Document:

Quantum Solar Power Corp.: Exhibit 10.1 - Filed by newsfilecorp.com

SETTLEMENT AGREEMENT

THIS AGREEMENT is made effective December 31, 2012 (the
"Effective Date")

AMONG:

SIMON FRASER UNIVERSITY, a corporation under the
University Act of British Columbia, having offices at 8888 University
Drive, Multi-Tenant Facility, Burnaby, British Columbia, Canada V5A 1S6
(“SFU”)

AND:

CANADIAN INTEGRATED OPTICS, BC LTD., a corporation duly
continued under the Company Act of British Columbia and having an office
at Suite #202-1128 West Broadway, Vancouver, British Columbia, Canada V6H 1G5
(“CIO”)

AND:

QUANTUM SOLAR POWER CORP., a corporation duly
incorporated under the laws of the State of Nevada with an address at 1055 W.
Hastings, Ste. 300, Vancouver, British Columbia V6E 2E9 (“Quantum”)

AND:

0935493 B.C. LTD., a corporation duly incorporated under
the Business Corporations Act of British Columbia with an address at
Suite #202-1128 West Broadway, Vancouver, British Columbia V6H 1G5
(“093Co”)

WHEREAS:

	A. 	
      SFU and CIO operating under the name Canadian Integrated
      Optics IOM Ltd. (“IOM”) entered into an April 1, 2010 Research
      Agreement (the “Research Agreement”) under which IOM sponsored
      certain research to be conducted at the 4D Labs materials science facility
      at SFU under the direction of Dr. Gary Leach of SFU;

	 	 
	B. 	
      IOM and SFU entered into a May 21, 2010, Amendment #1 to
      the Research Agreement;

	 	 
	C. 	
      IOM, SFU and CIO determined that the Research Agreement
      and any amendments thereto should be between SFU and CIO and, with the
      consent of IOM, SFU and CIO entered into a July 31, 2010, Amendment #2 to
      the Research Agreement amending the research sponsor under the Research
      Agreement from IOM to CIO and making certain other changes to the Research
      Agreement;

	 	 
	D. 	
      SFU and CIO entered into a January 1, 2011, Amendment #3
      to the Research Agreement, a July 2, 2011, Amendment #4 to the Research
      Agreement, and a January 2, 2012, Amendment #5 to the Research
      Agreement;

	E. 	
      In or around January and February 2012, CIO defaulted
      under the Research Agreement, as amended. In response, on or about March
      20, 2012, SFU delivered CIO a 30-day notice of termination of the Research
      Agreement (the “Termination Notice”);

	 	 
	F. 	
      SFU and CIO entered into an April 15, 2012, Amendment #6
      to the Research Agreement (the “Amendment”) suspending the
      Termination Notice without prejudice and providing for additional
      sponsored research to be conducted at 4D Labs under the direction of Dr.
      Gary Leach;

	 	 
	G. 	
      CIO executed a promissory note (the “Promissory
      Note”) in favour of SFU promising to pay to SFU the principal sum of
      $452,749 and interest on certain terms and conditions;

	 	 
	H. 	
      Quantum executed a guarantee (the “Quantum
      Guarantee”) in favour of SFU for the obligations of CIO under the
      Promissory Note (the “Guaranteed Obligations”);

	 	 
	I. 	
      093Co executed a guarantee (the “093Co Guarantee”)
      in favour of SFU for the Guaranteed Obligations;

	 	 
	J. 	
      SFU and 093Co entered into a Security Agreement (the
      “Security Agreement”) granting SFU a security interest in 093Co’s
      right title and interest in three Kurt J. Lesker PVD 75 Deposition Tools
      having serial numbers PRD060525, PRD064578 and PRD072561 (collectively,
      the “Collateral”) and any proceeds therefrom in consideration for
      the payment and performance of all indebtedness of 093Co to SFU,
      including, without limitation, indebtedness of 093Co to SFU under the
      093Co Guarantee;

	 	 
	K. 	
      SFU and Quantum entered into a Trustee Beneficial Owner
      Agreement (the “Beneficial Owner Agreement”) whereby Quantum
      ratified the execution and delivery by 093Co to SFU of the Security
      Agreement and charged in favour of SFU all of its beneficial interest in
      the Collateral as security for payment for all indebtedness of Quantum to
      SFU;

	 	 
	L. 	
      On May 24, 2012, SFU registered a financing statement
      against 093Co and Quantum in the Collateral and any proceeds
    therefrom;

	 	 
	M. 	
      As at August 8, 2012, CIO owed SFU $364,066 plus interest
      under the Promissory Note (and interest has continued to accrue since
      then);

	 	 
	N. 	
      Through September 15, 2012, CIO owed SFU a further
      $109,835 in 4D Labs’ user fees pursuant to the Research Agreement and the
      terms of use of 4D Labs in connection with the research under the Research
      Agreement;

	 	 
	O. 	
      Under the terms of the Research Agreement, the Amendment,
      the Promissory Note, the Quantum Guarantee and the 093Co Guarantee, CIO,
      Quantum and 093Co (collectively, the “Debtors”) are jointly and
      severally liable to pay to SFU $346,066 plus interest and costs but the
      Debtors are unable to do so;

	 	 
	P. 	
      Under the terms of the Research Agreement and the
      Amendment, CIO is liable to pay to SFU $109,835 plus interest and costs
      but CIO is unable to do so;

2

	Q. 	
      On or about October 1, 2012, CIO alleged that there were
      certain deficiencies in SFU’s 4D Lab facilities which resulted in wasted
      research expenditures under the Research Agreement and contributed to a
      lack of scientific progress on the research (the “Gas
      Allegations”); and

	 	 
	R. 	
      The parties wish to settle the aforementioned debts and
      allegations in support of their ongoing, mutually beneficial
      relationship.

