incurred in performing his services hereunder.
 

 

	
            14
 	
            All notices and other communications relating to this Escrow Agreement shall be in writing and shall be either personally delivered, sent by overnight courier, or sent by certified mail, return receipt requested, postage prepaid, to the parties at their addresses set forth below. Any party may from time to time give notice changing his or its address for notice to him (or for copies) by notice to the other parties. Notice shall be deemed received:
 

 

	
            (a)
 	
            when received by the addressee, if delivered by hand or by overnight courier service which obtains a written receipt of delivery; or
 

 

	
            (b)
 	
            three (3) days after deposit with the United States postal service if sent by certified mail, return receipt requested, postage prepaid.
 

 

 

 

5

 

 

 

If to Somerset, to: 

 

	
            John X. Adiletta
 	
             

	
            Somerset International Group, Inc.
 
	
            90 Washington Valley Road
 	
             

	
            Bedminster, NJ 07921
 	
             

				

Facsimile: (908) 953-0797

 

with a copy to (which shall not constitute notice):

 

William R. McClure, Esq.

Picinich & McClure

139 Harristown Road, Suite 101

Glen Rock, NJ 07452

Facsimile:  201-493-1662

 

If to Escrow Agent:

 

Robert Brantl, Esq.

	
            322 4th Street
 	
             

	
            Brooklyn, NY 11215
 	
             

	
            Facsimile:  (718) 965-4042
 
			

 

If to the Holders (or to any one Holder):

 

Notice shall be sent via regular and certified mail to the most current address(es) listed in the shareholder records of Secure.

 

	
            15.
 	
            Waiver of Conflict:
 

 

	
            (a)
 	
            Somerset agrees that the Escrow Agent shall have the right to (i) represent the Holders in any interpleader or other proceeding arising out of this Escrow Agreement or otherwise and (ii) represent the Holders in any matter or proceeding involving Somerset, Secure, or any affiliates thereof
 

 

	
            (b)
 	
            Somerset acknowledges that the Escrow Agent is as of the date hereof acting as counsel for Secure and for the Shareholders of Secure. Somerset acknowledges the possibility of conflict of interest arising as a result thereof and waives such conflict of interest.
 

 

	
            16
 	
            This Agreement shall be interpreted and the rights and liabilities of the parties hereto determined in accordance with the local law of the State of New Jersey excluding any conflicts of law rule or principle that might otherwise refer construction or interpretation of this agreement to the substantive law of another jurisdiction. 
 

 

 

6

 

 

 

IN WITNESS WHEREOF, Pledgor and the Escrow Agent have executed this Agreement as of the date first above written.

 

	
            PLEDGOR:
 	
             

	
            Somerset International Group, Inc.
 

 

	
            By:
 	
            /s/ John X. Adiletta  
 	
             

	
             
	
            John X. Adiletta, Chief Executive Officer
 

 

	
            ESCROW AGENT:
 

 

	
            /s/ Robert Brantl  
 	
             

	
            Robert Brantl, Escrow Agent
 

 

 

7

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