NOW THEREFORE for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by each party, SFU, CIO,
Quantum, and 093Co agree as follows:

1. CIO acknowledges and agrees that:

	 	a. 	
      it is liable to SFU for $364,066 plus interest which
      continues to accrue at the rates set out in the Promissory Note, and any
      other costs recoverable by or due to the SFU pursuant to the Research
      Agreement, the Amendment and the Promissory Note;

	 	 	 
	 	b. 	
      it is liable to SFU for a further $109,835 plus interest
      and any other costs recoverable by or due to SFU pursuant to the Research
      Agreement and the terms of use of 4D Labs in connection with the research
      under the Research Agreement;

	 	 	 
	 	c. 	
      it is in default of the terms of the Research Agreement,
      the Amendment, and the Promissory Note;

	 	 	 
	 	d. 	
      it does not have any defences to the right of SFU to
      enforce the terms of the Research Agreement, the Amendment, and the
      Promissory Note; and

	 	 	 
	 	e. 	
      SFU has entered into this Settlement Agreement based upon
      the release of SFU and the representations made
herein.

2. CIO confirms that the agreements governing the Research
Agreement, the Amendment and the Promissory Note are valid and enforceable in
accordance with their terms.

3. Quantum acknowledges and agrees that:

	 	a. 	
      it is liable to SFU for $364,066 plus interest which
      continues to accrue at the rates set out in the Promissory Note, and any
      other costs recoverable by or due to the SFU pursuant to the Research
      Agreement, the Amendment and the Promissory Note, the Quantum Guarantee
      and the Beneficial Owner Agreement;

	 	 	 
	 	b. 	
      it is in default of the terms of the Quantum
      Guarantee;

	 	 	 
	 	c. 	
      it does not have any defences to the right of SFU to
      enforce the terms of the Research Agreement, the Amendment, the Promissory
      Note, the Quantum Guarantee and the Beneficial Owner Agreement;
  and

3

	 	d. 	
      SFU has entered into this Settlement Agreement based upon
      the release of SFU and the representations made
herein.

4. Quantum confirms that the agreements governing the Research
Agreement, the Amendment, the Promissory Note, the Quantum Guarantee and the
Beneficial Owner Agreement are valid and enforceable in accordance with their
terms.

5. 093Co acknowledges and agrees that:

	 	a. 	
      it is liable to SFU for $364,066 plus interest which
      continues to accrue at the rates set out in the Promissory Note, and any
      other costs recoverable by or due to the SFU pursuant to the Research
      Agreement, the Amendment and the Promissory Note, the 093Co Guarantee and
      the Security Agreement;

	 	 	 
	 	b. 	
      it is in default of the terms of the 093Co
    Guarantee;

	 	 	 
	 	c. 	
      it does not have any defences to the right of SFU to
      enforce the terms of the Research Agreement, the Amendment, the Promissory
      Note, the 093Co Guarantee and the Security Agreement; and

	 	 	 
	 	d. 	
      SFU has entered into this Settlement Agreement based upon
      the release of SFU and the representations made
herein.

6. 093Co confirms that the agreements governing the Research
Agreement, the Amendment, the Promissory Note, the 093Co Guarantee and the
Security Agreement are valid and enforceable in accordance with their terms.

7. CIO, Quantum, and 093Co each represent and warrant that:

	 	a. 	
      all right, title, and interest in and to each of the
      Collateral and the additional supporting equipment more particularly
      described in Schedule “A” (collectively, the “Supporting
      Equipment”) are held by them;

	 	 	 
	 	b. 	
      are not subject to any claim, encumbrance, charge,
      security interest, hypothecation, lease or other interest except as
      provided or in the Security Agreement and in this Settlement
    Agreement;

	 	 	 
	 	c. 	
      in the case of CIO and 093Co, do not comprise all or
      substantially all of their assets or undertaking, and;

	 	 	 
	 	d. 	
      in the case of Quantum, do not comprise all of its
      property and assets including goodwill and corporate
  franchises.

8. CIO, Quantum and 093Co agree to and do hereby transfer all
of their title and interest (including all beneficial interest) to the following
assets to SFU free and clear of any and all encumbrances:

4

	 	a. 	
      the Collateral; and

	 	 	 
	 	b. 	
      the additional supporting equipment more particularly
      described in Schedule “A” (collectively, the “Supporting
      Equipment”)

(collectively, the “Asset
Transfer”).

9. This Agreement is contingent upon delivery by CIO, Quantum
and 093Co to SFU of the following in completion of the Asset Transfer concurrent
with signing of this Agreement:

	 	a. 	
      possession of the Collateral and the Supporting
      Equipment;

	 	 	 
	 	b. 	
      a legally enforceable transfer deed in favour of SFU for
      each deposition tool included in the Collateral; and

	 	 	 
	 	c. 	
      a legally enforceable transfer deed in favour of SFU for
      the Supporting Equipment.

10. Each of CIO, Quantum and 093Co hereby releases, remises and
forever discharges SFU and each of its affiliates, associates, holdings bodies
corporate and subsidiaries and all of their officers, directors, employees,
agents, successors and assigns and anyone claiming under or through them of and
from all manner of action and actions, cause and causes of action, suits, debts,
dues, sums of money, general damages, special damages, costs, claims and
demands, of every nature and kind at law or in equity or under any statute,
which it has or ever had, can, shall or may have in respect of or in any way
arising out of or related up to the present to the Research Agreement, the
Amendment, the Promissory Note, the Quantum Guarantee, the 093 Co Guarantee and
the Beneficial Owner Agreement, including, without limitation, any claim or
cause of action relating to, arising out of or in any way connected to the Gas
Allegations (the “Sponsor’s Released Claims”) and each of CIO, Quantum
and 093Co hereby covenants not to sue the released entities or individuals, or
any of them, on the basis of any Sponsor’s Released Claim.

11. SFU hereby releases, remises and forever discharges each of
CIO, Quantum and 093Co and each of their affiliates, associates, holdings bodies
corporate and subsidiaries and all of their officers, directors, employees,
agents, successors and assigns and anyone claiming under or through them of and
from all manner of action and actions, cause and causes of action, suits, debts,
dues, sums of money, general damages, special damages, costs, claims and
demands, of every nature and kind at law or in equity or under any statute,
which it has in respect of or in any way arising out of or related to the
following up to the present:

	 	a. 	
      the intellectual property developed pursuant to or
      arising out of the Research Agreement (other than claims against the
      intellectual property creators under SFU Intellectual Property Policy
      R30.03);

	 	 	 
	 	b. 	
      the $364,066 plus interest at the rates set out in the
      Promissory Note, and any other costs recoverable by or due to SFU due to
      SFU from CIO, Quantum and 093Co pursuant to the Research Agreement, the
      Amendment and the Promissory Note, the Quantum Guarantee, the 093Co Guarantee and the
  Security Agreement; and

5

	 	c. 	
      the further $109,835 plus interest and any other costs
      recoverable by or due to SFU from CIO pursuant to the Research Agreement
      and the terms of use of 4D Labs in connection with the research under the
      Research Agreement

(collectively, the “SFU Released
Claims”),

and SFU hereby covenants not to sue the released entities or
individuals, or any of them, on the basis of any SFU Released Claim and to
forthwith withdraw the registration of the finance statement referred in recital
L to this Settlement Agreement.

12. Terms of this Settlement Agreement are contractual and not
recitals.

13. This Settlement Agreement is binding upon and will enure to
the benefit of each of the parties and their respective successors and
assigns;

14. Time is of the essence of this Settlement Agreement.

15. This Settlement Agreement is governed by and shall be
construed in accordance with the laws of British Columbia.

16. The provisions contained herein constitute the entire
Settlement Agreement among SFU, CIO, Quantum and 093Co with respect to the
subject matter of this Settlement Agreement and supersede all previous
communications, representations, understandings and agreements, whether oral or
written among SFU, CIO, Quantum and 093Co with respect to the subject matter of
this Agreement, and that there are no other representations, warranties or terms
that have induced CIO, Quantum and 093Co to enter this Agreement, unless
expressly set forth in writing and signed on behalf of SFU and that there are no
agreements as among SFU, CIO, Quantum and 093Co collateral to this Settlement
Agreement, unless set forth in writing and signed by the parties hereto.

17. SFU, CIO, Quantum, and 093Co each acknowledge that they
have received independent legal advice with respect to the execution of this
Settlement Agreement and all related documentation and each confirm that they
have entered into this Settlement Agreement without any coercion or duress
having been imposed upon them by any other party.

18. SFU, CIO, Quantum and 093Co will execute such further
documents and assurances as may be necessary or will do such other acts and
things as may be required in order to carry out the transactions contemplated by
this Settlement Agreement.

19. This Settlement Agreement may be signed by the parties
hereto in as many counterparts as may be necessary, and may be delivered by fax
or electronic means, and each of which when so signed or delivered will be
deemed to be an original and such counterparts together will constitute one and
the same instrument and the date of execution will be deemed to be dated as of
the date and year first above written.

6

20. No term or condition of this Settlement Agreement may be
waived or varied orally or by any course of conduct of any officer, employee or
agent of a party. Any amendment to this Settlement Agreement and any consent or
approval to be given hereunder must be in writing and signed by a duly
authorized officer of that party.

21. If the provisions of any section of this Settlement
Agreement shall be held to be unenforceable or otherwise invalid, the holding
shall not in any way affect the enforceability or validity of the remaining
sections of this Settlement Agreement.

22. Wherever the singular or masculine are used herein, the
same shall be deemed to include the plural or the feminine or the body politic
or corporate where the context or parties so require.

23. Where notice is required to be given pursuant to any
provision of this Settlement Agreement it shall be provided in writing to the
parties at their respective addresses as set out at the head of this Settlement
Agreement.

IN WITNESS WHEREOF the parties have executed this Settlement
Agreement as of the date first above written.

SIMON FRASER UNIVERSITY by its 

  authorized
signatories:

	 	 
	Name: 	 
	 	 
	Name: 	 
	 	 
	CANADIAN INTEGRATED OPTICS, BC LTD., by its 	 
	authorized signatories: 	 
	 	 
	Name: 	 
	 	 
	Name: 	 
	 	 
	QUANTUM SOLAR POWER CORP. by its 	 
	authorized signatories: 	 
	 	 
	Name: 	 
	 	 
	Name: 	 

7

	0935493 B.C. LTD., by its 	 
	authorized signatories: 	 
	 	 
	Name: 	 
	 	 
	Name: 	 

8

SCHEDULE ”A”

To the Settlement Agreement among Simon Fraser University,
Canadian Integrated Optics, BC Ltd., Quantum Solar Power Corp., and 0935493 B.C.
Ltd. dated December 31, 2012

EQUIPMENT

	Date 	Vendor 	Description 	Amount 	Currency 
	03/06/2011 	Asahi Spectra 	optical filter 	230 	USD 
	03/02/2011 	Canadian Tire 	tools 	45.85 	CAD 
	16/03/2011 	Day Star Laser 	aperture 	107.96 	USD 
	16/03/2011 	Day Star Laser 	aperture 	107.96 	USD 
	17/03/2011 	ECM 	espresso machine 	817.04 	CAD 
	08/04/2010 	Edmund Optics 	Objective lenses 	1387.22 	USD 
	27/05/2010 	Edmund Optics 	screws for optical table 	77.38 	USD 
	28/06/2012 	Edmund Optics 	filters 	548.96 	USD 
	  	Edmund Optics 	5 color HeNe 	4995 	USD 
	05/05/2010 	Future Shop 	3 laptops and scanner 	3851.98 	CAD 
	14/05/2010 	Future shop 	laptops, mice 	4506.55 	CAD 
	11/05/2010 	Glas-Smith 	glass cutting tools 	97.44 	CAD 
	14/02/2011 	Horiba Jobin 	USB key for software 	550.9 	USD 
	29/04/2010 	Imperial 	airbrush 	159.94 	CAD 
	04/03/2011 	Industrial 	metal mesh 	1018 	USD 
	09/04/2010 	K. J. Lesker 	TiO2 sputter target 	1291.24 	CAd 
	11/04/2010 	K. J. Lesker 	ZnO and TiO2 targets 	1390.25 	CAD 
	07/07/2010 	K. J. Lesker 	ZnO:Al target 2" 	1638 	CAD 
	14/07/2010 	K. J. Lesker 	ZnO:Al target 3" 	640.1 	CAD 
	03/08/2010 	K. J. Lesker 	ZnO:Al target 3" bonding 	385.84 	CAD 
	07/09/2010 	K. J. Lesker 	Sputtering targets 	1157 	CAD 
	06/10/2010 	K. J. Lesker 	Sputtering targets and bonding 	3212.17 	CAD 
	22/10/2010 	K. J. Lesker 	Sputtering targets and bonding 	1779.99 	CAD 
	25/10/2010 	K. J. Lesker 	sputtering targets 	999.6 	CAD 
	01/12/2010 	K. J. Lesker 	sputtering targets 	1059.51 	CAD 
	28/12/2010 	K. J. Lesker 	sputtering targets 	4229.52 	CAD 
	28/12/2010 	K. J. Lesker 	sputtering targets 	1209.32 	CAD 
	18/01/2011 	K. J. Lesker 	sputtering targets 	1430.11 	CAD 
	25/02/2011 	K. J. Lesker 	substrate clips 	118.82 	CAD 
	24/02/2011 	K. J. Lesker 	spare parts for deposition tool 	1630 	CAD 
	08/03/2011 	K. J. Lesker 	spare parts for deposition tool 	570.62 	CAD 
	16/04/2011 	K. J. Lesker 	shutters, deposition material 	396.39 	CAD 
	20/04/2011 	K. J. Lesker 	spare parts for deposition tool 	665.56 	CAD 
	31/05/2011 	K. J. Lesker 	spare parts for deposition tool 	87.89 	CAD 
	08/07/2011 	K. J. Lesker 	spare parts for deposition tool 	1168.96 	CAd 
	22/07/2011 	K. J. Lesker 	gas valve 	1245.7 	USD 
	03/08/2011 	K. J. Lesker 	sputtering targets 	1485.38 	CAD 

	Date 	Vendor 	Description 	Amount 	Currency 
	 19/09/2011 	K. J. Lesker 	sputtering targets 	1928.08 	CAD 
	 06/06/2012 	K. J. Lesker 	deposition tool parts 	1030.68 	CAD 
	 10/12/2010 	K. J. Lesker 	sputtering target 	578 	CAD 
	 30/12/2010 	K. J. Lesker 	sputtering targets 	311.64 	CAD 
	 11/10/2011 	K. J. Lesker 	spare parts for deposition tool 	1435.07 	CAD 
	 13/10/2011 	K. J. Lesker 	spare parts for deposition tool 	60.18 	CAD 
	 18/10/2011 	K. J. Lesker 	sputtering target 0.5% Al ZnO 	1177.4 	cad 
	 09/11/2011 	K. J. Lesker 	deposition supplies 	431.76 	CAD 
	 08/11/2011 	K. J. Lesker 	spare parts for deposition tool 	55.24 	CAD 
	 03/11/2011 	K. J. Lesker 	spare parts for deposition tool 	240.43 	CAD 
	 22/02/2012 	K. J. Lesker 	bake out lamp 	1108.8 	CAD 
	 13/01/2012 	Labsphere 	integrating sphere 	2693.50 	USD 
	 08/12/2010 	Laco Tech 	vacuum chamber 	515 	USD 
	 14/02/2011 	Lenox Lasers 	aperture 	152.96 	USD 
	 18/05/2010 	London Drugs 	displays 	629.24 	CAD 
	 01/03/2011 	London Drugs 	laptop 	527.71 	CAD 
	 08/03/2011 	London Drugs 	2 laptops 	1010.64 	CAD 
	 05/10/2011 	London Drugs 	laptop 	505.32 	CAD 
	 21/06/2012 	Lumerical 	FDTD software license 	2737.28 	CAD 
	 07/07/2010 	MightEx 	fiber-coupled LED light source 	1,807.17 	CAD 
	 08/03/2010 	MightEx 	CCD spectrometer and LEDs 	3653.72 	CAD 
	 04/12/2010 	MightEx 	illumination source 	893.39 	CAD 
	 30/05/2011 	Mightex 	UV LED source 	597.37 	CAD 
	 16/06/2011 	MightEx 	collimator 	184.52 	cad 
	 13/07/2011 	Mightex 	optical fibers and power supply 	1318.07 	CAD 
	 19/07/2011 	MightEx 	spectrometer 	2626.48 	CAD 
	 06/12/2011 	Mightex 	optical sources 	1430.25 	CAD 
	 26/09/2011 	MTI 	ovens 	1842.39 	USD 
	 26/04/2010 	Nor-Tech 	workstation 	7312.52 	CAD 
	 10/06/2011 	OEM Optical 	infrared illuminator 	1210.7 	USD 
	 17/10/2011 	Pall 	gas filters 	4294.62 	CAD 
	 14/06/2010 	Signatone 	micropositioners, probe tips 	1559.95 	USD 
	  	Signatone 	micropositioner 	885.62 	USD 
	 29/06/2010 	SPI 	tweezers 	210.45 	USD 
	 17/02/2011 	SPI 	tweezers 	207.54 	USD 
	  	SRS 	Lock-in amplifier 	3850 	USD 
	  	SRS 	Lock-in amplifier 	3850 	USD 
	  	Tektronix 	oscilloscope 	  	  
	 13/10/2011 	Ted Pella 	calibration standard 	590 	USD 
	 18/08/2011 	Terra Universal 	cleanroom vacuum cleaner 	458 	USD 
	 21/06/2010 	Testforce 	source-measure unit 	4879.73 	CAD 
	  	Testforce 	USB interface for instruments 	671.4 	CAD 
	  	Testforce 	source-measure unit 	4879.73 	CAD 

	Date 	Vendor 	Description 	Amount 	Currency 
	  	Testforce 	USB interface for instruments 	671.4 	CAD 
	11/01/2011 	The Source 	laptop 	617.33 	CAD 
	07/01/2011 	Thermo Fisher 	chiller for deposition tool 	6577.2 	USD 
	29/03/2011 	Thermo Fisher 	chiller for deposition tool #2 	6637.05 	USD 
	  	Thermo Fisher 	chiller for deposition tool #3/4 	14324 	USD 
	08/04/2010 	Thorlabs 	Positioner and accessories for microbeam 	1932 	USD 
	10/05/2010 	Thorlabs 	rutile prism and CMOS camera 	860.99 	CAD 
	27/05/2010 	Thorlabs 	optical components 	3214.7 	CAD 
	17/06/2010 	Thorlabs 	diode and enclosure pieces 	1136.13 	USD 
	25/03/2011 	Thorlabs 	optical elements 	1790.1 	USD 
	13/07/2011 	Thorlabs 	holders 	85.47 	USD 
	02/08/2011 	Thorlabs 	  	328.55 	USD 
	16/09/2011 	Thorlabs 	power meter and optics 	1130.39 	usd 
	14/10/2011 	Thorlabs 	mirror 	149 	usd 
	02/12/2011 	Thorlabs 	optical components 	2730.88 	USD 
	19/02/2012 	Thorlabs 	optical components 	367.83 	USD 
	21/06/2012 	Thorlabs 	optics 	456.96 	USD 
	09/03/2011 	Westburne 	multimeter and connectors 	329.24 	CAD 
	29/06/2012 	Zinir 	light source 	1412.48 	CAD 
	  	  	  	  	  
	  	  	  	157388.4secureexh1031.htm

Exhibit 10.31

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT is made and effective as of the 1st day of January, 2013, at 12:01 AM mountain time, by and between SecureAlert, Inc., a Utah corporation, hereinafter the ("Seller") and DAVID ROTHBART, an  individual resident of the State of Mississippi (“DAVID ROTHBART” or “Buyer”) and Court Programs, Inc. a Mississippi corporation (the “Corporation”).  The Seller, Buyer and the Corporation are referred to collectively herein as the “Parties”.

WITNESSETH:

WHEREAS, Parties entered into that certain Stock Purchase Agreement dated December 1, 2007 and subsequently amended, wherein the Buyers herein sold the Corporation to the Seller herein (the “Original Transfer Agreement”) and;

WHEREAS, the Seller is the record owner and holder of all of the issued and outstanding shares of the capital stock of the Corporation, which Corporation has issued capital stock of 1000 shares and;

WHEREAS, the Seller still owes Buyer approximately $50,000.00 (fifty-thousand dollars) plus interest and penalties, and the Buyer desires to purchase all of the issued and outstanding capital stock of the Corporation (referred to as the "Corporation's Stock"), and the Seller desires to sell or cause to be sold all of the Corporation's stock, upon the terms and subject to the conditions hereinafter set forth in lieu of the money still owed to Buyer;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, and in order to consummate the purchase and the sale of the Corporation's Stock aforementioned, it is hereby agreed as follows:

1.  PURCHASE AND SALE:  CLOSING.

(a.)  Purchase and Sale of Corporation's Stock.  Subject to the terms and conditions hereinafter set forth, at the closing of the transaction contemplated hereby, the Seller shall sell, convey and transfer, or cause to be sold, conveyed or transferred, all of the Corporation's Stock and deliver to the Buyer certificates representing such stock, and the Buyer shall purchase from the Seller the Corporation's Stock in consideration of the purchase price and terms set forth in Section 2 and Exhibit "A" of this Agreement.  The certificates representing the Corporation's Stock shall be duly endorsed for transfer or accompanied by appropriate stock transfer powers duly executed in blank, in either case with signatures guaranteed in the customary fashion, and shall have all the necessary documentary transfer tax stamps affixed thereto at the expense of the Seller.

 

(b.)  Procedure for Closing.  The closing of the transactions contemplated by this Agreement (the "Closing"), shall be completed at such place or places as the parties here to agree on or before the 8th day of February,  2013, at 1:00 PM mountain time (such date to be referred to in this Agreement as the "Closing Date").

2.  AMOUNT AND PAYMENT OF PURCHASE PRICE.

The total consideration and method of payment thereof are fully set out in Exhibit "A" attached hereto and made a part hereof.

  

Stock Purchase Agreement 1

  

 

3.  REPRESENTATIONS AND WARRANTIES OF SELLER.

Seller hereby warrants and represents:

(a.)  Organization and Standing.  Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Mississippi and has the corporate power and authority to carry on its business as it is now being conducted.  A true and correct copy of:

i. It’s Articles of Incorporation and all amendments thereto to date, and

ii. Its Bylaws as now in effect, will be delivered by Seller to Buyer prior to the Closing Date.  The Corporation's minute books will be made available to Buyer and its representatives at any reasonable time or times prior to the Closing for inspection and will be complete and correct as of the date of any such inspection.

(b.)  Capitalization. The authorized capital stock of the Corporation consists of 1,000 (one thousand) shares of common stock, with 1,000 (one thousand) shares issued and outstanding.

 

 

(c.)  Restrictions on Stock.

i. Neither the Corporation nor Seller is a party to any agreement, written or oral, creating rights in respect to the Corporation's Stock in any third person or relating to the voting of the Corporation's Stock.

ii. Seller is the lawful owner of all of the Corporation's Stock, free and clear of all security interests, liens, encumbrances, equities and other charges.

iii. There are no existing warrants, options, stock purchase agreements, redemption agreements, restrictions of any nature, calls or rights to subscribe of any character relating to the capital stock of the Corporation, nor are there any securities convertible into such stock.

(d.)  Subsidiaries.  The Corporation has no subsidiaries.

(e.)  Authority Relative to this Agreement.  Except as otherwise stated herein, the Seller has full power and authority to execute this Agreement and carry out the transactions contemplated by it and no further  action is necessary by the Seller to make this Agreement valid and binding upon Seller and  enforceable against it in accordance with the terms hereof, or to carry out the actions contemplated hereby.  The execution, delivery and performance of this Agreement by the Seller will not:

i. Constitute a breach or a violation of the Corporation's Articles of Incorporation, By-Laws, or of any law, agreement, indenture, deed of trust, mortgage, loan agreement or other instrument to which it is a party, or by which it is bound;

ii. Constitute a violation of any order, judgment or decree to which it is a party or by which its assets or properties are bound or affected; or

iii. Result in the creation of any lien, charge or encumbrance upon its assets or properties, except as stated herein.

(f.)  Financial Statements.  Seller is furnishing financial statements of the Corporation as an inducement to Buyer to purchase the Corporation's Stock and accordingly, Seller warrants and represents the financial operating history or condition of the Corporation as indicated by the financial statements turned over to Buyer.  Moreover, Seller warrants and represents that at closing the Corporation and the Corporation's Stock will not be subject to any liability save and except those specifically enumerated in Exhibit "B" attached hereto and made a part hereof.  All the liabilities listed, including but not necessarily limited to the SBA loan, accrued liabilities, and all Accounts Payable that have not yet become due as of the closing date of this Agreement will transfer to Buyer, except for $180,751.04 (one-hundred-eighty-thousand-seven-hundred-fifty-one dollars and four cents) which is the Account Payable amount owed by the Corporation to the Seller for GPS electronic monitoring services previously provided to the Corporation by the Seller.

 

  

Stock Purchase Agreement 2

  

 

To the extent that liabilities are discovered by Buyer after Closing which relate to events prior to Closing, Seller shall be responsible to forthwith pay such liabilities, including income tax liabilities in cash within fifteen (15) business days thereof, or alternatively, if Seller objects to such liabilities in good faith, litigate the issue and indemnify and save harmless Buyer from any claim for such liability.  This indemnification as it relates to income tax liabilities of the Corporation shall terminate on the tenth (10th) day after the expiration of the applicable period of limitations on assessments and collections applicable to such taxes under the Internal Revenue Code.  Moreover, the aforementioned indemnity shall not apply to any tax liability which may occur by reason of actions taken by the Buyer including, but not limited to, the liquidation of the Corporation.

(g.)  Tax Matters.  The Corporation has timely prepared and filed all federal, state and local tax returns and reports as are and have been required to be filed and all taxes shown thereon to be due have been paid in full.

(h.)  Litigation.  The Corporation is not a party to any litigation, proceeding or administrative investigation and to the best knowledge of the Seller none is pending against the Corporation or its properties. To the extent that legal issues or matters of litigation are discovered by Buyer within 6 months after Closing which relate to events prior to Closing, Seller shall be responsible to resolve the issue(s) and indemnify and hold harmless Buyer from any claim for such liability.  Any legal issues or matters of  litigation which are discovered by Buyer within 6 months after Closing and which relate to events prior to Closing, will be the obligation of the Buyer.

(i.)  Properties.  The Corporation has good and merchantable title to all of its properties and assets which are those properties and assets set out in Exhibit "C" attached hereto and made a part hereof.  All the assets will transfer to Buyer, except for cash bank deposits, of which $0 will transfer; and except for the right for Buyer to utilize the Seller’s GPS monitoring equipment and services for the provision of GPS monitoring in the state of Mississippi. At closing, such properties and assets will be subject to no mortgage, pledge, lien, conditional sales agreement, security agreement, encumbrance or charge, secured or unsecured, except for personal property taxes, if applicable, and tangible personal property taxes which shall be prorated as of the date of closing, or those specifically set out in Exhibit "B". Notwithstanding the foregoing, Seller makes no representations as to the validity or existence of third-party software licenses for software on computer equipment listed on Exhibit “C” and in use by the Corporation.  Buyer hereby assumes any such liability for software on computer equipment of the Corporation.

(j.)  Compliance with Applicable Laws.  None of the Corporation's actions are prohibited by or have violated or will violate any law in effect on the date of this Agreement or on the date of closing.  None of the actions of the Corporation shall conflict  with or result in any breach of any of the provisions of, or constitute a default under, or result in the creation of any lien, security interest, charge or encumbrance upon the capital stock of the Corporation, or upon any of the assets of the  Corporation, under the provisions of the Certificate of Incorporation or Bylaws or any indenture,  mortgage, lease, loan agreement or other agreement to which the Corporation and/or the Seller is a party or by which the capital stock or properties and assets of the Corporation are bound to effect it.

The Corporation is in compliance with all applicable laws, including, but not limited to, corporate laws, zoning regulations, restaurant and beverage laws and regulations, if applicable, city, and/or county and state occupational laws and regulations, internal revenue laws, and any and all other laws which may affect the operation or liability of the Buyer herein.

  

Stock Purchase Agreement 3

  

 

(k.)  Documents for Review.  The Corporation's documents enumerated in Exhibit "D", attached hereto and made a part hereof, are true, authentic, and correct copies of the originals, or, if appropriate, the originals themselves, and no alterations or modifications thereof have been made.

4.  REPRESENTATIONS AND WARRANTIES OF SELLER AND BUYER.

Seller and Buyer hereby represent and warrant that there has been no act or omission by Seller, Buyer or the Corporation which would give rise to any valid claim against any of the parties hereto for a brokerage commission, finder's fee, or other like payment in connection with the transactions contemplated hereby.

5.  PRIOR TO THE CLOSING.

Seller hereby covenants the following:

(a.)  Conduct of Corporation's Business Until Closing.  Except as Buyer may otherwise consent in writing prior to the Closing Date, Seller will not enter into any transaction, take any action or fail to take any action which would result in, or could reasonably be expected to result in or cause, any of the representations and warranties of Seller contained in this Agreement, to be not true on the Closing Date. Seller shall pay all Accounts Payable invoices that are due and payable between the effective date of the Agreement and the Closing date of the Agreement.

(b.)  Resignations.  Seller will deliver to Buyer prior to the Closing Date the resignation of each director and officer of the Corporation, each such resignation to be effective on the Closing Date.

(c.)  Satisfactions.  Seller will deliver to Buyer on the Closing Date a satisfaction from any mortgage and lien holder of the Corporation's property, satisfactory in form and substance to the Buyer and his counsel indicating that the then outstanding unpaid principal balance of any promissory note secured thereby has been paid in full prior to or simultaneously with the Closing.

(d.)  Advice of Changes.  Between the date hereof and the Closing Date, Seller will promptly advise Buyer in writing of any fact which, if existing or known at the date hereof, would have been required to be set forth herein or disclosed pursuant to this Agreement, or which would represent a material fact the disclosure of which would be relevant to the Buyer.

(e)  Subsequent Support.  Seller shall provide certain support as outlined in Exhibit “E”, attached hereto and made a part hereof.

6.  EXPENSES.

Each of the parties hereto shall pay its own expense in connection with this Agreement and the transactions contemplated hereby, including the fees and expenses of its counsel and its certified public accountants and other experts.

  

Stock Purchase Agreement 4

  

 

7.  GENERAL.

(a.)  Survival of Representations and Warranties.  Each of the parties to this Agreement covenants and agrees that the Seller's representations, warranties, covenants and statements and agreements contained in this Agreement and the exhibits hereto, and in any documents delivered by Seller to Buyer in connection herewith, shall survive the Closing Date and terminate on the second anniversary of such date.  Except as set forth in this Agreement, the exhibits hereto or in the documents and papers delivered by Seller to Buyer in connection herewith, there are no other agreements, representations, warranties or covenants by or among the parties hereto with respect to the subject matter hereof.

(b.)  Waivers.  No action taken pursuant to this Agreement, including any investigation by or on behalf of any party shall be deemed to constitute a waiver by the party taking such action or compliance with any representation, warranty, covenant or agreement contained herein, therein

and in any documents delivered in connection herewith or therewith.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

(c.)  Notices.  All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered or mailed, first class mail, postage prepaid:

	
To Seller:

	SecureAlert, Inc.
	  	
Attn:  Chief Financial Officer

	  	
150 W. Civic Center Drive, Suite 100

	  	
Sandy, Utah  84070

	  	
Facsimile: 801-451-6281

	  	  
	
To Buyer:

	
DAVID ROTHBART

	  	
1100 W. Beach Blvd., #505

	  	
Pass Christian, MS 39571

	  	
Facsimile: None available

or to such other address as such party shall have specified by notice in writing to the other party.

(d.)  Entire Agreement.  This Agreement (including the exhibits hereto and all documents and papers delivered by Seller pursuant hereto and any written amendments hereof executed by the parties hereto) constitutes the entire Agreement and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof.

(e.)  Sections and Other Headings.  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

(f.)  Governing Law.  This Agreement and all transactions contemplated hereby, shall be governed by, construed and enforced in accordance with the laws of the State of Utah.  The parties herein waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject matter jurisdiction located in Salt Lake County, State of Utah.  In the event that litigation results from or arises  out of this Agreement or the performance thereof, the parties agree to reimburse the prevailing party's reasonable attorney's fees, court costs, and all other expenses, whether or not taxable by the court as costs, in addition to any other relief to which  the prevailing party may be entitled.  In such event, no action shall be entertained by said court or any court of competent jurisdiction if filed more than one year subsequent to the date the cause(s) of action actually accrued regardless of whether damages were otherwise as of said time calculable.

  

Stock Purchase Agreement 5

  

 

(g.)  Conditions Precedent.  There are no Conditions Precedent to the enforceability of this Agreement.

(h.)  Treasury Stock.  It is understood and agreed by the Buyer that none of the consideration furnished by Buyer hereunder shall be for treasury stock and such consideration, subject to the terms hereof, shall be the sole property of Seller.

(i.)  Contractual Procedures.  Unless specifically disallowed by law, should litigation arise hereunder, service of process therefore may be obtained through certified mail, return receipt requested; the parties hereto waiving any and all rights they may have to object to the method by which service was perfected.

(j.)  Counterparts:  This Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which together shall constitute but a single document.

IN WITNESS WHEREOF, this Agreement has been executed by each of the individual parties hereto and signed by an officer thereunto duly authorized and attested under the corporate seal by the Secretary of the corporate party hereto, all on the date first above written.  Final execution will be upon ratification by SecureAlert Inc.’s Board of Directors.

Signed, sealed and delivered in the presence of:

	
SELLER

	  
CORPORATION

	  	  
	
SECUREALERT, INC.

	
COURT PROGRAMS, INC.

	  	  
	  	  
	
By: /s/ Winfried Kunz

	
By: /s/ Chad D. Olsen

	
      Winfried Kunz

	Chad D. Olsen, CFO
	
      Executive Committee, Acting CEO

	  
	  	  
	  	  
	
By: /s/ George Schmitt

	  
	
       George Schmitt

	  
	
       Executive Committee, Acting CEO

	  

BUYER

DAVID ROTHBART

BY: /s/ David Rothbart

       David Rothbart

  

Stock Purchase Agreement 6

  

 

EXHIBIT "A"

AMOUNT AND PAYMENT OF PURCHASE PRICE AND EQUITY TRANSFER TERMS

Consideration.  As total consideration for the purchase and sale of the Corporation's Stock, pursuant to this Agreement, the Buyer shall pay to the Seller the following (the “Purchase Price”):

	
·

	
The amount of $10.00 (ten dollars).

	
·

	
Forgive all amounts owed to Buyer by Seller pursuant to the Original Stock Purchase Agreement, as amended, estimated at approximately $50,000.00 (fifty-thousand dollars) plus interest and  penalties.

Equity Transfer Terms.  The following terms are included in said Equity Transfer (the “Equity Transfer Terms”):

	
·

	
All equity of CPI Inc. is transferred.  Such equity transfer does not include the right for Buyer to utilize the Seller’s GPS monitoring equipment and services for the provision of GPS monitoring in the state of Mississippi. Buyer assumes the assets and liabilities of the Corporation as delineated in Exhibits B and C attached herein. 

	
·

	
Buyer will file a claim with BP for damages pursuant to BP’s oil spill in the gulf region and will retain 75% of any awards received, and will provide 25% to the Seller.   Final amounts to be retained by the Buyer and provided to the Seller will be net of expenses, including but not limited to attorney fees for the filing of claims.

	
·

	
Seller will enter into a note payable (“Loan”) with the Buyer of $60,000.00 (sixty-thousand dollars).  The Loan will be paid by the Buyer over 90 days with first payment due on April 1, 2013, but no later than April 5, 2013; the second payment due on May 1, 2013, but no later than May 6, 2013 and the final payment on June 1, 2013, but no later than June 5, 2013.

	
·

	
As collateral for this Loan, Buyer shall provide to Seller, 621 (six-hundred-twenty-one) shares of Series D Preferred stock along with the signed Irrevocable Stock Power attached as “Exhibit F”.  Upon the timely payment in full of the Loan, Seller will return the 621 (six-hundred-twenty-one) shares of Series D Preferred stock to Buyer and the Irrevocable Stock Power.

	
·

	
Buyer agrees to convert Series D Preferred shares as and when the Seller’s Board of Directors approves an offer for such conversion to be extended to all series D Preferred Shareholders.

 

  

Stock Purchase Agreement 7

  

 

EXHIBIT “B”

LIABILITIES OF THE CORPORATION

Liabilities are listed in the following separate documents:

 

	
·

	
CPI MS-01 Balance Sheet 10.01-11.30.12.xls

	
·

	
CPI MS-01 Balance Sheet for FYE 2012.xls

	
·

	
01-Balance sheet 10.01-12.31.12.xls

Listing of AP amounts as of December 31, 2012 is provided in the following separate document:

 

	
·

	
MS-N Accounts Payable 12.31.12.xls

The Account Payable of $180,751.04 (one-hundred-eighty-thousand-seven-hundred-fifty-one dollars and four cents) which is the Account Payable amount owed by the Corporation to the Seller for GPS electronic monitoring services previously provided to the Corporation by the Seller will not be transferred to the Buyer.

  

Stock Purchase Agreement 8

  

EXHIBIT "C"

PROPERTIES AND ASSETS OF CORPORATION

Listing of Fixed Assets as of December 31, 2012 is provided in the following separate document:

 

	
·

	
CPI MS-Fixed Assets 12.31.12.xlxs

SCRAM Equipment as delineated in the following separate document:

 

	
·

	
SCRAM Inventory as of 01.03.12.pdf

	
·

	
Transfer of SCRAM equipment assumes no issues on part of AMS in having equipment  transferred to Buyer

 

All deposits currently held by utilities companies and office spaces lessors will transfer to Buyer.

Cash bank balances as of the closing date of this Agreement will be retained by Seller.

The right for Buyer to utilize the Seller’s GPS monitoring equipment and services for the provision of GPS monitoring in the state of Mississippi will not be transferred to the Buyer.

 

 

  

Stock Purchase Agreement 9

  

 

EXHIBIT "D"

DOCUMENTS FOR REVIEW

	
i.

	
Corporate Articles of Incorporation and By Laws and State of Mississippi Annual Report and Change of Agent Form

	  	
·

	
CPI MS Articles of Incorporation and By Laws.pdf

	  	
·

	
CPI MS Corporate Annual Report & Agent Change.pdf

	
ii.

	
Corporate Minutes and Resolutions

	  	
·

	
CPI MS Certified Resolution of RMDX.pdf – Remote MDX Board Resolution Related to CPI MS

	  	
·

	
CPI MS Unanimous Consent Resolution.pdf – CPI Board Resolution

	  	
·

	
CPI MS Unanimous Consent Resolution 12.01.07.pdf – CPI Board Resolution

	
iii.

	
Financial and Operating Statements

	  	
·

	
CPI MS-01 Balance Sheet 10.01-11.30.12.xls – Balance sheets for Oct and Nov, 2012

	  	
·

	
CPI MS-02 P&L 10.01-11.30.12.xls – P&Ls for Oct and Nov, 2012

	  	
·

	
CPI MS-01 Balance Sheet for FYE 2012.xls – Balance sheet for fiscal year of 2012

	  	
·

	
CPI MS-02 P&L 10.01.11-9.30.12 by month.xls – P&Ls for fiscal year 2012 by month

	  	
·

	
01-Balance sheet 10.01-12.31.12.xls

	  	
·

	
02-P&L by month 10.01.12-12.31.12.xls

	
iv.

	
Listing of Leasehold Agreement(s)

	  	
·

	
CPI MS Listing of Lease Obligations as of 12.30.12.xls

	  	
·

	
Copies of leases will be provided after closing

	
v.

	
Redacted SBA Loan Agreement

	  	
·

	
20121211103935723.pdf – SBA Loan Document provided separately

	  	
·

	
Non-redacted Copy of Loan Agreement will be provided after closing

	
vi.

	
Listing of Employee Salaries by Employee #

	  	
·

	
CPI MS Employee Salary Listing as of 12.31.12, Emp #.xls

	  	
·

	
Full employee information will be provided after closing

 

 

  

Stock Purchase Agreement 10

  

 

EXHIBIT "E"

SUBSEQUENT SUPPORT

 

1.           Seller shall provide Buyer with a maximum of 40 work hours of time by its human resources, information technology and accounting personnel at no cost to assist with the transition of operations and the transition of systems or capabilities that are not being transferred to Buyer as part of this Stock Purchase Agreement, including but not necessarily limited to, the accounting system (Quickbooks), the email server and system, the hosting and support of the Court Programs’ website, and the payroll processing system (ADP).

 

  

Stock Purchase Agreement 11

  

 

EXHIBIT "F"

IRREVOCABLE STOCK POWER

 

 

The undersigned provides to SecureAlert Inc., (tax identification number 87-0543981) 621 (six-hundred-twenty-one)  shares of Series D Preferred stock of SecureAlert, Inc., represented by  Certificate No(s) DP-055 inclusive, standing in the name of the undersigned, on the books of SecureAlert Inc., and including any shares of Common stock that is received in exchange for or upon conversion of the Series D Preferred Stock.

If the undersigned does not pay the loan described in Exhibit A of this Agreement in full by June 5, 2013, the undersigned does hereby irrevocably sell, assign, and transfer said shares to SecureAlert Inc. 

The undersigned does hereby irrevocably constitute and appoint myself, David Rothbart, to transfer the said stock on the books of SecureAlert Inc. with full power of substitution in the premises.

Dated:  

 

 

 

	  	
Signature of Shareholder

	  	  
	  	  
	
 

	  
	  	
Signature of Shareholder

	  	  
	  	  
	
      

	  
	  	
Signature Guaranteed

 

 

 

Stock Purchase Agreement 12

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